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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report: December 18, 1997
(Date of earliest event reported)
METAL MANAGEMENT, INC.
(Exact name of registrant as specified in the charter)
Delaware 0-14836 94-2835068
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
500 Dearborn Street, Suite 405
Chicago, Illinois 60610
(Address of Principal Executive Offices)
(312) 645-0700
(Registrant's telephone number including area code)
N/A
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
SECURITIES PURCHASE AGREEMENT
On December 19, 1997, the Company issued to Samstock, L.L.C., a
Delaware limited liability corporation (the "Purchaser") 1,470,588 shares of
the Company's Common Stock, par value $.01 per Share (the "Shares" or the
"Common Stock"), pursuant to a Securities Purchase Agreement (the "Purchase
Agreement") between the Company and the Purchaser. The Company also issued
Purchaser a Warrant (the "Warrant") exercisable at any time prior to December
18, 2002 for: (i) 400,000 Shares at an exercise price of $20.00 per Share; and
(ii) 200,000 Shares at an exercise price of $23.00 per Share. The Shares
issued under the Purchase Agreement, and the Shares issuable upon exercise of
the Warrant, are referred to as the "Purchased Shares." The aggregate purchase
price of the Purchased Shares was $24,999,996. The Company applied the
proceeds of the sale of the Purchased Shares to working capital. The number of
Purchased Shares equaled approximately 7.3% of the Company's Shares issued and
outstanding immediately before the sale of the Purchased Shares.
In connection with the Purchase Agreement, the Company entered into a
Shelf Registration Rights Agreement, an Amended and Restated Registration
Rights Agreement and an Amended and Restated Stockholders Agreement. Copies of
these agreements, the Purchase Agreement and the Warrant, all of which are
dated as of December 19, 1997, are attached as Exhibits to this Report.
Pursuant to the Shelf Registration Rights Agreement by and between the
Company and Purchaser, the Company has agreed to file a registration statement
(the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), covering the resale of the Purchased Shares within one
hundred and twenty (120) days after the Closing Date (the "Filing Deadline").
If the Company has not filed the Registration Statement by the Filing Deadline,
or the Registration Statement is not declared effective within one hundred and
eighty (180) days after the Closing Date, the Company will be required to pay
the Purchaser an amount each month equal to the aggregate purchase price of the
Purchased Shares multiplied by the lower of two percent or the highest rate
permitted by applicable law. The Company is required to maintain the
effectiveness of the Registration Statement until the earlier to occur of: (i)
the date on which all of the Purchased Shares have been sold; and (ii) the date
on which all of the remaining Purchased Shares may be immediately sold to the
public without registration and without regard to the amount of Purchased
Shares which may be sold at a given time.
In connection with the Purchase Agreement, T. Benjamin Jennings and
Gerard M. Jacobs (collectively, the "MTLM Stockholders"), Albert A. Cozzi,
Frank J. Cozzi and Gregory P. Cozzi (collectively, the "Cozzi Stockholders"),
Purchaser and the Company entered into an Amended and Restated Registration
Rights Agreement (the "Registration Rights Agreement") which amends and
restates in its entirety the Registration Rights Agreement entered into as of
December 1, 1997 by and among the MTLM Stockholders, the Cozzi Stockholders and
the Company.
The Registration Rights Agreement grants the MTLM Stockholders, the
Cozzi Stockholders and the Purchaser the right at any time during the five-year
period beginning December 1, 1999 to include in a Registration Statement both
the Purchased Shares held by the Purchaser and Shares held
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by the MTLM Stockholders and the Cozzi Stockholders or issuable upon the
exercise of options or warrants held by them, and which were not previously
sold pursuant to a Registration Statement or pursuant to Rule 144 of the
Securities Act (the "Registrable Shares"). The Registration Rights Agreement
also grants the MTLM Stockholders, the Cozzi Stockholders and the Purchaser the
right at any time during the five-year period beginning December 1, 1999 to
require the Company to file a Registration Statement covering the resale of the
Registrable Shares. The Company will be required to file such a Registration
Statement only if it receives a written request from the MTLM Stockholders,
the Cozzi Stockholders and the Purchaser who in the aggregate own at least 25%
of the total number of Registrable Shares.
In connection with the Purchase Agreement, the MTLM Stockholders, the
Cozzi Stockholders, Purchaser and the Company entered into an Amended and
Restated Stockholders' Agreement (the "Stockholders Agreement") having a term
of ten years from December 1, 1997, the date of the Stockholders Agreement
entered into among the MTLM Stockholders, the Cozzi Stockholders and the
Company (the "Original Stockholders Agreement"). The Stockholders Agreement
amends and restates in its entirety the Original Stockholders Agreement.
The parties to the Stockholders Agreement have agreed that the Board
of Directors will consist of an odd number of from nine to seventeen Directors,
provided the "Purchaser Condition" (as defined herein) is satisfied. If the
Purchaser Condition is not satisfied, the Board of Directors will consist of an
even number of from eight to sixteen Directors. The "Purchaser Condition" will
be satisfied if both: (i) no more than three years have elapsed since the
Closing Date; and (ii) the Purchaser has not sold or otherwise disposed of more
than one-third of the Purchased Shares. So long as the Purchaser Condition is
satisfied, Purchaser will have the right to designate as a nominee for Director
either Sam Zell or Rod F. Dammeyer (the "Purchaser Director"). If the Purchaser
Condition is no longer satisfied, the Purchaser is required to cause the
Purchaser Director, if any, to resign. The MTLM Stockholders and the Cozzi
Stockholders will be able to nominate one-half the total number of Directors at
each annual meeting of the Company at which the total number of Directors is an
even number. If the total number of Directors of the Company is an odd number,
the MTLM Stockholders and the Cozzi Stockholders will be able to nominate
one-half of the next lowest even number of Directors. However, each group must
nominate one individual, independent and unaffiliated from each group or the
Company, as part of its slate.
The parties to the Stockholders Agreement have agreed to vote for
proposals, if and when presented by the Company, to amend the Company's
organizational documents to require the approval of at least two-thirds of the
Board of Directors to, among other things: (i) amend the Company's certificate
of incorporation or bylaws; (ii) liquidate or merge the Company; (iii) sell
substantially all of the Company's assets; (iv) elect or remove officers; (v)
adopt an annual budget; (vi) borrow funds, sell assets or make capital
expenditures exceeding $5 million; (vii) issue or register the Company's
securities; or (viii) declare or pay any dividends or distributions. In
addition, if any of the Cozzi Stockholders or MTLM Stockholders desire to sell
their respective shares of Common Stock, the selling MTLM Stockholder or Cozzi
Stockholder must generally offer its Shares to members of its own Stockholder
group, members of the other stockholder group, and to the
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Company before selling to a third party. If either the MTLM Stockholders or
the Cozzi Stockholders receive an offer to buy their shares from a third party,
the group generally must offer each of the MTLM Stockholders, the Cozzi
Stockholders and the Purchaser the right to participate in the offer on the
same terms and conditions. Finally, the Purchaser has agreed not to sell any
of the Purchased Shares for one year after the Closing Date, except for an
offering registered under the Securities Act or sales described in the
preceding sentence.
A copy of the press release issued by the Company in connection with
the sale of the Purchased Shares is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
PURCHASE OF COMMON STOCK OF KANKAKEE SCRAP CORPORATION
On December 18, 1997, the Company entered into a Purchase Agreement
(the "Kankakee Purchase Agreement") with Kankakee Scrap Corporation, an
Illinois corporation ("Kankakee") and the shareholders of Kankakee. The
aggregate purchase price for all of the shares of common stock of Kankakee was
$2,000,000 in cash plus 155,000 Shares. In connection with the Kankakee
Purchase Agreement, the shareholders of Kankakee entered into employment
agreements with Kankakee having terms of four years, and including
non-solicitation and non-competition covenants which survive for three years
after employment is terminated.
In connection with the Kankakee Purchase Agreement, the Company
entered into a Registration Rights Agreement with the shareholders of Kankakee
(the "Kankakee Shareholders"). This Registration Rights Agreement grants the
Kankakee Shareholders the right at any time through November 30, 2002 to
include in a Registration Statement the Shares they owned at the closing of the
Kankakee acquisition which were not previously sold pursuant to a Registration
Statement or pursuant to Rule 144 of the Securities Act. The Company is
required to maintain the effectiveness of the Registration Statement until the
earlier to occur of: (i) the date on which all of the Shares held by the
Kankakee Shareholders have been sold; and (ii) nine months after the date on
which the Kankakee Shareholders are first eligible to sell the Shares held by
them.
The Company and the Kankakee Shareholders also entered into a Pledge
Agreement pursuant to which the Kankakee Stockholders agreed to pledge 26,000
Shares to secure the Stockholders' obligations to the Company for breaches
under the Kankakee Purchase Agreement and for certain potential environmental
liabilities.
A copy of the press release issued by the Company in connection with
the Kankakee transaction is attached hereto as Exhibit 99.2 and incorporated
herein by reference.
All of the statements herein, other than historical facts, are
forward-looking statements made in reliance upon the Safe Harbor Provisions of
the Private Securities Litigation Reform Act of 1995. As such, they involve
risks and uncertainties and are subject to change at any time. These
statements reflect the Company's current expectations regarding the future
profitability of the Company and its subsidiaries and the benefits to be
derived from the Company's execution of its industry consolidation
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strategy. There can be no assurance that the Company's actual future
performance or that of its subsidiaries will meet the Company's expectations
for growth and profitability. The statements in this Form 8-K involve known
and unknown risks, uncertainties, and other factors which may cause actual
results, performance, or achievements to be materially different from any
future results, performance, or achievements expressed or implied by these
forward-looking statements. As discussed in the Company's Proxy Statement,
dated November 20, 1997, some of the factors which could affect the Company's
performance include, among other things, cyclicality of the scrap metal
recycling industry, price fluctuations in commodity markets, adverse economic
conditions, inability to successfully access capital, unavailability of
suitable acquisition opportunities, the cost of complying with environmental
laws and regulations, the risk that announced mergers are not consummated, the
risk of challenges by the Company's competition, and the risk that the Company
will face difficulties in consolidating and controlling operations in diverse
geographic locations.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
4.1 Warrant, dated December 19, 1997, issued by the Company to
Samstock, L.L.C. exercisable for an aggregate of 600,000 Shares of Common
Stock.
4.2 Shelf Registration Rights Agreement, dated December 19, 1997,
by and between the Company and Samstock, L.L.C.
4.3 Amended and Restated Registration Rights Agreement, dated
December 19, 1997, by and among the Company and T. Benjamin Jennings, Gerard M.
Jacobs, Albert A. Cozzi, Frank J. Cozzi, Gregory P. Cozzi and Samstock, L.L.C.
4.4 Registration Rights Agreement, dated December 18, 1997, by and
among the Company and Ronald I. Romano, Lolita A. Romano, Ronald T. Romano and
Ryan E. Romano.
10.1 Securities Purchase Agreement, dated December 19, 1997, by and
between the Company and Samstock, L.L.C.
10.2 Amended and Restated Stockholders Agreement, dated December
19, 1997, by and among T. Benjamin Jennings, Gerard M. Jacobs, Albert A. Cozzi,
Frank J. Cozzi, Gregory P. Cozzi, Samstock, L.L.C. and the Company.
99.1 Press Release announcing the sale of Common Stock and issuance
of a Warrant to Samstock, L.L.C.
99.2 Press Release announcing the completion of the acquisition of
Kankakee Scrap Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
METAL MANAGEMENT, INC.
Dated: January 2, 1998 By: /s/ T. Benjamin Jennings
-----------------------------
Name: T. Benjamin Jennings
Title: Chairman and Chief Development Officer
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EXHIBIT 4.1
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
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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.
(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-One 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.
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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.
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
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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.
(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.
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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.
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.
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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
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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.
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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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EXHIBIT 4.2
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
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(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 Registration Statement or prospectus contained
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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;
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(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
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make available its officers, directors and employees for questions regarding
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
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Registration Statement; and provided, further, that the Company shall not be
required to 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
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fault of the Company and such Holder in connection with the statements or
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.
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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.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first-above written.
METAL MANAGEMENT, INC., a Delaware
corporation
By:/s/ GERARD M. JACOBS
--------------------------------------
Name: GERARD M. JACOBS
------------------------------------
Title: CHIEF EXECUTIVE OFFICER
-----------------------------------
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 4.3
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
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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.
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(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> 4
(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> 5
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> 6
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> 7
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> 8
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> 9
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
METAL MANAGEMENT, INC.
By: /s/ T. Benjamin Jennings
-------------------------
T. Benjamin Jennings, Chairman and
Chief Development Officer
/s/ T. Benjamin Jennings
-------------------------
T. BENJAMIN JENNINGS
/s/ Gerard M. Jacobs
-------------------------
GERARD M. JACOBS
/s/ Albert A. Cozzi
-------------------------
ALBERT A. COZZI
/s/ Frank J. Cozzi
-------------------------
FRANK J. COZZI
/s/ Gregory P. 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> 1
EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and
entered into as of the _____ day of December, 1997, by and between METAL
MANAGEMENT, INC., a Delaware corporation (the "COMPANY"), and RONALD I. ROMANO,
LOLITA A. ROMANO, RONALD T. ROMANO and RYAN E. ROMANO (each a "STOCKHOLDER" and
collectively the "STOCKHOLDERS").
RECITALS
WHEREAS, the Stockholders and the Company are parties to that certain
Purchase Agreement dated of even date herewith (the "PURCHASE AGREEMENT"),
pursuant to which each Stockholder has agreed to sell, transfer and convey to
the Company all of the ownership interests (the "PURCHASED SECURITIES") in
Kankakee Scrap Corporation, an Illinois corporation ("SCRAP") in return for
cash and shares of common stock, par value $.01 per share of the Company (the
"COMMON STOCK"); and
WHEREAS, as a condition to the Stockholders agreeing to such transfer
and sale, the Stockholders are being granted registration rights with respect
to their shares of Common Stock;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows:
1. (a) Piggyback Registration. If, at any time during the
five-year period commencing December 1, 1997, 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 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
<PAGE> 2
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) 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) 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(b) in which it is not otherwise required to qualify to do
business.
(c) 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.
(d) 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.
(e) 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
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<PAGE> 3
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(b).
(f) 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.
(g) 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.
(h) 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.
2. Indemnification. () 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), 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
-3-
<PAGE> 4
(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
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
-4-
<PAGE> 5
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) above 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 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
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<PAGE> 6
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. Blackouts. Each Stockholder agrees that upon receipt of
notice from MTLM (a "Blackout Notice") of: (i) any request by the Securities
and Exchange Commission (the "SEC") for amendment or supplement to a
registration statement or for additional information; (ii) the issuance by the
SEC of any stop order suspending the effectiveness of the registration
statement or initiating proceedings for that purpose; (iii) the receipt by MTLM
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the shares for sale or exchange in any
jurisdiction of the United States or initiating proceedings for that purpose;
(iv) the happening of any event that makes any statement of a material fact
made in the registration statement or prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue or requires revisions
to the registration statement or prospectus so that these documents will not
contain any 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
in light of the circumstances under which they were made, not misleading; or
(v) the determination by MTLM that a post-effective amendment to the
registration statement, or supplement to the prospectus would be appropriate,
the Stockholder shall, or shall cause its permitted transferee to, immediately
discontinue disposition of the shares covered by the registration statement and
related prospectus until: (x) receipt by Stockholder of the supplemented or
amended prospectus or (y) notice from MTLM that use of the prospectus may be
resumed.
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<PAGE> 7
4. 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 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.
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<PAGE> 8
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
METAL MANAGEMENT, INC., a Delaware
corporation
By: /s/ GERARD M. JACOBS
--------------------------------------
Name: GERARD M. JACOBS
------------------------------------
Title: CHIEF EXECUTIVE OFFICER
-----------------------------------
/s/ RONALD I. ROMANO
-----------------------------------------
RONALD I. ROMANO
/s/ RONALD T. ROMANO
-----------------------------------------
RONALD T. ROMANO
/s/ RYAN E. ROMANO
-----------------------------------------
RYAN E. ROMANO
/s/ LOLITA A. ROMANO
-----------------------------------------
LOLITA A. ROMANO
-8-
<PAGE> 1
EXHIBIT 10.1
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
<PAGE> 2
and the other Transaction Documents (as defined below), have been executed and
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
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<PAGE> 3
limitation, stock appreciation rights, phantom stock or similar rights),
interests in the ownership or earnings of the Company or such subsidiary, as
the 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.
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<PAGE> 4
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
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<PAGE> 5
removed and the Company shall issue a new certificate without such legend to
the 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.
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<PAGE> 6
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 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
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<PAGE> 7
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 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
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<PAGE> 8
condition of the Company and its subsidiaries taken as a whole. The execution,
delivery and performance of this Agreement and the other Transaction 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.
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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, 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.
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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.
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
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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.
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,
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<PAGE> 12
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 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
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<PAGE> 13
relating to the use, handling or exposure to and disposal of asbestos or
asbestos-containing materials in connection with their assets and operations.
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.
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<PAGE> 14
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.
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.
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<PAGE> 15
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 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
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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.
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;
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<PAGE> 17
5.1.5 the Company and the other parties thereto shall have
executed and delivered the Shelf Registration Rights
Agreement, the Amended and 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
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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 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
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<PAGE> 19
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.
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
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<PAGE> 20
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 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
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<PAGE> 21
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 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> 22
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first-above written.
METAL MANAGEMENT, INC., a Delaware
corporation
By:/s/ GERARD M. JACOBS
--------------------------------------
Name: GERARD M. JACOBS
------------------------------------
Title: CHIEF EXECUTIVE OFFICER
-----------------------------------
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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<PAGE> 1
EXHIBIT 10.2
________________________________________________________________________________
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
FOR
METAL MANAGEMENT, INC.
Dated: December 19, 1997
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
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> 3
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:
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<PAGE> 4
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> 5
(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;
3
<PAGE> 6
(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.
4
<PAGE> 7
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:
(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.
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
5
<PAGE> 8
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
6
<PAGE> 9
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
7
<PAGE> 10
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
purchase 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,
8
<PAGE> 11
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
9
<PAGE> 12
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
10
<PAGE> 13
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.
11
<PAGE> 14
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
(A) 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
12
<PAGE> 15
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.
13
<PAGE> 16
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, notwithstanding 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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<PAGE> 17
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: T. Benjamin Jennings
----------------------------
Name: T. Benjamin Jennings
--------------------------
Title: Chairman
-------------------------
/s/ T. Benjamin Jennings
----------------------------
T. Benjamin Jennings
/s/ Gerard M. Jacobs
----------------------------
Gerard M. Jacobs
/s/ Albert A. Cozzi
----------------------------
Albert A. Cozzi
/s/ Frank J. Cozzi
----------------------------
Frank J. Cozzi
/s/ Gregory P. Cozzi
----------------------------
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
-----------------------------
Name: Rod Dammeyer
----------------------------
Title: Vice President
---------------------------
322233-3
15
<PAGE> 18
SCHEDULE 1.2
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.
16
<PAGE> 1
EXHIBIT 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE
FOR MORE INFORMATION CONTACT
CONTACT: Xavier Hermosillo, Corporate Communications and
Investor Relations (310-832-2999)
METAL MANAGEMENT ANNOUNCES $25,000,000
PRIVATE EQUITY PLACEMENT TO AFFILIATE OF SAM ZELL
Chicago, IL - Dec. 19, 1997 - Metal Management, Inc. (Nasdaq: MTLM) ("Metal
Management") today announced the completion of a $25,000,000 private equity
placement to an affiliate of noted Chicago investor Sam Zell. In the
transaction, Samstock, L.L.C., an affiliate of Sam Zell's Equity Group
Investments, Inc., received 1,470,588 shares of Metal Management's common
stock, and warrants to purchase an additional 400,000 shares of common stock at
$20 per share and 200,000 shares at $23 per share. The warrants are subject to
mandatory exercise under certain circumstances.
T. Benjamin Jennings, Metal Management's Chairman and Chief Development
Officer said, "We are excited to have such a quality organization involved with
our company. Between the Zell organization's capital sources, sophisticated
business experience, and a common philosophical approach of creating long term
shareholder value, we look forward to this partnership with our new
shareholders."
Sam Zell added, "We are enthusiastic about this investment and have a
lot of faith in the management and the strategic direction of the company."
In addition to the equity investment, Rod Dammeyer, of Equity Group
Investments, Inc. will join Metal Management's Board of Directors.
Metal Management, Inc., headquartered in Chicago, is a rapidly-growing
consolidator of the scrap metal recycling industry, building a quality company
through strategic integration and internal growth.
The Metal Management group of companies includes Cozzi Iron & Metal,
Inc. of Chicago, one of the largest scrap metal operations in the U.S., Proler
Southwest, Inc. of Houston, Texas, a leading recycler of industrial ferrous
scrap on the Houston Ship Channel, the Isaac Group of Companies of Toledo, one
of the world's largest briquetting operations, Reserve Iron & Metal L.P. of
Cleveland and Chicago, a major ferrous metal-breaking operation, the MacLeod
Group of Companies in Los Angeles, a major wire chopper and processor,
HouTexMetals Company, a significant supplier of ferrous metals to minimills,
which is located on the Houston Ship Channel, EMCO Recycling of Phoenix, one of
the largest scrap metal recyclers in Arizona, and Kankakee Scrap Corp of
Illinois.
Metal Management currently has several acquisitions pending. The
Company has signed a definitive agreement to acquire Houston Compressed Steel
Corp. of Houston, as well as binding letters of intent or letters of intent to
acquire Superior Forge, Inc. of Huntington Beach, California, Salt River
Recycling, L.L.C. of Phoenix, Arizona, Goldin Industries of Gulfport,
Mississippi,
<PAGE> 2
PerlCo, L.L.C. of Memphis, Tennessee, Aerospace Metals, Inc. of
Hartford, Connecticut, the Yonack and Gold Metal Group of Companies in Dallas,
with scrap metal operations throughout Texas and in Arkansas, and also
Chicago-area scrap metal recyclers Accurate Iron & Metal Co.,138 Scrap Inc.,
and Katrick Inc.
All of the statements in this release, other than historical facts, are
forward-looking statements made in reliance upon the Safe Harbor Provisions of
the Private Securities Litigation Reform Act of 1995. As such, they involve
risks and uncertainties and are subject to change at any time. These
statements reflect the Company's current expectations regarding the future
profitability of the Company and its subsidiaries and the benefits to be
derived from the Company's execution of the Company's industry consolidation
strategy. As discussed in the Company's annual report for the period ended
March 31, 1997, its quarterly reports for the periods ended June 30, 1997 and
September 30, 1997, and its proxy statement dated November 20, 1997, some of
the factors which could affect the Company's performance include, among other
things: possible inability to replace short term financing with longer term
capital commitments, possible inability to obtain capital through debt and/or
equity placements sufficient to fund cash requirements under acquisition and
merger agreements, risk of expansion strategy, cyclicality of operating
results, price fluctuations, existing and future debt of the Company,
competition in the scrap metal industry, immediate and future capital
requirements, substantial leverage, reliance on management and principal
stockholders, and environmental matters.
<PAGE> 1
EXHIBIT 99.2
PRESS RELEASE
FOR IMMEDIATE RELEASE
FOR MORE INFORMATION CONTACT
CONTACT: Xavier Hermosillo, Corporate Communications and
Investor Relations (310-832-2999)
METAL MANAGEMENT ANNOUNCES
COMPLETION OF ACQUISITION OF KANKAKEE SCRAP
Chicago, IL - Dec. 19, 1997 - Metal Management, Inc. (Nasdaq: MTLM) ("Metal
Management") today announced that it has completed its purchase of the stock of
Kankakee Scrap Corp. ("Kankakee Scrap") of Kankakee, Illinois, for a
combination of cash and Metal Management common stock. Metal Management valued
the transaction at approximately $4.5 million.
Founded 30 years ago by Ronald I. Romano, Sr., Kankakee Scrap is a ferrous
and non-ferrous metal recycling operation. The Romano family will continue to
manage and operate the Kankakee Scrap facilities under long-term employment
agreements with Kankakee Scrap.
Ronald I. Romano, Sr., President and Chief Executive Officer of Kankakee
Scrap Corp., said "The Romano family is extremely proud to become part of the
Metal Management team. I have long been convinced that the consolidation of
our industry was what the future would hold. As soon as I met the very
professional team of Gerry and Vin Jacobs and Ben Jennings, I knew they were
the people to lead the way. We feel that the future for Kankakee Scrap,
through our association with Metal Management, will be very bright."
Frank J. Cozzi, President of Cozzi Iron & Metal, Inc., said "This
acquisition broadens our service capabilities in the Kankakee and Joliet
markets. We look forward to working with the Romano family, which has many
years of experience in scrap metal recycling and a lot of integrity."
Vincent Jacobs, of Corporate Development at Metal Management, added
"The Romano family and the Kankakee Scrap organization clearly represent the
high level of integrity and successful performance that Metal Management seeks
in its new acquisitions. Kankakee Scrap clearly bolsters Cozzi Iron & Metal's
presence southwest of Chicago, and is eagerly welcomed into the Metal
Management family of companies."
Metal Management, Inc., headquartered in Chicago, is a rapidly-growing
consolidator of the scrap metal recycling
industry, building a quality company through strategic integration and internal
growth.
The Metal Management group of companies includes Cozzi Iron & Metal, Inc.
of Chicago, one of the largest scrap metal operations in the U.S., Proler
Southwest, Inc. of Houston, Texas, a leading recycler of industrial ferrous
scrap on the Houston Ship Channel, the Isaac Group of Companies of Toledo, one
of the world's largest briquetting operations, Reserve Iron & Metal L.P. of
Cleveland and Chicago, a major ferrous metal-breaking operation, the MacLeod
Group of Companies in Los Angeles, a major wire chopper and processor, HouTex
Metals Company, a significant supplier of ferrous metals to minimills, which is
located on the Houston Ship Channel, EMCO Recycling of Phoenix, one of the
largest scrap metal recyclers in Arizona, and Kankakee
<PAGE> 2
Scrap Corp of Kankakee, Illinois.
Metal Management currently has several acquisitions pending. The Company
has signed a definitive agreement to acquire Houston Compressed Steel Corp. of
Houston, as well as binding letters of intent or letters of intent to acquire
Superior Forge, Inc. of Huntington Beach, California, Salt River Recycling,
L.L.C. of Phoenix, Arizona, Goldin Industries of Gulfport, Mississippi, PerlCo,
L.L.C. of Memphis, Tennessee, Aerospace Metals, Inc. of Hartford, Connecticut,
the Yonack and Gold Metal Group of Companies in Dallas, with scrap metal
operations throughout Texas and in Arkansas, and also Chicago-area scrap metal
recyclers Accurate Iron & Metal Co., 138 Scrap Inc., and Katrick Inc.
All of the statements in this release, other than historical facts, are
forward-looking statements made in reliance upon the Safe Harbor Provisions of
the Private Securities Litigation Reform Act of 1995. As such, they involve
risks and uncertainties and are subject to change at any time. These
statements reflect the Company's current expectations regarding the future
profitability of the Company and its subsidiaries and the benefits to be
derived from the Company's execution of the Company's industry consolidation
strategy. As discussed in the Company's annual report for the period ended
March 31, 1997, its quarterly reports for the periods ended June 30, 1997 and
September 30, 1997, and its proxy statement dated November 20, 1997, some of
the factors which could affect the Company's performance include, among other
things: possible inability to replace short term financing with longer term
capital commitments, possible inability to obtain capital through debt and/or
equity placements sufficient to fund cash requirements under acquisition and
merger agreements, risk of expansion strategy, cyclicality of operating
results, price fluctuations, existing and future debt of the Company,
competition in the scrap metal industry, immediate and future capital
requirements, substantial leverage, reliance on management and principal
stockholders, and environmental matters.
