<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Metal Management, Inc.
________________________________________________________________________________
(Name of Issuer)
Common Stock, Par Value $.01 per share
________________________________________________________________________________
(Title of Class of Securities)
591097100
_______________________________________________________________
(CUSIP Number)
Alisa M. Singer
Rosenberg & Liebentritt
Two North Riverside Plaza, Suite 1600
Chicago, Illinois 60606
________________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
December 19, 1997
_______________________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
(Page 1 of 9)
Exhibit Index Appears on Page 9
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CUSIP NO. 591097100 13D PAGE 2 OF 9 PAGES
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NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Samstock, L.L.C. FEIN: 36-4156890
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [X]
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SEC USE ONLY
3
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SOURCE OF FUNDS
4
WC
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
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SOLE VOTING POWER
7
NUMBER OF 2,070,588(1)(2)
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 2,070,588(1)
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
10
0
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,070,588(1)
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
6.9%(1)
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TYPE OF REPORTING PERSON*
14
OO
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(1) Includes 600,000 shares which Samstock, L.L.C. has the right to purchase
under the warrant described in Item 3 herein, which warrant is
exercisable within 60 days.
(2) The power of Samstock, L.L.C. to vote these shares beneficially owned is
subject to limitations contained in the Amended and Restated Stockholders'
Agreement described in Item 4 herein.
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Item 1. Security and Issuer.
--------------------
This Statement relates to the common stock, par value $.01 per share (the
"Common Stock"), of Metal Management, Inc., a Delaware corporation (the
"Issuer"), which has its principal executive offices at 500 North Dearborn
Street, Suite 405, Chicago, Illinois 60610.
Item 2. Identity and Background.
------------------------
(a-c) and (f) This Statement is being filed by Samstock, L.L.C., a
Delaware limited liability company ("Samstock"). The sole member of Samstock is
SZ Investments, L.L.C., a Delaware limited liability company ("SZI"), the
managing member of which is Zell General Partnership, Inc., an Illinois
corporation ("ZGP"). Additional information concerning SZI and ZGP is set forth
in Appendix A hereto.
The principal business of Samstock, SZI and ZGP is general investments.
The business address of each of Samstock, SZI and ZGP is Two North Riverside
Plaza, Chicago, Illinois 60606.
(d) and (e) Neither Samstock nor, to the best knowledge of Samstock, SZI
or ZGP or any of the persons listed in Appendix A hereto, has during the last
five years (i) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was, or is, subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration.
--------------------------------------------------
On December 19, 1997 (the "Closing Date"), pursuant to the Stock Purchase
Agreement described in Item 4 below, Samstock acquired 1,470,588 shares of
Common Stock (the "Initial Shares") from the Issuer, together with a warrant to
purchase an additional 600,000 shares of Common Stock from the Issuer (the
"Warrant", and the shares covered by the Warrant together with the Initial
Shares are sometimes referred to as the "Purchased Shares"). The aggregate
amount of funds used in acquiring the Initial Shares and the Warrant was
$24,999,996. All funds used in acquiring the Initial Shares and the Warrant
were obtained from the working capital of Samstock.
Item 4. Purpose of the Transaction.
---------------------------
The acquisition of the Initial Shares and the Warrant was effected for the
purpose of investing in the Issuer.
Samstock and the Issuer entered into a Securities Purchase Agreement dated
as of December 19, 1997 (the "Stock Purchase Agreement"), pursuant to which
Samstock acquired the Initial Shares and the Warrant. The Stock Purchase
Agreement provides certain standstill provisions; until one year from the
Closing Date, Samstock and its affiliates will not: (i) propose any transaction
between Samstock and the Issuer and/or its securities holders involving any of
the Issuer's securities or securities holders, (ii) acquire or assist, advise or
encourage any other person in acquiring, directly or indirectly, control of the
Issuer or (iii) request or assist another in calling for an annual meeting of
the stockholders of the Issuer. The Stock Purchase Agreement also grants
Samstock the right to designate either Mr. Samuel Zell or Mr. Rod Dammeyer,
about each of whom information is set forth in Appendix A hereto, to the
Issuer's Board of Directors, upon terms set forth in the Restated Stockholders'
Agreement (as hereinafter defined). The Stock Purchase Agreement is attached
hereto as Exhibit 1 and is incorporated herein by reference.
Page 3 of 9 Pages
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Under the terms of the Warrant, Samstock has the right, prior to 11:59 p.m.
Central Time on December 18, 2002, to purchase (i) up to 400,000 shares of
Common Stock at an exercise price of $20 per share and (ii) up to 200,000 shares
of Common Stock at an exercise price of $23 per share. The Issuer may require
Samstock to exercise the Warrant in whole or in part after the completion by the
Issuer of one or more public offerings aggregating at least 3,000,000 shares of
Common Stock if the average closing bid price of the Common Stock for the
preceding 60 trading days is at least $31 per share. The number of shares, type
of security and exercise price of the shares covered by the Warrant are subject
to adjustment to prevent dilution. The Warrant is attached hereto as Exhibit 2
and is incorporated herein by reference.
In connection with the acquisition of the Initial Shares and the Warrant,
Samstock and the Issuer entered into a Shelf Registration Rights Agreement dated
as of December 19, 1997 (the "Shelf Registration Agreement"), pursuant to which
the Issuer agreed to prepare and file, within 120 days of the Closing Date, a
registration statement on Form S-3 covering the resale of the Purchased Shares
and to list such shares for quotation on the Nasdaq National Market. The Shelf
Registration Agreement requires the Issuer to cause the Form S-3 to become
effective as soon as possible after its filing and to maintain the registration
statement's effectiveness until all of the registered securities are sold or
until, in the reasonable opinion of Issuer's counsel, all of the unsold
registered shares may be immediately sold to the public without registration and
without regard to the amount which may be sold by a holder thereof at a given
time. The Shelf Registration Agreement is attached hereto as Exhibit 3 and is
incorporated herein by reference.
Also in connection with the acquisition of the Initial Shares and the
Warrant, Samstock and the Issuer entered into an Amended and Restated
Registration Rights Agreement dated as of December 19, 1997 (the "Restated
Registration Agreement") with each of T. Benjamin Jennings, Gerard M. Jacobs,
Albert A. Cozzi, Frank J. Cozzi and Gregory P. Cozzi (collectively, the "Other
Stockholders"). The Restated Registration Agreement amends and restates in its
entirety the Registration Rights Agreement dated as of December 1, 1997 between
the Issuer and the Other Stockholders for the purpose of extending to Samstock's
Purchased Shares certain demand and piggyback registration rights contained in
the original agreement. The piggyback registration rights commence December 1,
1999 and apply to registration statements filed by the Issuer during the five-
year period thereafter. The demand registration rights may be exercised by the
written request of Samstock and Other Stockholders who in the aggregate own at
least 25% of the then-outstanding number of shares of Common Stock which are
registrable under the Restated Registration Agreement. The Issuer is only
obligated to file one registration statement pursuant to the demand registration
rights; however, if Samstock or one or more Other Stockholders does not offer to
include its registrable securities in the first demand registration statement,
then not less than nine months after the Issuer's last demand or piggyback
registration statement, Samstock or the Other Stockholder, as the case may be,
shall be entitled to one separate demand covering all of its registrable
securities which have not been previously sold under Rule 144 of the Securities
Act of 1933 (as amended, the "Securities Act"). The Restated Registration
Rights Agreement is attached hereto as Exhibit 4 and is incorporated herein by
reference.
As of December 19, 1997, Samstock also entered into an Amended and Restated
Stockholders' Agreement with the Issuer and the Other Stockholders (the
"Restated Stockholders' Agreement"). The Restated Stockholders' Agreement
amends and restates in its entirety the prior stockholders' agreement between
the Issuer and the Other Stockholders in order to, among other things, provide
for Samstock's designee on the Issuer's Board of Directors as long as no more
than three years have elapsed since the closing under the Stock Purchase
Agreement and Samstock and its Permitted Transferees (as defined in the Restated
Stockholders' Agreement) have not sold or otherwise disposed of more than one-
third of the Initial Shares (collectively, the "Purchaser Condition"). Under
the Restated Stockholders' Agreement Samstock has agreed to vote all of its
shares of Common Stock for the directors listed therein and to cause its Board
designee to vote for the election of certain officers. Under the Restated
Stockholders' Agreement, Samstock has the right to participate in certain tag
along rights so long as Samstock and its
Page 4 of 9 Pages
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Permitted Transferees have not disposed of more than 50% of the aggregate number
of Purchased Shares.
The Restated Stockholders' Agreement contains other provisions restricting
the transfer of Common Stock. For a period of one year from the date of the
Restated Stockholders' Agreement, Samstock shall not, directly or indirectly,
sell, assign, transfer, pledge, hypothecate, encumber or otherwise dispose of
the Purchased Shares or any other shares of Common Stock acquired by Samstock,
except (i) to a Permitted Transferee, (ii) pursuant to the tag along rights
described above, (iii) in sales registered under the Securities Act or (iii)
pledges or hypothecations which are part of a bona fide financing transaction.
The Restated Stockholders' Agreement also contains provisions for management of
the Issuer, as contained in the original stockholders' agreement.
The Restated Stockholders' Agreement shall remain in full force and effect
with respect to Samstock until (i) the Purchaser Condition no longer remains
satisfied and (ii) Samstock and/or its Permitted Transferees have sold or
otherwise disposed of more than 50% of the Purchased Shares. The Restated
Stockholders' Agreement is attached hereto as Exhibit 5 and is incorporated
herein by reference.
The summaries contained in this Statement of certain provisions of each of
the Stock Purchase Agreement, Warrant, Shelf Registration Agreement, Restated
Registration Agreement and Restated Stockholders' Agreement are not intended to
be complete and are qualified in their entirety by reference to each respective
agreement attached as an Exhibit hereto and incorporated herein by reference.
Samstock intends to continue to review its investment in the Common Stock
and, from time to time depending upon certain factors, including without
limitation the financial performance of the Issuer, the availability and price
of shares of Common Stock and other general market and investment conditions,
may determine to acquire through open market purchases or otherwise additional
shares of Common Stock, or may determine to sell through the open market or
otherwise, in each case, subject to the limitations of each of the Stock
Purchase Agreement and the Restated Stockholders' Agreement described above.
Except as stated above, neither Samstock nor, to the best knowledge of
Samstock, SZI or ZGP or any of the persons listed in Appendix A hereto, has any
plans or proposals of the types referred to in clauses (a) through (j) of Item 4
of Schedule 13D, as promulgated by the Securities and Exchange Commission.
Item 5. Interest In Securities Of The Issuer.
-------------------------------------
(a) and (b) To the best knowledge of Samstock, there are 29,530,653 shares of
Common Stock outstanding as of the date hereof./1/ As of the date hereof, the
1,470,588 Initial Shares beneficially owned by Samstock represent approximately
4.9 % of the Common Stock issued and outstanding. The additional 600,000 shares
covered by the Warrant represent approximately 2.0% of the Common Stock issued
and outstanding,2 and the aggregate 2,070,588 Purchased Shares represent
approximately 6.9% of the Common Stock issued and outstanding./2/
Subject to the limitations of the Restated Stockholders' Agreement as
described above, Samstock currently has the sole power to vote or to direct the
vote of the shares of Common Stock acquired by it. Samstock also has the power
to dispose of or to direct the disposition of its shares of Common Stock,
subject to certain limitations under the Stock Purchase Agreement and Restated
Stockholders' Agreement as described more fully in Item 4.
- ------------------------
/1/ As disclosed to Samstock by the Issuer in Schedule 3.5 of the Stock
Purchase Agreement with the addition of the Initial Shares issued on
December 19, 1997.
/2/ On a fully-diluted basis with respect only to the number of shares covered
by the Warrant.
Page 5 of 9 Pages
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At the date hereof, neither Samstock, nor to the best knowledge of
Samstock, any of SZI, ZGP or the persons listed in Appendix A hereto owns any
shares of Common Stock other than the Purchased Shares owned by Samstock, as
described herein.
(c) During the last sixty days, the only transaction in the Common Stock
effected by Samstock, or to the best knowledge of Samstock, SZI, ZGP or any of
the persons listed in Appendix A hereto, was the transaction which occurred on
December 19, 1997, as described herein.
(d) No person other than Samstock has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of the
shares of Common Stock owned by Samstock.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings Or
Relationships With Respect to Securities of the Issuer.
-------------------------------------------------------
Except for the matters described herein, neither Samstock nor, to the best
knowledge of Samstock, any of SZI, ZGP or the persons listed in Appendix A
hereto has any contract, arrangement, understanding or relationship with any
person with respect to any securities of the Issuer.
Item 7. Material To Be Filed As Exhibits
--------------------------------
Exhibit 1 - Securities Purchase Agreement*
Exhibit 2 - Warrant
Exhibit 3 - Shelf Registration Rights Agreement*
Exhibit 4 - Amended and Restated Registration Rights Agreement*
Exhibit 5 - Amended and Restated Stockholders' Agreement*
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* Filed herewith.
Page 6 of 9 Pages
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APPENDIX A
SCHEDULE 13D
CUSIP NUMBER 591097100
SZ INVESTMENTS, L.L.C. is a Delaware limited liability company whose managing
member is Zell General Partnership, Inc., and its non-managing members are
Alphabet Partners and ZFT Partnership.
ZELL GENERAL PARTNERSHIP, INC. is an Illinois corporation whose sole shareholder
is the Samuel Zell Revocable Trust and whose sole director is Samuel Zell.
SAMUEL ZELL is President of Zell General Partnership, Inc. ROD DAMMEYER, DONALD
J. LIEBENTRITT and SHELI Z. ROSENBERG are each a Vice President of Zell General
Partnership, Inc. Messrs. Zell, Dammeyer and Liebentritt and Ms. Rosenberg are
all citizens of the United States of America.
Page 7 of 9 Pages
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SIGNATURE
After reasonable inquiry and to the best of the undersigned's knowledge and
belief, the undersigned certify that the information set forth in the statement
is true, complete and correct.
DATED: December 22, 1997
SAMSTOCK, L.L.C., by SZ INVESTMENTS, L.L.C.,
its sole member, by ZELL GENERAL PARTNERSHIP,
INC., its sole member
By: /s/ Sheli Z. Rosenberg
----------------------
Name: Sheli Z. Rosenberg
Title: Vice President
Page 8 of 9 Pages
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
1 Securities Purchase Agreement, dated as of December 19, 1997*
2 Warrant, dated as of December 19, 1997*
3 Shelf Registration Rights Agreement, dated as of December 19,
1997*
4 Amended and Restated Registration Rights Agreement, dated as
of December 19, 1997*
5 Amended and Restated Stockholders' Agreement, dated as of
December 19, 1997*
</TABLE>
____________________________________
* Filed herewith.
Page 9 of 9 Pages
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Exhibit 1
SECURITIES PURCHASE AGREEMENT
-----------------------------
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of December 19,
1997, by and among Metal Management, Inc., a Delaware corporation (the
"Company"), and Samstock, L.L.C., a Delaware limited liability company
("Purchaser").
RECITALS
A. The Company wishes to issue and sell to Purchaser, and Purchaser
wishes to buy from the Company, on the terms and subject to the conditions set
forth in this Agreement in the aggregate (i) 1,470,588 shares (the "Shares") of
the Company's Common Stock, $.01 par value per share (the "Common Stock"),
representing approximately 5.2% of the Common Stock outstanding, or 3.6% of the
Fully Diluted Common Stock (as hereinafter defined), together with (ii) a
warrant (the "Warrant") in the form of Exhibit A hereto to purchase an
additional 600,000 shares of the Common Stock (the "Warrant Shares"),
representing approximately 1.5% of the Fully Diluted Common Stock. The Warrant
Shares shall have an exercise price (subject to adjustment as provided in the
Warrant) of $20.00 per share for 400,000 Warrant Shares and $23.00 per share for
200,000 Warrant Shares. The Shares, the Warrant and the Warrant Shares are
collectively referred to herein as the "Securities" and each as a "Security".
B. The Company has agreed to effect the registration of the Shares and
the Warrant Shares under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to a Shelf Registration Rights Agreement of even date herewith
among the Company and Purchaser (the "Shelf Registration Rights Agreement") and
an Amended and Restated Registration Rights Agreement dated as of the date
hereof among the Company, Purchaser, T. Benjamin Jennings, Gerard M. Jacobs,
Albert A. Cozzi, Frank J. Cozzi and Gregory P. Cozzi (the "Amended and Restated
Registration Rights Agreement").
C. The sale of the Shares and the Warrant by the Company to Purchaser
will be effected in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D"), as promulgated by
the Securities and Exchange Commission (the "Commission") under the Securities
Act.
The Company and the Purchasers hereby agree as follows:
1. PURCHASE AND SALE OF THE SHARES AND THE WARRANT.
-----------------------------------------------
1.1 Agreement to Purchase and Sell. Upon the terms and subject to the
satisfaction of the conditions set forth herein, the Company agrees to sell at
the Closing (as defined below), and Purchaser agrees to purchase 1,470,588
Shares at a purchase price of $17.00 per Share, together with the Warrants in
each case free and clear of all Liens (as hereinafter defined).
1.2 Closing. Subject to the satisfaction of the conditions set forth
herein, the closing of the purchase and sale of the Shares and the Warrant will
be deemed to occur when this Agreement and the other Transaction Documents (as
defined below), have been executed and
<PAGE>
delivered by the Company and Purchaser, and full payment of the Purchase Price
has been made by Purchaser by wire transfer of immediately available funds to an
account designated by the Company against delivery by the Company of duly
executed certificates to Purchaser representing the Shares purchased by
Purchaser hereunder, as well as the Warrant to be delivered in connection
therewith (the "Closing"). The date on which the Closing is deemed to take place
is referred to herein as the "Closing Date". The aggregate Purchase Price for
all of the Shares and the Warrant to be purchased by Purchaser at the Closing
(assuming the satisfaction of the conditions described in Section 5 below) shall
be Twenty-Four Million Nine Hundred Ninety-Nine Thousand Nine Hundred Ninety-Six
and 00/100 Dollars ($24,999,996.00).
1.3 Certain Definitions. When used herein:
(A) "business day" shall mean any day on which the New York Stock Exchange
and commercial banks in the city of New York are open for business;
(B) an "affiliate" of a party shall mean any person or entity controlling,
controlled by or under common control with that party;
(C) "control" shall mean, with respect to an entity, the ability to direct
the business, operations or management of such entity, whether through an equity
interest therein or otherwise;
(D) "subsidiary" shall mean any entity in which the Company has an equity
interest of 50% or greater;
(E) "Fully Diluted Common Stock" shall mean the total number of shares of
Common Stock outstanding after taking into account the following: (i) all
shares of Common Stock outstanding (exclusive of the Shares), (ii) all Shares
and Warrant Shares (assuming full exercise of the Warrant and issuance of all
Warrant Shares), (iii) all shares of Common Stock issuable upon conversion,
exchange or other exercise of the Company's Equity Securities outstanding, and
(iv) adjustments needed to account or adjust for stock splits, stock dividends,
recapitalizations, recombinations and similar events;
(F) "Equity Securities" shall mean, with respect to the Company or any
subsidiary, as the case may be: (i) any class or series of common stock,
preferred stock or other capital stock, whether voting or non-voting, including,
without limitation, with respect to the Company, Common Stock, Series A
Convertible Preferred Stock and Series B Convertible Preferred Stock, (ii) any
other equity securities issued by the Company or such subsidiary, as the case
may be, whether now or hereafter authorized for issuance by the Company's or
such subsidiary's, as the case may be, Certificate of Incorporation, (iii) any
debt, hybrid or other securities issued by the Company or such subsidiary, as
the case may be, which are convertible into, exercisable for or exchangeable for
any other Equity Securities, whether now or hereafter authorized for issuance by
the Company's or such subsidiary's, as the case may be, Certificate of
Incorporation, (iv) any equity equivalents (including, without limitation, stock
appreciation rights, phantom stock or similar rights), interests in the
ownership or earnings of the Company or such subsidiary, as the
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case may be, or other similar rights, (v) any written or oral rights, options,
warrants, subscriptions, calls, preemptive rights, rescission rights or other
rights to subscribe for, purchase or otherwise acquire any of the foregoing,
(vi) any written or oral obligation of the Company or such subsidiary, as the
case may be, to issue, deliver or sell, any of the foregoing, (vii) any written
or oral obligations of the Company or such subsidiary, as the case may be, to
repurchase, redeem or otherwise acquire any Equity Securities, and (viii) any
bonds, debentures, notes or other indebtedness of the Company or such
subsidiary, as the case may be, having the right to vote (or convertible into,
or exchangeable for securities having the right to vote) on any matters on which
the stockholders of the Company or such subsidiary, as the case may be, may
vote; and
(G) "Lien" shall mean any preemptive or similar rights of any third party,
purchase options, calls, proxies, voting trusts, voting agreements, judgments,
pledges, charges, taxes, assessments, levies, escrows, rights of first refusal
or first offer, transfer restrictions, mortgages, indentures, claims, liens,
equities, mortgages, deeds of trust, deeds to secure debt, security interests
and other encumbrances of every kind and nature whatsoever, whether arising by
agreement, operation of law or otherwise, other than any created by Purchaser.
2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
-----------------------------------------------
Purchaser, solely with respect to it, hereby makes the following
representations and warranties to the Company (which shall be true as of the
date hereof and as of the Closing Date) and agrees with the Company that:
2.1 Authorization; Enforceability. Purchaser is duly and validly
organized, validly existing and in good standing as a limited liability company
under the laws of the State of Delaware with full power and authority to
purchase the Shares and the Warrant and to execute and deliver this Agreement.
This Agreement constitutes Purchaser's valid and legally binding obligation,
enforceable in accordance with its terms, except as such enforcement may be
limited by (i) applicable bankruptcy, insolvency, reorganization or other laws
of general application relating to or affecting the enforcement of creditors'
rights generally and (ii) general principles of equity.
2.2 Accredited Investor; Investment Intent. Purchaser is an accredited
investor as that term is defined in Rule 501 of Regulation D, and is acquiring
the Shares and the Warrant solely for its own account for investment purposes as
a principal and not with a present view to the public resale or distribution of
all or any part thereof, except pursuant to sales that are exempt from the
registration requirements of the Securities Act and/or sales registered under
the Securities Act; provided, however that in making such representation,
Purchaser does not agree to hold the Securities for any minimum or specific term
and reserves the right to sell, transfer or otherwise dispose of the Securities
at any time in accordance with the provisions of this Agreement and with Federal
and state securities laws applicable to such sale, transfer or disposition.
-3-
<PAGE>
2.3 Information. The Company has provided Purchaser with, and Purchaser
has reviewed, the written information regarding the Company set forth on
Schedule 2.3, and has granted to Purchaser the opportunity to ask questions of
and receive answers from representatives of the Company, its officers,
directors, employees and agents concerning the business, operations and
financial condition of the Company and materials relating to the terms and
conditions of the purchase and sale of the Shares and the Warrant hereunder.
Neither such information nor any other investigation conducted by Purchaser or
any of its representatives shall modify, amend or otherwise affect Purchaser's
right to rely on the Company's representations and warranties contained in this
Agreement.
2.4 Limitations on Disposition. Purchaser acknowledges that, except as
provided in the Shelf Registration Rights Agreement or the Amended and Restated
Registration Rights Agreement, the Securities have not been and are not being
registered under the Securities Act and may not be transferred or resold without
registration under the Securities Act or unless pursuant to an exemption
therefrom. Purchaser agrees not to sell, transfer or otherwise dispose of the
Securities unless and until:
(a) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or
(b) (i) Purchaser shall have notified the Company in advance of the
proposed disposition, and (ii) if reasonably requested by the Company,
Purchaser shall have furnished the Company with an opinion of counsel (the
cost of which shall be borne by the Purchaser), reasonably satisfactory to
the Company, that such disposition will not require registration under the
Securities Act. It is agreed that no opinion of counsel will be required
for the transfer of the Securities to an affiliate of Purchaser or with
respect to a sale thereof made pursuant to Rule 144 under the Securities
Act ("Rule 144").
2.5 Legend. Purchaser understands that the certificates representing the
Securities may bear at issuance, in addition to any restrictive legend required
pursuant to the Amended and Restated Stockholders Agreement, a restrictive
legend in substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws, and may not be sold,
transferred or assigned in the absence of an effective registration
statement under the Securities Act and any such state law or an
exemption from the registration requirements thereunder."
Notwithstanding the foregoing, it is agreed that, as long as the sale of
the Warrant Shares are registered pursuant to an effective registration
statement or such shares are eligible for resale under Rule 144(k), the Warrant
Shares shall be issued upon exercise of the Warrant pursuant to the terms of the
Warrant, without any legend or other restrictive language. The legend set forth
above shall be removed and the Company shall issue a new certificate without
such legend to the
-4-
<PAGE>
holder of any Security upon which it is stamped if (i) the sale of such Security
is registered under the Securities Act, (ii) such holder provides the Company
with an opinion of counsel, in form, substance and scope customary for opinions
of counsel in comparable transactions (the cost of which shall be borne by the
Purchaser) to the effect that such Security can be sold publicly without
registration under the Securities Act or (iii) such holder provides the Company
with reasonable assurances that such Security can be sold pursuant to Rule 144
without any restriction as to the number of shares of such Security that can
then be immediately resold.
2.6 No Reliance by Purchaser. Purchaser acknowledges that (i) it has
such knowledge in business and financial matters as to be fully capable of
evaluating this Agreement, the other Transaction Documents (as defined below)
and the transactions contemplated hereby and thereby, (ii) it is not relying on
any advice or representation of the Company in connection with entering into
this Agreement, the other Transaction Documents or such transactions (other than
the representations made by the Company in this Agreement and the other
Transaction Documents, and in the written information described in paragraph 2.3
above), (iii) it has not received from the Company any assurance or guarantee as
to the merits (whether legal, regulatory, tax, financial or otherwise) of
entering into this Agreement or the other Transaction Documents or the
performance of its obligations hereunder and thereunder, and (iv) it has
consulted with its own legal, regulatory, tax, business, investment, financial
and accounting advisors to the extent that it has deemed necessary, and has
entered into this Agreement and the other Transaction Documents based on its own
independent judgment and on the advice of its advisors as it has deemed
necessary, and not on any view (whether written or oral) expressed by the
Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby makes the following representations, warranties and
covenants to Purchaser (which shall be true as the date hereof and as of the
Closing Date, provided that the representations and warranties made by the
Company in paragraph 3.18 hereof shall be true as of the date specified therein)
and agrees with Purchaser that:
3.1 Organization, Good Standing and Qualification. Each of the Company
and its subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite power and authority, corporate and otherwise, to carry on
its business as now conducted. Each of the Company and its subsidiaries is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure so to qualify would have a material adverse effect on the
consolidated business or financial condition of the Company and its subsidiaries
taken as a whole.
3.2 Authorization; Consents. The Company has the requisite corporate
power and authority to enter into and perform this Agreement, the Registration
Rights Agreement and the Warrant, to issue and sell the Shares and the Warrant
to Purchaser in accordance with the terms hereof, and to issue the Warrant
Shares upon exercise of the Warrant in accordance with its terms. All corporate
action on the part of the Company by its officers, directors and stockholders
necessary for the authorization, execution and delivery of, and the performance
by the Company
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of its obligations under: (i) this Agreement; (ii) the Registration Rights
Agreement; (iii) the Warrant; (iv) the Amended and Restated Registration Rights
Agreement; (v) the Amended and Restated Stockholders' Agreement dated as of the
date hereof among the Company, Purchaser, T. Benjamin Jennings, Gerard M.
Jacobs, Albert A. Cozzi, Frank J. Cozzi and Gregory P. Cozzi (the "Amended and
Restated Stockholders' Agreement"); and (vi) all other agreements, documents,
certificates or other instruments delivered by the Company at the Closing (the
instruments described in (i), (ii), (iii), (iv), (v) and (vi) being collectively
referred to herein as the "Transaction Documents") has been obtained and no
further consent or authorization of the Company, its Board of Directors or its
stockholders is required.
3.3 Enforcement. The Transaction Documents constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except as such enforcement may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors' rights generally and (ii)
general principles of equity. Except as otherwise provided in the Transaction
Documents, the Company has obtained all governmental or regulatory consents and
approvals required for it to execute, deliver and perform its obligations under
the Transaction Documents.
3.4 Disclosure Documents; Material Agreements; Other Information. The
Company has filed with the Commission: (i) the Company's Annual Report on Form
10-K for the year ended March 31, 1997; (ii) Quarterly Reports on Form 10-Q and
10-Q/A for the quarters ended January 31, 1996, June 30, 1996, September 30,
1996, December 31, 1996, June 30, 1997 and September 30, 1997; (iii) Transition
Report on Form 10-Q for the period from November 1, 1995 through March 31, 1996;
(iv) all Current Reports on Form 8-K required to be filed with the Commission
since January 31, 1996; (v) the Company's definitive Proxy Statement for its
1995 Annual Meeting of Shareholders; (vi) the Company's definitive proxy
statement for its 1997 Annual Meeting of Shareholders, a copy of which has been
provided to Purchaser (the "Proxy Statement"); (vii) any amendments to the
foregoing; and (viii) all schedules and exhibits attached thereto (collectively,
the "Disclosure Documents"). Except as described in the 1997 Proxy Statement,
and except for the transactions contemplated hereby, the Company is not aware of
any event that would require the filing of a Form 8-K within fifteen (15) days
following the Closing Date. Each Disclosure Document, as of the date of the
filing thereof with the Commission, conformed in all material respects to the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations thereunder and, as of the date of such
filing or, if such Disclosure Document was subsequently amended, as of the date
of the filing of any amendment thereto with the Commission, such Disclosure
Document did not contain an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. All material agreements required to be filed as exhibits to the
Disclosure Documents have been filed as required. The written information
provided to such Purchaser as described in paragraph 2.3 above does not contain
an untrue statement of material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except as set
forth in the financial statements of the Company included in the Disclosure
Documents, the Company
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has no liabilities, contingent or otherwise, other than liabilities incurred in
the ordinary course of business which, under generally accepted accounting
principles, are not required to be reflected in such financial statements and
which, individually or in the aggregate, are not material to the business,
operations or financial condition of the Company and its subsidiaries taken as a
whole.
3.5 Capitalization. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares reserved for issuance pursuant to the
Company's stock option plans, the number of shares reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for
any shares of Common Stock and the number of shares initially to be reserved for
issuance upon exercise of the Warrant is set forth on Schedule 3.5 hereto. All
of such outstanding shares of capital stock have been, or upon issuance will be,
validly issued, fully paid and non-assessable. No shares of the capital stock of
the Company are subject to preemptive rights or any other similar rights of the
stockholders of the Company or any liens or encumbrances created by or through
the Company. Except as disclosed on Schedule 3.5, or as contemplated herein, as
of the date of this Agreement and as of the Closing Date, there are no
outstanding Equity Securities of the Company or any subsidiary. The Shares shall
represent approximately 3.6% of the Fully Diluted Common Stock and 5.2% of the
outstanding shares of Common Stock as of the Closing Date. The Warrant Shares
shall represent approximately 1.5% of the Fully Diluted Common Stock as of the
Closing Date.
3.6 Valid Issuance. The Shares are duly authorized and, when issued, sold
and delivered in accordance with the terms hereof: (i) will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens; and (ii)
based in part upon the representations of Purchaser in this Agreement, will be
issued, sold and delivered in compliance with all applicable Federal and state
securities laws. The Warrant Shares are duly authorized and reserved for
issuance and, upon exercise of the Warrant in accordance with its terms, will be
duly and validly issued, fully paid and nonassessable, free and clear of all
Liens. Upon payment of the Purchase Price at the Closing, Purchaser will
acquire good and marketable title to the Shares, free and clear of all Liens.
Upon payment of the Purchase Price at the Closing, Purchaser will acquire good
and marketable title to the Warrant, free and clear of all Liens. Upon exercise
of the Warrant in accordance with its terms, including payment of the
consideration in the form and amount specified therein, Purchaser will acquire
good and marketable title to the Warrant Shares, free and clear of all Liens.
3.7 No Conflict with Other Instruments. Neither the Company nor any of
its subsidiaries is in violation of any provisions of its Certificate of
Incorporation or Bylaws as amended and in effect on and as of the date hereof;
the Company is not in default (and no event has occurred which, with notice or
lapse of time or both, would constitute a default) under any material provision
of any material instrument or contract to which it is a party or by which it is
bound, or of any provision of any Federal or state judgment, writ, decree,
order, statute, rule or governmental regulation applicable to the Company, which
would have a material adverse effect on the business, operations or financial
condition of the Company and its subsidiaries taken as a whole. The execution,
delivery and performance of this Agreement and the other Transaction
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Documents, and the consummation of the transactions contemplated hereby and
thereby (including without limitation the issuance and reservation for issuance
of the Warrant Shares) will not result in any such violation or be in conflict
with or constitute, with or without the passage of time and giving of notice,
either a default under any such provision, instrument or contract or an event
which results in the creation of any lien, charge or encumbrance upon any assets
of the Company.
3.8 Financial Condition; Taxes; Litigation.
3.8.1 The Company's financial condition is, in all material respects,
as described in the Disclosure Documents, except for changes in the ordinary
course of business and normal year-end adjustments that are not, in the
aggregate, materially adverse to the Company. Except as otherwise described in
the Disclosure Documents, as of the date hereof and as of the Closing there has
been no material adverse change to the Company's business, operations,
properties, financial condition or results of operations since the date of the
Company's most recent audited financial statements contained in the Disclosure
Documents.
3.8.2 The Company has filed all tax returns required to be filed by
it and paid all taxes which are due, except for taxes which it reasonably
disputes or which could not reasonably be expected to have a material adverse
effect on the consolidated business or financial condition of the Company.
3.8.3 Except as set forth on Schedule 3.8.3, the Company is not the
subject of any pending or, to its knowledge, threatened investigation or
administrative or legal proceeding by the Internal Revenue Service, the taxing
authorities of any state or local jurisdiction, the Commission or any state
securities commission or other governmental entity which could reasonably be
expected to have a material adverse effect on the business, operations or
financial condition of the Company and its subsidiaries taken as a whole.
3.8.4 Except as set forth on Schedule 3.8.4, there is no material
claim, litigation or administrative proceeding pending, or, to the best of the
Company's knowledge, threatened, against the Company or against any officer,
director or employee of the Company in connection with such person's employment
therewith. The Company is not a party to or subject to the provisions of, any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality which could reasonably be expected to have a material adverse
effect on the business, operations or financial condition of the Company and its
subsidiaries taken as a whole.
3.9 Reporting Company; Form S-3. The Company is subject to the reporting
requirements of the Exchange Act, has a class of securities registered under
Section 12 of the Exchange Act, and has filed all reports required thereby. The
Company is eligible to register for resale shares of its Common Stock on a
registration statement on Form S-3 under the Securities Act.
3.10 No Reliance by Company. The Company acknowledges that (i) it has
such knowledge in business and financial matters as to be fully capable of
evaluating this Agreement,
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the other Transaction Documents and the transactions contemplated hereby and
thereby, (ii) it is not relying on any advice or representation of Purchaser in
connection with entering into this Agreement, the other Transaction Documents or
such transactions (other than the representations made by Purchaser in this
Agreement and the other Transaction Documents), (iii) it has not received from
Purchaser any assurance or guarantee as to the merits (whether legal,
regulatory, tax, financial or otherwise) of entering into this Agreement or the
other Transaction Documents or the performance of its obligations hereunder and
thereunder, and (iv) it has consulted with its own legal, regulatory, tax,
business, investment, financial and accounting advisors to the extent that it
has deemed necessary, and has entered into this Agreement and the other
Transaction Documents based on its own independent judgment and on the advice of
its advisors as it has deemed necessary, and not on any view (whether written or
oral) expressed by Purchaser.
3.11 Acknowledgment of Dilution. The Company acknowledges that the
issuance of the Warrant Shares upon exercise of the Warrant Shares in accordance
with its terms may result in dilution of the outstanding shares of Common Stock,
which dilution may be substantial under certain market conditions. The Company
further acknowledges that its obligation to issue Warrant Shares upon exercise
of the Warrant in accordance with its terms is unconditional and absolute
regardless of the effect of any such dilution.
3.12 Registration Rights; Rights of Participation. Except as described on
Schedule 3.12 hereto, (A) the Company has not granted or agreed to grant to any
person or entity any rights (including "piggy-back" registration rights) to have
any securities of the Company registered with the Commission or any other
governmental authority and (B) no person or entity, including, but not limited
to, current or former shareholders of the Company, underwriters, brokers, agents
or other third parties, has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the transactions
contemplated by this Agreement or any other Transaction Document which has not
been waived.
3.13 Trading on Nasdaq. The Common Stock is authorized for quotation on
the Nasdaq National Market, and trading in the Common Stock on Nasdaq has not
been suspended as of the date hereof and as of the Closing Date.
3.14 Solicitation. Neither the Company nor any of its subsidiaries or
affiliates, nor any person acting on its or their behalf, (i) has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Shares and the
Warrant; or (ii) has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under any circumstances
that would require registration of the Shares or the Warrant under the
Securities Act.
3.15 Fees. The Company is not obligated to pay any compensation or other
fee, cost or related expenditure to any underwriter, broker, agent or other
representative in connection with the transactions contemplated hereby.
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3.16 Foreign Corrupt Practices. Neither the Company, nor any of its
subsidiaries nor any director, officer, agent, employee or other person acting
on behalf of the Company or any subsidiary has (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity, (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee, (iii)
violated any provision of the Foreign Corrupt Practices Act of 1977, as amended,
or made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.
3.17 Pending Acquisitions. With respect to any acquisition of assets or
securities by the Company or any of its subsidiaries, the agreement for which
has been executed as of the date of this Agreement, the closing of such
acquisition, and the obligations of the parties thereunder, are not conditioned
in any respect on the maintenance at any given level of the closing bid, ask or
sale price of the Common Stock as quoted by Nasdaq.
3.18 Environmental Matters. Except as set forth in the Disclosure
Documents or on Schedule 3.18 hereof, the following representations and
warranties shall be true with respect to the Company and its subsidiaries (and
only those subsidiaries owned by the Company as of May 16, 1997) as of May 16,
1997:
3.18.1 To the best of the Company's knowledge, the Company and each
of its subsidiaries is in material compliance with all Environmental, Health and
Safety Laws (as defined below) governing its business, operations, properties
and assets. Neither the Company nor any of its subsidiaries is currently liable
for any penalties, fines or forfeitures for failure to comply with any
Environmental, Health and Safety Laws.
3.18.2 The Company and each of its subsidiaries has obtained, or
caused to be obtained, and to the best of the Company's knowledge, is in
material compliance with, all applicable and material licenses, certificates,
permits, approvals and registrations required by the Environmental, Health and
Safety Laws (collectively, "Licenses"). There are no administrative or judicial
investigations, notices, claims or other proceedings pending or threatened by
any governmental authority or third parties against the Company or any of its
subsidiaries, their respective businesses, operations, properties or assets,
which question the validity or entitlement of the Company or any of its
subsidiaries to any License wherein an unfavorable decision, ruling or finding
could have a material adverse effect on the Company or any of its subsidiaries.
3.18.3 Neither the Company nor any of its subsidiaries has received
or is aware of any non-compliance order, warning letter, investigation, notice
of violation, claim, suit, action, judgment or administrative or judicial
proceeding pending or threatened against or involving the Company or any of its
subsidiaries, issued by any governmental authority or third party with respect
to any Environmental, Health and Safety Laws, which has not been resolved to the
satisfaction of the issuing governmental authority or third party and which
could have a material adverse effect on the Company or any of its subsidiaries.
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3.18.4 To the best of the Company's knowledge, neither the Company
nor any of its subsidiaries has generated, manufactured, used, transported,
transferred, stored, handled, treated, Discharged, Released or disposed of, nor
has it allowed or arranged for any third parties to generate, manufacture, use,
transport, transfer, store, handle, treat, Discharge, Release or dispose of,
Hazardous Substances or other Waste (as defined below) to or at any location
other than a site lawfully permitted to receive such Hazardous Substances or
other waste for such purposes, nor has it performed, arranged for or allowed by
any method or procedure such generation, manufacture, use, transportation,
transfer, storage, treatment, spillage, leakage, dumping, Discharge, Release or
disposal in material contravention of any Environmental, Health and Safety Laws.
To the best of the Company's knowledge, neither the Company nor any of its
subsidiaries has generated, manufactured, used, stored, handled, treated,
Discharged, Released or disposed of, or allowed or arranged for any third
parties to generate, manufacture, use, store, handle, treat, spill, leak, dump,
discharge, release or dispose of, any material quantities of Hazardous
Substances or other waste upon property currently or previously owned or leased
by it, except as permitted by law. For purposes of this Agreement, the term
"Hazardous Substances" means any toxic or hazardous substance, material, or
waste, any other contaminant, pollutant or constituent thereof, whether liquid,
solid, semi-solid, sludge and/or gaseous, including without limitation,
chemicals, compounds, metals, by-products, pesticides, asbestos containing
materials, petroleum or petroleum products, and polychlorinated biphenyls, the
presence of which requires investigation or remediation under any Environmental,
Health and Safety Laws or which are or become regulated, listed or controlled
by, under or pursuant to any Environmental Health and Safety Laws. For purposes
of this Agreement, the term "Waste" means agricultural wastes, biomedical
wastes, biological wastes, bulky wastes, construction and demolition debris,
garbage, household wastes, industrial solid wastes, liquid wastes, recyclable
materials, sludge, solid wastes, special wastes, used oils, white goods, and
yard trash.
3.18.5 To the best of the Company's knowledge, neither the Company
nor any of its subsidiaries has caused, nor allowed to be caused or permitted,
either by action or inaction, a Release or Discharge, or threatened Release or
Discharge, of any material quantity of Hazardous Substances on, into or beneath
the surface of any parcel of the Owned Properties or the Leased Premises or to
any properties adjacent thereto which would have a material adverse effect on
the Company or its subsidiaries. To the best of the Company's knowledge, there
has not occurred, nor is there presently occurring, a Release or Discharge, or,
threatened Release or Discharge, of any material quantity of Hazardous
Substances on, into or beneath the surface of any parcel of the Owned Properties
or the Leased Premises or to any properties adjacent thereto which would have a
material adverse effect on the Company or its subsidiaries. For purposes of this
Agreement, the terms "Release" and "Discharge" shall have the meanings given
them in the Environmental, Health and Safety Laws.
3.18.6 To the best of the Company's knowledge, neither the Company
nor any of its subsidiaries has generated, handled, manufactured, treated,
stored, used, shipped, transported, transferred or disposed of, nor has it
allowed or arranged, by contract, agreement or otherwise, for any third parties
to generate, handle, manufacture, treat, store, use, ship, transport, transfer
or dispose of, any Hazardous Substances or other Waste to or at a site which,
pursuant to
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CERCLA or any similar state law, has been placed or been proposed for placement
on the National Priorities List or its state equivalent. Neither the Company nor
any of its subsidiaries has received notice, and neither the Company nor any of
its subsidiaries has knowledge of any facts which could give rise to any notice,
that the Company or any of its subsidiaries is a potentially responsible party
for a federal or state environmental cleanup site or for corrective action under
Environmental Health and Safety Laws. Neither the Company nor any of its
subsidiaries has submitted or was required to submit any notice pursuant to
Section 103(c) of CERCLA with respect to the Leased Premises or the Owned
Properties. Neither the Company nor any of its subsidiaries has received any
written request for information in connection with any federal or state
environmental cleanup site, or in connection with any of the real property or
premises where the Company or any of its subsidiaries has transported,
transferred or disposed of other Wastes. Neither the Company nor any of its
subsidiaries has been required to or has undertaken any response or remedial
actions or clean-up actions of any kind at the request of any governmental
authorities or at the request of any other third party. To the best of the
Company's knowledge, neither the Company nor any of its subsidiaries has any
material liability under any Environmental, Health and Safety Laws for personal
injury, property damage, natural resource damage, or clean up obligations.
3.18.7 To the best of the Company's knowledge, there are no
Aboveground Storage Tanks or Underground Storage Tanks on the Owned Properties
or the Leased Premises. For purposes of this Agreement, the terms "Aboveground
Storage Tanks" and "Underground Storage Tanks" shall have the meanings given
them in Section 6901 et seq., as amended, of RCRA, or any applicable state or
local statute, law, ordinance, code, rule, regulation, order, ruling or decree
governing Aboveground Storage Tanks or Underground Storage Tanks.
3.18.8 Schedule 3.18 identifies (i) all material environmental
audits, assessments or occupational health studies, of which the Company is
aware, undertaken by the Company, its subsidiaries or their agents, or by any
governmental authority, or by any third party, relating to or affecting the
Company, its subsidiaries or any of the Leased Premises or the Owned Properties;
and (ii) all material citations issued under OSHA, or similar state or local
statutes, laws, ordinances, codes, rules, regulations, orders, rulings or
decrees, relating to or affecting the Company or any of its subsidiaries or any
of the Leased Premises or the Owned Properties.
3.18.9 Schedule 3.18 contains a list of the assets of the Company and
its subsidiaries which have been confirmed to contain "Asbestos" or "Asbestos-
Containing Material" (as such terms are identified under the Environmental,
Health and Safety Laws). The Company and each of its subsidiaries has operated
and continues to operate in material compliance with all Environmental, Health
and Safety Laws governing the handling, use and exposure to and disposal of
asbestos or asbestos-containing materials. There are no claims, actions, suits,
governmental investigations or proceedings before any governmental authority or
third party pending, or threatened against or directly affecting the Company,
any of its subsidiaries, or any of their respective assets or operations
relating to the use, handling or exposure to and disposal of asbestos or
asbestos-containing materials in connection with their assets and operations.
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3.18.10 As used in this Agreement, "Environmental Health and Safety
Laws" means all federal, state, regional or local statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees, rulings, and changes or
ordinances or judicial or administrative interpretations thereof, any of which
govern (or purport to govern) or relate to pollution, protection of the
environment, public health and safety, air emissions, water discharges,
hazardous or toxic substances, solid or hazardous waste or occupational health
and safety, as any of these terms are or may be defined in such statutes, laws,
rules, regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations thereof,
including, without limitation, the United States Department of Transportation
Table (49 CFR 172, 101) or by the Environmental Protection Agency as hazardous
substances (40 CFR Part 302) and any amendments thereto; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C. Section 9601,
et seq. (collectively, "CERCLA"); the Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act of 1976 and subsequent Hazardous and
Solid Waste Amendments of 1984, 42 U.S.C. section 6901 et seq. (collectively
"RCRA"); the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
Section 1801, et seq.; the Clean Water Act, as amended, 33 U.S.C. Section 1311,
et seq.; the Clean Air Act, as amended (42 U.S.C. Section 7401-7642); Toxic
Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act as amended, 7 U.S.C. Section 136-
136y ("FIFRA"); the Emergency Planning and Community Right-to-Know Act of 1986
as amended, 42 U.S.C. Section 11001, et seq. (Title III of SARA) ("EPCRA"); the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Section 651,
et seq. ("OSHA"); any similar state statute, or regulations implementing such
statutes, laws, ordinances, codes, rules, regulations, orders, rulings, or
decrees, or which has been or shall be determined or interpreted at any time by
any governmental authority to be a hazardous or toxic substance regulated under
any other statute, law, regulation, order, code, rule, order, or decree.
3.18.11 Schedule 3.18 identifies the operations and activities, and
locations thereof, which have been conducted and are being conducted by the
Company or any of its subsidiaries on any of the Owned Properties or the Leased
Premises which have involved the generation, accumulation, storage, treatment,
transportation, labeling, handling, manufacturing, use, spilling, leaking,
dumping, discharging, release or disposal of any material quantities of
Hazardous Substances.
3.18.12 To the best of the Company's knowledge, none of the Owned
Properties or Leased Premises presently includes, or has been constructed upon,
any "Wetlands" as defined under applicable Environmental, Health and Safety
Laws.
3.18.13 Unless otherwise specified herein, as used in Section 3.18,
the terms "Owned Properties" and "Leased Premises" are deemed to refer only to
the properties currently owned or leased by the Company.
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4. COVENANTS.
4.1 Covenants of the Company. The Company hereby agrees and covenants
with Purchaser as follows:
4.1.1 Corporate Existence. The Company shall, so long as Purchaser
beneficially owns any Securities, maintain its corporate existence in good
standing and shall pay all its taxes when due except for taxes which the Company
reasonably disputes or which could not reasonably be expected to have a material
adverse effect on the business, operations or financial condition of the Company
and its subsidiaries taken as a whole.
4.1.2 Form D; Blue-Sky Qualification. The Company agrees to file a
Form D with respect to the Securities as required under Regulation D and to
provide a copy thereof to Purchaser promptly after such filing. The Company
shall, on or before the Closing, take such action as is necessary to qualify the
Shares and the Warrant Shares for sale under applicable state or "blue-sky" laws
or obtain an exemption therefrom, and shall provide evidence of any such action
to Purchaser at or prior to the Closing.
4.1.3 Reporting Status. As long as Purchaser or any affiliate of
Purchaser beneficially owns any Securities and until the date on which any of
the foregoing may be sold to the public pursuant to Rule 144(k) (or any
successor rule or regulation), (i) the Company shall timely file with the
Commission all reports required to be so filed pursuant to the Exchange Act and
(ii) the Company shall not terminate its status as an issuer required by the
Exchange Act to file reports thereunder even if the Exchange Act or the rules or
regulations thereunder would permit such termination. The Company will issue a
press release (the form and content of which shall be subject to Purchaser's
prior written comment) describing the transactions contemplated by this
Agreement no later than the business day following the Closing Date.
4.1.4 Use of Proceeds. The Company shall use the proceeds from the
sale of the Shares and Warrant for general corporate purposes and shall not use
such proceeds to make a loan to or an investment in any other corporation,
partnership or other entity, provided that the Company may use such proceeds as
full or partial consideration for the purchase of more than 50% of the voting
equity or substantially all of the assets of any corporation, partnership or
other entity.
4.1.5 Quotation on Nasdaq. The Company shall promptly secure the
designation and quotation of the Warrant Shares on the Nasdaq National Market
and shall use its best efforts to maintain the designation and quotation, or
listing, of the shares of Common Stock on the Nasdaq National Market or, if not
quoted on such market, the New York Stock Exchange or other national securities
exchange.
4.1.6 Use of Purchaser Name. The Company shall not use, directly
or indirectly, Purchaser's name in any advertisement, announcement, press
release or other similar
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communication unless it has received the prior written consent of Purchaser for
the specific use contemplated, or except as it may be required to do so, in the
reasonable opinion of counsel to the Company, pursuant to applicable law or
regulation, provided, whenever practicable, the Company first consults with
Purchaser concerning the timing, form and content of such use before such use is
made.
4.1.7 Company's Instructions to Transfer Agent. On or prior to the
Closing, the Company shall execute and deliver a letter to its transfer agent
(the "Transfer Agent"), thereby appointing the Transfer Agent as the Company's
exercise agent and irrevocably instructing the Transfer Agent: (i) to issue
certificates representing the Warrant Shares upon exercise of the Warrant in
accordance with its terms upon receipt of a valid exercise from Purchaser; (ii)
to issue certificates representing the number of Warrant Shares specified in
such exercise notice, free of any restrictive legend, in the name of Purchaser
or its nominee as long as the sale of the Warrant Shares is registered pursuant
to an effective registration statement or such shares are eligible for resale
under Rule 144(k); and (iii) to deliver certificates to such Purchaser no later
than the close of business on the later to occur of (i) the third (3rd) business
day following the date of exercise and (ii) the business day following the day
on which the Warrant is received by the Company. As long as purchases and sales
of shares of Common Stock are eligible for settlement at the Depository Trust
Company ("DTC"), the Company may instruct the Transfer Agent that, in lieu of
delivering physical certificates to Purchaser upon exercise of the Warrant, the
Transfer Agent may effect delivery of Warrant Shares by crediting the account of
Purchaser or its nominee at DTC for the number of shares for which delivery is
required hereunder within the time frame specified above for delivery of
certificates. The Company represents to and agrees with Purchaser that it will
not give any instruction to the Transfer Agent that will conflict with the
foregoing instruction or otherwise restrict Purchaser's right to exercise the
Warrant or receive Warrant Shares in accordance with the terms of the Warrant,
the Registration Rights Agreement and this Agreement, respectively. In the
event the Company's relationship with the Transfer Agent should be terminated
for any reason, the Transfer Agent shall continue acting as transfer agent
pursuant to the terms hereof until such time that a successor transfer agent is
appointed by the Company and agrees to be bound by the terms hereof.
4.1.8 Reservation of Shares. As long as the Warrant has not expired
and all of the Warrant Shares issuable thereunder have not been issued, the
Company at all times shall have authorized and reserved for issuance the number
of shares of Common Stock remaining issuable thereunder.
4.1.9 Board Representation. Until the third anniversary of the
Closing Date, so long as Purchaser and its affiliates do not sell or otherwise
dispose of more than one-third of the Shares and the Warrant Shares (on an as
exercised basis), other than to affiliates of Purchaser: (a) Purchaser shall be
entitled to designate one director to the Company's board of directors; and (b)
the Company shall take all necessary or appropriate action to assist in the
nomination and election of Purchaser's designee as a director of the Company,
with such designee's initial term of office to begin no later than six months
after the Closing Date, provided, that the director so designated by Purchaser
shall be either Mr. Sam Zell or Mr. Rod F. Dammeyer.
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4.2 Covenant of Purchaser.
No Tender Offers. For a period of one year from the Closing Date,
unless such shall have been specifically invited by the Company, neither
Purchaser nor any of its affiliates (as defined under the Securities Exchange
Act of 1934, as amended) (other than any public affiliates) will: (i) propose
to the Company or any other person any transaction between Purchaser and the
Company and/or its security holders or involving any of its securities or
security holders, whether by merger, tender offer or otherwise; (ii) acquire, or
assist, advise or encourage any other persons in acquiring, directly or
indirectly, control of the Company, whether by solicitation of proxies or
otherwise, or any of the Company's securities, businesses or assets; or (iii)
request or demand the call, or participate with or in any way assist any other
person in requesting or demanding the call of a special or annual meeting of
shareholders. Purchaser also agrees that the Company shall be entitled to
equitable relief, including injunction, in the event of any breach of the
provisions of this paragraph; provided, however, that, notwithstanding anything
to the contrary in this Section 4.2, Purchaser shall be entitled to sell or
pledge the Shares, the Warrant and the Warrant Shares to any party whatsoever.
5. CONDITIONS TO CLOSING.
5.1 Conditions to Purchaser's Obligations at Closing. Purchaser's
obligations at the Closing, including without limitation its obligation to
purchase the Shares and the Warrant, are conditioned upon the fulfillment of
each of the following events:
5.1.1 the representations and warranties of the Company set forth in
this Agreement shall be true and correct in all material
respects as of the date of the Closing as if made on such date;
provided that the representations and warranties made by the
Company in paragraph 3.18 shall be true and correct in all
material respects as of the date specified therein;
5.1.2 the Company shall have complied with or performed all of the
agreements, obligations and conditions set forth in this
Agreement that are required to be complied with or performed by
the Company on or before the Closing;
5.1.3 the Company shall have delivered to Purchaser a certificate,
signed by an officer of the Company, certifying that the
conditions specified in paragraphs 5.1.1 and 5.1.2 above have
been fulfilled;
5.1.4 the Company shall have delivered to Purchaser an opinion of
counsel for the Company, dated as of the date of the Closing,
in the form attached as Exhibit 5.1.4 hereto;
5.1.5 the Company and the other parties thereto shall have executed
and delivered the Shelf Registration Rights Agreement, the
Amended and
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Restated Registration Rights Agreement and the Amended and
Restated Stockholders' Agreement;
5.1.6 the Common Stock shall be designated for quotation and actively
traded on the Nasdaq National Market;
5.1.7 there shall have been no material adverse changes in the
consolidated business or financial condition of the Company and
its subsidiaries taken as a whole since the date of the
Company's most recent audited financial statements contained in
the Disclosure Documents; and
5.1.8 the Company shall have authorized and reserved for issuance
upon exercise of the Warrant in full the number of shares of
Common Stock issuable thereunder.
5.2 Conditions to Company's Obligations at Closing. The Company's
obligations at the Closing are conditioned upon the fulfillment of each of the
following events:
5.2.1 the representations and warranties of Purchaser shall be true
and correct in all material respects as of the date of the
Closing as if made on such date;
5.2.2 Purchaser shall have complied with or performed all of the
agreements, obligations and conditions set forth in this
Agreement that are required to be complied with or performed by
Purchaser on or before the Closing; and
5.2.3 Purchaser shall have delivered to the Company a certificate,
signed by an officer of Purchaser, certifying that the
conditions specified in paragraphs 5.2.1 and 5.2.2 above have
been fulfilled.
6. INDEMNIFICATION.
The Company agrees to indemnify and hold harmless Purchaser and its
officers, directors, employees and agents, and each person who controls
Purchaser within the meaning of the Securities Act or the Exchange Act (each, a
"Purchaser Indemnified Party") against any losses, claims, damages, liabilities
or reasonable out-of-pocket expenses (including the reasonable fees and
disbursements of counsel) as incurred, joint or several, to which it, they or
any of them, may become subject and not otherwise reimbursed, arising out of or
in connection with the breach by the Company of any of its representations,
warranties or covenants made herein. In addition, in the event of a breach or
inaccuracy (a) by Cozzi Iron & Metal, Inc. ("Cozzi"), Albert A. Cozzi, Frank J.
Cozzi or Gregory P. Cozzi (the "Cozzi Shareholders") of the representation and
warranty contained in Section 4.13 of that certain Agreement and Plan of Merger
dated May 16, 1997 by and among Cozzi, the Cozzi Shareholders, the Company and
CIM Acquisition Co. (the "Cozzi Agreement"), and/or (b) by the Isaac
Corporation, Ferrex Trading Corporation, Paulding Recycling, Inc., Briquetting
Corporation of America (the "Isaac Companies"), or any of the
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<PAGE>
former shareholders of the Isaac Companies (the "Isaac Shareholders") of the
representation and warranty contained in Section 4.13 of that certain Purchase
Agreement and Plan of Merger dated June 23, 1997 by and among the Isaac
Companies, the Isaac Shareholders, the Company and Isaac Acquisition Corporation
(the "Isaac Agreement"), for which the Company is entitled to indemnification
pursuant to the Cozzi Agreement or the Isaac Agreement, as the case may be, the
Company shall indemnify and hold harmless Purchaser against any losses, claims,
damages, liabilities or reasonable out-of-pocket expenses (including the
reasonable costs and disbursements of counsel) incurred by Purchaser as a result
of such breach or inaccuracy.
Purchaser agrees to indemnify and hold harmless the Company and its
officers, directors, employees and agents, and each person who controls the
Company within the meaning of the Securities Act or the Exchange Act (each, a
"Company Indemnified Party") (a Purchaser Indemnified Party and a Company
Indemnified Party are each hereinafter referred to as an "Indemnified Party")
against any losses, claims, damages, liabilities or expenses (including the fees
and disbursements of counsel) as incurred, joint or several, to which it, they
or any of them, may become subject and not otherwise reimbursed, arising out of
or in connection with the breach by Purchaser of any of its representations,
warranties or covenants made herein.
Promptly after receipt by an Indemnified Party of notice of the
commencement of any action pursuant to which indemnification may be sought
hereunder, such Indemnified Party will, if a claim in respect thereof is to be
made against the other party (the "Indemnifying Party"), deliver to the
Indemnifying Party a written notice of the commencement thereof and, upon
delivery to the Indemnified Party of the Indemnifying Party's undertaking and
agreement that such claim is within the scope of the Indemnifying Party's
indemnity to the Indemnified Party under this Agreement, the Indemnifying Party
shall have the right to participate in and to assume the defense thereof with
counsel reasonably selected by the Indemnifying Party, provided, however, that
an Indemnified Party shall have the right to retain its own counsel, with the
reasonably incurred fees and expenses of such counsel to be paid by the Company,
if representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential conflicts
of interest under applicable standards of professional conduct between such
Indemnified Party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the Indemnifying Party
within a reasonable time of the commencement of any such action will not relieve
the Indemnifying Party of any of its obligations hereunder with respect to such
action except to the extent such failure is prejudicial to the Indemnifying
Party's ability to defend any such action.
No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of pending or threatened action in
respect of which an Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on any claims that are the subject matter of such action. An
Indemnifying Party will not be liable for any settlement of any action or claim
effected without its written consent.
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<PAGE>
7. MISCELLANEOUS.
7.1 Survival; Severability. The representations and warranties made by
the parties herein shall survive the Closing until the sooner to occur of the
date which is (i) eighteen (18) months from the date hereof or (ii) the first
date on which the Purchaser no longer owns any Shares or Warrant Shares (on an
as exercised basis), notwithstanding any due diligence investigation made by or
on behalf of the Purchaser. No claim may be asserted by Purchaser for any
breach or misrepresentation of any representation or warranty of the Company
after such representations and warranties have expired; provided, however, that
any claims first asserted within the survival period shall not thereafter be
barred. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to either party.
7.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. The Purchaser may assign its rights hereunder (other than
those under Section 4.1.9 hereof), in connection with any private sale or
transfer of the Shares, so long as, as a condition precedent to such transfer,
the transferee executes an acknowledgment agreeing to be bound by the applicable
provisions of this Agreement, in which case the term "Purchaser" shall be deemed
to refer to such transferee as though such transferee were an original signatory
hereto.
7.3 Injunctive Relief. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to Purchaser and that the
remedy or remedies at law for any such breach will be inadequate and agrees, in
the event of any such breach, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate and specific
performance of such obligations without the necessity of showing economic loss.
7.4 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed under the laws of the State of Delaware without regard to the conflict
of laws provisions thereof. Each party hereby irrevocably submits to the
jurisdiction of the state and federal courts sitting in the City of Wilmington,
Delaware for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address in effect for notices to it under this Agreement and
agrees that such service
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<PAGE>
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
7.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
7.6 Headings. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
7.7 Notices. Any notice, demand or request required or permitted to be
given by any party to any other party pursuant to the terms of this Agreement
shall be in writing and shall be deemed given: (i) when delivered personally or
by verifiable facsimile transmission (with a hard copy to follow) on or before
5:00 p.m., eastern time, on a business day or, if such day is not a business
day, on the next succeeding business day; (ii) on the next business day after
timely delivery to an overnight courier; and (iii) on the third business day
after deposit in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed to the parties as follows:
If to the Company:
Metal Management, Inc.
500 North Dearborn Street
Suite 405
Chicago, Illinois 60610
Attn: Gerard M. Jacobs
Fax: (312) 645-0714
With a copy to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2500
Chicago, Illinois 60611
Attn: Stuart M. Savitz. Esq.
Fax: (312) 527-5921
If to Purchaser:
Samstock, L.L.C.
Two North Riverside Plaza
Suite 600
Chicago, Illinois 60606
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<PAGE>
Attn: Rod F. Dammeyer
Fax: (312) 454-0610
With a copy to:
Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza
Suite 1600
Chicago, Illinois 60606
Attn: Joseph M. Paolucci
Fax: (312) 454-0335
or to such other address or fax number as any party shall specify in writing to
the other parties.
7.8 Expenses. Except as otherwise specified herein, each of the Company
and each Purchaser shall pay all costs and expenses that it incurs in connection
with the negotiation, execution, delivery and performance of this Agreement.
7.9 Entire Agreement; Amendments. This Agreement and the other
Transaction Documents constitute the entire agreement between the parties with
regard to the subject matter hereof and thereof, superseding all prior
agreements or understandings, whether written or oral, between or among the
parties. Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended except pursuant to a written instrument executed by
the Company and Purchaser, and no provision hereof may be waived other than by a
written instrument signed by the party against whom enforcement of any such
waiver is sought.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first-above written.
METAL MANAGEMENT, INC., a Delaware
corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
SAMSTOCK, L.L.C., a Delaware limited liability
company
By: SZ Investments, L.L.C., its managing member
By: Zell General Partnership, Inc., its
managing member
By: /s/ Rod Dammeyer
-----------------------------------
Name: Rod Dammeyer
---------------------------------
Title: Vice President
--------------------------------
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Exhibit 2
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY HAVE BEEN ACQUIRED SOLELY
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL,
SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY
APPLICABLE STATE SECURITIES LAWS.
No. SAM-1 WARRANT December 19, 1997
----- To Purchase 600,000 Shares of Common Stock of
Metal Management, Inc. (the "Company")
1. Number of Shares; Exercise Price; Term. This certifies that, in
consideration of purchasing 1,470,588 shares of the Company's common stock, $.01
per value per share ("Common-Stock"), Samstock, L.L.C., a Delaware limited
liability company ("Investor"), is entitled, upon the terms and subject to the
conditions hereinafter set forth, at any time after the date hereof and at or
prior to 11:59 p.m. Central Time, on December 18, 2002 (the "Expiration Time"),
but not thereafter, to acquire from the Company, in whole or in part, from time
to time, up to 400,000 fully paid and nonassessable shares (the "Shares") of
Common Stock at a purchase price of Twenty Dollars ($20.00) per Share, as
adjusted pursuant to Section 10 hereof for 400,000 Shares, and up to 200,000
Shares of Common Stock at a purchase price of Twenty-Three Dollars ($23.00) per
Share, as adjusted pursuant to Section 10 hereof for 200,000 Shares (in either
case the "Exercise Price"). The number of Shares, type of security and Exercise
Price are subject to adjustment as provided herein, and all references to
"Common Stock" and "Exercise Price" herein shall be deemed to include any such
adjustment or series of adjustments.
2. Exercise of Warrant.
-------------------
(a) Exercise Provisions. The purchase rights represented by this
Warrant are exercisable by the Investor or its successors and assigns, in whole
or in part, at any time, or from time to time, prior to the Expiration Time, by
the surrender of this Warrant and the Notice of Exercise annexed hereto, all
duly completed and executed on behalf of the Investor, at the office of the
Company in Chicago, Illinois (or such other office or agency of the Company as
it may designate by notice in writing to the Investor at the address of the
Investor appearing on the books of the Company), and upon payment of the
Exercise Price for the Shares thereby purchased (by cash, certified or cashier's
check or wire transfer payable to the order of the Company, at the time of
exercise in an amount equal to the purchase price of the Shares thereby
purchased). Thereupon, the Investor as the holder of this Warrant, shall be
entitled to receive from the Company a stock certificate in proper form
representing the number of Shares so purchased, and a new Warrant in
substantially identical form and dated as of such exercise for the purchase of
that number of Shares equal to the difference, if any, between the number of
Shares subject hereto and the number of Shares as to which this Warrant is so
exercised.
<PAGE>
(b) Mandatory Exercise. Upon the occurrence of the Mandatory Exercise
Conditions (as defined below), and at any time thereafter prior to the
Expiration Time, the Company shall have the right, upon not less than fifteen
(15) days written notice to Investor (the "Mandatory Exercise Notice"), to
require the Investor to immediately exercise this Warrant, in whole or in part,
for the Exercise Price and upon the terms and conditions of this Warrant. The
"Mandatory Exercise Conditions" shall mean:
(i) the Company shall have completed, following the date of this
Warrant, one or more public offerings aggregating a total of not less than
three million shares of Common Stock of the Company; and
(ii) the average closing bid price for the Company's Common Stock
for the sixty (60) trading days occurring immediately prior to (but not
including) the date of the Mandatory Exercise Notice is not less than
Thirty Dollars ($31.00) per share (subject to adjustments for stock
splits, stock dividends, combinations, reclassifications or other similar
events).
3. Issuance of Shares. Certificates for Shares purchased hereunder shall
be delivered to the Investor within a reasonable time after the date on which
this Warrant shall have been exercised in accordance with the terms hereof. All
Shares that may be issued upon the exercise of this Warrant shall, upon such
exercise, be duly and validly authorized and issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of the
issuance thereof (other than liens or charges created by or imposed upon the
Investor as the holder of the Warrant or taxes in respect of any transfer
occurring contemporaneously or otherwise specified herein). The Company agrees
that the Shares so issued shall be and shall for all purposes be deemed to have
been issued to the Investor as the record owner of such Shares as of the close
of business on the date on which this Warrant shall have been exercised or
converted in accordance with the terms hereof. In the event of any exercise of
the rights represented by this Warrant, certificates for the shares of Common
Stock so purchased shall be delivered to Investor within a reasonable time and,
unless this Warrant has been fully exercised or has expired, a new Warrant of
identical terms and provisions as those hereof, representing the shares with
respect to which this Warrant shall not have been exercised shall also be issued
to Investor within such time.
4. No Fractional Shares or Scrip. No fractional Shares or scrip
representing fractional Shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional Share to which the Investor as the holder
would otherwise be entitled, the Investor shall be entitled, at his option, to
receive either (i) a cash payment equal to the excess of fair market value for
such fractional Share above the Exercise Price for such fractional share (as
determined in good faith by the Company) or (ii) a whole Share if the Investor
tenders the Exercise Price for one whole share.
5. No Rights as Shareholders. This Warrant does not entitle the Investor
as a holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof.
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<PAGE>
6. Charges, Taxes and Expenses. Certificates for Shares issued upon
exercise of this Warrant shall be issued in the name of the Investor as the
holder of this Warrant. Issuance of certificates for Shares upon the exercise
of this Warrant shall be made without charge to the Investor for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company.
7. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the Investor as the registered holder at the office or
agency of the Company referenced in Section 2 above, for a new Warrant on
substantially identical form and dated as of such exchange. The Company shall
maintain at the office or agency referenced in Section 2 above, a registry
showing the name and address of the Investor as the registered holder of this
Warrant. This Warrant may be surrendered for exchange or exercise, in
accordance with its terms, at the office of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in the case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation
and reissuance, in lieu of this Warrant.
9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.
10. Adjustments of Rights. The purchase price per Share and the number of
Shares purchasable hereunder are subject to adjustment from time to time as
follows:
(a) Merger or Consolidation. If at any time there shall be a merger
or a consolidation of the Company with or into another corporation when the
Company is not the surviving corporation, then, as part of such merger or
consolidation, lawful provision shall be made so that the Investor as the holder
of this Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the aggregate
Exercise Price then in effect, the number of shares of stock or other securities
or property (including cash) of the successor corporation resulting from such
merger or consolidation, to which the Investor as the holder of the stock
deliverable upon exercise of this Warrant would have been entitled in such
merger or consolidation if this Warrant had been exercised immediately before
such merger or consolidation. In any such case, appropriate adjustment shall be
made in the application of the provisions of this Warrant with respect to the
rights and interests of the Investor as the holder of this Warrant after the
merger or consolidation. This provision shall apply to successive mergers or
consolidations.
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<PAGE>
(b) Reclassification, Recapitalization, etc. If the Company at any
time shall, by subdivision, combination or reclassification of securities,
recapitalization, automatic conversion, or other similar event affecting the
number or character of outstanding Shares, or otherwise, change any of the
securities as to which purchase rights under this Warrant exist into the same or
a different number of securities of any other class or classes, this Warrant
shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities that were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change.
(c) Split, Subdivision or Combination of Shares. If the Company at
any time while this Warrant remains outstanding and unexpired shall split,
subdivide or combine the securities as to which purchase rights under this
Warrant exist, the Exercise Price shall be proportionately decreased in the case
of a split or subdivision or proportionately increased in the case of a
combination.
(d) Common Stock Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect to Common
Stock payable in Shares, or make any other distribution with respect to Common
Stock, then the Exercise Price shall be adjusted, from and after the date of
determination of the shareholders entitled to receive such dividend or
distribution, to that price determined by multiplying the Exercise Price in
effect immediately prior to such date of determination by a fraction (i) the
numerator of which shall be the total number of Shares outstanding immediately
prior to such dividend or distribution, and (ii) the denominator of which shall
be the total number of Shares outstanding immediately after such dividend or
distribution. This paragraph shall apply only if and to the extent that, at the
time of such event, this Warrant is then exercisable for Common Stock.
(e) Adjustment of Number of Shares. Upon each adjustment in the
Exercise Price pursuant to 10(c) or 10(d) hereof, the number of Shares
purchasable hereunder shall be adjusted, to the nearest whole Share, to the
product obtained by multiplying the number of Shares purchasable immediately
prior to such adjustment in the Exercise Price by a fraction (i) the numerator
of which shall be the Exercise Price immediately prior to such adjustment, and
(ii) the denominator of which shall be the Exercise Price immediately after such
adjustment.
11. Notice of Adjustments; Notices. Whenever the Exercise Price or number
or type of securities issuable hereunder shall be adjusted pursuant to Section
10 hereof, the Company shall issue and provide to the Investor as the holder of
this Warrant a certificate signed by an officer of the Company setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the Exercise
Price and number of Shares purchasable hereunder after giving effect to such
adjustment.
12. Governing Law. This Warrant shall be binding upon any successors or
assigns of the Company. This Warrant shall constitute a contract under the laws
of Delaware and for all purposes shall be construed in accordance with and
governed by the laws of said state, without giving effect to the conflict of
laws principles.
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<PAGE>
13. Attorneys' Fees. In any litigation, arbitration or court proceeding
between the Company and the Investor as the holder of this Warrant relating
hereto, the prevailing party shall be entitled to reasonable attorneys' fees and
expenses incurred in enforcing this Warrant.
14. Amendments. This Warrant may be amended and the observance of any
term of this Warrant may be waived only with the written consent of the Company
and the Investor as the holder hereof.
15. Notice. All notices hereunder shall be in writing and shall be
effective (a) on the day on which delivered if delivered personally or
transmitted by telex or telegram or telecopier with evidence of receipt, (b) one
business day after the date on which the same is delivered to a nationally
recognized overnight courier service with evidence of receipt, or (c) five
business days after the date on which the same is deposited, postage prepaid, in
the U.S. mail, sent by certified or registered mail, return receipt requested,
and addressed to the party to be notified at the address indicated below for the
Company, or at the address for the Investor as the holder set forth in the
registry maintained by the Company pursuant to Section 7, or at such other
address and/or telecopy or telex number and/or to the attention of such other
person as the Company or the Investor as the holder may designate by ten-day
advance written notice.
16. Entire Agreement. This Warrant and the form attached hereto contain
the entire Agreement between the parties with respect to the subject matter
hereof and supersede all prior and contemporaneous arrangements or undertakings
with respect thereto.
17. Transfer. This Warrant may be transferred to any person or entity, at
any time, in whole, or from time to time, in part, without the Company's
consent, upon delivery of notice to the Company.
IN WITNESS WHEREOF, Metal Management, Inc. has caused this Warrant to be
executed by its duly authorized officer.
Dated: December 19, 1997
METAL MANAGEMENT, INC.
By: /s/ Gerard M. Jacobs
-------------------------------------
Name: Gerard M. Jacobs
-----------------------------------
Title: Chief Executive Officer
----------------------------------
Address: 500 North Dearborn Street
Suite 405
Chicago, Illinois 60610
-5-
<PAGE>
NOTICE OF EXERCISE
------------------
To: Metal Management, Inc.
1. The undersigned hereby elects to purchase ________________ shares (the
"Shares") of common stock $.01 par value of Metal Management, Inc. (the
"Company") pursuant to the terms of the attached Warrant, and tenders herewith
payment of the purchase price and any transfer taxes payable pursuant to the
terms of the Warrant, together with an investment Representation Statement in
form and substance satisfactory to legal counsel to the Company.
2. The Shares to be received by the undersigned upon exercise of the
Warrant are being acquired for its own account, not as a nominee or agent, and
not with a view to resale or distribution of any part thereof, and the
undersigned has no present intention of selling, granting any participation in,
or otherwise distributing the same, except in compliance with applicable federal
and state securities laws. The undersigned further represents that it does not
have any contract, undertaking, Agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third person,
with respect to the Shares. The undersigned believes it has received all the
information it considers necessary or appropriate for deciding whether to
purchase the Shares.
3. The undersigned understands that the Shares are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in transactions not involving a public offering
and that under such laws and applicable regulations such securities may be
resold without registration under the Securities Act of 1933, as amended (the
"Act"), only in certain limited circumstances. In this connection, the
undersigned represents that it is familiar with Rule 144 of the Act, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
4. The undersigned understands the certificates evidencing the Shares may
bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
(b) Any legend required by applicable state law.
<PAGE>
5. Please issue a certificate or certificates representing said Shares in
the name of the undersigned.
-----------------------------------------
[Name]
6. Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned.
-----------------------------------------
[Name]
- ------------------------ -----------------------------------------
[Date] [Signature]
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<PAGE>
- ------------- COMPARISON OF FOOTERS -------------
- -FOOTER 1-
==========
SMS/317023/121697/8:35pm/SDF/22621
==================================
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<PAGE>
Exhibit 3
SHELF REGISTRATION RIGHTS AGREEMENT
-----------------------------------
SHELF REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of December
19, 1997, by and among Metal Management, Inc., a Delaware corporation (the
"Company"), and Samstock, L.L.C., a Delaware limited liability company
("Purchaser").
RECITALS
A. The Company has agreed, on the terms and subject to the conditions set
forth in the Securities Purchase Agreement of even date herewith (the
"Securities Purchase Agreement"), to issue and sell to Purchaser in the
aggregate (i) 1,470,588 shares (the "Shares") of the Company's Common Stock,
$.01 par value per share (the "Common Stock"), and (ii) a warrant (the
"Warrant") to purchase an additional 600,000 shares of Common Stock (the
"Warrant Shares").
B. In order to induce the Purchaser to enter into the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended (the "Securities Act"), and under
applicable state securities laws. Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Securities
Purchase Agreement.
In consideration of Purchaser entering into the Securities Purchase
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
------------
For purposes of this Agreement, the following terms shall have the meanings
specified:
(a) "Filing Deadline" means 120 days following the Closing Date;
(b) "Registration Deadline" means 180 days following the Closing
Date;
(c) "Holder" means any person owning or having the right to acquire,
through exercise of the Warrant, Registrable Securities, including initially
Purchaser and thereafter any permitted assignee thereof;
(d) "Register", "registered" and "registration" refer to a
registration effected by preparing and filing a shelf registration statement or
statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act ("Rule 415") or any successor rule providing for the offering
of securities on a continuous basis ("Registration Statement"), and the
declaration or ordering of effectiveness of the Registration Statement by the
Securities and Exchange Commission (the "Commission"); and
<PAGE>
(e) "Registrable Securities" means (i) Shares and the Warrant Shares,
and (ii) any shares of capital stock issued or issuable from time to time (with
any adjustments) in replacement of, in exchange for or otherwise in respect of
such shares.
2. MANDATORY REGISTRATION.
----------------------
(a) On or before Filing Deadline, the Company shall prepare and file
a Registration Statement on Form S-3 (or, if Form S-3 is not available, on such
form of Registration Statement as is then available to effect a registration of
the Registrable Securities as a "shelf" registration statement under Rule 415)
covering the resale of the Shares and the Warrant Shares and including in the
"plan of distribution" and the definition of "selling shareholder" pledgees,
donees, transferees or other successors in interest of the selling shareholders.
The Registration Statement shall state, to the extent permitted by Rule 416
under the Securities Act, that it also covers such indeterminate number of
shares of Common Stock as may be required to prevent dilution resulting from
stock splits, stock dividends or similar events.
(b) The Company shall cause the Registration Statement to become
effective as soon as practicable following the filing thereof but in no event
later than the Registration Deadline, and shall submit to the Commission, within
five (5) business days after the Company learns that no review of the
Registration Statement will be made by the staff of the Commission or that the
staff of the Commission has no further comments on the Registration Statement,
as the case may be, a request for acceleration of the effectiveness of the
Registration Statement to a time and date not later than forty-eight (48) hours
after the submission of such request, and maintain the effectiveness of the
Registration Statement until the earlier to occur of (i) the date on which all
of the Registrable Securities have been sold and (ii) the date on which all of
the remaining Registrable Securities (in the reasonable opinion of counsel to
the Purchaser) may be immediately sold to the public without registration and
without regard to the amount of Registrable Securities which may be sold by a
Holder thereof at a given time (the "Registration Period").
(c) The Filing Deadline and the Registration Deadline shall be
extended by the number of days (not exceeding an aggregate for both such dates,
when taken together, of thirty (30) days) during (i) any period in which the
Company has been advised by its outside counsel that the Registration Statement
will not be accepted for filing by the Commission as a result of the Company
then having on file a registration statement which has not yet gone effective or
a proxy statement that is then being reviewed by the Commission (a "Filing Delay
Period"), and (ii) any period in which the Board of Directors of the Company
determines in good faith (A) that an amendment or supplement to the Registration
Statement or prospectus contained therein is necessary in order to correct a
material misstatement made therein or to include information the absence of
which would render the Registration Statement or such prospectus materially
misleading and (B) that the disclosure of such information at such time would be
detrimental to the business or prospects of the Company; provided that no such
period specified in this clause (ii) may exceed ten (10) days unless, prior to
the end of such ten day period, the Company obtains the written advice of its
outside legal counsel that an amendment or supplement to the
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<PAGE>
Registration Statement or prospectus contained therein is necessary in order to
correct a material misstatement made therein or to include information the
absence of which would render the Registration Statement or such prospectus
materially misleading (a "Standstill Period").
(d) If (A) the Registration Statement (i) is not filed by the Filing
Deadline or (ii) is not declared effective by the Commission on or before the
Registration Deadline, (B) after the Registration Statement has been declared
effective by the Commission, sales of Registrable Securities cannot be made by a
Holder under the Registration Statement for any reason not within the exclusive
control of such Holder, or (C) the Common Stock is not included for quotation on
the Nasdaq National Market ("Nasdaq") or listed on the New York Stock Exchange
(the "NYSE") or other national securities exchange at any time after the
Registration Deadline, the Company shall pay to such Holder an amount equal to
the lesser of (x) two percent (2%) per month and (y) the highest rate permitted
by applicable law, times the aggregate purchase price of the Shares, the Warrant
and/or the Warrant Shares held by such Holder, accruing daily and compounded
monthly, (I) from the Filing Deadline until the date on which the Registration
Statement is filed with the Commission, (II) from the Registration Deadline
until the date on which the Registration Statement is declared effective, (III)
from the date on which the Registration Statement is unavailable for sales of
Registrable Securities by a Holder until the Registration Statement becomes
available for sales of Registrable Securities; provided that the Registration
Statement will not be considered unavailable for the number of days occurring
during a Standstill Period which takes place after the effectiveness of the
Registration Statement, or (IV) from the date on which the Common Stock is no
longer quoted or listed on Nasdaq, the NYSE or such other exchange until the
date on which the Common Stock becomes so listed or quoted, as the case may be.
The amounts paid or payable by the Company hereunder shall be in addition to any
other remedies available to Purchaser at law or in equity or pursuant to the
terms of any other Transaction Document. Payments of cash pursuant hereto shall
be made within five (5) days after the end of each period that gives rise to
such obligation, provided that, if any such period extends for more than thirty
(30) days, payments shall be made at the end of each thirty-day period.
3. OBLIGATIONS OF THE COMPANY.
--------------------------
In addition to performing its obligations under paragraphs 2(a) and (b)
above, the Company shall:
(a) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary to comply with the
provisions of the Securities Act or to maintain the effectiveness of the
Registration Statement during the Registration Period, or as may be reasonably
requested by a Holder in order to incorporate information concerning such Holder
or such Holder's intended method of distribution;
(b) secure the designation and quotation of the Registrable
Securities on the Nasdaq National Market;
-3-
<PAGE>
(c) furnish to each Holder such number of copies of the prospectus
included in such Registration Statement, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as such Holder may reasonably request in order to facilitate the disposition of
such Holder's Registrable Securities;
(d) use its best efforts to register or qualify the Registrable
Securities under the securities or "blue sky" laws of such jurisdictions within
the United States as shall be reasonably requested from time to time by a
Holder, and do any and all other acts or things which may be necessary or
advisable to enable such Holder to consummate the public sale or other
disposition of the Registrable Securities in such jurisdictions; provided that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such jurisdiction;
(e) in the event of an underwritten public offering of the
Registrable Securities, enter into and perform its obligations under an
underwriting agreement, in usual and customary form reasonably acceptable to the
Company, with the managing underwriter of such offering;
(f) notify each Holder immediately upon the occurrence of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, contains an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and as promptly as practicable, prepare, file and furnish to each Holder a
reasonable number of copies of a supplement or an amendment to such prospectus
as may be necessary so that such prospectus does not contain an untrue statement
of material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing;
(g) use its best efforts to prevent the issuance of any stop order or
other order suspending the effectiveness of such Registration Statement and, if
such an order is issued, to obtain the withdrawal thereof at the earliest
possible time and to notify each Holder of the issuance of such order and the
resolution thereof;
(h) furnish to each Holder, on the date that such Registration
Statement becomes effective, (x) an opinion, dated such date, of outside counsel
representing the Company addressed to such Holder and in form and substance as
is customarily given to underwriters in an underwritten public offering, and (y)
in the case of an underwriting, a letter, dated such date, from the Company's
independent certified public accountants, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
each Holder; and
(i) permit counsel for each Holder to review such Registration
Statement and all amendments and supplements thereto, and provide such counsel
with the opportunity to conduct a reasonable inquiry of the Company's financial
and other records during normal business hours and make available its officers,
directors and employees for questions regarding
-4-
<PAGE>
information contained in such Registration Statement, amendments or supplements,
a reasonable period of time prior to the filing thereof with the Commission.
4. OBLIGATIONS OF EACH HOLDER.
--------------------------
In connection with the registration of the Registrable Securities pursuant
to the Registration Statement, each Holder shall:
(a) furnish to the Company such information regarding itself and the
intended method of disposition of Registrable Securities as the Company shall
reasonably request in order to effect the registration thereof; and
(b) upon receipt of any notice from the Company of the happening of
any event of the kind described in paragraph 4(f) or 4(g) above, immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement until the Registration has been amended in accordance with paragraph
4(f) or until withdrawal of the stop order referred to in paragraph 4(g), as the
case may be.
5. INDEMNIFICATION.
---------------
In the event that any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) To the extent permitted by law, the Company shall indemnify and
hold harmless each Holder, the officers, directors, employees, agents and
representatives of such Holder, and each person, if any, who controls such
Holder within the meaning of the Securities Act or the Securities Exchange Act
of 1934, as amended (the "1934 Act"), against any losses, claims, damages,
liabilities or reasonable out-of-pocket expenses (whether joint or several)
(collectively, including legal or other expenses reasonably incurred in
connection with investigating or defending same, "Losses"), insofar as any such
Losses arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (collectively, "Violations"). The Company will reimburse
such Holder, and each such officer, director, employee, agent, representative or
controlling person for any legal or other expenses as reasonably incurred by any
such entity or person in connection with investigating or defending any Loss;
provided, however, that the foregoing indemnity shall not apply to amounts paid
in settlement of any Loss if such settlement is effected without the consent of
the Company (which consent shall not be unreasonably withheld), nor shall the
Company be obligated to indemnify any person for any Loss to the extent that
such Loss arises out of or is based upon and in conformity with written
information furnished by such person expressly for use in such Registration
Statement; and provided, further, that the Company shall not be required to
-5-
<PAGE>
indemnify any person to the extent that any Loss results from such person
selling Registrable Securities (i) to a person to whom there was not sent or
given, at or prior to the written confirmation of the sale of such shares, a
copy of the prospectus, as most recently amended or supplemented, if the Company
has previously furnished or made available copies thereof or (ii) during any
period following written notice by the Company to such Holder of an event
described in Section 4(f) or 4(g).
(b) To the extent permitted by law, each Holder, acting severally and
not jointly, shall indemnify and hold harmless the Company, the officers,
directors, employees, agents and representatives of the Company, and each
person, if any, who controls the Company within the meaning of the Securities
Act or the 1934 Act, against any Losses to the extent (and only to the extent)
that any such Losses arise out of or are based upon and in conformity with
written information furnished by such Holder expressly for use in such
Registration Statement; and such Holder will reimburse any legal or other
expenses as reasonably incurred by the Company and any such officer, director,
employee, agent, representative, or controlling person, in connection with
investigating or defending any such Loss; provided, however, that the foregoing
indemnity shall not apply to amounts paid in settlement of any such Loss if such
settlement is effected without the consent of such Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this subsection 6(b) exceed the net purchase price of securities sold by
such Holder under the Registration Statement.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in and to assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the reasonably incurred fees and expenses of one such counsel to
be paid by the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate under
applicable standards of professional conduct due to actual or potential
conflicting interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, to the extent prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified party
under this Section 6 with respect to such action, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 6 or
with respect to any other action.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 6 is unavailable or insufficient to hold harmless an indemnified
party for any reason, the Company and each Holder agree, severally and not
jointly, to contribute to the aggregate Losses to which the Company or such
Holder may be subject in such proportion as is appropriate to reflect the
relative fault of the Company and such Holder in connection with the statements
or
-6-
<PAGE>
omissions which resulted in such Losses; provided, however, that in no case
shall such Holder be responsible for any amount in excess of the net purchase
price of securities sold by it under the Registration Statement. Relative fault
shall be determined by reference to whether any alleged untrue statement or
omission relates to information provided by the Company or by such Holder. The
Company and each Holder agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section 6,
each person who controls a Holder within the meaning of either the Securities
Act or the 1934 Act and each officer, director, employee, agent or
representative of such Holder shall have the same rights to contribution as such
Holder, and each person who controls the Company within the meaning of either
the Securities Act or the Exchange Act and each officer, director, employee,
agent or representative of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
(e) The obligations of the Company and each Holder under this Section
6 shall survive the conversion or redemption, if any, of the Preferred Shares,
the completion of any offering of Registrable Securities pursuant to a
Registration Statement under this Agreement, or otherwise.
6. REPORTS.
-------
With a view to making available to each Holder the benefits of Rule
144 under the Securities Act ("Rule 144") and any other rule or regulation of
the Commission that may at any time permit such Holder to sell securities of the
Company to the public without registration, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934 Act; and
(c) furnish to such Holder, so long as such Holder owns any
Registrable Securities, and until such Registrable Securities are eligible for
sale pursuant to Rule 144(k), forthwith upon request (i) a written statement by
the Company, if true, that it has complied with the reporting requirements of
Rule 144, the Securities Act and the 1934 Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be reasonably
requested in availing such Holder of any rule or regulation of the Commission
which permits the selling of any such securities without registration.
-7-
<PAGE>
7. MISCELLANEOUS.
-------------
(a) Expenses of Registration. All expenses, other than underwriting
discounts and commissions and fees and expenses of counsel to each Holder,
incurred in connection with the registrations, filings or qualifications
described herein, including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees, the fees and disbursements of
counsel for the Company, and the fees and disbursements incurred in connection
with the opinion and letter described in paragraph 4(h) hereof, shall be borne
by the Company.
(b) Amendment; Waiver. Any provision of this Agreement may be
amended only pursuant to a written instrument executed by the Company and each
Holder. Any waiver of the provisions of this Agreement may be made only pursuant
to a written instrument executed by the party against whom enforcement is
sought. Any amendment or waiver effected in accordance with this paragraph shall
be binding upon each Holder, each future Holder, and the Company.
(c) Notices. Any notice, demand or request required or permitted to
be given by the Company or a Holder pursuant to the terms of this Agreement
shall be in writing and shall be deemed given (i) when delivered personally or
when sent by verifiable facsimile transmission (with a hard copy to follow),
(ii) on the next business day after timely delivery to an overnight courier and
(iii) on the third business day after deposit in the U.S. mail (certified or
registered mail, return receipt requested, postage prepaid), addressed to the
parties at the addresses set forth in the Securities Purchase Agreement, or to
such other address or fax number as any party shall notify the others in
accordance herewith.
(d) Termination. This Agreement shall terminate on the earlier to
occur of (a) the end of the Registration Period and (b) the date on which all of
the Registrable Securities have been publicly distributed; but any such
termination shall be without prejudice to (i) the parties' rights and
obligations arising from breaches of this Agreement occurring prior to such
termination and (ii) the indemnification obligations under this Agreement.
(e) Assignment. The rights of a Holder hereunder shall be assigned
automatically to any transferee of the Warrant Shares or Registrable Securities
from such Holder as long as: (i) the Company is, within a reasonable period of
time following such transfer, furnished with written notice of the name and
address of such transferee, (ii) the transferee agrees in writing with the
Company to be bound by all of the provisions hereof and (iii) such transfer is
made in accordance with the applicable requirements of the Securities Purchase
Agreement.
(f) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the
conflict of laws provisions thereof.
-8-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first-above written.
METAL MANAGEMENT, INC., a Delaware
corporation
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
SAMSTOCK, L.L.C., a Delaware limited liability
company
By: SZ Investments, L.L.C., its managing member
By: Zell General Partnership, Inc., its
managing member
By: /s/ Rod Dammeyer
---------------------------------------
Name: Rod Dammeyer
-------------------------------------
Title: Vice President
------------------------------------
316230.5
-9-
<PAGE>
Exhibit 4
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This Amended and Restated Registration Rights Agreement (the "Agreement")
is made and entered into as of the 19th day of December, 1997, by and between
Metal Management, Inc., a Delaware corporation (the "Company"), and T. Benjamin
Jennings, Gerard M. Jacobs, Albert A. Cozzi, Frank J. Cozzi, Gregory P. Cozzi
and Samstock, L.L.C., a Delaware limited liability company (each a "Stockholder"
and collectively the "Stockholders").
RECITALS
A. The Stockholders and the Company are parties to that certain Amended
and Restated Stockholders' Agreement dated of even date herewith (the
"Stockholders' Agreement"), pursuant to which each Stockholder has agreed to
certain restrictions on the transfer of their shares of common stock, par value
$.01 per share of the Company (the "Common Stock").
B. T. Benjamin Jennings, Gerard M. Jacobs, Albert A. Cozzi, Frank J.
Cozzi, Gregory P. Cozzi, together with the Corporation, entered into a
Registration Rights Agreement dated as of December 1, 1997 (the "Original
Registration Rights Agreement").
C. Pursuant to that certain Securities Purchase Agreement (the
"Securities Purchase Agreement") dated as of December 19, 1997, by and between
the Corporation and Samstock, L.L.C., a Delaware limited liability company (the
"Purchaser"), Purchaser acquired 1,470,588 shares of Common Stock and a warrant
to purchase an additional 600,000 shares of Common Stock.
D. The parties to the Original Registration Rights Agreement desire to
amend and restate the Original Registration Rights Agreement in its entirety to,
among other things, include Purchaser as a party to the Agreement.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree that the Original Registration
Rights Agreement is amended and restated in its entirety to read as follows:
1. (a) Piggyback Registration. If, at any time during the five-year
period commencing December 1, 1999, the Company shall file a registration
statement (other than a registration statement on Form S-4, Form S-8, or any
successor form) with the Securities and Exchange Commission (the "Commission")
while any Registrable Securities (as hereinafter defined) are outstanding, the
Company shall give all the Stockholders who are then holders of any Registrable
Securities (the "Eligible Holders") at least 30 days' prior written notice of
the filing of such registration statement. If requested by an Eligible Holder
in writing within 20 days after receipt of any such notice, the Company shall,
at the Company's sole expense (other than the fees and disbursements of counsel
for the Eligible Holders, and the underwriting discounts, if any, payable in
respect of the Registrable Securities sold by any Eligible Holder), register all
or, at each Eligible Holder's option, any portion of the Registrable Securities
of any Eligible Holders who shall have made such request, concurrently with the
registration of such other securities, all to the extent requisite to permit the
public offering and sale of the Registrable
<PAGE>
Securities through the facilities of all appropriate securities exchanges, if
any, on which the Company's Common Stock is being sold or on the over-the-
counter market, and will use its best efforts through its officers, directors,
auditors, and counsel to cause such registration statement to become effective
as promptly as practicable. Notwithstanding the foregoing, if the managing
underwriter of any such offering shall advise the Company in writing that, in
its opinion, the distribution of all or a portion of the Registrable Securities
requested to be included in the registration concurrently with the securities
being registered by the Company would materially adversely affect the
distribution of such securities by the Company for its own account, then any
Eligible Holder who shall have requested registration of his or its Registrable
Securities shall delay the offering and sale of such Registrable Securities (or
the portions thereof so designated by such managing underwriter) for such
period, not to exceed 120 days (the "Delay Period"), as the managing underwriter
shall request. As used herein, "Registrable Securities" shall mean (i) the
shares of Common Stock owned by the Stockholders on the date hereof as set forth
on Schedule 1(a) and (ii) the shares of Common Stock for which the options and
warrants listed on Schedule 1(a) are exercised, which, with respect to each
Stockholder, have not been previously sold pursuant to a registration statement
or Rule 144 promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
(b) Demand Registration. If, at any time during the five-year period
commencing December 1, 1999, the Company shall receive a written request from
Eligible Holders who in the aggregate own at least 25% of the total number of
shares of Common Stock then included (or upon such exercises would be included)
in the Registrable Securities (the "Majority Holders"), to register the sale of
all or part of such Registrable Securities, the Company shall, as promptly as
practicable, at the Company's sole cost and expense (other than the fees and
disbursements of counsel for the Eligible Holders, and the underwriting
discounts if any, payable in respect of the Registrable Securities sold by the
Eligible Holders), prepare and file with the Commission a registration statement
sufficient to permit the public offering and sale of the Registrable Securities
through the facilities of all appropriate securities exchanges, if any, on which
the Company's Common Stock is being sold or on the over-the-counter market, and
will use its best efforts through its officers, directors, auditors, and counsel
to cause such registration statement to become effective as promptly as
practicable; provided, however, that the Company shall only be obligated to file
one such registration statement; provided further, however, that if an
undersigned Eligible Holder does not offer to include any portion of its
Registrable Securities in the registration statement so prepared, then such
Eligible Holder shall be entitled to one separate demand covering all of his
Registrable Securities which have not been previously sold pursuant to Rule 144
under the Securities Act. The Company shall not be obligated to effect any
registration of its securities pursuant to this Section 1(b) within nine months
after the effective date of a previous registration statement prepared and filed
in accordance with Section 1(a) or 1(b). Within three business days after
receiving any request contemplated by this Section 1(b), the Company shall give
written notice to all the other Eligible Holders, advising each of them that the
Company is proceeding with such registration and offering to include therein all
or any portion of any such other Eligible Holder's Registrable Securities,
provided that the Company receives a written request to do so from such Eligible
Holder within 30 days after receipt by him or it of the Company's notice.
2
<PAGE>
(c) In the event of a registration pursuant to the provisions of this
Section 1, the Company shall use its best efforts to cause the Registrable
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as the Eligible Holder or such
holders may reasonably request; provided, however, that the Company shall not be
required to qualify to do business in any state by reason of this Section 1(c)
in which it is not otherwise required to qualify to do business.
(d) The Company shall keep effective any registration or
qualification contemplated by this Section 1 and shall from time to time amend
or supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document and communication for such period of
time as shall be required to permit the Eligible Holders to complete the offer
and sale of the Registrable Securities covered thereby. The Company shall in no
event be required to keep any such registration or qualification in effect for a
period in excess of nine months from the date on which the Eligible Holders are
first free to sell such Registrable Securities; provided, however, that, if the
Company is required to keep any such registration or qualification in effect
with respect to securities other than the Registrable Securities beyond such
period, the Company shall keep such registration or qualification in effect as
it relates to the Registrable Securities for so long as such registration or
qualification remains or is required to remain in effect in respect of such
other securities.
(e) In the event of a registration pursuant to the provisions of this
Section 1, the Company shall furnish to each Eligible Holder such number of
copies of the registration statement and of each amendment and supplement
thereto (in each case, including all exhibits), such reasonable number of copies
of each prospectus contained in such registration statement and each supplement
or amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Securities Act and the rules and regulations
thereunder, and such other documents, as any Eligible Holder may reasonably
request to facilitate the disposition of the Registrable Securities included in
such registration.
(f) In the event of a registration pursuant to the provisions of this
Section 1, the Company shall furnish each Eligible Holder of any Registrable
Securities so registered with an opinion of its counsel (reasonably acceptable
to the Eligible Holders) to the effect that (i) the registration statement has
become effective under the Securities Act and no order suspending the
effectiveness of the registration statement, preventing or suspending the use of
the registration statement, any preliminary prospectus, any final prospectus, or
any amendment or supplement thereto has been issued, nor has the Commission or
any securities or blue sky authority of any jurisdiction instituted or
threatened to institute any proceedings with respect to such an order, (ii) the
registration statement and each prospectus forming a part thereof (including
each preliminary prospectus), and any amendment or supplement thereto, comply as
to form with the Securities Act and the rules and regulations thereunder, and
(iii) such counsel has no knowledge of any material misstatement or omission in
such registration statement or any prospectus, as amended or supplemented. Such
opinion shall also state the jurisdictions in which the Registrable Securities
have been registered or qualified for sale pursuant to the provisions of Section
1(c).
3
<PAGE>
(g) The Company agrees that until all the Registrable Securities have
been sold under a registration statement or pursuant to Rule 144 under the
Securities Act, it shall use its best efforts to keep current in filing all
reports, statements and other materials required to be filed with the Commission
to permit holders of the Registrable Securities to sell such securities under
Rule 144.
(h) The Company shall notify the Eligible Holders of the Registrable
Securities promptly when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed.
(i) The Company shall promptly notify the Eligible Holders of the
Registrable Securities at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and at the reasonable request of the Eligible Holders of the
Registrable Securities prepare and furnish to them such number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made.
(j) If requested by the underwriter for any underwritten offering of
Registrable Securities on behalf of an Eligible Holder of Registrable Securities
pursuant to a registration requested under Section 1(b), the Company and such
Eligible Holder of Registrable Securities will enter into an underwriting
agreement with such underwriter for such offering, which shall be reasonably
satisfactory in substance and form to the Company and the Company's counsel,
such Eligible Holder of Registrable Securities and the underwriter, and such
agreement shall contain such representations and warranties by the Company and
such Eligible Holder of Registrable Securities and such other terms and
provisions as are customarily contained in an underwriting agreement with
respect to secondary distributions solely by selling stockholders, including,
without limitation, indemnities substantially to the effect and to the extent
provided in Section 2 hereof.
2. Indemnification. (a) Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless each Eligible Holder, its
officers, directors, partners, employees, agents, and counsel, and each person,
if any, who controls any such person within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), from and against any and all loss, liability,
charge, claim, damage, and expense whatsoever (which shall include, for all
purposes of this Section 2, but not be limited to, reasonable attorneys' fees
and any and all reasonable expenses whatsoever incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation),
4
<PAGE>
as and when incurred, arising out of, based upon, or in connection with (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any registration statement, preliminary prospectus, or final prospectus (as from
time to time amended and supplemented), or any amendment or supplement thereto,
relating to the sale of any of the Registrable Securities or (B) in any
application or other document or communication (in this Section 2 collectively
called an "application") executed by or on behalf of the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to register or qualify any of the Registrable Securities
under the securities or blue sky laws thereof or filed with the Commission or
any securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements made
therein not misleading, unless (x) such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company with respect to such Eligible Holder by or on behalf of such person
expressly for inclusion in any registration statement, preliminary prospectus,
or final prospectus, or any amendment or supplement thereto, or in any
application, as the case may be, or (y) such loss, liability, charge, claim,
damage or expense arises out of such Eligible Holder's failure to comply with
the terms and provisions of this Agreement, or (ii) any breach of any
representation, warranty, covenant, or agreement of the Company contained in
this Agreement. The foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including liabilities arising under
this Agreement.
If any action is brought against any Eligible Holder or any of its
officers, directors, partners, employees, agents, or counsel, or any controlling
persons of such person (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of the
institution of such action (but the failure so to notify shall not relieve the
Company from any liability other than pursuant to this Section 2(a)) and the
Company shall promptly assume the defense of such action, including the
employment of counsel (reasonably satisfactory to such indemnified party or
parties), provided that the indemnified party shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such action or the Company shall not have
promptly employed counsel reasonably satisfactory to such indemnified party or
parties, or such indemnified party or parties shall have reasonably concluded
that there may be one or more legal defenses available to it or them or to other
indemnified parties which are different from or additional to those available to
the Company, in any of which events such fees and expenses shall be borne by the
Company and the Company shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties. Anything in this Section 2
to the contrary notwithstanding, the Company shall not be liable for any
settlement of any such claim or action effected without its written consent,
which shall not be unreasonably withheld. The Company shall not, without the
prior written consent of each indemnified party that is not released as
described in this sentence, settle or compromise any action, or permit a default
or consent to the entry of judgment in or otherwise seek to terminate any
pending or threatened action, in respect of which indemnity may be sought
hereunder (whether or not any indemnified party is a party thereto), unless such
5
<PAGE>
settlement, compromise, consent, or termination includes an unconditional
release of each indemnified party from all liability in respect of such action.
The Company agrees promptly to notify Eligible Holders of the commencement of
any litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of any Registrable Securities or any
preliminary prospectus, prospectus, registration statement, or amendment or
supplement thereto, or any application relating to any sale of any Registrable
Securities.
(b) Each Eligible Holder agrees to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who shall
have signed any registration statement covering Registrable Securities held by
such Eligible Holder, each other person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, and its or their respective counsel, to the same extent as the foregoing
indemnity from the Company to such Eligible Holder in Section 2(a), but only
with respect to statements or omissions, if any, made in any registration
statement, preliminary prospectus, or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, or in any
application, in reliance upon and in conformity with written information
furnished to the Company with respect to such Eligible Holder by or on behalf of
such Eligible Holder, expressly for inclusion in any such registration
statement, preliminary prospectus, or final prospectus, or any amendment or
supplement thereto, or in any application, as the case may be. If any action
shall be brought against the Company or any other person so indemnified based on
any such registration statement, preliminary prospectus, or final prospectus or
any amendment or supplement thereto, or in any application, and in respect of
which indemnity may be sought against such Eligible Holder pursuant to this
Section 2(b), such Eligible Holder shall have the rights and duties given to the
Company, and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
2(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 2(a) or
2(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such cases, or (ii) any indemnified or indemnifying party
seeks contribution under the Securities Act, the Exchange Act or otherwise, then
the Company (including for this purpose any contribution made by or on behalf of
any director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and the Eligible Holders of the Registrable
Securities, included in such registration in the aggregate (including for this
purpose any contribution by or on behalf of an indemnified party), as a second
entity, shall contribute to the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
such Eligible Holders in connection with the facts which resulted in such
losses, liabilities, claims, damages, and expenses. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission, or alleged
omission shall be determined by, among other things, whether such statement,
alleged statement, omission, or alleged omission relates to information
6
<PAGE>
supplied by the Company or by such Eligible Holders, and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement, alleged statement, omission, or alleged omission. The Company
and Eligible Holders agree that it would be unjust and inequitable if the
respective obligations of the Company and the Eligible Holders for contribution
were determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages, and expenses (even if each Eligible Holder and the
other indemnified parties were treated as one entity for such purpose) or by any
other method of allocation that does not reflect the equitable considerations
referred to in this Section 2(c). In no case shall any Eligible Holder be
responsible for a portion of the contribution obligation imposed on all Eligible
Holders in excess of its pro rata share based on the number of shares of Common
Stock owned by him and included in such registration as compared to the number
of shares of Common Stock owned by all Eligible Holders and included in such
registration. No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 2(c), each person, if any, who
controls any Eligible Holder within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act and each officer, director, partner,
employee, agent, and counsel of Eligible Holder or control person shall have the
same rights to contribution as such Eligible Holder or control person and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, each officer of the Company
who shall have signed any such registration statement, each director of the
Company, and its or their respective counsel shall have the same rights to
contribution as the Company, subject in each case to the provisions of this
Section 2(c). Anything in this Section 2(c) to the contrary notwithstanding, no
party shall be liable for contribution with respect to the settlement of any
claim or action effected without its written consent. This Section 2(c) is
intended to supersede any right to contribution under the Securities Act, the
Exchange Act or otherwise.
3. Miscellaneous.
-------------
(a) Remedies. In the event of a breach by the Company of its
obligations under this Agreement, each Stockholder, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
(b) Agreements and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, unless such amendment, modification or supplement is in writing
and signed by the parties hereto.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in accordance with the provision of the
Stockholders' Agreement.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation
7
<PAGE>
and without the need for an express assignment, subsequent holders of the
Registrable Securities subject to the terms hereof.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois without reference to its
conflicts of law provisions.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application hereof in any circumstance is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any such
provisions contained herein shall not be affected or impaired thereby.
(i) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of this agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises
warranties or undertakings, other than those set forth or referred to herein,
concerning the registration rights granted by the Company pursuant to this
Agreement.
8
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
METAL MANAGEMENT, INC.
By:
---------------------------------------
T. Benjamin Jennings, Chairman and
Chief Development Officer
---------------------------------------
T. BENJAMIN JENNINGS
---------------------------------------
GERARD M. JACOBS
---------------------------------------
ALBERT A. COZZI
---------------------------------------
FRANK J. COZZI
---------------------------------------
GREGORY P. COZZI
SAMSTOCK, L.L.C., a Delaware limited
liability company
By: SZ Investments, L.L.C., it managing
member
By: Zell General Partnership, Inc., its
managing member
By: /s/ Rod Dammeyer
-------------------------------
Name: Rod Dammeyer
------------------------------
Title: Vice President
-----------------------------
9
<PAGE>
Exhibit 5
- --------------------------------------------------------------------------------
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
for
METAL MANAGEMENT, INC.
Dated: December 19, 1997
--
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I
<S> <C>
CORPORATE STRUCTURE AND OPERATION....................................... 2
1.1 Board of Directors................................................. 2
(a) Board Size.................................................... 2
(b) Election of Directors......................................... 2
(c) Removal....................................................... 3
(d) Vacancies..................................................... 3
(e) Selection of Nominees......................................... 3
1.2 Management Provisions.............................................. 4
1.3 Committees......................................................... 5
1.4 Election of Officers............................................... 5
1.5 Agreement to Vote Shares........................................... 5
ARTICLE II
RESTRICTIONS UPON AND OBLIGATIONS WITH
RESPECT TO DISPOSITION OF SHARES.........................................6
2.1 Certain Definitions................................................ 6
2.2 General Restriction; Cozzi Stockholders and JJ Stockholders........ 6
2.3 General Restriction; Purchaser..................................... 6
2.4 First Refusal Options.............................................. 7
(a) Receipt of Offer.............................................. 7
(b) Order of First Refusal Options................................ 7
(c) Place of Closing.............................................. 9
(d) Date of Closing............................................... 9
(e) Deliveries at Closing......................................... 9
(f) Right to Accept............................................... 9
2.5 Tag Along Rights................................................... 9
2.6 Effect of Giving of Notice.........................................10
2.7 Restrictive Legend on Securities...................................10
2.8 Permitted Transfers................................................10
2.9 Requirements for Transfer..........................................12
2.10 Rights and Obligations of Transferor...............................12
ARTICLE III
GENERAL PROVISIONS......................................................12
3.1 Term of This Agreement.............................................12
3.2 Remedies...........................................................12
3.3 Notices............................................................13
3.4 Legal Fees.........................................................15
3.5 Successors and Assigns.............................................15
3.6 Governing Law......................................................15
3.7 Further Assurances.................................................15
3.8 Counterparts.......................................................15
3.9 Headings...........................................................15
3.10 Entire Agreement...................................................15
3.11 Severability.......................................................15
3.12 Waivers............................................................16
3.13 Gender References..................................................16
</TABLE>
<PAGE>
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
--------------------------------------------
THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT ("Agreement"), made and
entered into as of the 19th day of December, 1997, by and among T. Benjamin
Jennings ("TBJ"), Gerard M. Jacobs ("GMJ"), Albert A. Cozzi ("AAC"), Frank J.
Cozzi ("FJC"), Gregory P. Cozzi ("GPC") and Samstock, L.L.C., a Delaware limited
liability company ("Purchaser")(each a "Stockholder" and collectively the
"Stockholders") and Metal Management, Inc., a Delaware corporation (the
"Corporation").
R E C I T A L S
A. Pursuant to that certain Agreement and Plan of Merger dated May 16,
1997 (the "Merger Agreement") among the Corporation, CIM Acquisition, Co., Cozzi
Iron & Metal, Inc., AAC, FJC and GPC (AAC, FJC and GPC being sometimes
hereinafter referred to collectively as the "Cozzi Stockholders"), the Cozzi
Stockholders received 11,404,748 shares of common stock, $.01 par value per
share, of the Corporation (the "Common Stock").
B. TBJ and GMJ (the "JJ Stockholders") currently own an aggregate of
1,020,000 shares of the Common Stock of the Corporation.
C. The Cozzi Stockholders and the JJ Stockholders, together with the
Corporation, entered into a Stockholders' Agreement dated as of December 1, 1997
(the "Original Stockholders Agreement").
D. Pursuant to that certain Securities Purchase Agreement (the
"Securities Purchase Agreement") dated as of December 19, 1997, by and between
the Corporation and Purchaser, Purchaser acquired 1,470,588 shares of Common
Stock and a warrant to purchase an additional 600,000 shares of Common Stock
(the shares of Common Stock acquired by Purchaser pursuant to the Securities
Purchase Agreement, including the shares of Common Stock issuable upon exercise
of the warrant, the "Purchaser Shares").
E. The parties to the Original Stockholders' Agreement desire to amend
and restate the Original Stockholders' Agreement in its entirety to, among other
things, include Purchaser as a party to certain provisions of the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and provisions
herein set forth, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the original Stockholders'
Agreement is amended and restated in its entirety to read as follows:
1
<PAGE>
ARTICLE I
----------
CORPORATE STRUCTURE AND OPERATION
---------------------------------
1.1 Board of Directors.
(a) Board Size. So long as the Purchaser Condition is satisfied, the
Board of Directors of the Corporation shall consist of an odd number of
Directors, which shall be not less than nine (9) nor more than seventeen (17).
At any time at which the Purchaser Condition is not satisfied, the Board of
Directors of the Corporation shall consist of an even number of directors, which
shall be not less than eight (8) nor more than sixteen (16). For purposes of
this Agreement, the "Purchaser Condition" shall be satisfied if both: (i) no
more than three (3) years have elapsed since the Closing Date under the
Securities Purchase Agreement; and (ii) Purchaser and its Permitted Transferees
have not sold or otherwise disposed of more than one-third (1/3) of the
Purchaser Shares.
(b) Election of Directors. At all meetings (and written actions in lieu of
meetings) of stockholders of the Corporation at which directors are to be
elected, each Stockholder shall vote all of such Stockholder's shares of Common
Stock to elect as directors of the Corporation the persons nominated in
accordance with the following provisions:
(i) The JJ Stockholders shall have the right to nominate that number
of persons (each, a "JJ Director") constituting: (A) at any time at which
the total number of Directors of the Corporation is an even number, one-
half (1/2) of such total; or (B) at any time at which the total number of
Directors of the Corporation is an odd number, one-half (1/2) of the next
lowest even number of Directors; provided, that one of such nominees shall
be an Independent Director (as defined below), who shall be reasonably
acceptable to the Cozzi Stockholders;
(ii) The Cozzi Stockholders shall have the right to nominate that
number of persons (each, a "Cozzi Director") constituting: (A) at any time
at which the total number of Directors of the Corporation is an even
number, one-half (1/2) of such total; or (B) at any time at which the total
number of Directors of the Corporation is an odd number, one-half (1/2) of
the next lowest even number of Directors; provided, that one of such
nominees shall be an Independent Director (as defined below), who shall be
reasonably acceptable to the JJ Stockholders; and
(iii) At any time when the Purchaser Condition is satisfied, Purchaser
shall have the right to designate either Sam Zell or Rod F. Dammeyer as a
nominee (the "Purchaser Director").
For purposes of this Agreement, an "Independent Director" shall mean a director
who is not an employee, officer or director of the Corporation or any of its
subsidiaries or a relative or an Associate of any of the Stockholders.
"Associate" shall have the meaning ascribed to it in Rule 12b-2 of the General
Rules and Regulations of the Securities Exchange Act of 1934, as amended.
2
<PAGE>
(c) Removal. Each Stockholder agrees to vote such Stockholder's
shares of Common Stock to remove a JJ Director upon request at any time by
the unanimous consent of the JJ Stockholders, to remove a Cozzi Director
upon request at any time by the holders of a majority of the shares of
Common Stock held by the Cozzi Stockholders, and to remove the Purchaser
Director upon request at any time by Purchaser; provided, that the
Stockholders making such request shall simultaneously designate a
replacement to fill any vacancy so created, which replacement, if such
replacement is an Independent Director, shall be reasonably acceptable to
the other group.
(d) Vacancies. Each Stockholder agrees to vote such Stockholder's
shares of Common Stock to fill any vacancy on the Board of Directors caused
by the death, disability, resignation or removal of any JJ Director, Cozzi
Director, or Purchaser Director, with a nominee selected by the JJ
Stockholders, the Cozzi Stockholders, or the Purchaser, respectively;
provided, that if such nominee is to fill the vacancy of an Independent
Director, such nominee shall be reasonably acceptable to either the JJ
Stockholders or the Cozzi Stockholders, as applicable; and provided
further, that if such nominee is to fill the vacancy of the Purchaser
Director, such nominee shall be either Sam Zell or Rod F. Dammeyer.
Notwithstanding any provision of this Agreement to the contrary, if at any
time the Purchaser Condition is not satisfied, Purchaser agrees to cause
the Purchaser Director, if any, to resign effective immediately upon such
failure to satisfy the Purchaser Condition, and the vacancy created by such
resignation shall not be filled.
(e) Selection of Nominees. Any person nominated by the holders of a
majority of the shares of Common Stock held by the Cozzi Stockholders, as
to the Cozzi Directors, and by the unanimous approval of the JJ
Stockholders, as to the JJ Directors, shall be deemed to be the nominee of
such group. Each group shall notify the Corporation of its nominees not
less than forty-five (45) days prior to the Corporation's annual meeting,
and not less than forty-five (45) days prior to any special meeting at
which directors are to be elected. Purchaser shall notify the Corporation
of the identity of the nominee for the Purchaser Director (whether Mr. Zell
or Mr. Dammeyer) not less than forty-five (45) days prior to the
Corporation's annual meeting, and not less than forty-five (45) days prior
to any special meeting at which Directors are to be elected.
1.2 Management Provisions. Without limiting the actions that may be
required, by applicable law or otherwise, to be approved by the Board of
Directors, the parties expressly agree that, unless approved by a two-thirds
vote of the Board of Directors, neither the Corporation nor any of its
subsidiaries may take or agree to take, and no Stockholder shall cause the
Corporation or any subsidiary to take or agree to take, any of the following
actions:
(i) amend the Certificate of Incorporation or By-laws of the
Corporation;
(ii) wind-up, liquidate, dissolve or reorganize the Corporation
or adopt a plan or proposal contemplating any of the foregoing;
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<PAGE>
(iii) approve the annual budget of the Corporation for any
fiscal year or approve any course of action which would cause the
Corporation to materially deviate from its budget;
(iv) elect or remove Officers;
(v) change the level of compensation of or modify or terminate
any written agreement with AAC, FJC, GPC, GMJ or TBJ;
(vi) issue securities of the Corporation including debt or
equity securities, options, rights or warrants, or any other
securities which are convertible into or exchangeable for shares of
Common Stock of the Corporation;
(vii) register any securities of the Corporation;
(viii) borrow funds in excess of $5,000,000 or provide a
guarantee in respect of the obligations of another person or request
any waiver from a lender to the Corporation;
(ix) merge, consolidate or combine the Corporation with any
person or sell substantially all of its assets;
(x) purchase, sell, lease, acquire or dispose of assets valued
at $5,000,000 or more, including acquiring another company, division
or line of business (other than matters provided for in the
Corporation's annual budget approved in accordance with this
Agreement);
(xi) declare or pay any dividends or any other distribution in
respect of any securities of the Corporation or redeem, acquire or
retire any securities of the Corporation;
(xii) make or commit to make during any fiscal year capital
expenditures (other than capital expenditures provided for in the
Corporation's annual budget approved in accordance with this
Agreement) which, in the aggregate, exceed $5,000,000;
(xiii) create any committee of the Board of Directors or change a
committee of the Board of Directors; and
(xiv) make any decision involving a matter referred to in (i)
through (xiii), inclusive, relating to any subsidiary of the
Corporation.
Notwithstanding the foregoing, no further action or approval of the Board of
Directors shall be required for, and the provisions of this Section 1.2 shall
not apply to, the matters set forth on Schedule 1.2, which matters have been
approved by the Board of Directors prior to the date of this Agreement and which
shall be acted upon by the Chairman and Chief Executive Officer of the
Corporation in their sole discretion.
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1.3 Committees. The Board of Directors shall establish and at all times
maintain an Executive Committee consisting of at least the Chairman of the
Board, the President, and the Chief Executive Officer; provided, that in the
event of the death or disability of Albert A. Cozzi, Frank J. Cozzi shall assume
Albert A. Cozzi's position on such Executive Committee. The Board of Directors
shall delegate to the Executive Committee all the power and authority of the
Board of Directors, including those matters set forth in Section 1.2, relating
to the management of the business and affairs of the Corporation to the extent
permitted under Section 141 (c) (i) of the General Corporation Law of the State
of Delaware. Any action to be taken by the Executive Committee shall require the
unanimous consent of Albert A. Cozzi, Gerard M. Jacobs and T. Benjamin Jennings.
1.4 Election of Officers. The Stockholders shall cause their designees on
the Board of Directors to elect the following persons to the offices set forth
opposite their names:
<TABLE>
<CAPTION>
<S> <C>
(a) Albert A. Cozzi President, Chief Operating Officer
(b) Gerard M. Jacobs Chief Executive Officer
(c) T. Benjamin Jennings Chairman of the Board and Chief
Development Officer
(d) Frank J. Cozzi Vice President and President of
Cozzi Iron & Metal, Inc.
</TABLE>
1.5 Agreement to Vote Shares. Each Stockholder shall vote all of his
shares of Common Stock (or such other securities of the Corporation which
entitle such Stockholder to vote on such matters), execute and deliver such
further documents, take such further action and cause his designees on the Board
of Directors to vote in such a manner as may be necessary or desirable to carry
out the purposes and intent of this Agreement, including, without limitation,
any amendments to the Certificate of Incorporation or By-Laws which are required
by law or prudent business practices in order to make the terms of this
Agreement effective and binding on the Corporation and all of its stockholders
or otherwise to effectuate any of the terms, conditions, provisions or purposes
hereof.
ARTICLE II
RESTRICTIONS UPON AND OBLIGATIONS WITH
RESPECT TO DISPOSITION OF SHARES
2.1 Certain Definitions. The term "Corporation Securities" as used herein
shall mean any shares of capital stock of the Corporation at any time owned or
subscribed for by any party hereto, and any subscriptions, options, warrants,
calls, commitments, or rights of any kind whatsoever to purchase or otherwise
acquire any shares of capital stock of the Corporation.
2.2 General Restriction; Cozzi Stockholders and JJ Stockholders. During
the term of this Agreement, each of the Cozzi Stockholders and JJ Stockholders
covenants and agrees that such Stockholder will not, directly or indirectly,
voluntarily or involuntarily, sell, assign, transfer, pledge, hypothecate,
encumber or otherwise dispose (each, a "Transfer") of the Corporation Securities
at any time owned by such Stockholder, or any interest therein, except for (i)
Transfers of up to that amount of Corporation Securities that such Stockholder
is permitted (or would be
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permitted) to sell in reliance upon Rule 144 of the Securities Act of 1933, as
amended (the "Securities Act"), as specified in paragraph (c) of such Rule 144,
(ii) Transfers to Permitted Transferees (as hereinafter defined), (iii)
Transfers in accordance with the terms and conditions of the provisions of
Section 2.4 or 2.5, (iv) Transfers of Corporation Securities registered under
the Securities Act, or (v) Transfers between the Escrow Agent (as such term is
defined in that certain Escrow Agreement by and among the Corporation, the JJ
Stockholders, the Cozzi Stockholders and Chicago Title & Trust Company) and the
Cozzi Stockholders, JJ Stockholders or the Corporation pursuant to the terms of
the Escrow Agreement. Any attempted Transfer not in accordance with the terms
and conditions of this Agreement shall be void and of no force or effect.
2.3 General Restriction; Purchaser. For a period beginning on the date of
this Agreement and continuing for one year, Purchaser covenants and agrees that
it will not, directly or indirectly, voluntarily or involuntarily, sell, assign,
transfer, pledge, hypothecate, encumber or otherwise dispose (each, a
"Transfer") of the Corporation Securities at any time owned by Purchaser, or any
interest therein, except for (i) Transfers to Permitted Transferees (as
hereinafter defined), (ii) Transfers in accordance with the terms and conditions
of the provisions of Section 2.5 or (iii) Transfers of Corporation Securities
registered under the Securities Act. Any attempted Transfer not in accordance
with the terms and conditions of this Agreement shall be void and of no force or
effect. Notwithstanding anything to the contrary in this Agreement, Purchaser
shall be entitled to pledge or hypothecate any number of Corporation Securities
to any bank or other financial institution in connection with a bona fide
financing transaction involving Purchaser or its affiliates, and neither such
pledge or hypothecation, nor any exercise of rights or remedies pursuant
thereto, shall be subject to any of the provisions of this Agreement, and upon
any realization of such pledge or hypothecation, the pledgee shall take such
Corporation Securities free and clear of this Agreement.
2.4 First Refusal Options.
(a) Receipt of Offer. If at any time after the date hereof any of the
Cozzi Stockholders and JJ Stockholders shall at any time desire to sell all
or a portion of the Corporation Securities owned by such Stockholder (the
"Offered Corporation Securities"), other than a Transfer of up to that
number of Corporation Securities that such Stockholder is permitted (or
would be permitted) to sell in reliance upon Rule 144 of the Securities Act
pursuant to Section 2.2(i) of this Agreement, a Transfer to a Permitted
Transferee pursuant to Section 2.2 (ii) of this Agreement, or a Transfer of
Corporation Securities registered under the Securities Act, and shall have
received a bona fide written offer for the purchase thereof, with a
proposed closing required within a reasonable time (an "Offer"), which such
Stockholder desires to accept, such Stockholder (the "Selling Stockholder")
shall within five (5) days thereafter transmit executed or true and correct
photostatic copies of the Offer to each of the other Stockholders (the
"Remaining Stockholders") and to the Corporation. For purposes of this
Section 2.4, if any portion of the purchase price for the Offered
Corporation Securities is payable in property other than in cash or a
promissory note (the "Non-Cash Portion") the Non-Cash Portion shall be
valued at its fair market value on the date of the Offer, and shall be
payable by the Remaining Stockholders in cash in accordance with the
payment terms set forth in the Offer. The fair market value of the Non-Cash
Portion shall be mutually
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<PAGE>
determined by the Selling Stockholder on the one hand, and the Remaining
Stockholders, on the other. If the two sides cannot agree on the fair market
value of the Non-Cash Portion within a fifteen (15) day period, the two sides
shall mutually select an appraiser to value such property. The option periods
set forth in Section 2.4(b) and (c), and 2.5 shall not begin to run until the
parties have assigned a value to the Non-Cash Portion.
(b) Order of First Refusal Options. All of the Offered Corporation
Securities shall thereupon be subject to the following options to purchase from
the Selling Stockholder at the price and terms set forth in the Offer, in the
following order of priority:
(i) In the event that the Selling Stockholder is a Cozzi Stockholder,
each of the remaining Cozzi Stockholders shall have the first option to
purchase any Offered Corporation Securities on a pro rata basis (determined
by reference to the remaining Cozzi Stockholders only) or in such
proportions as is otherwise agreed upon by the remaining Cozzi
Stockholders. The remaining Cozzi Stockholders shall exercise this option
by giving notice to the Corporation and the Selling Stockholder not later
than fifteen (15) days after the giving of the notice of Offer. If the
Cozzi Stockholders exercise the first options with respect to less than all
of the Offered Corporation Securities or fail to exercise the options
within such fifteen (15) day period, each of the JJ Stockholders shall have
the second option to purchase any remaining Offered Corporation Securities
on a pro rata basis (determined by reference to the JJ Stockholders only)
or in such proportions as is otherwise agreed upon by the remaining JJ
Stockholders. The JJ Stockholders shall exercise their option by giving
notice to the Selling Stockholder and the Corporation not later than
fifteen (15) days after notice from the Cozzi Stockholders, or if the Cozzi
Stockholders fail to give notice, fifteen (15) days after the expiration of
the first option period. If the remaining Cozzi Stockholders and the JJ
Stockholders have in the aggregate exercised their respective options with
respect to less than all of the Offered Corporation Securities, then the
Corporation shall have a third option to purchase any remaining Offered
Corporation Securities. The Corporation shall exercise its option by giving
notice to the Selling Stockholder not later than five (5) days after notice
from the JJ Stockholders, or if the JJ Stockholders fail to give notice,
five (5) days after the expiration of the second option period. If after
the exercise or expiration of the foregoing options there remain any
Offered Corporation Securities for sale, then no Offered Corporation
Securities may be purchased pursuant to such options and such options shall
be deemed to have expired without exercise.
(ii) In the event that the Selling Stockholder is a JJ Stockholder,
each of the remaining JJ Stockholders shall have the first option to
purchase any Offered Corporation Securities on a pro rata basis (determined
by reference to the remaining JJ Stockholders only) or in such proportions
as is otherwise agreed upon by the remaining JJ Stockholders. The remaining
JJ Stockholders shall exercise this option by giving notice to the
Corporation and the Selling Stockholder not later than fifteen (15) days
after the giving of the notice of Offer. If the JJ Stockholders exercise
the first options with respect to less than all of the Offered
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<PAGE>
Corporation Securities or fail to exercise the options within such
fifteen (15) day period, each of the Cozzi Stockholders shall have the
second option to purchase any remaining Offered Corporation Securities
on a pro rata basis (determined by reference to the Cozzi Stockholders
only) or in such proportions as is otherwise agreed upon by the
remaining Cozzi Stockholders. The Cozzi Stockholders shall exercise
their option by giving notice to the Selling Stockholder and the
Corporation not later than fifteen (15) days after notice from the JJ
Stockholders, or if the JJ Stockholders fail to give notice, fifteen
(15) days after the expiration of the first option period. If the
remaining JJ Stockholders and the Cozzi Stockholders have in the
aggregate exercised their respective options with respect to less than
all of the Offered Corporation Securities, then the Corporation shall
have a third option to purchase any remaining Offered Corporation
Securities. The Corporation shall exercise its option by giving notice
to the Selling Stockholder not later than five (5) days after notice
from the Cozzi Stockholders, or if the Cozzi Stockholders fail to give
notice, five (5) days after the expiration of the second option
period. If after the exercise or expiration of the foregoing options
there remain any Offered Corporation Securities for sale, then no
Offered Corporation Securities may be purchased pursuant to such
options and such options shall be deemed to have expired without
exercise.
(c) Place of Closing. Unless otherwise agreed by the parties, all
purchases pursuant to exercise of any options hereunder shall be consummated at
the offices of the Corporation, and the date of Closing shall be as provided in
Section 2.4 (d) below.
(d) Date of Closing. The purchase of Offered Corporation Securities
pursuant to the exercise of one or more of the options provided for in this
Section 2.4 shall be consummated on the date specified in the Offer or sixty
(60) days after the exercise or expiration of the last such option, whichever is
later (an "Option Closing Date").
(e) Deliveries at Closing. The cash portion of the purchase price of
any Corporation Securities purchased hereunder shall be paid on the Option
Closing Date by certified or bank cashier's check or by wire transfer as
designated by the Selling Stockholder. Simultaneously with such payment, the
Selling Stockholder shall deliver to the purchaser a certificate or certificates
representing all of the Corporation Securities so purchased, duly endorsed in
blank, or with separate assignments attached duly executed in blank, in either
case with signatures guaranteed and appropriate tax stamps, if any, affixed, in
form satisfactory to transfer such Corporation Securities to the order of such
purchaser, free and clear of any liens, claims or encumbrances thereon. Each
Selling Stockholder shall furnish to each purchaser such additional evidence and
executed documents as such purchaser may reasonably request to establish that
the transfer of such shares is valid and free and clear of any liens, claims or
encumbrances.
(f) Right to Accept. In the event that the options provided for in
Section 2.4 (b) hereof expire without exercise or the Offered Corporation
Securities are not purchased pursuant to exercise thereof, then within sixty
(60) days after all rights to make such pur chase shall have expired, the
Selling Stockholder, subject to the provisions of Section 2.5, shall have the
right to consummate the sale of all of the Offered Corporation Securities,
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<PAGE>
upon terms and conditions no less favorable than those contained in the Offer,
to the offeror thereunder. If for any reason the sale is not consummated within
the period provided for herein, the Selling Stockholder shall not thereafter
dispose of the Offered Corporation Securities unless and until it has again
complied with all of the provisions hereof.
2.5 Tag Along Rights. In addition to the options set forth in Section
2.4, if a Selling Stockholder has given notice of an Offer to sell more than
that number of Corporation Securities that such Stockholder is permitted (or
would be permitted) to sell in reliance upon Rule 144 of the Securities Act
pursuant to Section 2.2(i) of this Agreement to any person other than the
Corporation or a Permitted Transferee (the "Proposed Transferee") other than an
offer of Corporation Securities registered under the Securities Act, the
Remaining Stockholders (which, for purposes of this Section 2.5 only, shall
include Purchaser, so long as the Purchaser and its Permitted Transferees have
not sold or otherwise disposed of more than fifty percent (50%) of the Purchaser
Shares) shall have the right to elect to participate in the contemplated
transaction by delivering a notice to the Selling Stockholder within five (5)
days of the expiration of all of the options set forth in Section 2.4. If any
Remaining Stockholder elects to participate in the proposed sale, he shall have
the right to sell, at the same price and on the same terms as set forth in the
Offer, that number of shares of Corporation Securities equal to the product of
(i) the number obtained by dividing (A) the number of shares of Corporation
Securities owned by such Remaining Stockholder, by (B) the aggregate number of
shares owned by the Selling Stockholder and all Remaining Stockholders electing
to participate in the sale, and (ii) the number of shares of Corporation
Securities to be sold to the Proposed Transferee pursuant to the Offer (the
"Tag-Along Shares"). The Tag-Along Shares shall either (i) be purchased by the
Proposed Transferee in addition to the Selling Stockholder's shares, or (ii) be
purchased by the Proposed Transferee in lieu (and reduction) of the number of
shares being sold by the Selling Stockholder. The Selling Stockholder will use
his best efforts to obtain the agreement of the Proposed Transferee to the
participation of the Remaining Stockholders in such sale. The Selling
Stockholder will be prohibited from transferring any of his shares of
Corporation Securities to the Proposed Transferee if the Proposed Transferee
declines to allow the participation of the Remaining Stockholders electing to
participate.
2.6 Effect of Giving of Notice. The giving of any notice of exercise of
any option to purchase, or to require any other party to sell, any Corporation
Securities shall, subject to revocation of such as herein expressly permitted,
create a binding contract for the sale and purchase of such Corporation
Securities on the Option Closing Date in accordance with the provisions hereof.
2.7 Restrictive Legend on Securities. Each stock certificate or
instrument representing any Corporation Securities shall be endorsed with the
following legend:
"The shares represented by this Certificate have not been registered
under the Securities Act of 1933 (the "Act") or any state securities
law. This Certificate may not be transferred or otherwise disposed of
unless an effective registration statement under the Act and all
applicable state securities laws is then in effect or, in the opinion
of counsel for the Corporation, such registration is not necessary.
The transfer or other
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disposition of the shares represented by this Certificate is also
restricted under the terms of a Stockholders' Agreement dated December
19, 1997 by and among the Corporation, T. Benjamin Jennings, Gerard M.
Jacobs, Albert A. Cozzi, Frank J. Cozzi and Gregory P. Cozzi, and
Samstock, L.L.C., a copy of which is available in the office of the
Corporation."
2.8 Permitted Transfers.
(a) Notwithstanding anything contained in Section 2.2 or 2.3 to the
contrary, a Stockholder may transfer any or all of his Corporation
Securities to a Permitted Transferee, as defined below, subject to the
terms and conditions contained in this Section 2.8.
(b) A "Permitted Transferee" of a Stockholder is hereby defined as
and construed to mean any one or more of the following:
(i) With respect to a Cozzi Stockholder, to any other Cozzi
Stockholder;
(ii) With respect to a JJ Stockholder, to any other JJ
Stockholder;
(iii) An executor(s), administrator(s) or conservator(s) of the
Stockholder;
(iv) A beneficiary of a deceased Stockholder's will or trust;
(v) A trustee or trustees of a trust or a beneficiary or
beneficiaries of a trust created by a Stockholder, but only if (A) the
beneficiary or beneficiaries of such trust are one or more of a group
consisting of the Stockholder, the spouse of the Stockholder and the
descendants and/or the adopted children of the Stockholder or the
Stockholder's parents, and (B) the trustee or other person exercising
dominion or control over such trust is a Stockholder or former
Stockholder;
(vi) With respect to Purchaser, any person or entity that
directly or indirectly controls, is controlled by, or is under common
control with, Purchaser; "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a person or entity, whether through
ownership of voting securities, by contract or otherwise; and
(vii) A Transferee of a Permitted Transferee if the transfer
would have been permissible under the provisions hereof if made by the
Stockholder who originally transferred the Corporation Securities to
the Permitted Transferee.
(c) All Permitted Transferees shall execute an appropriate supplement
to this Agreement pursuant to which the Permitted Transferee agrees to
assume and become subject to all of the rights and obligations hereunder of
the party whose Corporation
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Securities it has acquired and upon such execution shall be deemed a
Stockholder hereunder; provided, however, that with respect to a Permitted
Transferee under Section 2.8(b)(iii) and (iv), the Permitted Transferee
shall further execute a proxy granting to the Remaining Stockholders of the
deceased Stockholder's group the right to vote the transferred Corporation
Securities with respect to the designation, nomination and/or election of
directors. The proxy shall be in a form acceptable to the Remaining
Stockholders. The Permitted Transferee shall assume and become subject to
all of the rights and obligations hereunder of the Stockholder whose
Corporation Securities it has acquired. Until a Permitted Transferee shall
execute such a supplement to this Agreement, and a proxy, if necessary, the
transfer and conveyance of the Corporation Securities to such Permitted
Transferee shall be void and of no effect and he or she shall not be deemed
a Stockholder hereunder and shall have none of the rights and benefits of a
Stockholder hereunder.
2.9 Requirements for Transfer. Other than Transfers permitted pursuant to
Section 2.2(i), (iii) and (iv) of this Agreement, no Corporation Securities
shall be transferred upon the books of the Corporation, nor shall any sale or
transfer or any other disposition thereof be effective, unless and until (a) all
of the terms and conditions of this Agreement and applicable law have been first
complied with and, with respect to compliance with applicable law, the
Corporation has been provided with an opinion of counsel in form and substance
satisfactory to the Corporation's counsel, and (b) the transferees shall have
executed an agreement in form and substance satisfactory to counsel for the
Corporation to assume and become subject to all of the rights and obligations
hereunder of the party whose Corporation Securities it has acquired, including,
without limitation, the obligation to make payment for any unpaid stock
subscriptions and the obligations and restrictions under Article II hereof with
respect to disposition of the Corporation Securities with the same full force
and effect as if originally a signatory hereto.
2.10 Rights and Obligations of Transferor. Following disposition of all of
his Corporation Securities in compliance with this Agreement, a party hereto
shall have no further rights or obligations hereunder.
ARTICLE III
GENERAL PROVISIONS
3.1 Term of This Agreement. This Agreement shall continue in full force
and effect for a period of ten (10) years unless sooner terminated by the
unanimous consent of the Stockholders. No termination of this Agreement, by
lapse of time or otherwise shall affect any rights or obligations created by
exercise of any option to purchase or sell the Corporation Securities in
accordance with any of the provisions of Article II hereof. In addition, this
Agreement shall continue in full force and effect with respect to Purchaser
until (a) the Purchaser Condition no longer remains satisfied, and (b) Purchaser
and its Permitted Transferees have sold or otherwise disposed of more than fifty
percent (50%) of the Purchaser Shares, and Purchaser agrees to take all actions
which may be reasonably requested by the other parties hereto to amend, restate,
terminate, or modify this Agreement to effect the foregoing.
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3.2 Remedies. Each of the parties to this Agreement acknowledges that (a)
the rights of the Stockholders concerning the restrictions on the transfer of
the Corporation Securities, and in the management and affairs of the Corporation
are unique, and (b) any failure of any Stockholder to perform any of such
party's obligations under this Agreement will cause irreparable harm for which
any remedies at law would be inadequate. Accordingly, each of the parties
agrees that, in the event of any actual or threatened or attempted failure of
any party to perform any of his obligations hereunder, each of the other parties
shall, in addition to all other remedies, be entitled to a decree for specific
performance of the provisions of this Agreement and to temporary and permanent
injunctions restraining such failure or commanding performance of such
obligations, without being required to show actual damage or to furnish any bond
or other security.
3.3 Notices. All notices required or permitted hereunder shall be in
writing, signed by the party giving notice or an officer thereof, and shall be
deemed to have been given when delivered by personal delivery, by Federal
Express or similar courier service, by facsimile or three (3) days after deposit
in the United States mail, registered or certified, with postage prepaid,
addressed as follows:
(A) If to AAC, FJC or GPC at:
Cozzi Iron & Metal, Inc.
2232 South Blue Island Avenue
Chicago, Illinois 60608
Tel.: (773) 254-1200
Fax: (773) 254-8201
(B) If to TBJ, at:
12 Country Lane
Northfield, Illinois 60093
with a copy to:
Thomas V. Skinner, Esq.
Winston & Strawn
33 West Wacker Drive
Chicago, Illinois 60601
Tel.: (312) 558-5578
Fax: (312) 558-5700
(C) If to GMJ, at:
7600 Augusta
River Forest, Illinois 60305
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with a copy to:
Thomas V. Skinner, Esq.
Winston & Strawn
33 West Wacker Drive
Chicago, Illinois 60601
Tel.: (312) 558-5578
Fax: (312) 558-5700
(D) If to the Corporation, at:
500 North Dearborn Street
Suite 405
Chicago, Illinois 60610
Attn: Chief Financial Officer
Fax: (312) 645-0714
With a copy to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2500
Chicago, Illinois 60611
Attn: Erhard R. Chorle
Fax: 312) 527-5921
If to Purchaser:
Samstock, L.L.C.
Two North Riverside Plaza
Suite 600
Chicago, Illinois 60606
Attn: Rod F. Dammeyer
Fax: (312) 454-0610
With a copy to:
Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza
Suite 1600
Chicago, Illinois 60606
Attn: Joseph M. Paolucci
Fax: (312) 454-0335
or such other address as any party may designate for himself or itself by
notice given to the other parties from time to time in accordance with the
provisions hereof.
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3.4 Legal Fees. In the event that any action is filed to enforce any of
the terms, covenants or provisions of this Agreement, the prevailing party in
such action shall be entitled to payment from the other party of all costs and
expenses, including reasonable attorney fees, court costs and ancillary expenses
incurred by such prevailing party in connection with such action.
3.5 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
personal representatives, successors and assigns.
3.6 Governing Law. This Agreement shall be controlled, construed and
enforced in accordance with the substantive laws of the United States and the
State of Illinois, notwithstand ing any conflict of law principles.
3.7 Further Assurances. Each party agrees to cooperate with the others,
and to execute and deliver, or cause to be executed and delivered, all such
other instruments, and to take all such other actions as he may be reasonably
required to take, from time to time, in order to effect the provisions and
purposes hereof.
3.8 Counterparts. This Agreement may be executed in any one or more
counterparts, each of which shall constitute an original, no other counterpart
needing to be produced and all of which, when taken together, shall constitute
but one and the same instrument.
3.9 Headings. The headings of Articles and subdivisions herein are merely
for convenience of reference and shall not affect the interpretation of any of
the provisions hereof.
3.10 Entire Agreement. This Agreement and the Merger Agreement contain the
entire understanding among the parties with respect to the subject matter of
this Agreement. Any modification hereof may be made only by an instrument in
writing signed by all of the parties hereto, except that Purchaser expressly
acknowledges that any modification to this Agreement made after the Purchaser
Condition is no longer satisfied need not be signed by Purchaser.
3.11 Severability. Whenever possible, each provision of this Agreement
shall be construed and interpreted in such a manner as to be effective and valid
under applicable law. If any provision of this Agreement or the application
thereof to any party or circumstance shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition without invalidating the remainder of such provision or any other
provision of this Agreement or the application of such provision to other
parties or circumstances.
3.12 Waivers. No delay on the part of any party in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by any party or any remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy.
3.13 Gender References. Whenever appropriate, the singular form of a word
shall be interpreted in the plural and vice versa. All words and phrases shall
be construed as masculine, feminine or neuter gender, according to the context.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
METAL MANAGEMENT, INC.,
a Delaware corporation
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
--------------------------------------------
T. Benjamin Jennings
--------------------------------------------
Gerard M. Jacobs
--------------------------------------------
Albert A. Cozzi
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Frank J. Cozzi
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Gregory P. Cozzi
SAMSTOCK, L.L.C.,
a Delaware limited liability company
By: SZ Investments, L.L.C.,
its managing member
By: Zell General Partnership, Inc.,
its managing member
By: /s/ Rod Dammeyer
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Name: Rod Dammeyer
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Title: Vice-President
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322233-3
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SCHEDULE 1.2
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1. The board of directors of MTLM has authorized the Chairman and the CEO of
MTLM to negotiate an arrangement with Donald Moorehead whereby Donald
Moorehead would become Vice-Chairman of MTLM and Donald Moorehead and/or
his designees would receive a package of 150,000 warrants to purchase
common stock of MTLM in connection therewith.
2. The board of directors of MTLM has authorized the Chairman and the CEO of
MTLM to negotiate and grant 30,000 warrants to purchase shares of common
stock of MTLM to Dan Burgess, 25,000 warrants and 15,000 options to
purchase shares of common stock of MTLM to Xavier Hermosillo, and 25,000
options to purchase shares of common stock of MTLM to Robert Larry.
Additionally, the board of directors authorized the Chairman and CEO to
issue options to purchase 20,000 shares of common stock to employees of the
Company that are not officers or directors.
3. The board of directors of MTLM has authorized the Chairman and the CEO of
MTLM to negotiate and grant increases in the compensation of Xavier
Hermosillo and Robert Larry. The adjustment to annual compensation for Mr.
Larry and Mr. Hermosillo increased their annual base pay to $135,000 and
$100,000 respectively.
4. The Compensation Committee approved increases in annual base salary for Mr.
Jacobs and Mr. Jennings effective from and after June 1, 1997. Mr.
Jennings' adjusted annual salary is equal to the amount of $275,000 and Mr.
Jacobs' adjusted annual salary is equal to the amount of $287,000. In
addition, Mr. Jennings receives a travel allowance equal to $12,000 per
year.
5. The board of directors of MTLM has authorized the Chairman and CEO to grant
bonuses for Mr. Jennings, Mr. Jacobs, and Mr. Larry. On July 31, 1997, Mr.
Jacobs and Mr. Jennings each received a bonus in the amount of $50,000. On
July 15, 1997, Mr. Larry received a bonus in the amount of $25,000.
6. The Company plans to pay aggregate bonuses to Mr. Hermosillo in an amount
equal to $102,332.
7. MTLM plans to issue 50,000 warrants to purchase common stock of MTLM to a
financial advisor of MTLM on terms and conditions being negotiated by the
Chairman and the CEO of MTLM.
8. MTLM plans to issues 70,000 warrants to purchase common stock of MTLM to a
governmental affairs advisor of MTLM on terms and conditions being
negotiated by the Chairman and CEO of MTLM.
9. The board of directors of MTLM has authorized the Chairman and the CEO to
negotiate certain agreements with George Moorehead as more fully described
in MTLM's definitive Proxy Statement dated November 20, 1997.
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