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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 31, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NO. 0-14836
METAL MANAGEMENT, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 94-2835068
(State or other jurisdiction of incorporation (I.R.S. Employer Identification Number)
or organization)
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500 N. DEARBORN ST., SUITE 405,
CHICAGO, IL 60610
(Address of principal executive offices including zip code)
Registrant's telephone number, including area code: (312) 645-0700
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No
As of February 3, 1999, the Registrant had 44,194,122 shares of Common
Stock outstanding.
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INDEX
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PAGE
PART I: FINANCIAL INFORMATION ----
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Part I, Exhibit 11.1 (Statement re: Computation of net
income (loss) per share) and Exhibit 27.1 (Financial Data
Schedule) will be filed by amendment to this quarterly
report in accordance with Rule 12b-25 of the Securities
Exchange Act of 1934, as amended.
PART II: OTHER INFORMATION
ITEM 2: Changes in Securities....................................... 1
ITEM 4: Submission of Matters to a Vote of Security Holders......... 1
ITEM 5: Other Information........................................... 1
ITEM 6: Exhibits and Reports on Form 8-K............................ 2
SIGNATURES.................................................. 3
Exhibit Index............................................... 4
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PART II -- OTHER INFORMATION
ITEM 2: CHANGES IN SECURITIES
On November 2, 1998, the Company issued 6,000 shares of Series C Preferred
Stock to FPX, Inc. and Southern Tin Compress Corporation in exchange for the
common stock of FPX, Inc. and certain assets of Southern Tin Compress
Corporation. The Series C Preferred Stock is convertible into shares of Common
Stock at a price equal to $9.00 per share of Common Stock. The Series C
Preferred Stock was valued at approximately $5.1 million for financial reporting
purposes.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of the Stockholders of the Company was held on
November 2, 1998.
(b) The following directors were elected at the Annual Meeting of
Stockholders: Albert A. Cozzi, Frank J. Cozzi, Gregory P. Cozzi, Rod F.
Dammeyer, George A. Isaac III, Gerard M. Jacobs, T. Benjamin Jennings, Kenneth
A. Merlau, Joseph F. Naporano and William T. Proler.
(c) Of the 39,632,289 shares entitled to vote, 33,724,048 shares were
represented at the meeting by proxy or present in person. The stockholders
considered the following matters:
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PROPOSAL FOR AGAINST WITHHELD
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1. Election of Directors:
a. Albert A. Cozzi.................................. 33,179,004 0 545,044
b. Frank J. Cozzi................................... 33,176,106 0 547,942
c. Gregory P. Cozzi................................. 33,178,006 0 546,042
d. Rod F. Dammeyer.................................. 33,178,144 0 545,904
e. George A. Isaac III.............................. 33,176,944 0 547,104
f. Gerard M. Jacobs................................ 33,161,004 0 563,044
g. T. Benjamin Jennings............................. 33,161,804 0 562,244
h. Kenneth A. Merlau................................ 33,175,984 0 548,064
i. Joseph F. Naporano.............................. 33,179,004 0 545,044
j. William T. Proler............................... 33,179,004 0 545,044
2. Approval of the Amended and Restated Certificate of
Incorporation which served to increase authorized
common stock from 80,000,000 to 140,000,000 and
eliminate the ability of stockholders to act by
written consent..................................... 27,412,676 1,188,324 5,123,048
3. Increase the number of shares authorized under the
1995 Stock Plan from 2,600,000 to 5,200,000......... 26,837,089 1,516,151 5,370,808
4. Approval of the 1998 Director Compensation Plan..... 27,786,053 775,270 5,162,725
5. Approval of the 1998 Employee Stock Purchase Plan... 28,005,298 585,361 5,133,389
6. Approval of PricewaterhouseCoopers LLP as
independent accountants............................. 33,587,227 70,640 66,181
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ITEM 5: OTHER INFORMATION
Directorships:
Effective November 2, 1998, Kenneth A. Merlau was appointed an Executive
Vice-President of the Company. Mr. Merlau currently serves on the Company's
Board of Directors.
Effective November 19, 1998, Timothy P. Orlowski was appointed a director
of the Company.
Effective January 11, 1999, Gene C. McCaffery was appointed a director of
the Company.
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Change of Chief Executive Officer.
On February 12, 1999, Gerard M. Jacobs ("Jacobs") and the Company entered
into a Settlement Agreement and General Release (the "Severance Agreement")
pursuant to which Jacobs resigned as the Company's Chief Executive Officer. The
Company's Board of Directors elected T. Benjamin Jennings, the Company's
Chairman and Chief Development Officer, as the Company's new Chief Executive
Officer. Simultaneously with the execution of the Severance Agreement, the
Company entered into a Stock Purchase Agreement (the "Stock Purchase Agreement")
with a newly formed corporation controlled by Jacobs ("Buyer"), pursuant to
which the Company agreed to sell the common stock of its Superior Forge, Inc.
subsidiary to the Buyer for $13,600,000 in cash and a $2,500,000 subordinated
promissory note. In addition, the Company will receive a $1,000,000 "success
fee" if Superior Forge, Inc. has EBITDA in excess of $6,250,000 in any of the
first five years after the closing. At the closing, Buyer will also purchase
Jacobs' $500,000 promissory note owed to the Company, for a cash amount equal to
the principal amount thereof plus accrued interest to the closing date.
The Severance Agreement provides that in the event (and only in the event
that) the Stock Purchase Agreement is terminated without Buyer purchasing
Superior Forge, Inc., Jacobs will be entitled to receive severance payments in
the amount of $672,677, $631,426, $625,176 and $618,926 on the six-month,
one-year, eighteen-month and two-year anniversaries of the date the Stock
Purchase Agreement is terminated. In such event, Jacobs will repay his $500,000
promissory note to the Company in four equal semi-annual installments of
$125,000 plus accrued and unpaid interest. The sale and purchase of Superior
Forge, Inc. pursuant to the Stock Purchase Agreement is subject to certain
conditions, including Buyer's ability to complete financing for the transaction.
The closing to the Stock Purchase Agreement is also subject to certain
government approvals.
In connection with the execution of the Severance Agreement and the Stock
Purchase Agreement, the parties to the Company's Stockholders' Agreement amended
and restated the same, to (among other things) remove Jacobs as a party thereto.
Copies of the Severance Agreement and the Amended and Restated Stockholders'
Agreement are attached to this Form 10-Q as Exhibits 10.2 and 10.3,
respectively.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See Exhibit Index
(b) Reports on Form 8-K
The following reports on Form 8-K were filed during the quarter ended
December 31, 1998:
(1) Form 8-K dated October 5, 1998, filed October 6, 1998 (providing
consolidated financial statements of the Company that give effect to the
Company's merger with R&P Holdings, Inc. accounted as a pooling of
interests and reporting certain amendments to the Company's $250.0 million
Senior Credit Facility).
(2) Form 8-K dated December 1, 1998, filed December 11, 1998 (relating
to the Company's stock option exchange plan).
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
METAL MANAGEMENT, INC.
By: /s/ ALBERT A. COZZI
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Albert A. Cozzi
Director, President and
Chief Operating Officer
By: /s/ T. BENJAMIN JENNINGS
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T. Benjamin Jennings
Director, Chairman of the Board,
Chief Executive Officer,
and Chief Development Officer
By: /s/ ROBERT C. LARRY
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Robert C. Larry
Executive Vice President of
Finance,
Treasurer, Chief Financial
Officer
and Assistant Secretary
Date: February 16, 1999
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METAL MANAGEMENT, INC.
EXHIBIT INDEX
NUMBER AND DESCRIPTION OF EXHIBIT
3.1 Amended and Restated Certificate of Incorporation of the Company, as
filed with the Secretary of State of the State of Delaware on November 2,
1998 (incorporated by reference to Exhibit 3.1 of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998).
3.2 Certificate of Designations, Preferences and Rights of Series C
Convertible Preferred Stock of the Company, as filed with the Secretary
of State of the State of Delaware on November 2, 1998 (incorporated by
reference to Exhibit 3.2 of the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1998).
3.3 Restated By-Laws of the Company, as amended through August 27, 1998
(incorporated by reference to Exhibit 3.3 of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998).
4.1 Eight Supplemental Indenture, dated as of November 3, 1998, executed by
FPX, Inc., amending Indenture, dated as of May 13, 1998, among the
Company, the Guarantors and LaSalle National Bank, as Trustee
(incorporated by reference to Exhibit 4.3 of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998).
4.2 Ninth Supplemental Indenture, dated as of November 3, 1998, executed by
PerlCo, L.L.C., amending Indenture, dated as of May 13, 1998, among the
Company, the Guarantors and LaSalle National Bank, as Trustee
(incorporated by reference to Exhibit 4.4 of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998).
10.1 Amendment No. 4 to Credit Agreement, dated as of December 31, 1998, by
and among the Company and its subsidiaries named therein and BT
Commercial Corporation and the other financial institutions signatories
thereto as lenders (incorporated by reference to Exhibit 10.1 of the
Company's Current Report on Form 8-K dated January 28, 1999).
10.2 Settlement Agreement and General Release, dated February 12, 1999, by and
between Gerard M. Jacobs and the Company.
10.3 Amended and Restated Stockholders' Agreement, dated as of February 12,
1999, 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.
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EXHIBIT 10.2
SETTLEMENT AGREEMENT AND GENERAL RELEASE
THIS SETTLEMENT AGREEMENT and GENERAL RELEASE (hereinafter "Agreement")
is made and entered into by and between GERARD M. JACOBS (hereinafter "Jacobs")
and METAL MANAGEMENT, INC., a Delaware corporation (hereinafter "MTLM").
WHEREAS, the parties have engaged in discussions resulting in an
amicable and mutually satisfactory agreement concerning Jacobs' resignation from
his employment and Executive Committee membership with MTLM, and with respect to
Jacobs' shareholdings in, and options and warrants to acquire shares of, MTLM,
and all matters arising out of or relating thereto; and
WHEREAS, this Agreement is being entered into pursuant to and in
conjunction with that certain Stock Purchase Agreement, dated the date hereof,
among MTLM, Huntington AluTech, Inc., a Delaware corporation (hereinafter
"HAI"), Jacobs and the other parties signatory thereto, concerning the
acquisition by a wholly owned subsidiary of HAI (hereinafter, "Buyer") of the
common stock of Superior Forge, Inc., a wholly owned subsidiary of MTLM (the
"Stock Purchase Agreement"). Capitalized terms used herein without definition
shall have the meaning ascribed to such terms in the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth below, the parties hereby agree as follows:
1. The Employment Agreement. Jacobs and MTLM are parties to an
"Employment Agreement" dated December 1, 1997. Except for Jacobs' obligations
pursuant to Paragraphs 15 (as modified by Section 5(d) below), 18 (as modified
by the last sentence of Article X of the Stock Purchase Agreement and Section 4
below), 19 and 26(a) thereof and MTLM's obligations pursuant to Paragraphs
5(c)(ii), 5(c)(iv), 23, 24 and 25 thereof, which shall continue (in the case of
Paragraph
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25, for a period of seven years from the date hereof), or except as otherwise
expressly provided in this Agreement, this Agreement shall supersede the terms
and provisions of the Employment Agreement, which is terminated effective
immediately and is hereby null and void and without further effect. Jacobs
agrees that he has received all bonuses (including his Annual Cash Bonus under
the Employment Agreement) to which he is or will be entitled.
2. Jacobs' Resignation. Effective immediately, Jacobs hereby resigns as
Chief Executive Officer of MTLM, as an officer of MTLM and any and all of its
affiliates and as a director of any and all of MTLM's affiliates (including his
position on the Executive Committee of the Board of Directors of MTLM), which
resignation is a required condition to the execution and delivery of the Stock
Purchase Agreement. The parties agree that Jacobs will remain as a non-officer
employee of MTLM until the earlier of (i) the date that the Closing of the
purchase and sale of the stock of Superior Forge, Inc. occurs under the Stock
Purchase Agreement and (ii) the actual or purported termination of the Stock
Purchase Agreement (such earlier date being referred to herein as the
"Resignation Date"), on which date Jacobs agrees he will no longer be an
employee of MTLM. Jacobs agrees that he will remain a director of MTLM until
such time as his resignation or removal, or the expiration of his term if not
nominated for re-election.
3. The Obligations of MTLM. On and after the Effective Date of this
Agreement, as defined in Section 8 hereof, and in consideration of Jacobs'
promises as set forth herein, MTLM shall be obligated to him as set forth
herein. Except as expressly set forth in this Agreement, MTLM shall have no
continuing obligation to Jacobs of any kind or nature whatsoever.
a. From the Effective Date of this Agreement until the Resignation Date
(the "Interim Period"), Jacobs will be an employee of the Company as
contemplated in Section 2 above, without
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an employment contract. During the Interim Period, Jacobs will continue to be
paid his salary on the Company's regular payroll cycle at a rate equal to an
annual salary of $275,000; will be afforded the use of his office and related
support services; and will be entitled to (i) the employee benefits specified in
Paragraphs 9, 10, 11 and 13 of the Employment Agreement, (ii) the car allowance,
reimbursement for all gas, oil, repairs, maintenance and insurance in regard to
such car and all costs, fees and charges in regard to a car phone and a cellular
phone as contemplated by Paragraph 12 of the Employment Agreement (and not
including any other benefit specified therein) and (iii) his current medical
insurance and dental insurance. From and after the Resignation Date, MTLM will
be obligated to Jacobs as set forth in either subsection (b) or subsection (c)
below.
b. In the event the Stock Purchase Agreement is terminated, or one of
the parties thereto purports to terminate it, without the Closing of the
purchase and sale of the stock of Superior Forge, Inc. having occurred, the
Interim Period will immediately end and MTLM shall be obligated to Jacobs as if
he was terminated by MTLM pursuant to Paragraph 14(a) of the Employment
Agreement as set forth below, with the ninety (90) day period referred to
therein being deemed to have elapsed. In such event:
(i) MTLM shall have no further obligations to Jacobs under
clause (i) of the first sentence of Paragraph 17(a) of the Employment
Agreement;
(ii) in full satisfaction of MTLM's obligations to Jacobs
under clause (ii) of the first sentence of Paragraph 17(a) of the
Employment Agreement, MTLM agrees to make severance payments to Jacobs
as follows: (w) $672,677 on the six-month anniversary of the actual or
purported termination date of the Stock Purchase Agreement; (x)
$631,426 on the first anniversary of the actual or purported
termination date of the Stock Purchase
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Agreement; (y) $625,176 on the eighteen-month anniversary of the actual
or purported termination date of the Stock Purchase Agreement; and (z)
$618,926 on the second anniversary of the actual or purported
termination date of the Stock Purchase Agreement; and all late payments
shall bear interest at the rate of 12% per annum until paid;
(iii) in full satisfaction of MTLM's obligations to Jacobs
under clause (i) of the second sentence of Paragraph 17(a) of the
Employment Agreement, MTLM agrees to continue, at no cost to Jacobs,
his medical, dental and life insurance benefits until November 30, 2003
(which benefits shall not be considered continuation coverage pursuant
to Section 4980(B) of the Code, and such continuation coverage shall
commence on the date that benefits provided hereunder cease);
(iv) MTLM and Jacobs will enter into an amendment to Jacobs'
$500,000 demand promissory note payable to the Company, which will
serve to amend the repayment terms thereof so that the principal amount
thereof shall be due and payable in four equal installments of $125,000
on each of the six-month, twelve-month, eighteen-month and twenty-four
month anniversaries of the Resignation Date, in each case together with
all accrued and unpaid interest on such promissory note to the date of
each installment of principal repayment; Jacobs acknowledges that MTLM
may set off a portion of the severance payments referred to in
subsection (ii) above against the installments of principal and
interest owing to MTLM under the promissory note as so amended; and
concurrently with such amendment, the collateral held by MTLM securing
the repayment of such promissory note shall be returned to Jacobs, and
the Pledge Agreement between Jacobs and MTLM relating thereto shall be
terminated;
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(v) MTLM's obligations to Jacobs under clause (ii) of the
second sentence of Paragraph 17(a) of the Employment Agreement shall be
satisfied in the manner set forth in subsections (c)(iii) and (c)(iv)
below, and Paragraph 17(b) of the Employment Agreement shall continue
to be applicable with respect to MTLM=s payments to Jacobs hereunder.
c. In the event that the Closing of the purchase and sale of the stock
of Superior Forge, Inc. under the Stock Purchase Agreement occurs, the Interim
Period will immediately end and Jacobs will be deemed to have voluntarily
resigned his employment with MTLM, and MTLM shall be obligated to Jacobs as
follows:
(i) Vacation. On the next regular payroll date following the
Closing Date, MTLM shall pay to Jacobs all of his accrued but unused
vacation pay.
(ii) Health Insurance. MTLM shall offer to Jacobs health
insurance continuation to the extent required by and pursuant to the
terms and conditions of the Consolidated Omnibus Budget Reconciliation
Act ("COBRA").
(iii) Benefit Plans. It is understood and agreed that Jacobs'
continuous service under MTLM's 401(k) plan and its other benefit plans
shall cease as of his Resignation Date. Jacobs' rights and the
obligations of MTLM pursuant to said benefit plans shall be as
determined by the terms of each such plan and applicable law.
(iv) Warrants and Stock Options. Jacobs' interest in and
rights with respect to his warrants to purchase MTLM's common stock
shall be governed by and subject to all conditions, terms and
restrictions contained in his warrants. In addition, on his Resignation
Date all warrants and stock options owned by Jacobs shall be
immediately and fully vested in Jacobs (to the extent not already
vested), without regard to any early termination of such
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warrants or options resulting from Jacobs= termination of employment,
and shall remain outstanding and exercisable until the expiration date
of such warrants and options.
4. Noncompetition. Paragraph 18 of the Employment Agreement, Jacobs'
noncompetition covenant, shall remain in full force and effect for a period of
thirty-six (36) months from the Resignation Date (without respect to the
provisions of the first sentence of Paragraph 18); provided, however, that the
provisions of said Paragraph 18 shall not be deemed to be violated under the
circumstances set forth in the last paragraph of Article X of the Stock Purchase
Agreement. This Section 4 shall also be applicable in the event the Stock
Purchase Agreement is terminated, as said Paragraph 18 is modified
(notwithstanding such termination) by said last paragraph of Article X of the
Stock Purchase Agreement; provided, that in such event, (i) Jacobs'
noncompetition covenant shall continue to apply with respect to the business of
the forging of aluminum for so long as MTLM owns at least a majority of the
common equity of Superior Forge, Inc., but in any event shall not apply for a
period of more than thirty-six (36) months from the Resignation Date ; (ii)
Jacobs' noncompetition covenant shall apply with respect to the business of hard
aluminum alloy extrusion if Superior Forge, Inc. is in such business at the
Resignation Date , but in any event shall not apply for a period of more than
thirty-six (36) months from the Resignation Date; and (iii) Jacobs'
noncompetition covenant shall not be construed to prevent him from participating
as an equity investor with Ian Albert and/or Alan Shumway in a purchase of
Superior Forge, Inc. from and after the Resignation Date. Jacobs acknowledges
that he has received good and valuable consideration for the continuation of the
provisions of Paragraph 18 of the Employment Agreement set forth in this Section
4.
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5. The Obligations of Jacobs. In consideration of the promises of MTLM
contained in this Agreement and its execution of the Stock Purchase Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Jacobs agrees as follows:
a. Mutual General Releases. Jacobs, for himself and for his
estate, heirs, personal representatives, executors, administrators and
assigns, hereby releases and forever discharges, except as set forth in
subsections (i) through (v) below, MTLM, its subsidiaries and related
and affiliated entities signatory hereto (hereinafter collectively and
individually the "MTLM Releasees"), and the MTLM Releasees hereby
release and forever discharge Jacobs, his estate, heirs, personal
representatives, executors, administrators and assigns, from any and
all rights, claims, demands, debts, dues, sums of money, accounts,
attorneys= fees, complaints, judgments, executions, actions and causes
of action of any nature whatsoever, cognizable at law or equity, which
either party now has or claims, or might hereafter have or claim,
against the other party, based upon or arising out of any matter or
thing whatsoever through date of this release, including, without
limitation, any claim, action or cause of action which was or is
related to or arises out of Jacobs' employment or directorship with, or
his shareholding in, MTLM, or his separation and/or resignation
therefrom, or which is based upon or arises under or the Employment
Agreement, or any local, state, or federal law dealing with employment
discrimination, including without limitation Title VII of the Civil
Rights Act of 1964, the Americans with Disabilities Act and the Age
Discrimination in Employment Act.
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The following provisions are applicable to and made a part of this
Agreement and the foregoing general release and waiver:
(i) Jacobs does not release or waive any right or claim
which he may have under the Age Discrimination in
Employment Act which arises after the date of
execution of this Agreement.
(ii) Jacobs does not release or waive any right or claim
which he may have in the future for a breach of this
Agreement or for a breach of the Stock Purchase
Agreement (including, without limitation, a claim for
specific performance or damages in the event MTLM is
obligated, but fails, to consummate the transactions
contemplated by the Stock Purchase Agreement in
accordance with the terms thereof) or any other
agreement delivered in connection with the Stock
Purchase Agreement at the Closing thereunder,
notwithstanding any payments that may be made under
Section 3(b) of this Agreement, or any right or claim
which he may have in the future under this Agreement
or with respect to indemnification and contribution
rights under (x) the Certificate of Incorporation or
by-laws of MTLM or (y) under the General Corporation
Law of the State of Delaware.
(iii) In exchange for this general release and waiver,
Jacobs hereby acknowledges that he has received
separate consideration beyond that which he is
otherwise entitled to under MTLM policy, the
Employment Agreement, or applicable law.
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(iv) MTLM hereby expressly advises Jacobs to consult with
an attorney of his choosing prior to executing this
Agreement which contains a general release and
waiver.
(v) Jacobs has twenty-one (21) days from the date of
presentment to consider whether or not to execute
this Agreement. In the event of such execution,
Jacobs' has a further period of seven (7) days from
such date in which to revoke said execution, notice
of which must be received by MTLM within such seven
(7) day period.
b. Stockholders' Agreement. Attached hereto and incorporated
herein as Exhibit A is a Second Amended and Restated Stockholders'
Agreement among the parties to the Amended and Restated Stockholders'
Agreement dated December 19, 1997 (the "Stockholders' Agreement").
c. Availability. For a period beginning on the date hereof and
continuing for six (6) months from the Resignation Date, Jacobs agrees
to cooperate reasonably with MTLM in the transition of his
responsibilities to other employees including, without limitation,
being generally available by telephone during normal business hours in
California to answer questions and to assist other MTLM employees.
Jacobs agrees to make himself reasonably available to MTLM and its
attorneys and agents for interview, deposition, and testimony and
agrees to appear as a witness at trial and, at the election of MTLM,
provide a sworn statement or deposition of any matters in which MTLM is
a party and/or for which Jacobs may have knowledge of any relevant
facts. MTLM agrees to reimburse Jacobs for any reasonable, pre-approved
out-of-pocket expenses that he incurs in providing such
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assistance, including the cost of travel or lost compensation. Jacobs
agrees not to withhold any information relevant to such matters from
the Company. Nothing in this agreement is intended to influence any
such testimony that Jacobs may offer.
d. MTLM Property. Jacobs represents that he has turned (or
will within 24 hours turn) over to MTLM all property of MTLM in his
control or possession by the Resignation Date. This includes all notes,
memoranda, records, documents and all other information, no matter how
produced or reproduced, all computer equipment and programs, all office
keys and access cards, and all credit and charge cards kept by Jacobs
or in his possession or control used in or pertaining to the business
of MTLM, it being hereby acknowledged that all of said items, and all
copies of said items, are the sole and exclusive property of MTLM.
Notwithstanding the foregoing, Jacobs shall be entitled to take
possession of the articles set forth on Exhibit B. The obligations set
forth herein are in addition to the obligations of Jacobs pursuant to
Paragraph 15 of the Employment Agreement.
e. Confidentiality of Agreement. Except pursuant to valid
subpoena enforced by a court or government agency of competent
jurisdiction and except as may be required by law or by the rules and
regulations of any securities exchange or unless the terms hereof
become public other than by reason of Jacobs' breach of this subsection
(e), Jacobs shall not, directly or indirectly, discuss or communicate
the terms of this Agreement with any third party, except members of his
immediate family, his accountant and his attorney who shall be advised
of this confidentiality restriction. Except pursuant to a valid
subpoena and except as may be required by law or by the rules and
regulations of any securities exchange or
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unless the terms hereof become public other than by reason of Jacobs'
breach of this subsection (e), Jacobs will not communicate or cooperate
with any employee or director or former employee or director of MTLM,
or with any third party, concerning any claim against MTLM.
6. Non-Disparagement. From and after the date of presentment of this
Agreement, both parties represent that they have not and will not (and, in the
case of MTLM, MTLM will cause the MTLM Releasees not to), nor will they cause or
assist another person to, disparage or make critical, negative, derogatory or
defamatory statements about the other to any third party, or make any other
statement to a third party which is intended to or would reasonably have the
effect of harming the other party to this Agreement. Nothing herein shall
prevent Jacobs from expressing his opinions in any manner he chooses in meetings
of the Company's Board of Directors. It is understood that Jacobs' commitment
hereunder extends to the Company's officers and directors. Any party's claim for
damages arising under subsection 5(c) or subsection 5(e) of this Agreement or
under this Section 6 may not be offset against any other obligation owed by such
party, unless and until a final nonappealable judgment (or a judgment that is
not appealed in a timely manner) has been entered with respect thereto.
7. Registration Rights. In the event that at any time prior to December
1, 2009, MTLM proposes to file a registration statement with the Securities and
Exchange Commission registering for resale any shares of common stock of MTLM
owned by Albert A. Cozzi or T. Benjamin Jennings, MTLM shall notify Jacobs in
writing at least five business days prior to the filing thereof of MTLM's plans
to file such registration statement, and Jacobs will have the right, at MTLM's
cost and expense (not including any underwriters' fees and commissions, unless
such underwriters' fees
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and commissions are paid for on behalf of Albert A. Cozzi or T. Benjamin
Jennings), to include any shares of MTLM's common stock owned by him (or that
could be owned by him upon the exercise of his options or warrants) in such
registration statement. Nothing in this Section 7 shall be deemed to limit or
affect in any way Jacobs' registration rights under Paragraph 5(c) of the
Employment Agreement.
8. Effective Date. The Effective Date of this Agreement shall be the
eighth day after Jacobs' execution of this Agreement without receipt by MTLM of
a signed statement from Jacobs revoking such execution.
9. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the heirs, assigns, administrators, executors, and legal
representatives of Jacobs and shall be binding upon and inure to the benefit of
the MTLM Releasees.
10. Entire Agreement. This instrument constitutes the entire Agreement
between the parties. It may not be amended or modified except by a subsequent
written instrument signed by all parties hereto.
11. Indemnification. Each of the parties hereto hereby promises to
indemnify and hold harmless the other from and against any loss, claim, cost,
expense (including reasonable attorney's fees and expenses of litigation) or
damages sustained or incurred by such other party arising out of or in
connection with any breach of such party's obligations hereunder or in the
enforcement of such party's rights hereunder.
12. Severability. If any provision, section, subsection or other
portion of this Agreement shall be determined by any court of competent
jurisdiction to be invalid, illegal or unenforceable in whole or in part, and
such determination shall become final, such provision or portion shall be
-12-
<PAGE> 13
deemed to be severed or limited, but only to the extent required to render the
remaining provisions and portions of this Agreement enforceable. This Agreement
as thus amended shall be enforced so as to give effect to the intention of the
parties insofar as that is possible. In addition, the parties hereby expressly
empower a court of competent jurisdiction to modify any term or provision of
this Agreement to the extent necessary to comply with existing law and to
enforce this Agreement as modified.
13. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Illinois.
14. Counterparts. This Agreement may be signed in multiple
counterparts, each of which shall be deemed to be an original for all purposes.
15. Acknowledgment. Jacobs acknowledges that he has carefully read and
fully understands the terms and provisions of this Separation Agreement and
General Release, has had the opportunity to be represented in this matter by
counsel of his own choosing, and that his execution of this Separation Agreement
and General Release is voluntary. The parties agree that the language used in
this Agreement is the language chosen by the parties to express their mutual
intent, and that no rule of strict construction is to be applied to or against
any party hereto.
-13-
<PAGE> 14
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date(s) set forth below.
/s/ Gerard M. Jacobs
---------------------------------------
Gerard M. Jacobs
Date: February 12, 1999
---------------------------------
METAL MANAGEMENT, INC., a Delaware
corporation
By: /s/ David A. Carpenter
-----------------------------------
Title: Vice President
--------------------------------
Date: February 12, 1999
---------------------------------
RESERVE IRON & METAL LIMITED PARTNERSHIP
By: P. JOSEPH IRON & METAL, INC.,
its general partner
By: /s/ David A. Carpenter
-----------------------------------
Name: David A. Carpenter
Title: Vice President
-14-
<PAGE> 15
AEROSPACE METALS, INC.
AMERICAN SCRAP PROCESSING, INC.
C SHREDDING CORP.
CALIFORNIA METALS RECYCLING, INC.
CIM TRUCKING, INC.
COMETCO CORP.
COZZI BUILDING CORPORATION
COZZI IRON & METAL, INC.
EMCO TRADING, INC.
FERREX TRADING CORPORATION
FIRMA, INC.
FIRMA PLASTIC CO., INC.
FPX, INC.
HOUSTON COMPRESSED STEEL CORP.
HOUTEX METALS COMPANY, INC.
THE ISAAC CORPORATION
P. JOSEPH IRON & METAL, INC.
KANKAKEE SCRAP CORPORATION
MAC LEOD METALS CO.
METAL MANAGEMENT ARIZONA, INC.
METAL MANAGEMENT REALTY, INC.
PERLCO, L.L.C.
PROLER SOUTHWEST INC.
PROLER STEELWORKS L.L.C.
SALT RIVER RECYCLING, L.L.C.
SCRAP PROCESSING, INC.
TROJAN TRADING CO.
USA SOUTHWESTERN CARRIERS, INC.
138 SCRAP ACQUISITION CORP.
R & P HOLDINGS, INC.
R & P REAL ESTATE, INC.
CHARLES BLUESTONE COMPANY
By: /s/ David A. Carpenter
--------------------------------
Name: David A. Carpenter
Title: Vice President
-15-
<PAGE> 1
EXHIBIT 10.3
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT ("AGREEMENT"), made
and entered into as of the 12th day of February, 1999, by and among T. Benjamin
Jennings ("TBJ"), Gerard M. Jacobs ("GMJ"), Albert A. Cozzi ("AAC"), Frank J.
Cozzi ("FJC"), Gregory P. Cozzi ("GPC" and together with AAC and FJC, the "Cozzi
Stockholders') and Samstock, L.L.C., a Delaware limited liability company
("Samstock") (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. WHEREAS, the parties hereto are each a party to that certain Amended
and Restated Stockholders' Agreement, dated December 19, 1997 (the "Original
Amended and Restated Stockholders' Agreement"), establishing certain rights and
obligations of the parties with respect to the ownership of common stock, $.01
par value per share ("Common Stock") of the Corporation.
B. The parties to the Original Amended and Restated Stockholders'
Agreement desire to amend and restate the Original Amended and Restated
Stockholders' Agreement in its entirety to, among other things, evidence the
release of GMJ from all of his rights and obligations thereunder.
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 Amended and Restated
Stockholders' Agreement is amended and restated in its entirety to read as
follows:
ARTICLE I
CORPORATE STRUCTURE AND OPERATION
1.1 BOARD OF DIRECTORS.
(a) BOARD SIZE. Unless otherwise agreed by each of TBJ and the
Cozzi Stockholders, the Board of Directors of the Corporation shall consist of
twelve (12) Directors until the completion of the second Annual Meeting of
Stockholders of the Corporation following the date hereof.
(b) ELECTION OF DIRECTORS. At all 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:
<PAGE> 2
(i) TBJ shall have the right to nominate for election
by the Corporation's stockholders three (3) Directors of the
Corporation (each, a "TBJ DIRECTOR"); provided, that at least
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 for election by the Corporation's stockholders five
(5) Directors of the Corporation (each, a "COZZI DIRECTOR");
provided, that at least one of such nominees shall be an
Independent Director (as defined below), who shall be
reasonably acceptable to TBJ; and
(iii) At any time when the Purchaser Condition is
satisfied, Samstock shall have the right to designate either
Sam Zell or Rod F. Dammeyer as a nominee for election by the
Corporation's stockholders (the "SAMSTOCK DIRECTOR"). For
purposes of this Agreement, the "PURCHASER CONDITION" shall be
satisfied if both: (i) the date is prior to December 19, 2000
(which is the third anniversary of the Closing Date under the
Securities Purchase Agreement, dated as of December 19, 1997
(the "Securities Purchase Agreement"), by and between the
Corporation and Samstock in connection with which the Original
Amended and Restated Stockholders' Agreement was entered
into); and (ii) Samstock and its Permitted Transferees have
not sold or otherwise disposed of more than one-third (1/3) of
the Purchaser Shares. "Purchaser Shares" will mean for
purposes of this Agreement the shares of Common Stock acquired
by Samstock pursuant to the Securities Purchase Agreement,
including shares of Common Stock issuable upon exercise of the
warrants issued to Samstock pursuant to the Securities
Purchase Agreement.
(iv) 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 Cozzi
Stockholders or TBJ. "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.
(c) OTHER DIRECTORS. The Directors of the Corporation other
than the TBJ Directors, the Cozzi Directors and the Samstock Director shall be
recommended to the Board of Directors for nomination (or recommended for
appointment by the Board of Directors in connection with appointments made by
the Board of Directors to fill vacancies occurring between Annual Stockholder
Meetings) by the Nominating Committee of the Board of Directors. The parties
agree to act as expeditiously as possible to cause new Directors to be appointed
in replacement of any Director who is not a TBJ Director, a Cozzi Director or a
Samstock Director, but in no event later than the tenth day after such vacancy
arises. Each of TBJ, each of the Cozzi
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<PAGE> 3
Stockholders and Samstock agree to use their reasonable efforts to cause only
TBJ, AAC and the Samstock Director to serve on the Nominating Committee.
(d) REMOVAL. Each Stockholder agrees to vote such
Stockholder's shares of Common Stock to remove a TBJ Director upon request at
any time by TBJ, 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 Samstock Director upon request at any time by
Samstock; provided, that the Stockholders making such request shall
simultaneously designate a replacement to fill any vacancy so created. The
agreement set forth in this subsection (d) shall not apply with respect to an
Independent Director.
(e) 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 TBJ
Director, Cozzi Director or Samstock Director, with a nominee selected by TBJ,
the Cozzi Stockholders or Samstock, respectively; provided, that if such nominee
is to fill the vacancy of an Independent Director, such nominee shall be
reasonably acceptable to either TBJ or the Cozzi Stockholders, as applicable;
and provided further, that if such nominee is to fill the vacancy of the
Samstock 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, Samstock agrees to cause the Samstock
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.
(f) 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 TBJ, as to the TBJ 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. Samstock shall notify the Corporation of the
identity of the nominee for the Samstock 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.
(g) CURRENT DIRECTORS. The TBJ Directors, Cozzi Directors and
Samstock Directors on the date hereof are designated on Schedule A hereto. Each
of TBJ, the Cozzi Stockholders and Samstock further agree that the Board of
Directors on the date hereof is comprised of the twelve (12) directors set forth
on Schedule A hereto, in accordance with this Agreement. The parties further
agree that after such period, the Board of Directors of the Corporation shall be
comprised of not less than nine (9) Directors.
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, the parties will use their best efforts to
ensure that the size of the Board of Directors will remain at twelve
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<PAGE> 4
(12) until the completion of the second Annual Meeting of Stockholders of the
Corporation following the date hereof.
1.3 NO EXECUTIVE COMMITTEE REQUIREMENT. The provisions of Section 1.3
of the Original Amended and Restated Stockholders' Agreement, setting forth the
requirement of an Executive Committee, are expressly deleted.
1.4 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 use his best efforts to 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 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 TBJ. During the term
of this Agreement, each of the Cozzi Stockholders and TBJ 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 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 2.3 or 2.4, or (iv) 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, any stockholder
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
financial transaction involving such Stockholder 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.
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<PAGE> 5
2.3 FIRST REFUSAL OPTIONS.
(a) RECEIPT OF OFFER. If at any time after the date hereof any
of the Cozzi Stockholders or TBJ 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 (subject to the
restrictions set forth in Section 2.1) (the "REMAINING STOCKHOLDERS")
and to the Corporation. For purposes of this Section 2.3, 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 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 2.3(b) and (c),
and 2.4, 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, TBJ shall have
the second option to purchase any remaining Offered
Corporation Securities. TBJ shall exercise his option by
5
<PAGE> 6
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 TBJ
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 TBJ or if TBJ fails 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
TBJ, 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 Cozzi
Stockholders only) or in such proportions as is otherwise
agreed upon by the Cozzi Stockholders. The 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 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
second 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 first 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 principal executive offices of the Corporation, and
the date of Closing shall be as provided in Section 2.3(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 2.3 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").
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<PAGE> 7
(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 reasonably in advance 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 2.4, shall have the right to consummate the sale of all of
the Offered Corporation Securities, 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.
2.4 TAG ALONG RIGHTS. In addition to the options set forth in Section
2.3, 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
pursuant to an offer of Corporation Securities registered under the Securities
Act, the Remaining Stockholders (which, for purposes of this Section 2.4 only,
shall include Samstock, so long as Samstock and its Permitted Transferees have
not sold or otherwise disposed of more than fifty percent (50%) of the Samstock
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 2.3. 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, times (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
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<PAGE> 8
purchased by the Proposed Transferee in lieu (and with a 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 Stockholder electing to
participate.
2.5 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.
2.6 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 disposition of
the shares represented by this Certificate is also restricted under
the terms of an Amended and Restated Stockholder's Agreement dated
February 12, 1999 by and among the Corporation, T. Benjamin
Jennings, Albert A. Cozzi, Frank J. Cozzi, Gregory P. Cozzi and
Samstock, L.L.C., a copy of which is available in the office of the
Corporation."
2.7 PERMITTED TRANSFERS.
(a) Notwithstanding anything contained in Section 2.2 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 2.7.
(b) A "PERMITTED TRANSFEREE" of any Stockholder is hereby defined
as and construed to mean any and one or more of the following:
(i) With respect to a Cozzi Stockholder, to any other Cozzi
Stockholder;
(ii) An executor(s), administrator(s) or conservator(s) of
the Stockholder;
(iii) A beneficiary of a deceased Stockholder's will or trust;
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<PAGE> 9
(iv) 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;
(v) With respect to Samstock, any person or entity
that directly or indirectly controls, is controlled by, or is
under common control with Samstock; "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
(vi) 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 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 2.7(b)(ii) and (iii), 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.
2.8 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,
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<PAGE> 10
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.
2.9 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 until December 19, 2007 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 Samstock until
(a) the Purchaser Condition no longer remains satisfied, and (b) Samstock and
its Permitted Transferees have sold or otherwise disposed of more than fifty
percent (50%) of the Samstock Shares, and Samstock 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.
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.
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<PAGE> 11
2232 South Blue Island Avenue
Chicago, Illinois 60608
Tel.: (773) 254-1200
Fax.: (773) 254-8201
(B) If to TBJ, at:
12 Country Lane
Northfield, Illinois 60093
(C) If to GMJ, at:
7600 Augusta
River Forest, Illinois 60305
(D) If to the Corporation, at:
500 North Dearborn Street
Suite 405
Chicago, Illinois 60610
Attn: Chief Financial Officer/General Counsel
Fax: (312) 645-0714
(E) If to Samstock, at:
Samstock, L.L.C.
Two North Riverside Plaza
Suite 600
Chicago, Illinois 60606
Attn: Rod F. Dammeyer
Fax: (312) 902-1512
With a copy to:
Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza
Suite 1600
Chicago, Illinois 60606
Attn: Joseph M. Paolucci
Fax: (312) 454-0335
or such other address as any party may designate for himself or itself by notice
given to the other parties from time to time in accordance with the provisions
hereof.
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<PAGE> 12
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 Delaware, 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 Samstock
expressly acknowledges that any modification to this Agreement made after the
Purchaser Condition is no longer satisfied need not be signed by Samstock.
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.
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<PAGE> 13
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.
3.14 TERMINATION OF GMJ AS A PARTY. GMJ executes this Agreement only
for the purpose of amending the Original Amended and Restated Stockholders'
Agreement to delete GMJ as a party and to permit the other parties to make such
other changes as they deem appropriate. The parties hereto agree that, as of the
date hereof, GMJ has no further rights or obligations under this Agreement or
the Original Amended and Restated Stockholders' Agreement, and the other parties
hereto have no rights against, and have no obligations to, GMJ under this
Agreement or the Original Amended and Restated Stockholders' Agreement.
<PAGE> 14
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
/s/ David A. Carpenter
-------------------------------
By: David A. Carpenter
Title: Vice President, General Counsel and Secretary
/s/ T. Benjamin Jennings
-------------------------------
T. Benjamin Jennings
/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
/s/ Rod Dammeyer
---------------------------------
Name: Rod Dammeyer
Title: Vice President
GMJ executes this Agreement only for the purpose of amending the
Original Amended and Restated Stockholders' Agreement to delete GMJ as a party
and to permit the other parties to make such other changes as they deem
appropriate. The parties hereto agree that, as of the date hereof, GMJ has no
further rights or obligations under this Agreement or the Original Amended and
Restated Stockholders' Agreement, and the other parties hereto have no rights
against, and have no obligations to, GMJ under this Agreement or the Original
Amended and Restated Stockholders' Agreement.
/s/ Gerard M. Jacobs
-------------------------------
Gerard M. Jacobs
<PAGE> 15
Schedule A
PRESENT DIRECTORS
TBJ DIRECTORS COZZI DIRECTORS SAMSTOCK DIRECTOR
------------- --------------- -----------------
T. Benjamin Jennings Albert A. Cozzi Rod F. Dammeyer
Gerard M. Jacobs Frank J. Cozzi
Gene C. McCaffrey Gregory P. Cozzi
Timothy T. Orlowski
Kenneth A. Merlau
OTHER DIRECTORS
George A. Isaac III
William T. Proler
Joseph Naporano
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