Document:

EX-10.18

 

Exhibit 10.18

SECURITYHOLDERS’ AGREEMENT

     THIS SECURITYHOLDERS’ AGREEMENT (this “Agreement”) is made as of December 23, 2003, by
and among (i) Sun Horsehead, LLC, a Delaware limited liability company (“Sun”), (ii) each
Person whose name appears on the signature page hereto or who otherwise hereafter becomes a party
to this Agreement (collectively, the “Minority Stockholders”), and Horsehead Holding Corp.,
a Delaware corporation (the “Company”). Certain other capitalized terms used herein are
defined in Section 1.

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

     1. Certain Definitions. The terms defined in this Section 1, whenever used in
this Agreement, shall, unless the context clearly otherwise requires, have the following respective
meanings:

     “Affiliate” of a Person shall mean any other Person directly or indirectly
controlling, controlled by or under common control with such Person.

     “Applicable Percentage” shall have the meaning set forth herein in Section
3.1(c).

     “Common Stock” shall mean the Voting Common Stock and the Non-Voting Common Stock.

     “Company” shall have the meaning set forth in the first paragraph of this Agreement.

     “Exempt Transfer,” as applied to any Stockholder, shall mean (a) any sale or Transfer
permitted by the Registration Agreement, (b) any Permitted Affiliate Sale, (c) in the case of an
individual, any Transfer to a member of the Family of such Stockholder, or a trust or other entity
for the sole benefit of a member of the Family of such Stockholder, if such individual or trust or
other entity agrees to be bound by the terms of this Agreement and executes a joinder hereto, or
(d) any Transfer to another Stockholder.

     “Family,” as applied to any individual, shall mean (a) the children of such individual
(by birth or adoption), (b) the parents, spouse and siblings of such individual, (c) the children
of the siblings of such individual, (d) any trust solely for the benefit of, or any partnership,
limited liability company or other entity owned solely by, anyone or more of such aforementioned
individuals (so long as such individuals have the exclusive right to control such trust or other
entity) and (e) the estate of such individual.

     “Minority Shares” shall mean shares of the Company’s Common Stock owned or controlled
by the Minority Stockholders.

     “Minority Stockholders” shall have the meaning set forth in the first paragraph of
this Agreement.

 

 

     “Minority Stockholder Notes” shall mean the promissory notes issued by the Company to
one or more Minority Stockholders.

     “Non-Voting Common Stock” shall mean the Non-Voting Common Stock, $0.01 par value per
share, of the Company as constituted on the date hereof and any stock into which any such
Non-Voting Common Stock shall have been changed or any stock resulting from any reclassification of
any such Non-Voting Common Stock.

     “Notes” shall mean the Sun Note and the Minority Stockholder Notes.

     “Notice of Transfer” shall have the meaning set forth herein in Section
3.1(b).

     “Outside Offer” shall have the meaning set forth herein in Section 2.2( a).

     “Permitted Affiliate Sale” shall mean any sale by a holder of Securities to any one or
more of its Affiliates, if such Affiliate agrees to be bound by the terms of this Agreement to the
same extent as the transferor and executes a joinder hereto.

     “Person” shall mean an individual, a corporation, a limited liability company, an
association, a joint-stock company, a business trust or other similar organization, a partnership,
a joint venture, a trust, an unincorporated organization or a government or any agency,
instrumentality or political subdivision thereof.

     “Prospective Purchaser” shall have the meaning set forth herein in Section
2.2(a).

     “Registration Agreement” shall mean that certain Registration Agreement, dated as of
the date hereof, by and between the Company, Sun, and the other Persons listed on the signature
page thereto.

     “Rights” shall have the meaning set forth in Section 4(a).

     “Securities” shall mean the Common Stock and the Notes.

     “Securities Act” shall mean the Securities Act of 1933, as amended, or any successor
federal statute, and the rules and regulations promulgated thereunder, all as amended, modified or
supplemented from time to time.

     “Selling Stockholder” shall have the meaning set forth in Section 2.2(a).

     “Stockholder” shall mean Sun, the Minority Stockholders and each other Person who
shall acquire any shares of Common Stock from the Company, Sun or the Minority Stockholders and
their respective heirs, executors, successors and assigns in accordance with the terms and
conditions of this Agreement.

     “Sun Note” shall mean the promissory note issued by the Company to Sun.

     “Transfer” shall mean any sale, pledge, gift, assignment or other transfer.

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     “Voting Common Stock” shall mean the Voting Common Stock $0.01 par value per share, of
the Company as constituted on the date hereof and any stock into which any such Voting Common Stock
shall have been changed or any stock resulting from any reclassification of any such Voting Common
Stock.

     2. Restriction on Transfer of Securities by Minority Stockholders.

     2.1 General. The Minority Stockholders shall not Transfer any interest in the
Securities (except in connection with an Exempt Transfer) and the Company shall not register the
Transfer of, or otherwise permit the Transfer of, any interest in the Securities by any Minority
Stockholders (except in connection with an Exempt Transfer) unless (a) such Transfer has been
consummated in accordance with the terms hereof and (b) the new holder thereof shall first have
become a party to this Agreement and shall have agreed in writing to be bound by all of the terms
and conditions hereof applicable to the Minority Stockholders. Any Transfer of any interest in the
Securities by any Minority Stockholder which is not consummated in accordance with this Agreement
shall be void.

     2.2 Limited Right to Dispose of Interest.

          (a) Bona Fide Offer to Purchase Interest. If any Minority Stockholder (or any of his,
her or its transferees) shall at any time desire to Transfer all or any part of his, her or its
interest in the Securities as permitted under the terms of this Agreement, such Person (the
“Selling Stockholder”) shall first obtain a bona fide written offer which such Selling
Stockholder desires to accept (the “Outside Offer”) to purchase all or any portion of such
Selling Stockholder’s Securities for a fixed cash price payable in full at the closing of such
transaction. The Outside Offer shall set forth its date, the proposed purchase price, an
identification of the Securities to be purchased, and the other terms and conditions upon which the
purchase is proposed to be made, as well as the name and address of the Prospective Purchaser.
“Prospective Purchaser”, as used herein, shall mean the prospective record owner or owners
of the interest in the Securities which are the subject of the Outside Offer and all other Persons
proposed to have a beneficial interest in such Securities. The Selling Stockholder shall transmit
copies of the Outside Offer to the Company and Sun within five (5) days after the Selling
Stockholder’s receipt of the Outside Offer.

          (b) Option of Company and Sun.

               (i) As a result of the foregoing transmittal of the Outside Offer, the Selling Stockholder
shall be deemed to have offered in writing to sell to the Company all, but not less than all, of
such Selling Stockholder’s interest in the Securities which are proposed to be purchased in the
Outside Offer at the price and upon the terms and conditions set forth in the Outside Offer. For a
period of ten (10) days after such deemed offer by the Selling Stockholder to the Company, the
Company shall have the option, exercisable by written notice to the Selling Stockholder, to accept
the Selling Stockholder’s offer, in whole and not in part, as to the Selling Stockholder’s interest
in the Securities that are the subject of the Outside Offer.

               (ii) If the Company does not exercise its option set forth in the preceding Section
2.2(b)(i), the Selling Stockholder shall be deemed to have offered in writing to

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sell to Sun all, but not less than all, of such Selling Stockholder’s interest in the
Securities which are proposed to be sold in the Outside Offer at the price and upon the terms and
conditions set forth in the Outside Offer. For a period of ten (10) days after such deemed offer by
the Selling Stockholder to Sun, Sun shall have the option, exercisable by written notice to the
Selling Stockholder, to accept the Selling Stockholder’s offer, in whole and not in part, as to the
Selling Stockholder’s interest in the Securities that are the subject of the Outside Offer.

               (c) Acceptance of the Bona Fide Offer. If, at the end of the option periods described
in Section 2.2(b) hereof, the option has not been exercised either by the Company or Sun to
purchase all of the Selling Stockholder’s interest in the Securities proposed to be purchased in
the Outside Offer, the Selling Stockholder shall be free for a period of forty-five (45) days
thereafter to Transfer such interest in the Securities proposed to be purchased in the Outside
Offer to the Prospective Purchaser at the price and upon the terms and conditions set forth in the
Outside Offer, provided that the Prospective Purchaser is not a Person that, directly or indirectly
(whether as sole proprietor, partner, manager, consultant, director, officer, employee or agent),
owns, manages, operates, controls, finances, engages or participates in the ownership, management,
operation or control of any Person that competes with the Company. If such Securities are not so
transferred within the forty-five (45) day period, the Selling Stockholder shall not be permitted
to sell such Securities without again complying with this Section 2.2.

               (d) Notwithstanding anything contained in this Agreement to the contrary, the restrictions on
the Transfer of Securities set forth in this Section 2.2 shall not apply to Sun or any of
its Affiliates and shall not apply with respect to an Exempt Transfer by a Minority Stockholder.

     3. Tag-Along Rights; Drag-Along Rights.

     3.1 Tag-Along Rights. Subject to Section 3.1(f):

          (a) If Sun at any time proposes to Transfer any interest in Securities, then, as a condition
precedent thereto, Sun shall afford the Minority Stockholders the right to participate in such
Transfer in accordance with this Section 3.1.

          (b) If Sun wishes to Transfer any interest in Securities, it shall give written notice to the
Minority Stockholders (a “Notice of Transfer”) not less than ten (10) nor more than thirty
(30) days prior to any proposed Transfer of any such shares. Each such Notice of Transfer shall:

               (i) specify in reasonable detail (A) the number of shares of Common Stock, if any, which Sun
proposes to Transfer, (B) the principal amount of the Sun Note, if any, which Sun proposes to
Transfer, (C) the identity of the proposed transferee or transferees of such shares, (D) the time
within which, the prices at which, and all other terms and conditions upon which, Sun proposes to
Transfer such interest in Securities, (E) the percentage of the Common Stock then owned by Sun
(calculated on a fully-diluted basis) which Sun proposes to Transfer to such proposed transferee or
transferees, (F) the percentage of the principal amounts of the Notes then outstanding represented
by the principal amount of the Sun Note and (G) a representation that such proposed transferees
have been informed of the tag-along rights provided for in this

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Section 3.1 and have agreed to purchase interests in the Securities in accordance with
the terms hereof;

               (ii) make explicit reference to this Section 3.1 and state that the right of the
Minority Stockholders to participate in such Transfer under this Section 3.1 shall expire
unless exercised within ten (10) days after receipt of such Notice of Transfer; and

               (iii) contain an irrevocable offer by Sun to the Minority Stockholders to participate in the
proposed Transfer to the extent provided in Section 3.1 (c).

          (c) Each Minority Stockholder shall have the right to participate in the proposed Transfer by
transferring to the proposed transferee or transferees up to that interest in the Securities owned
by such Minority Stockholder which is equal to the Applicable Percentage (as hereinafter defined)
(or, if such Minority Stockholder shall elect, any lesser percentage) of the interest in Securities
proposed to be transferred by Sun, at the same prices and on the same terms and conditions as are
applicable to the proposed Transfer by Sun (and, if and to the extent such Minority Stockholder
shall exercise such right, then the interest in Securities to be sold by Sun in such transaction
shall be correspondingly reduced). As used herein, the term “Applicable Percentage” as
applied to a Minority Stockholder on any date shall mean (i) with respect to the Common Stock, a
ftraction (expressed as a percentage), the numerator of which is the aggregate number of shares of
Common Stock owned by such Minority Stockholder on such date and the denominator of which is the
total number of shares of Common Stock owned by all Stockholders on such date and (ii) with respect
to the Notes, a ftraction (expressed as a percentage), the numerator of which is the principal
amount of the Minority Stockholder Note owned by such Minority Stockholder on such date and the
denominator of which is aggregate principal amount of all Notes outstanding on such date.

          (d) Each Minority Stockholder must notify Sun, within ten (10) days after receipt of the
Notice of Transfer, if he, she or it desires to accept such offer and to Transfer any interest in
Securities owned by such Person in accordance with this Section 3.1. The failure of a
Minority Stockholder to provide such notice within such 10-day period shall, for the purposes of
this Section 3.1, be deemed to constitute a waiver by such Person of his, her or its right
to sell any of his, her or its interest in Securities in connection with the proposed Transfer
described in such Notice of Transfer. Sun will use its commercially reasonable efforts to obtain
the agreement of the prospective transferee or transferees to the participation of the Minority
Stockholders in such proposed Transfer. The Minority Stockholders shall not be obligated to sell
any interest in Securities pursuant to this Section 3.1. Any and all sales of Securities by
any of the Minority Stockholders pursuant to this Section 3.1 shall be made concurrently
with the sale of Common Stock by Sun.

          (e) If the Transfer described in any Notice of Transfer is not consummated within ninety (90)
days following the date upon which such Notice of Transfer is given or if there is any change in
the terms pursuant to which such Transfer is to be consummated, then, prior to consummating such
Transfer, Sun must again comply with the provisions of this Section 3.1.

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          (f) Notwithstanding anything to the contrary contained in this Section 3.1, the
Minority Stockholders shall not have any rights pursuant to this Section 3.1 to participate
(i) in any Exempt Transfer by Sun or (ii) anyone or more Transfers by Sun not to exceed in the
aggregate twenty percent of the number of shares of Common Stock owned by Sun as of the date hereof
and not to exceed in the aggregate twenty percent of the principal amount of the Notes owned by Sun
as of the date hereof.

     3.2 Drag-Along Rights.

          (a) If at any time following the date hereof, Sun shall enter into an agreement to sell at
least 50% of the shares of Common Stock (and all securities convertible into and exercisable or
exchangeable for shares of Common Stock) of the Company to any Person or group of Persons who are
not affiliated with Sun, then Sun may require that the Minority Stockholders sell the same
percentage of their Common Stock to such transferee or transferees as the percentage of Common
Stock then owned by Sun which Sun proposes to Transfer to such proposed transferee or transferees
at the same price per share and on the same terms and conditions as are applicable to the proposed
sale by Sun.

          (b) If at any time following the date hereof, Sun (i) shall enter into an agreement to sell
any portion of the aggregate principal amount of the Sun Note to any Person or group of Persons who
are not affiliated with Sun or (ii shall enter into an agreement to sell or exchange any portion of
the aggregate principal amount of the Sun Note to or with the Company, then Sun may require that
the Minority Stockholders sell or exchange the same percentage of their Minority Stockholder Notes
to such transferee or transferees as the percentage of the Sun Note at the same price and on the
same terms and conditions as are applicable to the proposed sale or exchange by Sun (provided that
if in connection with such sale or exchange Sun acquires shares of Voting Common Stock, the
Minority Stockholders will acquire shares of Non-Voting Common Stock).

          (c) In order to exercise the rights under Sections 3.2(a) and (b), Sun must
give notice to the Minority Stockholders not less than ten (10) days prior to the proposed date
upon which the contemplated sale or exchange is to be effected. In addition, Sun shall furnish to
the Minority Stockholders all such agreements, documents and instruments to be executed in
connection with such transaction and shall afford the Minority Stockholders a reasonable period of
time (but in any event not less than five (5) business days) within which to review such
agreements, documents and instruments.

     4. Preemptive Rights.

          (a) Notice and Exercise. The Company shall, prior to any proposed issuance by the
Company to Sun or its Affiliates of any shares of capital stock or securities representing the
right to acquire shares of capital stock (“Rights”) (other than debt securities with no
equity feature), offer to the Minority Stockholders by written notice the right, for a period of
ten (10) days from the date on which such notice is postmarked, hand delivered or faxed, to
purchase for cash at an amount equal to the price or other consideration for which such capital
stock or Rights are to be issued, a number of such shares of capital stock or Rights so that, after
giving effect to such issuance (and the conversion, exercise and exchange into or for (whether
directly or

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indirectly) shares of capital stock of all Rights), each such Minority Stockholder will
continue to maintain his, her or its same percentage equity ownership in the Company represented by
the shares of Common Stock owned by each such Minority Stockholder as of the date of such notice.

          (b) Exceptions. Notwithstanding any other provision of this Agreement to the contrary,
(i) the preemptive rights of the Minority Stockholders pursuant to this Section 4 shall not
apply to securities issued (A) upon conversion or exchange of any of the shares of Common Stock,
(B) as a stock dividend or upon any subdivision of shares of Common Stock, (C) pursuant to
subscriptions, warrants, options, convertible securities, or other rights, issued, or to be issued,
under any stock incentive plan approved by the Company’s board of directors and in place from time
to time for the benefit of the Company’s directors, employees, consultants or independent
contractors or (D) to any Person other than Sun or its Affiliates; and (ii) nothing in this
Section 4 shall give any Minority Stockholder the right to acquire Voting Common Stock of
the Company or any other securities or capital stock of the Company that have voting rights.

          (c) Acceptance. The Company’s written notice to the Minority Stockholders shall
describe the capital stock or Rights proposed to be issued by the Company to Sun or its Affiliates
and specify the number of shares, price and payment terms. Each Minority Stockholder may accept the
Company’s offer as to the full number of shares of capital stock or Rights offered to him, her or
it or any lesser number, by written notice thereof given by him, her or it to the Company prior to
the expiration of the aforesaid 10-day period, in which event the Company shall promptly sell and
each Minority Stockholder shall buy, upon the terms specified, the number of shares of capital
stock or Rights agreed to be purchased by such Person. The Company shall be free at any time prior
to ninety (90) days after the date of its notice of offer to the Minority Stockholders, to offer
and sell to Sun or its Affiliates or any third party or parties the remainder of such capital stock
or Rights proposed to be issued by the Company (including but not limited to the securities not
agreed by the Minority Stockholders to be purchased by them), at a price and on payment terms no
less favorable to the Company than those specified in such notice of offer to the Minority
Stockholders. However, if such third party sale or sales are not consummated within such ninety
(90) day period, the Company shall not sell such capital stock or Rights as shall not have been
purchased within such period without again complying with this Section 4.

     5. Voting; Tax Election.

          (a) Each Minority Stockholder agrees to vote the shares of Common Stock owned or controlled by
it, him or her in the manner specified by Sun with respect to: (i) any sale of all or substantially
all of the assets of the Company or any of its subsidiaries to a Person not an Affiliate of Sun;
(ii) any acquisition, merger or consolidation involving the Company or any of its subsidiaries in
which a Person (or group of Persons acting in concert) not an Affiliate (or Affiliates) of Sun
shall own in excess of 50% of the surviving corporation of such acquisition, merger or
consolidation; (iii) any transaction to which Section 3.1 or Section 3.2 applies;
(iv) the election of the members of the Company’s board of directors; and (v) any other matter on
which the stockholders of a Delaware corporation generally have a right to vote.

          (b) Each Minority Stockholder hereby grants to Sun an irrevocable proxy to vote all shares of
Common Stock now or hereafter owned or controlled by each of them in

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accordance with the agreements contained in this Section 5; provided, that
notwithstanding the foregoing, any proxy granted pursuant to this Section 5 shall
automatically terminate on the date this Agreement terminates pursuant to Section 7 below.

     6. Legends. So long as any shares of Common Stock are subject to the provisions of
this Agreement, all certificates or instruments representing such securities shall bear a legend in
substantially the following form:

THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS OF THE
SECURITYHOLDERS’ AGREEMENT DATED AS OF DECEMBER 23, 2003 AMONG THE
ISSUER HEREOF AND CERTAIN OTHER PERSONS, A TRUE AND CORRECT COPY OF
WHICH IS ON FILE AT THE ISSUER’S CHIEF EXECUTIVE OFFICE. UPON
WRITTEN REQUEST TO THE ISSUE, A COPY THEREOF WILL BE MAILED OR
OTHERWISE PROVIDED WITHOUT CHARGE WITHIN TEN (10) DAYS OF RECEIPT OF
SUCH REQUEST TO APPROPRIATELY INTERESTED PERSONS.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS.

     7. Termination of this Agreement. This Agreement shall terminate on the last to occur
of (a) the date on which Sun and its Affiliates no longer own or control at least 25% of the Common
Stock on a fully diluted basis and (b) the date on which Sun and its Affiliates no longer control
the Company’s board of directors.

     8. Notices. All communications provided for herein shall be in writing and sent (a) by
facsimile if the sender on the same day sends a confirming copy of such communication by a
recognized overnight delivery service (charges prepaid), (b) by a recognized overnight delivery
service (charges prepaid), or (c) by messenger. The respective addresses of the parties hereto for
the purposes of this Agreement are set forth on Exhibit A attached hereto. Any party may
change its address (or facsimile number) by notice to each of the other parties in accordance with
this Section 8. The date of giving or making of any such communication shall be, in the
case of clauses (a) and (c), the date of the receipt; and, in the case of clause (b), the business
day next following the date such communication is sent.

     9. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective heirs, executors,

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successors and assigns, who, upon acceptance thereof, shall, without further action, be (a)
entitled to enforce the applicable provisions and enjoy the applicable benefits hereof and (b)
bound by the terms and conditions hereof.

     10. Amendment and Waiver. Except as otherwise provided herein, no modification,
amendment, or waiver of any provision of this Agreement will be effective unless such modification,
amendment, or waiver is approved in writing by the Company, the holders of at least a majority of
the Minority Shares and Sun; provided that execution of a joinder hereto shall not be considered a
modification, amendment or waiver of any of the provisions of this Agreement. The failure of any
party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of
such provisions and will not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.

     11. Remedies. Any Person having rights under any provision of this Agreement shall be
entitled to enforce their rights under this Agreement specifically to recover damages by reason of
any breach of any provision of this Agreement and to exercise all other rights existing in their
favor; provided, that the parties hereto stipulate that the remedies at law of any party
hereto in the event of any default or threatened default by any other party hereto in the
performance of or compliance with the terms hereof are not and will not be adequate and that, to
the fullest extent permitted by law, such terms may be specifically enforced (without posting a
bond or other security) by a decree for the specific performance thereof, whether by an injunction
against violation thereof or otherwise.

     12. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be
governed by and construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware
or any other jurisdiction) that would cause the application of the laws of any jurisdiction other
than the State of Delaware. Each party hereto submits to the jurisdiction of any state or federal
court sitting in the State of Delaware, in any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each party also agrees not to bring any action or proceeding arising
out of or relating to this Agreement in any other court. Each party hereto waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other party with respect thereto. Any party
may make service on any other party by sending or delivering a copy of the process to the party to
be served at the address and in the manner provided for the giving of notices in Section 8
above. Nothing in this Section 12, however, shall affect the right of any party to bring
any action or proceeding arising out of or relating to this Agreement in any other court or to
serve legal process in any other manner permitted by law or at equity. Each party agrees that a
final judgment in any action or proceeding so brought shall be conclusive and may be enforced by
suit on the judgment or in any other manner provided by law or at equity. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING
INSTITUTED BY OR AGAINST SUCH PARTY IN RESPECT OF ITS, HIS OR HER OBLIGATIONS HEREUNDER OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

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     13. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal, or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality, or unenforceability will
not affect any other provision or any other jurisdiction, but this Agreement will be reformed,
construed, and enforced in such jurisdiction as if such invalid, illegal, or unenforceable
provision had never been contained herein.

     14. Entire Agreement. Except as otherwise expressly set forth herein, this Agreement,
those documents expressly referred to herein, and the other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and preempt any prior
understandings, agreements, or representations by or among the parties, written or oral, which may
have related to the subject matter hereof in any way.

     15. Counterparts. This Agreement may be executed in separate counterparts each of
which will be an original and all of which taken together shall. constitute one and the same
agreement.

     16. Descriptive Headings. The descriptive headings of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.

[The remainder of this page is left blank intentionally.]

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     IN WITNESS WHEREOF, the parties hereto have executed this Securityholders’ Agreement on the
day and year first above written.

	 	 	 	 	 
	 	HORSEHEAD HOLDING CORP.

 	 
	 	By:  	/s/ Michael Kalb
 	 
	 	 	Name:  	Michael Kalb 	 
	 	 	Title:  	Vice President 	 
	 

	 	 	 	 	 
	 	SUN HORSEHEAD, LLC

 	 
	 	By:  	/s/ Michael Kalb
 	 
	 	 	Name:  	Michael Kalb 	 
	 	 	Title:  	Vice President 	 
	 

 

 

Exhibit A

Addresses for Notices

	 	 	 	 	 	 	 	 	 
	(a)	 	If to the Company, to it at:
	 
	 	 	 	 	 	 	 	 
	 	 	Horsehead Holding Corp.

c/o Sun Capital Advisors III, LP

5200 Town Center Circle, Suite 470

Boca Raton, Florida 33486
	 	 	Attention:	 	Marc J. Leder

Rodger R. Krouse

C. Deryl Couch

	 	 	Telecopy No.:	 	(561) 394-0540
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	with a copy to:
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Sun Capital Advisors III, LP

5200 Town Center Circle, Suite 470

Boca Raton, Florida 33486
	 	 	 	 	Attention: 	Marc J. Leder
	 

	 	 	 	 	 	 	 	Rodger R. Krouse
	 

	 	 	 	 	 	 	 	C. Deryl Couch
	 	 	 	 	Telecopy No.:	 	(561) 394-0540
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	and	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Kirkland & Ellis LLP

Citigroup Center

153 East 53ni Street

New York, New York 10022-4611

Attention: Daniel J. Eisner

Telecopy No.: (212) 446-4900
	 
	 	 	 	 	 	 	 	 
	(b)	 	If to Sun Horsehead, LLC, to it at:
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Sun Horsehead, LLC

c/o Sun Capital Advisors III, LP

5200 Town Center Circle, Suite 470

Boca Raton, Florida 33486
	 	 	 	 	Attention:	 	Marc J. Leder

Rodger R. Krouse

C. Deryl Couch
	 	 	 	 	Telecopy No.:	 	(561) 394-0540

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	with a copy to:
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Kirkland & Ellis LLP

Citigroup Center

153 East 53rd Street

New York, New York 10022-4611

Attention: Daniel J. Eisner

Te1ecopy No.: (212) 446-4900EX-10.19

 

Exhibit 10.19

Horsehead Holding Corp.

300 Frankfort Road

Monaca, Pennsylvania 15601

October 31, 2006

James M. Hensler III

1035 South Lake Drive

Gibsonia, Pennsylvania 15044

     Re:     Retention Bonus Arrangement

Dear Mr. Hensler,

     You are hereby confidentially informed that Horsehead Holding Corp. (the “Company”) is
prepared to offer a retention bonus to you on the terms and conditions set forth in this letter
(the “Retention Bonus Arrangement”). This Retention Bonus Arrangement is being offered to
you in return for your continued employment by the Company and your contribution towards its
planned sale of its common stock, par value $0.01 per share, to Friedman, Billings, Ramsey & Co.,
Inc. and certain other purchasers (the “Rule 144A Sale”) and the other consideration set
forth herein. This Retention Bonus Arrangement is in addition to the current compensation and
benefits you receive.

     1. Retention Bonus Amount. In consideration of your continued employment and
contributions toward the Rule 144A Sale and the closing thereof, the Company will pay to you,
subject to the other provisions specified in this letter, a retention bonus in the aggregate of
$818,580.18 (the “Bonus”).

     Provided that the other provisions of this Retention Bonus Arrangement are satisfied, the
Bonus will be paid to you in equal installments of $409,290.09 upon the first and second
anniversaries of the successful initial closing (without regard to any secondary closings) of the
Rule 144A Sale (the “Bonus Payment Dates”). Notwithstanding anything contained herein to
the contrary, (i) if the initial closing of the Rule 144A Sale does not occur prior to December 31,
2006, you shall not be entitled to receive the Bonus and this letter agreement (other than your
obligations to keep this letter agreement and the terms set forth herein confidential, which shall
remain in full force and effect) shall terminate and (ii) if your employment with the Company is
terminated by the Company without Cause prior to the second Bonus Payment Date, you shall be
entitled to receive, on the remaining Bonus Payment Date(s), subject to your execution and delivery
to the Company of a customary release in form and substance acceptable to the Company, the
remaining amount of the Bonus contemplated to be paid to you hereunder.

     2. Performance. All payments to you and other rights provided to you hereunder are
conditioned upon your:

 

 

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James Hensler

October 31, 2006

(i) Not disclosing to any person the existence or the terms of this Retention Bonus
Arrangement, including but not limited to the Bonus amount, without the prior written
consent of the Company;

(ii) Employment with the Company not being previously terminated by you for any
reason or by the Company for Cause. If your employment is terminated by you for any
reason or by the Company for Cause prior to either Bonus Payment Date, you will not be
eligible for any portion of the Bonus to be paid to you on such Bonus Payment Date;
provided that you shall not be obligated to return any Bonus amounts paid to you on a
previous Bonus Payment Date. You acknowledge that this Retention Bonus Arrangement is
not a contract of employment with the Company nor does it restrict the right of the
Company to discharge you; and

(iii) Personally providing to the Company, or its representatives, until the time of
the applicable Bonus Payment Date, reasonable assistance and cooperation relating to
any other sale or public offering of securities of the Company, including without
limitation, any registration of common stock of the Company required pursuant to the
Rule 144A Sale.

     For purposes of this letter agreement, “Cause” shall mean any of (i) a breach by you of any
agreement between you and the Company or any of its subsidiaries, (ii) the commission by you of, or
the pleading by you of guilty or no contest to, (x) any felony or (y) any crime involving moral
turpitude on his part which the Board of Directors of the Company reasonably determines would have
an adverse effect on (A) the reputation of the Company or any of its subsidiaries or affiliates or
their relationships with suppliers, customers, employees or others, (B) your ability to effectively
perform your duties as an officer or employee of the Company and/or any of its subsidiaries, or (C)
the business, operations or financial condition of the Company, its subsidiaries or its affiliates,
(iii) the commission of fraud or embezzlement on the part of you (iv) a failure by you to comply
with the directives and policies of the Boards of Directors of the Company and its subsidiaries,
(v) gross negligence or reckless activity in the conduct of the business of the Company or any of
its subsidiaries or affiliates (including, without limitation, a material breach of any employee
manual of the Company or any of its subsidiaries now existing or hereinafter instituted), (vi)
material abandonment of duties, and/or (vii) willful action taken for the purpose of harming the
Company or any of its subsidiaries or affiliates.

     3. Miscellaneous. Any payments under this Retention Bonus Arrangement will be subject
to all applicable withholding and other employment taxes as determined by the Company in its sole
discretion, and will not meet the definition of eligible earnings for benefit purposes under the
Company benefit plans (including, without limitation, any 401(k) matching, life insurance and
disability arrangements). The terms of this Retention Bonus Arrangement (a) may be amended or
canceled only by mutual agreement of the Company and you, in writing and (b) shall be construed in
accordance with the law of the State of Delaware. This letter may be executed in separate
counterparts (including by means of telecopied signature pages), each of

 

 

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James Hensler

October 31, 2006

which shall be an original
and all of which taken together shall constitute one and the same agreement.

     4. Entire Agreement. Except as specifically provided herein, this letter agreement
constitutes the entire agreement with respect to the subject matter hereof, and supersedes all
previous agreements and understandings relating to the subject matter hereof, whether written or
oral, between the Company and you.

     5. WAIVER OF TRIAL BY JURY. EACH OF THE PARTIES TO THIS LETTER AGREEMENT IRREVOCABLY
AND UNCONDITIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING
OUT OF, CONNECTED WITH OR RELATING TO THIS LETTER AGREEMENT, THE MATTERS CONTEMPLATED HEREBY, OR
THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT OF THIS
LETTER AGREEMENT.

 

 

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James Hensler

October 31, 2006

     Please indicate your acceptance by signing, dating and returning the enclosed duplicate
original of this letter no later than October 31, 2006.

	 	 	 	 	 	 	 
	 	 	Sincerely,	 	 
	 
	 	 	 	 	 	 
	 	 	HORSEHEAD HOLDING CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Ali Alavi
 

Ali Alavi
	 	 
	 

	 	Title:
	 	Secretary	 	 

I acknowledge, accept and agree to the terms and conditions contained herein.

	 	 	 
	/s/ James M. Hensler III

	 	October 28, 2006
	 

	 	 
	James M. Hensler III

	 	Date

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