<PAGE> 1
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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, 1999
[ ] 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)
<TABLE>
<S> <C>
DELAWARE 94-2835068
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
</TABLE>
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 1, 2000, the Registrant had 57,204,142 shares of Common
Stock outstanding.
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<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I: FINANCIAL INFORMATION
ITEM Financial Statements
1:
Condensed Consolidated Balance Sheets -- December 31, 1999
(unaudited) and March 31, 1999.............................. 1
Condensed Consolidated Statements of Operations -- three and
nine months ended December 31, 1999 and 1998 (unaudited).... 2
Condensed Consolidated Statements of Cash Flows -- nine
months ended December 31, 1999 and 1998 (unaudited)......... 3
Condensed Consolidated Statements of Stockholders'
Equity -- nine months ended December 31, 1999 (unaudited)... 4
Notes to Condensed Consolidated Financial Statements
(unaudited)................................................. 5
ITEM Management's Discussion and Analysis of Financial Condition
2: and Results of Operations................................... 14
ITEM Quantitative and Qualitative Disclosures about Market
3: Risk........................................................ 21
PART II: OTHER INFORMATION
ITEM Legal Proceedings........................................... 22
1:
ITEM Changes in Securities....................................... 22
2:
ITEM Submission of Matters to a Vote of Security Holders......... 22
4:
ITEM Other Information........................................... 23
5:
ITEM Exhibits and Reports on Form 8-K............................ 23
6:
Signatures.................................................. 24
Exhibit Index............................................... 25
</TABLE>
<PAGE> 3
PART I: FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
METAL MANAGEMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, 1999 MARCH 31, 1999
----------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 840 $ 2,482
Accounts receivable, net 142,035 103,760
Inventories 65,056 60,443
Prepaid expenses and other assets 7,760 11,405
Deferred taxes 3,235 3,303
------------ ------------
Total current assets 218,926 181,393
Property and equipment, net 168,091 171,240
Goodwill, net 284,233 290,362
Deferred financing costs and other intangibles, net 13,035 13,228
Deferred taxes 5,982 3,261
Investments in joint ventures 3,279 4,525
Other assets 3,048 3,727
------------ ------------
TOTAL ASSETS $ 696,594 $ 667,736
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 4,065 $ 5,308
Accounts payable 69,576 62,230
Accrued interest 3,223 8,638
Other accrued liabilities 15,474 19,323
------------ ------------
Total current liabilities 92,338 95,499
Long-term debt, less current portion 373,528 330,154
Other liabilities 4,115 2,879
------------ ------------
TOTAL LIABILITIES 469,981 428,532
Stockholders' equity:
Convertible preferred stock:
Series A 0 4,020
Series B 4,893 10,877
Series C 5,100 5,100
Common Stock 565 489
Warrants 40,745 40,745
Additional paid-in-capital 269,024 259,878
Accumulated deficit (93,714) (81,905)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 226,613 239,204
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 696,594 $ 667,736
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
1
<PAGE> 4
METAL MANAGEMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $ 233,734 $ 178,752 $ 643,882 $ 610,959
Cost of sales 205,245 167,607 565,004 570,178
------------ ------------ ------------ ------------
Gross profit 28,489 11,145 78,878 40,781
OPERATING EXPENSES:
General and administrative 13,535 14,670 41,144 42,307
Depreciation and amortization 6,896 7,512 20,197 18,162
Non-cash and non-recurring (Note 3) 0 6,452 5,014 3,091
------------ ------------ ------------ ------------
Total operating expenses 20,431 28,634 66,355 63,560
------------ ------------ ------------ ------------
Operating income (loss) from continuing operations 8,058 (17,489) 12,523 (22,779)
Income (loss) from joint ventures 100 (695) 69 (1,626)
Interest expense 9,834 9,043 27,828 22,634
Interest and other income (expense), net (3) 568 359 1,884
------------ ------------ ------------ ------------
Loss from continuing operations before income taxes
and extraordinary charge (1,679) (26,659) (14,877) (45,155)
Benefit for income taxes (91) (8,269) (4,285) (12,052)
------------ ------------ ------------ ------------
Loss from continuing operations before extraordinary
charge (1,588) (18,390) (10,592) (33,103)
DISCONTINUED OPERATIONS:
Gain on sale of discontinued operations, net of
taxes 14 21 41 95
------------ ------------ ------------ ------------
Loss before extraordinary charge (1,574) (18,369) (10,551) (33,008)
Extraordinary charge for early retirement of debt, net
of taxes 0 76 0 938
------------ ------------ ------------ ------------
NET LOSS (1,574) (18,445) (10,551) (33,946)
Premium paid on redemption of preferred stock 0 0 616 0
Preferred stock dividends 183 619 642 1,475
------------ ------------ ------------ ------------
NET LOSS APPLICABLE TO COMMON STOCK $ (1,757) $ (19,064) $ (11,809) $ (35,421)
============ ============ ============ ============
BASIC LOSS PER SHARE:
Loss from continuing operations $ (0.03) $ (0.46) $ (0.22) $ (0.92)
Gain on sale of discontinued operations 0.00 0.00 0.00 0.00
Extraordinary charge 0.00 0.00 0.00 (0.02)
------------ ------------ ------------ ------------
Net loss applicable to Common Stock $ (0.03) $ (0.46) $ (0.22) $ (0.94)
============ ============ ============ ============
Weighted average shares outstanding 54,215 41,381 53,350 37,506
DILUTED LOSS PER SHARE:
Loss from continuing operations $ (0.03) $ (0.46) $ (0.22) $ (0.92)
Gain on sale of discontinued operations 0.00 0.00 0.00 0.00
Extraordinary charge 0.00 0.00 0.00 (0.02)
------------ ------------ ------------ ------------
Net loss applicable to Common Stock $ (0.03) $ (0.46) $ (0.22) $ (0.94)
============ ============ ============ ============
Weighted average diluted shares outstanding 54,215 41,381 53,350 37,506
</TABLE>
The accompanying notes are an integral part of these financial statements
2
<PAGE> 5
METAL MANAGEMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 31,
--------------------------------
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss from continuing operations $ (10,592) $ (33,103)
Adjustments to reconcile net loss from continuing
operations to cash flows from operating activities:
Depreciation and amortization 20,197 18,162
Deferred income taxes (4,257) (10,856)
Amortization of debt issuance costs and bond discount 2,543 1,538
Non-cash and non-recurring expense (income) 211 (523)
Discontinued operations 41 182
Penalties paid on early retirement of debt 0 (973)
Other 1,940 1,653
Changes in assets and liabilities, net of acquisitions:
Accounts and notes receivable (37,878) 62,030
Inventories (4,241) 15,791
Accounts payable 7,347 (14,890)
Other (5,398) (1,367)
--------- -----------
Cash flows provided by (used in) operating activities (30,087) 37,644
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (7,042) (15,451)
Proceeds from sale of property and equipment 2,008 697
Acquisitions, net of cash acquired (4,542) (184,542)
Costs of operating lease buyouts 0 (10,623)
Other 1,316 689
--------- -----------
Net cash used in investing activities (8,260) (209,230)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuances of long-term debt 772,312 1,227,357
Repayments of long-term debt (730,173) (1,047,473)
Fees paid to issue long-term debt (2,356) (11,056)
Redemption of convertible preferred stock (3,078) 0
Issuances of Common Stock, net 0 724
--------- -----------
Net cash provided by financing activities 36,705 169,552
--------- -----------
Net decrease in cash and cash equivalents (1,642) (2,034)
Cash and cash equivalents at beginning of period 2,482 4,464
--------- -----------
Cash and cash equivalents at end of period $ 840 $ 2,430
========= ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 30,771 $ 18,792
Income taxes refunded, net $ 1,873 $ 125
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE> 6
METAL MANAGEMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited, in thousands, except shares)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK
------------------------------ -------------------
NUMBER ADDITIONAL
OF PAID-IN- ACCUMULATED
SERIES A SERIES B SERIES C SHARES AMOUNT WARRANTS CAPITAL DEFICIT
-------- -------- -------- ------ ------ -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT MARCH 31, 1999 $ 4,020 $10,877 $ 5,100 48,890,898 $ 489 $ 40,745 $ 259,878 $ (81,905)
Conversion of preferred stock (1,558) (5,984) 0 6,934,675 69 0 7,854 0
Cash redemption of preferred stock (2,462) 0 0 0 0 0 0 (616)
Preferred stock dividends 0 0 0 256,163 3 0 410 (642)
Acquisitions 0 0 0 322,467 3 0 275 0
Other 0 0 0 84,209 1 0 607 0
Net loss 0 0 0 0 0 0 0 (10,551)
------- ------- ------- ---------- ------ -------- ---------- -----------
BALANCE AT DECEMBER 31, 1999 $ 0 $ 4,893 $ 5,100 56,488,412 $ 565 $ 40,745 $ 269,024 $ (93,714)
======= ======= ======= ========== ====== ======== ========== ===========
<CAPTION>
TOTAL
-----
<S> <C>
BALANCE AT MARCH 31, 1999 $ 239,204
Conversion of preferred stock 381
Cash redemption of preferred stock (3,078)
Preferred stock dividends (229)
Acquisitions 278
Other 608
Net loss (10,551)
-----------
BALANCE AT DECEMBER 31, 1999 $ 226,613
===========
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE> 7
METAL MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 -- INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements
include the accounts of Metal Management, Inc. and its subsidiaries (herein
referred to as "MTLM" or the "Company") and have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission
("SEC"). All significant intercompany accounts, transactions and profits have
been eliminated. Certain information related to the Company's organization,
significant accounting policies and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These unaudited condensed
consolidated financial statements reflect, in the opinion of management, all
material adjustments (which include only normal recurring adjustments) necessary
to fairly state the financial position and the results of operations for the
periods presented. Operating results for interim periods are not necessarily
indicative of the results that can be expected for a full year. These interim
financial statements should be read in conjunction with the Company's audited
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended March 31, 1999.
In order to maintain consistency and comparability between periods
presented, certain amounts have been reclassified from the previously reported
financial statements in order to conform to the financial statement presentation
of the current period.
NOTE 2 -- ACQUISITIONS
Fiscal 2000
In November 1999, the Company acquired the assets of National Metals
Company of Phoenix and Tucson, Arizona. The purchase consideration was not
material to the Company's consolidated financial position or results of
operations.
Fiscal 1999
In July 1998, the Company acquired the common stock of Naporano Iron &
Metal Co. and Nimco Shredding Co. (collectively "Naporano"). The purchase
consideration for Naporano consisted of approximately 1.9 million shares of
common stock, par value $.01 per share ("Common Stock") and $86.6 million of
cash (including transaction costs). The Common Stock issued to Naporano was
valued at $18.5 million for financial reporting purposes. The following
unaudited pro forma statement of operations information presents a summary of
the consolidated results of operations of the Company and Naporano as if the
acquisition of Naporano had occurred on April 1, 1998. The unaudited pro forma
statement of operations information includes certain adjustments, such as
additional depreciation expense as a result of a step-up in basis of the fixed
assets acquired, additional amortization expense as a result of goodwill and
interest expense related to cash portions of purchase consideration and assumed
debt. The unaudited pro forma statement of operations information also includes
non-cash and non-recurring expenses of $6.1 million. The unaudited pro forma
5
<PAGE> 8
METAL MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
results do not purport to be indicative of the financial results which actually
would have resulted had the Naporano acquisition been in effect on April 1, 1998
(in thousands, except per share data):
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
1998
-----------------
(UNAUDITED)
<S> <C>
PRO FORMA STATEMENT OF OPERATIONS
Net sales $651,115
Net loss from continuing operations applicable to
Common Stock $(37,407)
Basic and diluted net loss from continuing
operations applicable to Common Stock $ (0.87)
</TABLE>
During this nine months ended December 31, 1998, the Company also acquired
various other businesses in the scrap metals industry. The total purchase
consideration for these acquisitions consisted of approximately $101.7 million
of cash (including transaction costs), 2.6 million shares of Common Stock,
warrants to purchase 150,000 shares of Common Stock, 6,000 shares of Series C
convertible preferred stock and promissory notes aggregating $1.3 million. The
Common Stock, Series C convertible preferred stock and warrants to purchase
Common Stock were valued at $23.3 million, $5.1 million and $0.7 million,
respectively, for financial reporting purposes.
The allocation of the purchase consideration for all these acquisitions was
as follows (in thousands):
<TABLE>
<S> <C>
Fair value of tangible assets acquired $132,999
Goodwill 133,014
Liabilities assumed (29,419)
Common Stock and warrants issued (42,462)
Convertible preferred stock issued (5,100)
Promissory notes issued (1,250)
--------
Cash paid 187,782
Less: cash acquired (3,240)
--------
Net cash paid for acquisitions $184,542
========
</TABLE>
These acquisitions have been accounted for by the purchase method of
accounting and are included in the Company's results of operations from the
effective date of each acquisition. The purchase price was allocated based on
estimates of the fair value of assets acquired and liabilities assumed. These
estimates were revised during the allocation period when information regarding
contingencies became available to define and quantify the assets acquired and
liabilities assumed.
6
<PAGE> 9
METAL MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3 -- NON-CASH AND NON-RECURRING EXPENSES (INCOME)
Fiscal 2000
During the nine months ended December 31, 1999, the Company recorded
non-cash and non-recurring expenses of $5.0 million consisting of the following
(in thousands):
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
1999
-----------------
<S> <C>
Severance and other benefits $4,701
Other 313
------
$5,014
======
</TABLE>
Severance and other benefits
Effective July 15, 1999, T. Benjamin Jennings resigned as the Company's
Chairman of the Board and Chief Executive Officer, as a director of the Company
and as an officer and director of all of the Company's subsidiaries for which he
served in such capacities. In connection with his resignation, the Company
entered into a settlement agreement and general release with Mr. Jennings (the
"Jennings Settlement Agreement"). Mr. Jennings' employment agreement was
terminated and superseded by the terms of the Jennings Settlement Agreement.
Pursuant to the terms of the Jennings Settlement Agreement, Mr. Jennings
received approximately $2.1 million in a lump-sum cash payment from the Company,
and continues to receive health, dental and life insurance and certain other
benefits as set forth in the Jennings Settlement Agreement. In accordance with
the Jennings Settlement Agreement, on January 2, 2000, the Company also forgave
an outstanding $500,000 loan to Mr. Jennings, plus accrued interest thereon. In
addition, Mr. Jennings agreed to release, waive and renounce his interest under
and pursuant to the amended and restated stockholders' agreement, dated February
12, 1999. The Company and Mr. Jennings agreed to mutual general releases from
any and all liabilities arising out of any matter or event occurring on or prior
to the date of the Jennings Settlement Agreement. During the three months ended
September 30, 1999, the Company recorded a $2.8 million non-recurring expense
related to the Jennings Settlement Agreement.
Effective August 1, 1999, George A. Isaac, III resigned as the Company's
Executive Vice President and as an officer and director of all of the Company's
subsidiaries for which he served in such capacities. In connection with his
resignation, Mr. Isaac invoked what he believed to be a contractual entitlement
to certain "change of control" payments and other benefits included in his
employment agreement with the Company which were triggered by the resignation of
Gerard M. Jacobs as the Company's Chief Executive Officer. In connection with
his resignation and the invocation of the "change of control" provisions of his
employment agreement, the Company entered into a settlement agreement and
general release with Mr. Isaac (the "Isaac Settlement Agreement"). Mr. Isaac's
employment agreement was terminated and superseded by the terms of the Isaac
Settlement Agreement. Pursuant to the terms of the Isaac Settlement Agreement,
Mr. Isaac received a lump-sum cash payment of approximately $768,000 from the
Company. In addition, Mr. Isaac received $415,000 to be paid in six equal
monthly payments beginning on September 1, 1999. The Company also agreed to
continue to employ Mr. Isaac as a non-officer, part-time employee without an
employment agreement through January 31, 2000 at a salary of $120,000 per year
($60,000 aggregate compensation for the six-month employment period). Mr. Isaac
will continue to be covered by the Company's medical, dental and life insurance
plans through June 23, 2002. The Company agreed to provide Mr. Isaac, at the
Company's expense, use of his current office space and the services of an
administrative assistant through June 23, 2002. The Company and Mr. Isaac agreed
to mutual general releases from any and all liabilities arising out of any
matter or event occurring on or prior to the date of the Isaac Settlement
Agreement. During the three months ended September 30, 1999, the Company
recorded a $1.4 million non-recurring expense related to the Isaac
7
<PAGE> 10
METAL MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Settlement Agreement. Mr. Isaac remained a director of the Company until his
resignation on January 3, 2000.
During the three months ended September 30, 1999, the Company also incurred
severance and other termination benefits relating to twelve employees totaling
$0.5 million as a result of consolidation and integration of its various
businesses.
Facility abandonment, shutdown and integration
In connection with facility abandonments and other termination
arrangements, during the year ended March 31, 1999, the Company recorded
severance, facility closure and other charges totaling approximately $1.8
million, of which $1.5 million remained unpaid at March 31, 1999. The primary
components of this charge were $0.6 million of severance and $1.2 million for
lease cancellation, facility clean-up and other exit costs. During the nine
months ended December 31, 1999, the Company paid approximately $0.8 million
related to severance, facility closure and other charges. At December 31, 1999,
approximately $0.2 million of unpaid severance and $0.5 million of unpaid lease
cancellation, facility clean-up and other exit costs remain in accrued
liabilities. Certain terminated employees are being paid in installments and
these payments will be made by the end of the fiscal year. The final clean-up
and shutdown of all abandoned facilities is expected to be completed by March
31, 2000.
Fiscal 1999
During the three and nine months ended December 31, 1998, the Company
recorded non-cash and non-recurring expense of $6.4 million and $3.1 million,
respectively, consisting of the following (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1998
------------------ -----------------
<S> <C> <C>
Impairment of goodwill $6,000 $ 6,000
Pooling related merger expense 37 1,721
Non-cash warrant compensation income 0 (6,775)
Terminated merger expenses 371 1,453
Other 44 692
------ -------
$6,452 $ 3,091
====== =======
</TABLE>
Impairment of goodwill
On February 12, 1999, the Company signed a definitive purchase agreement to
sell Superior Forge Inc. ("SFI"). In accordance with Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-lived Assets and for Long-lived Assets to be Disposed of", the Company
determined that a portion of the goodwill associated with the Company's original
acquisition of SFI was impaired. The Company recorded a $6.0 million non-cash
and non-recurring charge to reflect the impairment of its goodwill related to
SFI at December 31, 1998. The sale was completed in March 1999. As partial
consideration in the sale of SFI, the Company received a $2.5 million note which
bears interest at 10% per annum. Due to recent weakness in business activity
between SFI and a significant customer, there have been losses incurred by SFI.
There is a reasonable possibility that if the business conditions for SFI do not
recover that the Company may not realize payments of principal and interest on
the note received in the sale of SFI.
Pooling merger expenses
In connection with a merger which was a pooling of interests, the Company
recognized merger expenses consisting primarily of fees and expenses for
accountants, attorneys, and investment bankers. The merger
8
<PAGE> 11
METAL MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
expenses also included a charge of $750,000 related to the buy-out of existing
contracts which was recorded during the three months ended September 30, 1998.
Non-cash warrant compensation income
On May 1, 1997, the Company issued warrants to purchase 1,400,000 shares of
Common Stock to the former general partners of Reserve Iron & Metal Limited
Partnership (the "Reserve Warrants"). The Reserve Warrants have initial exercise
prices of $3.50 or $4.00 per share, subject to a $0.50 per share increase in the
event that the Company's stock price exceeds $10.00 per share on the date of
exercise. The Reserve Warrants have terms that range from 30 to 60 months and
vest over 6 month, 12 month, 18 month and 24 month intervals for each group of
350,000 warrants, respectively, beginning on May 1, 1997. The decrease in the
Company's stock price during the nine months ended December 31, 1998 resulted in
the reversal of $6.8 million of previously recognized non-cash warrant
compensation expense. Since the Reserve Warrants are considered variable
instruments under APB No. 25, the Company will record non-cash warrant
compensation expense or income throughout the term of the warrants depending on
the fair market value of its Common Stock. At December 31, 1999, warrants to
purchase 455,000 shares of Common Stock remained outstanding under the Reserve
Warrants.
Terminated merger expenses
In September 1998, the Company elected, due to adverse scrap metals market
conditions, to terminate all negotiations and related due diligence processes
with potential acquisition candidates. The terminated merger expenses recognized
represented all incurred transaction costs associated with acquisitions that the
Company was pursuing.
NOTE 4 -- INVENTORIES
Inventories for all periods presented are stated at the lower of cost or
market. Cost is determined principally utilizing the average cost method.
Inventories consisted of the following categories at (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 1999
------------ ---------
<S> <C> <C>
Ferrous metals $31,483 $37,679
Non-ferrous metals 30,169 19,791
Other 3,404 2,973
------- -------
$65,056 $60,443
======= =======
</TABLE>
NOTE 5 -- DEBT
Long-term debt consisted of the following at (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 1999
------------ ---------
<S> <C> <C>
Senior Credit Facility $161,450 $144,410
Notes payable to related parties 1,723 3,688
12 3/4% Senior Secured Notes 27,263 0
10% Senior Subordinated Notes 180,000 180,000
Other debt 7,157 7,364
-------- --------
377,593 335,462
Less: current portion (4,065) (5,308)
-------- --------
$373,528 $330,154
======== ========
</TABLE>
9
<PAGE> 12
METAL MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Senior Credit Facility
On March 31, 1998, the Company and its subsidiaries entered into a three
year credit facility (the "Senior Credit Facility"), as amended, which provides
for a revolving credit and letter of credit facility of $250.0 million, subject
to borrowing base limitations. A security interest on substantially all of the
assets and properties of the Company and its subsidiaries, including pledges of
the capital stock of the Company's subsidiaries, are pledged as collateral
against the obligations of the Company and its subsidiaries under the Senior
Credit Facility.
Pursuant to the Senior Credit Facility, the Company is required to satisfy
a minimum EBITDA (as defined in the Senior Credit Facility) to interest coverage
ratio test. The minimum interest coverage tests (i) for the twelve month period
ending March 31, 2000 and (ii) for the end of each subsequent fiscal quarter
thereafter for the twelve month period then ending require that the Company
satisfy an interest coverage ratio of not less than 1.0 to 1.0. In addition, the
Senior Credit Facility places contractual restrictions on the Company's ability
to make interest payments on its Senior Subordinated Notes (defined below)
unless during the thirty day period ending on the date on which the interest
payment is to be made, there exists average undrawn availability under the
Senior Credit Facility of not less than $12.0 million plus the amount of
interest ($9.0 million) which is then due and payable on the Senior Subordinated
Notes.
Senior Secured Notes
On May 7, 1999, the Company issued $30.0 million principal amount of
12 3/4% Senior Secured Notes due on June 15, 2004 (the "Senior Secured Notes").
Interest on the Senior Secured Notes is payable semi-annually. The Senior
Secured Notes were issued at 90% of their principal amount and are redeemable by
the Company, in whole or in part, at 100% of their principal amount at any time
after June 15, 2000. The Senior Secured Notes are secured by a second priority
lien on substantially all of the Company's personal property, plant (to the
extent it constitutes fixtures) and equipment that secures the Senior Credit
Facility. The Senior Secured Notes are senior obligations of the Company,
ranking equally with all of its existing and future unsubordinated debt,
including indebtedness under the Senior Credit Facility, and senior to all of
its existing and future subordinated debt, including the Senior Subordinated
Notes. The Company's payment obligation is jointly and severally guaranteed by
the Company's current and future subsidiaries. The Company received net proceeds
of approximately $25.5 million, after the 10% original issue discount and
transaction fees and expenses. Net proceeds were used to reduce amounts
outstanding under the Senior Credit Facility. The Senior Secured Notes are
traded on the PORTAL system.
Senior Subordinated Notes
On May 13, 1998, the Company issued $180.0 million principal amount of 10%
Senior Subordinated Notes due on May 15, 2008 (the "Senior Subordinated Notes")
and received net proceeds of $174.6 million. Interest on the Senior Subordinated
Notes is payable semi-annually. The Senior Subordinated Notes are general
unsecured obligations of the Company and are subordinated in right of payment to
all senior debt of the Company, including the indebtedness of the Company under
the Senior Credit Facility and the Senior Secured Notes. The Company's payment
obligation is jointly and severally guaranteed by the Company's current and
certain future subsidiaries. The Senior Subordinated Notes are redeemable at the
Company's option at specified redemption prices and redemption events. The
Senior Subordinated Notes are traded on the PORTAL system.
10
<PAGE> 13
METAL MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Senior Credit Facility, the Indenture governing the Senior Secured
Notes and the Indenture governing the Senior Subordinated Notes contain
covenants that, among other things, restrict the Company and most of its
subsidiaries' ability to:
- incur additional indebtedness;
- pay dividends;
- prepay subordinated indebtedness;
- dispose of some types of assets;
- make capital expenditures;
- create liens and make some types of investments or acquisitions; and
- engage in some fundamental corporate transactions.
In addition, under the Senior Credit Facility, the Company is required to
satisfy specified financial covenants, including an interest coverage ratio and
ratio of capital expenditures to consolidated revenues. The Company's ability to
comply with these provisions may be affected by general economic conditions,
industry conditions, and other events or circumstances beyond its control. A
breach of any of these covenants could result in a default under the Senior
Credit Facility. In the event of a default, depending on the actions taken by
the lenders under the Senior Credit Facility, the lenders could elect to declare
all amounts borrowed under the Senior Credit Facility, together with accrued
interest, to be due and payable. In addition, a default under the Indenture
governing the Senior Secured Notes or the Indenture governing the Senior
Subordinated Notes would constitute a default under the Senior Credit Facility
and any instruments governing our other indebtedness.
Both the Indenture governing the Senior Secured Notes and the Indenture
governing the Senior Subordinated Notes contain restrictions on the Company's
ability to incur, subject to certain exceptions, additional indebtedness, unless
the Company meets an EBITDA (as defined in the Indenture) to fixed charge
coverage ratio of 2.0 to 1.0 for the immediately preceding four calendar
quarters. Because of recent financial performance, the Company currently would
not satisfy the fixed charge coverage ratio test, and, accordingly, is unable
and will remain unable in the foreseeable future to incur significant amounts of
additional indebtedness. As a result, if the Company experiences a liquidity
shortfall, the ability to incur additional indebtedness to cover the shortfall
will be severely limited.
Extraordinary charge on early retirement of debt
The Company borrowed under the Senior Credit Facility to refinance existing
secured debt (including notes payable to related parties), buyout certain
operating leases and pay prepayment penalties associated with the early
retirement of debt. In connection with the refinancing of debt, the Company
recognized extraordinary charges consisting of the following (in thousands):
11
<PAGE> 14
METAL MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
NINE MONTHS
THREE MONTHS ENDED
ENDED 12/31/98- 12/31/98------
<S> <C> <C>
Cash prepayment penalties................................... $ 0 $ 973
Value of warrants to purchase 106,797 shares of Common Stock
issued as a prepayment penalty............................ 128 128
Write-off of related unamortized financing costs............ 0 487
---- ------
Extraordinary charge before income tax benefit.............. 128 1,588
Income tax benefit.......................................... 52 650
---- ------
Net extraordinary charge.................................... $ 76 $ 938
==== ======
</TABLE>
The warrants are exercisable at $6.50 per share over a 3 year period and
were issued as a prepayment penalty in connection with the repayment of certain
notes issued in an acquisition. The value of the warrants was determined using
the Black-Scholes model.
NOTE 6 -- STOCKHOLDERS' EQUITY
Convertible preferred stock
The Company's Amended and Restated Certificate of Incorporation allows for
the issuance of up to 4,000,000 shares of preferred stock. During the year ended
March 31, 1998, the Company issued 25,000 shares of convertible preferred stock
(designated as Series A) and 20,000 shares of convertible preferred stock
(designated as Series B). In November 1998, the Company issued 6,000 shares of
convertible preferred stock (designated as Series C) in connection with an
acquisition. The Series A, Series B and Series C convertible preferred stock
each have a par value of $.01 per share and a stated value of $1,000 per share.
Dividends on the Series A, Series B and Series C convertible preferred
stock accrue, whether or not declared by the Board of Directors, at an annual
rate of 6.0%, 4.5% and 6.9%, respectively, of the stated value of each
outstanding share of Series A, Series B and Series C convertible preferred
stock. Dividends are payable in cash, or at the Company's option, in additional
shares of preferred stock, or Common Stock in the case of the Series C
convertible preferred stock.
On September 29, 1999, the Company redeemed all of the outstanding shares
of its Series A convertible preferred stock at a price equal to 125% of the
aggregate stated value plus all accrued and unpaid dividends thereon. As a
result, the Company recognized a special dividend of $0.6 million representing
the premium paid on the redemption. The aggregate price paid by the Company for
the redemption of all remaining shares of Series A convertible preferred stock
was approximately $3.1 million. Upon redemption, the shares of Series A
convertible preferred stock were cancelled by the Company. These shares are not
subject to reissuance by the Company.
The Company has the right to redeem up to 2,500 shares or $2.5 million
stated value of Series B convertible preferred stock in exchange for a cash
payment of $3.1 million plus accrued dividends. The right to redeem Series B
convertible preferred stock expires on or about March 24, 2000.
The holders of Series B convertible preferred stock are able to convert
their shares into Common Stock at a price equal to the lower of: (i) $24.60;
(ii) 92.5% of the average closing bid price for the Common Stock for the five
trading days prior to the conversion date; or (iii) the lowest traded price of
the Common Stock during the time when the Common Stock is not listed on a
national securities exchange. The holders of the Series C convertible preferred
stock are able to convert their shares into Common Stock at a price equal to
$9.00 per share of Common Stock until November 2003, and thereafter, at a price
equal to the average closing bid price for the Common Stock for the five trading
days prior to the conversion date.
12
<PAGE> 15
METAL MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following presents a summary of the Series A, Series B and Series C
convertible preferred stock activity during the nine months ended December 31,
1999:
<TABLE>
<CAPTION>
SERIES A SERIES B SERIES C
-------- -------- --------
<S> <C> <C> <C>
Shares outstanding at March 31, 1999 4,020 10,877 6,000
Shares converted into Common Stock (1,560) (6,163) 0
Shares redeemed for Cash (2,462) 0 0
Shares issued for dividends 2 179 0
------ ------ -----
Shares outstanding at December 31, 1999 0 4,893 6,000
====== ====== =====
</TABLE>
NOTE 7 -- RECENTLY ISSUED ACCOUNTING STANDARDS
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," was issued by the FASB in June 1998 and is effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. SFAS No. 133
establishes accounting and reporting standards for derivative instruments and
for hedging activities. SFAS No. 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. The Company is evaluating
SFAS No. 133 to determine its impact on the consolidated financial statements.
NOTE 8 -- LOSS PER COMMON SHARE
Basic and diluted earnings per share (EPS) are calculated in accordance
with SFAS No. 128, "Earnings Per Share." Basic EPS is computed by dividing
reported net income (loss) applicable to Common Stock by the weighted average
shares outstanding. Diluted EPS includes the incremental shares issuable upon
the assumed exercise of stock options and warrants, using the treasury stock
method and the assumed conversion of preferred stock. The following is a
reconciliation of the numerators and denominators of the basic and diluted EPS
from continuing operations per share computations (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------ -------------------
1999 1998 1999 1998
------- -------- -------- --------
<S> <C> <C> <C> <C>
LOSS (NUMERATOR):
Loss from continuing operations $(1,588) $(18,390) $(10,592) $(33,103)
Premium paid on redemption of preferred
stock 0 0 (616) 0
Dividends on convertible preferred stock (183) (619) (642) (1,475)
------- -------- -------- --------
Net loss applicable to Common Stock $(1,771) $(19,009) $(11,850) $(34,578)
======= ======== ======== ========
SHARES (DENOMINATOR):
Weighted average number of shares
outstanding during the period 54,215 41,381 53,350 37,506
Incremental common shares attributable to
dilutive stock options and warrants 0 0 0 0
------- -------- -------- --------
Diluted number of shares outstanding during
the period 54,215 41,381 53,350 37,506
======= ======== ======== ========
Basic loss per common share $ (0.03) $ (0.46) $ (0.22) $ (0.92)
======= ======== ======== ========
Diluted loss per common share $ (0.03) $ (0.46) $ (0.22) $ (0.92)
======= ======== ======== ========
</TABLE>
The effect of dilutive stock options and warrants were not included as
their effect would have been anti-dilutive for all periods presented. Also, the
potentially dilutive effect of the Company's convertible preferred stock was not
used in the diluted earnings per share calculation as its effect was also
anti-dilutive.
13
<PAGE> 16
This Form 10-Q includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Statements in this Form 10-Q which address
activities, events or developments that the Company expects or anticipates will
or may occur in the future, including such things as future acquisitions
(including the amount and nature thereof), business strategy, expansion and
growth of the Company's business and operations and other such matters are
forward-looking statements. Although the Company believes the expectations
expressed in such forward-looking statements are based on reasonable assumptions
within the bounds of its knowledge of its business, a number of factors could
cause actual results to differ materially from those expressed in any
forward-looking statements. These and other risks, uncertainties and other
factors are discussed under "Investment Considerations" appearing in the
Company's Annual Report on Form 10-K for the year ended March 31, 1999, as
amended, and elsewhere in the Company's quarterly and periodic filings with the
Securities Exchange Commission filed subsequent to the date of the Annual
Report.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto included under
Item 1. In addition, reference should be made to the audited consolidated
financial statements and notes thereto and related Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the
Company's Annual Report on Form 10-K for the year ended March 31, 1999.
GENERAL OVERVIEW
Metal Management is one of the largest and fastest-growing full-service
metals recyclers in the United States, with approximately 50 recycling
facilities in 14 states. In addition, Metal Management holds a 28.5% member
interest in Southern Recycling, L.L.C., the largest scrap metal recycler in the
Gulf Coast region. The Company is a leading consolidator in the metals recycling
industry. The Company has achieved its leading position in the metals recycling
industry primarily by implementing a national strategy of completing and
integrating regional acquisitions. The Company believes that its consolidation
strategy will enhance the competitive position and profitability of the
operations it acquires because of improved managerial and financial resources
and increased economies of scale.
The Company is primarily engaged in the collection and processing of
ferrous and non-ferrous metals for resale to metals brokers, steel producers,
and producers and processors of other metals. The Company collects industrial
scrap and obsolete scrap, processes it into reusable forms and supplies the
recycled metals to its customers, including mini-mills, integrated steel mills,
foundries and metals brokers. The Company believes that it provides one of the
most comprehensive offerings of both ferrous and non-ferrous scrap metals in the
industry. The Company's ferrous products primarily include shredded, sheared,
hot briquetted, cold briquetted and bundled scrap and other processed scrap,
such as turnings, cast and broken furnace iron. The Company also processes
non-ferrous metals, including aluminum, copper, stainless steel, brass, titanium
and high temperature alloys, using similar techniques and through application of
the Company's proprietary technologies.
The Company's predecessor was incorporated on September 24, 1981 as a
California corporation under the name General Parametrics Corporation, and was
reincorporated as a Delaware corporation in September 1986 under the same name.
Prior to April 1996, the Company manufactured and marketed color thermal and dye
sublimation printers and related consumables, including ribbons, transparencies
and paper. On April 12, 1996, the Company changed its name to "Metal Management,
Inc."
The Company's Common Stock is traded on the NASDAQ SmallCap Market under
the symbol "MTLM." The Company's principal executive offices are located at 500
North Dearborn Street, Suite 405, Chicago, Illinois 60610, and its telephone
number is (312) 645-0700.
14
<PAGE> 17
RESULTS OF OPERATIONS
The Company's consolidated net sales consist primarily of revenues derived
from the sale of processed and brokered scrap metals. The Company recognizes
revenues from processed product sales at the time of shipment. Revenues related
to brokerage sales are recognized upon receipt of the material by the customer.
Cost of sales consists primarily of the cost of processed and brokered
metals sold, direct and indirect labor and related taxes and benefits, repairs
and maintenance, utilities and freight.
General and administrative expenses include management salaries, clerical
and administrative costs, professional services, facility rentals and related
insurance and utility costs, as well as costs related to the Company's marketing
and business development activities.
Non-cash and non-recurring expenses include costs recognized relating to
severance, stock based compensation, facility abandonment, goodwill impairment,
and merger related expenses.
The Company's results of operations for the three and nine months ended
December 31, 1998 include the operations of Superior Forge, Inc. ("Superior
Forge"), which was sold in March 1999. Superior Forge derived substantially all
of its revenues from non-ferrous metals. The Company's results of operations for
the nine months ended December 31, 1999 include the results of operations of
businesses acquired by the Company subsequent to June 30, 1998. These
acquisitions include Naporano Iron & Metal Co. and Nimco Shredding Co.
(collectively, "Naporano") and Michael Schiavone & Sons, Inc. ("Schiavone")
which are primarily ferrous processors, and M. Kimerling & Sons, Inc.
("Kimerling") which is primarily a non-ferrous processor (collectively, the
"July 1998 Acquisitions"). The nine month period ended December 31, 1998
reflects only a portion of activity relating to the July 1998 Acquisitions.
During the fiscal year ended March 31, 1999 ("Fiscal 1999"), the Company's
results of operations were negatively impacted by the adverse market conditions
prevalent in the steel and scrap metals sectors. These market conditions were
characterized by a significant decline in the price and demand for scrap metals.
This decline resulted in large part from the increase in steel imports flowing
into the United States, principally from Japanese, Brazilian, Russian and
Southeast Asian steel producers during the last nine months of calendar 1998.
Consolidated net sales for the three months ended December 31, 1999 and
1998 in broad product categories were as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
-------------------------- --------------------------
COMMODITY WEIGHT NET SALES % WEIGHT NET SALES %
- --------- ------ --------- - ------ --------- -
<S> <C> <C> <C> <C> <C> <C>
Ferrous metals (tons) 1,143 $130,717 55.9 859 $ 81,456 45.6
Non-ferrous metals (lbs) 133,175 70,538 30.2 147,301 60,526 33.9
Brokerage -- ferrous (tons) 199 21,147 9.0 337 26,040 14.6
Brokerage -- non ferrous (lbs) 15,503 6,036 2.6 22,625 5,110 2.8
Other 5,296 2.3 5,620 3.1
-------- ---- -------- ----
$233,734 100% $178,752 100%
======== ==== ======== ====
</TABLE>
Consolidated net sales for the nine months ended December 31, 1999 and 1998
in broad product categories were as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
-------------------------- --------------------------
WEIGHT NET SALES % WEIGHT NET SALES %
------ --------- - ------ --------- -
<S> <C> <C> <C> <C> <C> <C>
COMMODITY
Ferrous metals (tons) 3,194 $343,802 53.4 2,775 $305,928 50.1
Non-ferrous metals (lbs) 405,535 196,106 30.5 402,878 190,708 31.2
Brokerage -- ferrous (tons) 767 74,461 11.6 881 87,487 14.3
Brokerage -- non ferrous (lbs) 48,580 14,381 2.2 61,978 18,161 3.0
Other 15,132 2.3 8,675 1.4
-------- ---- -------- ----
$643,882 100% $610,959 100%
======== ==== ======== ====
</TABLE>
15
<PAGE> 18
Consolidated net sales for the three and nine months ended December 31,
1999 increased by $55.0 million (30.8%) and $32.9 million (5.4%), respectively,
compared with consolidated net sales for the three and nine months ended
December 31, 1998. The increase in consolidated net sales from the prior periods
is principally due to higher units sold in the ferrous product category and
higher average realized sales prices in both the ferrous and non-ferrous product
categories.
Ferrous sales for the three and nine months ended December 31, 1999
increased by $49.3 million (60.5%) and $37.9 million (12.4%), respectively,
compared with ferrous sales for the three and nine months ended December 31,
1998. Ferrous sales during the three months ended December 31, 1999 reflect
significant increases in units sold and average realized sales prices resulting
from improving market conditions. The Company's average sales price for ferrous
metals sold increased by 20.6% to $114.36 in the three months ended December 31,
1999 compared with the three months ended December 31, 1998. Ferrous sales
during the nine months ended December 31, 1999 increased primarily due to higher
units sold, mainly as a result of the inclusion of the sales of Naporano and
Schiavone for the entire period ending December 31, 1999 and for only six months
of the nine month period ended December 31, 1998.
Non-ferrous sales for the three and nine months ended December 31, 1999
increased by $10.0 million (16.5%) and $5.4 million (2.8%), respectively,
compared with non-ferrous sales for the three and nine months ended December 31,
1998. Non-ferrous sales increased in dollar terms during the three months ended
December 31, 1999 over the prior year period notwithstanding a decrease in units
of non-ferrous metals sold of 14.1 million pounds (9.6%). The increase in sales
for this period was due to higher realized sales prices and a change in product
mix. The increase in non-ferrous sales for the nine months ended December 31,
1999 was due to an increase in units sold, mainly as a result of the inclusion
of sales of Kimerling for the entire period ending December 31, 1999 and for
only six months of the nine month period ended December 31, 1998. The Company's
average selling price for the non-ferrous product category is impacted by market
conditions and the product mix of non-ferrous metals sold. The majority of the
Company's non-ferrous sales are derived from copper, aluminum and stainless
steel.
Brokerage ferrous sales decreased by $4.9 million (18.8%) during the three
months ended December 31, 1999 compared with brokerage ferrous sales for the
three months ended December 31, 1998. For the nine month period ended December
31, 1999, brokerage ferrous sales decreased by $13.0 million (14.9%) compared
with brokerage ferrous sales during the nine months ended December 31, 1998. The
decrease from the prior year periods was principally the result of lower units
sold.
Brokerage non-ferrous sales increased by $0.9 million (18.1%) during the
three months ended December 31, 1999 compared with brokerage non-ferrous sales
for the three months ended December 31, 1998. Although units of non-ferrous
metals brokered decreased by 7.1 million pounds (31.5%), average realized sales
prices for non-ferrous brokered metals increased to $0.39 per pound during the
three months ended December 31, 1999, compared with $0.23 per pound for the
three months ended December 31, 1998. For the nine month period ended December
31, 1999, brokerage non-ferrous sales decreased by $3.8 million (20.8%) compared
with brokerage non-ferrous sales during the nine months ended December 31, 1998.
The decrease was a result of lower units sold.
Gross profit was $28.5 million (12.2% of consolidated net sales) and $78.9
million (12.3% of consolidated net sales) for the three and nine months ended
December 31, 1999, respectively, compared with gross profit of $11.1 million
(6.2% of consolidated net sales) and $40.8 million (6.7% of consolidated net
sales) for the three and nine months ended December 31, 1998, respectively. The
improvement in the gross profit margin reflects higher material margins realized
by the Company from improved market conditions, better purchasing practices and
the benefits from consolidation and integration initiatives undertaken during
Fiscal 1999. Gross profit for the three and nine months ended December 31, 1998
was adversely impacted by inventory write-downs recorded principally to reflect
lower of cost or market adjustments arising from adverse market conditions.
General and administrative expenses were $13.5 million (5.8% of
consolidated net sales) and $41.1 million (6.4% of consolidated net sales) for
the three and nine months ended December 31, 1999, respectively, compared with
$14.7 million (8.2% of consolidated net sales) and $42.3 million (6.9% of
16
<PAGE> 19
consolidated net sales) for the three and nine months ended December 31, 1998,
respectively. The decrease in general and administrative expenses reflect
reductions in executive and administrative personnel and other cost containment
initiatives undertaken by the Company.
Depreciation and amortization expense was $6.9 million (3.0% of
consolidated net sales) and $20.2 million (3.1% of consolidated net sales) for
the three and nine months ended December 31, 1999, respectively, compared with
$7.5 million (4.2% of consolidated net sales) and $18.2 million (3.0%
consolidated net sales) for the three and nine months ended December 31, 1998,
respectively. The increase for the nine months ended December 31, 1999, both in
dollars and as a percentage of consolidated net sales, is attributed to the
inclusion of goodwill amortization and depreciation of fixed assets of the
businesses comprising the July 1998 Acquisitions for the entire period.
During the nine months ended December 31, 1999, the Company recorded
non-cash and non-recurring expenses of $5.0 million. During the three and nine
months ended December 31, 1998, the Company recorded non-cash and non-recurring
expense of $6.4 million and $3.1 million, respectively (see Note 3 to the
condensed consolidated financial statements included in Item 1 of this Report).
Interest expense was $9.8 million (4.2% of consolidated net sales) and
$27.8 million (4.3% of consolidated net sales) for the three and nine months
ended December 31, 1999, respectively, compared with $9.0 million (5.1% of
consolidated net sales) and $22.6 million (3.7% of consolidated net sales) for
the three and nine months ended December 31, 1998, respectively. The increase is
primarily attributable to an increase in the Company's borrowings under the
Senior Credit Facility, to fund the Company's operating and investing
activities, and an increase in the applicable base interest rates payable under
the Senior Credit Facility, and the issuance of the Senior Secured Notes.
Net loss from continuing operations, after preferred stock dividends, was
$1.8 million ($0.03 per share) and $11.8 million ($0.22 per share) for the three
and nine months ended December 31, 1999, respectively, compared with a net loss
from continuing operations, after preferred stock dividends, of $19.0 million
($0.46 per share) and $34.6 million ($0.92 per share) for the three and nine
months ended December 31, 1998, respectively. The decrease in the net loss is
due to the improvements the Company has been able to achieve in its gross margin
resulting from improved scrap metals market conditions and the realization of
consolidation and integration benefits. These benefits from the Company's
consolidation and integration efforts are evidenced by the reduced general and
administrative expenses and increased gross profits of the Company as compared
with the prior year periods.
The Company's effective tax rate differs from the statutory rate primarily
due to permanent differences represented by non-deductible goodwill amortization
and certain non-deductible, non-cash and non-recurring expenses.
During the nine months ended December 31, 1998, the Company recognized an
extraordinary charge of $0.9 million, net of taxes, related to the early
retirement of debt and other costs principally incurred in connection with the
closing of the Senior Credit Facility (see Note 5 to the condensed consolidated
financial statements included in Item 1 of this Report).
LIQUIDITY AND CAPITAL RESOURCES
The Company has required significant amounts of capital to fund its
operations, capital expenditures and acquisition program. The Company has funded
these cash needs principally through cash generated from operating activities,
borrowings under the Senior Credit Facility, and the issuance of equity
securities, the Senior Subordinated Notes and the Senior Secured Notes.
The Company anticipates that it will continue to have significant capital
requirements to fund its operations, capital expenditures and consolidation
strategy. The Company believes that cash generated from operations and undrawn
borrowing availability under the Senior Credit Facility provide it with
sufficient liquidity to fund its operations, capital expenditure and debt
service requirements. However, limiting conditions provided for in the
documentation governing the Senior Credit Facility, the Senior Subordinated
Notes and the Senior Secured Notes will limit the Company's ability to incur
significant additional debt to
17
<PAGE> 20
fund significant acquisition or expansion opportunities unless and until the
Company achieves an EBITDA to interest coverage ratio of greater than 2 to 1 for
four consecutive quarters.
Cash Flows from Operating Activities
During the nine months ended December 31, 1999, the Company used $30.1
million of cash for operating activities. During this period, working capital
increased by $40.7 million principally due to higher accounts receivable and
inventory balances, which were generated as a result of business expansion
during the current fiscal year. Pursuant to separation agreements with two
former officers, the Company also made cash payments totaling $4.0 million (see
Note 3 to the condensed consolidated financial statements included in Item 1 of
this Report).
Cash Flows from Investing Activities
During the nine months ended December 31, 1999, the Company used $8.3
million of cash for investing activities. Purchases of property and equipment
were $7.0 million, while the Company generated $2.0 million of cash from the
sale of redundant fixed assets. Proceeds from the sale of property and equipment
include assets sold as part of the Company's plan to abandon and consolidate
certain facilities. The Company also used $4.5 million of cash for the
acquisition of certain assets of National Metals Company.
Cash Flows from Financing Activities
During the nine months ended December 31, 1999, the Company's financing
activities provided $36.7 million of cash, principally from increased borrowings
under the Senior Credit Facility. On May 7, 1999, the Company issued $30.0
million aggregate principal amount of Senior Secured Notes, and received net
proceeds of $25.5 million after the 10% discount, transaction fees and expenses.
Proceeds from the Senior Secured Notes were used to repay amounts then
outstanding under the Senior Credit Facility. The Company also used $3.1 million
of cash to redeem 2,462 shares of Series A convertible preferred stock at 125%
of par value.
FINANCIAL CONDITION
Cash Requirements for Maturing Debt Obligations and Interest Payments
On May 15, 2000, the Company is required to make a semi-annual interest
payment of $9.0 million on the Senior Subordinated Notes. The Company's amended
Senior Credit Facility allows the Company to make interest payments on the
Senior Subordinated Notes, but requires the Company to maintain average unused
availability equal to the sum of (x) the interest payment and (y) $12.0 million
for a period of thirty days prior to the payment date. On June 15, 2000, the
Company is required to make a semi-annual interest payment of approximately $2.0
million on the Senior Secured Notes. The Company is also required to pay
currently maturing obligations under other long-term borrowings totaling $4.1
million.
The Company believes, based on its current financial condition and
liquidity and its current projections of cash flows, that it will be able to
meet all interest payment and maturing debt obligations coming due in the
current fiscal year.
Working Capital Availability and Requirements
Accounts receivable balances of the Company increased from $103.8 million
at March 31, 1999 to $142.0 million at December 31, 1999. The increase is
primarily due to increases in sales realized by the Company during the three
months ended December 31, 1999 compared with the three months ended March 31,
1999, and an increase in average days sales outstanding principally as a result
of increased sales of stainless steel metals to customers which generally
benefit from longer payment terms.
Accounts payable balances of the Company increased from $62.2 million at
March 31, 1999 to $69.6 million at December 31, 1999 due to improved support
from and relations with suppliers engaged in trade markets which provide
materials to the Company and due to increases in inventories.
18
<PAGE> 21
Inventory levels can vary significantly among the Company's operations and
with changes in market conditions. Inventories consisted of the following
categories at (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 1999
------------ ---------
<S> <C> <C>
Ferrous metals $31,483 $37,679
Non-ferrous metals 30,169 19,791
Other 3,404 2,973
------- -------
$65,056 $60,443
======= =======
</TABLE>
The Company's ferrous inventory levels have decreased during the current
fiscal year as the Company continues to implement its strategy of reducing
inventory levels to reduce interest costs and to reduce the Company's exposure
to changing market prices for scrap metals. Non-ferrous inventory, however, has
increased due to an increase of inventory units and an increase in purchase
prices for non-ferrous scrap metals, due to changes in non-ferrous metals
markets during the current fiscal year.
COMPANY INDEBTEDNESS
The Company's principal indebtedness is represented by borrowings under the
Senior Credit Facility, the Senior Subordinated Notes and the Senior Secured
Notes.
Senior Credit Facility
The Credit Agreement, dated March 31, 1998, among the Company, BT
Commercial Corporation, as agent and the lenders thereunder (as amended, the
"Senior Credit Facility") provides for a revolving credit and letter of credit
facility of $250.0 million, subject to borrowing base limitations. The Company's
obligations under the Senior Credit Facility are secured by substantially all of
the Company's assets and properties, including pledges of the capital stock of
the Company's subsidiaries. Availability of loans and letters of credit under
the Senior Credit Facility is generally limited to a borrowing base of 85% of
eligible accounts receivable, 70% of eligible inventory (subject to a cap of
$100.0 million) and a fixed asset sublimit ($50.1 million as of December 31,
1999) that amortizes on a quarterly basis.
The Senior Credit Facility provides the Company with the option of
borrowing at an interest rate equal to either the Bankers Trust Company's prime
rate plus a margin or the London Interbank Offered Rate ("LIBOR") plus a margin.
As of February 1, 2000, the interest rate margins are 1.25% for prime rate
borrowings and 2.00% for LIBOR borrowings. The margins applicable to both prime
and LIBOR rate loans, however, decrease to the extent that the Company is able
to satisfy interest coverage tests in subsequent fiscal periods or has excess
availability of at least $40.0 million for a period of 30 consecutive days.
The Senior Credit Facility also contains certain financial covenants,
including a minimum interest coverage ratio, imposes certain limitation on the
Company's ability to make capital expenditures and incur additional
indebtedness, and restricts payments of dividends and equity redemptions. The
Senior Credit Facility limits capital expenditures to 2% of consolidated net
sales for the fiscal year ending March 31, 2000.
The interest coverage test of the Senior Credit Facility requires the
Company to maintain an interest coverage ratio of not less than 1.0 to 1.0
(EBITDA (as defined in the Senior Credit Facility) to interest expense) (i) for
the twelve months ending March 31, 2000 and (ii) for the end of each fiscal
quarter thereafter, for the twelve-month period then ending. The Company is in
compliance as of December 31, 1999 with this and other financial covenants set
forth in the Senior Credit Facility.
At December 31, 1999, the Company had outstanding borrowings under its
Senior Credit Facility of approximately $161.5 million. As of January 31, 2000,
the Company had undrawn availability of approximately $29 million under the
Senior Credit Facility.
The Senior Credit Facility also restricts the Company's ability to make
interest payments on the Senior Subordinated Notes with respect to the interest
payment due on May 15, 2000 and on each subsequent
19
<PAGE> 22
interest payment date thereafter unless the Company maintains average undrawn
availability of $12.0 million plus the amount of the interest payment for the
30-day period ending on the interest payment date.
10% Senior Subordinated Notes due 2008
On May 13, 1998, the Company issued $180.0 million of 10% Senior
Subordinated Notes due on May 15, 2008 (the "Senior Subordinated Notes") in a
private placement pursuant to exemptions under the Securities Act of 1933.
Interest on the Senior Subordinated Notes is payable semi-annually during May
and November of each year. The Company received net proceeds of $174.6 million
in the offering of the Senior Subordinated Notes. The Senior Subordinated Notes
are the Company's general unsecured obligations and are subordinated in right of
payment to all of the Company's senior debt, including the Company's
indebtedness under the Senior Credit Facility and the Senior Secured Notes. The
Company's payment obligations are jointly and severally guaranteed by all of the
Company's current and certain future subsidiaries.
Except as described below, the Senior Subordinated Notes are not redeemable
at the Company's option prior to May 15, 2003. After May 15, 2003, the Senior
Subordinated Notes are redeemable by the Company at the redemption prices
(expressed as a percentage of the principal amount and rounded to the nearest
whole percentage) plus accrued and unpaid interest, if redeemed during the
twelve month period beginning on May 15 of each of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003 105%
2004 103%
2005 102%
2006 and thereafter 100%
</TABLE>
Also, prior to May 15, 2001, the Company may redeem up to 35% of the
aggregate principal amount of the Senior Subordinated Notes at a redemption
price of 110% of the principal amount of the Senior Subordinated Notes, plus
accrued and unpaid interest, from the proceeds of one or more sales of Common
Stock. The Senior Subordinated Notes are also redeemable at the option of the
holders of such notes at a repurchase price of 101% of the principal amount
thereof, plus accrued and unpaid interest, in the event of certain change of
control events with respect to the Company. Subject to certain exceptions, the
Senior Subordinated Notes are redeemable at the option of the holders of such
notes at a repurchase price of 100% of the principal amount thereof, plus
accrued and unpaid interest, in the event of certain asset sales made by the
Company.
The Indenture governing the Senior Subordinated Notes contains certain
covenants that limit, among other things, the Company's ability to: (i) incur
additional indebtedness (including by way of guarantee), subject to certain
exceptions, unless the Company meets a fixed charge coverage ratio of 2.0 to 1.0
or certain other conditions apply; (ii) issue certain types of securities
containing mandatory redemption rights or which otherwise are redeemable at the
option of the holder prior to the maturity of the Senior Subordinated Notes;
(iii) pay dividends or distributions, or make certain types of investments or
other restricted payments, unless the Company meets certain specified
conditions; (iv) enter into certain transactions with affiliates; (v) dispose of
certain assets; (vi) incur liens securing indebtedness that is pari passu or
subordinated to the Senior Subordinated Notes; or (viii) engage in certain
mergers and consolidations.
12 3/4% Senior Secured Notes due 2004
On May 7, 1999, the Company issued $30.0 million aggregate principal amount
of its Senior Secured Notes (the "Senior Secured Notes") in a private placement
pursuant to Rule 144A under the Securities Act of 1933. The Senior Secured Notes
were issued at 90% of their stated principal amount at maturity. The Senior
Secured Notes mature on September 15, 2004 and bear interest at the rate of
12 3/4% per annum. Interest on the Senior Secured Notes is payable semi-annually
during September and December of each year. The Company received net proceeds of
$25.5 million in the offering of the Senior Secured Notes. The Senior Secured
Notes are senior obligations of the Company and will rank equally in right of
payment with all of the
20
<PAGE> 23
Company's unsubordinated debt, including the Company's indebtedness under the
Senior Credit Facility, and senior in right of payment to all of the Company's
subordinated debt, including the Senior Subordinated Notes.
The Company's payment obligations are jointly and severally guaranteed by
all of the Company's current and future subsidiaries. The Senior Secured Notes
are also secured by a second priority lien on substantially all of the Company's
personal property, plant (to the extent it constitutes fixtures) and equipment
that secure the Senior Credit Facility. The liens that secure the Senior Secured
Notes are subordinated to the liens that secure the indebtedness under the
Senior Credit Facility.
The Senior Secured Notes are not redeemable at the Company's option prior
to June 15, 2000. Thereafter, the Company may redeem some or all of the Senior
Secured Notes (in multiples of $10.0 million) at a redemption price of 100% of
the principal amount thereof, plus accrued and unpaid interest. The Senior
Secured Notes are redeemable at the option of the holders of such notes at a
repurchase price of 101% of the principal amount thereof, plus accrued and
unpaid interest, in the event of a change of control with respect to the
Company. Subject to certain exceptions, the Senior Secured Notes are redeemable
at the option of the holders of such notes at a repurchase price of 100% of the
principal amount thereof, plus accrued and unpaid interest, in the event of
certain asset sales made by the Company.
The Indenture governing the Senior Secured Notes contains substantially the
same operating restrictions as those contained in the Indenture governing the
Senior Subordinated Notes. These include limits on, among other things, the
Company's ability to: (i) incur additional indebtedness; (ii) pay dividends or
distributions on the Company's capital stock or repurchase its capital stock;
(iii) issue stock of subsidiaries; (iv) make certain investments; (v) create
liens on the Company's assets; (vi) enter into transactions with affiliates;
(vii) merge or consolidate with another company; and (viii) transfer and sell
assets or enter into sale and leaseback transactions.
YEAR 2000
As described in the Company's previous filings, the Company had developed
plans to address the possible exposures related to the impact of the Year 2000
on its computer systems and on its non-information technology systems. Since
entering the year 2000, the Company has not experienced any major disruptions to
its business nor is it aware of any significant Year 2000 related disruptions
impacting its customers and suppliers.
However, there is no guarantee that the Company has discovered all possible
failure points. Specific factors contributing to this uncertainty include
failure to identify all systems, non-ready third parties whose systems and
operations impact the Company, and other similar uncertainties. The Company will
continue to monitor its critical systems over the next several months, but does
not anticipate any significant impacts due to Year 2000 exposures from its
computer systems, non-information technology systems as well as from the
activities of its suppliers and customers. Costs incurred to date associated
with Year 2000 readiness have not been material to the Company's financial
position or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to financial risk resulting from fluctuations in
interest rates and commodity prices. The Company seeks to minimize these risks
through regular operating and financing activities and, where appropriate,
through use of derivative financial instruments. The Company's use of derivative
financial instruments is limited and related solely to hedges of certain
non-ferrous inventory positions. Reference is made to the Company's quantitative
disclosures about market risk as of March 31, 1999 included under Item 7A of the
Company's most recent Annual Report on Form 10-K.
21
<PAGE> 24
PART II -- OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
The Company's subsidiary, Metal Management Midwest, Inc., formerly known as
Cozzi Iron & Metal, Inc. ("MMMI"), operates seven facilities in the Chicago area
(the "MMMI Facilities") which have been the subject to a series of inspections
dating back to the mid-1990s by, among other agencies, the United States
Environmental Protection Agency ("USEPA") pursuant to the so-called Greater
Chicagoland Initiative to perform multimedia and multi-agency inspections of
scrap yards in the Chicago Area (the "USEPA Initiative"). The USEPA Initiative
included the MMMI Facilities and inspections have occurred since 1997. In
addition, the MMMI Facilities have responded to multiple document requests.
In a letter dated January 10, 2000, USEPA alleged that certain of the MMMI
Facilities had violated certain provisions of the Resource Conservation and
Recovery Act, the Clean Air Act, the Clean Water Act, the Oil Pollution
Standards and the Toxic Substances Control Act. MMMI has initiated a dialogue
with the USEPA to respond to USEPA's allegations and expects to resolve any
compliance issues in 2000 and is currently negotiating an informal resolution of
the enforcement matter. As with any litigation matter, outcomes are uncertain
until definitive settlement terms are reached or the case is litigated.
ITEM 2: CHANGES IN SECURITIES
In November 1999, the Company issued 347,706 shares of Common Stock to
National Metals Company in exchange for certain assets of National Metals
Company. The Common Stock was valued at approximately $0.5 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 22, 1999.
(b) The following directors were elected at the Annual Meeting of
Stockholders: Albert A. Cozzi, Frank J. Cozzi, Gregory P. Cozzi, George A. Isaac
III, Gerard M. Jacobs, Kenneth A. Merlau, Joseph F. Naporano, Timothy T.
Orlowski and William T. Proler.
(c) Of the 53,353,582 shares entitled to vote, 43,516,736 shares were
represented at the meeting by proxy or present in person. The stockholders
considered the following matters:
<TABLE>
<CAPTION>
PROPOSAL FOR WITHHELD NON-VOTE
- -------- --- -------- --------
<S> <C> <C> <C> <C> <C>
1. Election of Directors:
a. Albert A. Cozzi 42,864,381 652,355 0
b. Frank J. Cozzi 43,175,370 341,366 0
c. Gregory P. Cozzi 43,167,270 349,466 0
d. George A. Isaac III 42,571,573 945,163 0
e. Gerard M. Jacobs 42,360,823 1,155,913 0
f. Kenneth A. Merlau 43,166,840 349,896 0
g. Joseph F. Naporano 43,175,640 341,096 0
h. Timothy T. Orlowski 43,188,640 328,096 0
i. William T. Proler 43,185,140 331,596 0
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
PROPOSAL FOR AGAINST WITHHELD NON-VOTE
- -------- --- ------- -------- --------
<S> <C> <C> <C> <C> <C>
2. Approval of the Company's Restricted Stock
Plan 24,688,447 1,803,736 249,301 16,775,252
3. Approval and Ratification of the Issuance of
Common Stock previously issued in a Private
Placement to certain Officers and Directors
of the Company 25,463,345 1,808,473 250,291 15,994,627
4. Approval of PricewaterhouseCoopers LLP as
the Company's independent accountants 43,010,270 377,075 129,391 0
</TABLE>
ITEM 5: OTHER INFORMATION
Directorships:
In December 1999, Governor James R. Thompson, Richard L. Measelle and
Patrick J. Ottensmeyer were appointed to serve on the Company's Board of
Directors. The appointments became effective in February 2000. In addition,
effective January 2000, Gerard M. Jacobs and George A. Isaac III resigned as
directors of the Company. As a result, the Board of Directors is currently
comprised of ten directors, with two vacancies.
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, 1999:
(1) Form 8-K dated September 24, 1999, filed October 8, 1999,
disclosing the redemption of 2,500 shares of Series A Convertible Preferred
Stock.
23
<PAGE> 26
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
----------------------------------
Albert A. Cozzi
Director, Chairman of the Board,
and Chief Executive Officer
(Principal Executive Officer)
By: /s/ MICHAEL W. TRYON
----------------------------------
Michael W. Tryon
President and Chief Operating
Officer
By: /s/ ROBERT C. LARRY
----------------------------------
Robert C. Larry
Executive Vice President, Finance,
Chief Financial Officer and
Assistant Secretary (Principal
Financial Officer)
By: /s/ AMIT N. PATEL
----------------------------------
Amit N. Patel
Vice President, Finance and
Controller (Principal Accounting
Officer)
Date: February 11, 2000
24
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
-------------- ----------------------
<C> <S>
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 March
31, 1999.
10.1 -- Warrant to purchase 50,000 shares of Common Stock at an
exercise price of $2.50 per share, dated December 3,
1999, issued by the Company to Richard L. Measelle.
10.2 -- Warrant to purchase 50,000 shares of Common Stock at an
exercise price of $2.00 per share, dated December 3,
1999, issued by the Company to Richard L. Measelle.
10.3 -- Warrant to purchase 50,000 shares of Common Stock at an
exercise price of $3.50 per share, dated December 3,
1999, issued by the Company to Richard L. Measelle.
10.4 -- Warrant to purchase 33,333 shares of Common Stock at an
exercise price of $2.50 per share, dated December 3,
1999, issued by the Company to Patrick J. Ottensmeyer.
10.5 -- Warrant to purchase 33,334 shares of Common Stock at an
exercise price of $2.00 per share, dated December 3,
1999, issued by the Company to Patrick J. Ottensmeyer.
10.6 -- Warrant to purchase 33,333 shares of Common Stock at an
exercise price of $3.50 per share, dated December 3,
1999, issued by the Company to Patrick J. Ottensmeyer.
10.7 -- Warrant to purchase 50,000 shares of Common Stock at an
exercise price of $2.50 per share, dated December 3,
1999, issued by the Company to James R. Thompson.
10.8 -- Warrant to purchase 50,000 shares of Common Stock at an
exercise price of $2.00 per share, dated December 3,
1999, issued by the Company to James R. Thompson.
10.9 -- Warrant to purchase 50,000 shares of Common Stock at an
exercise price of $3.50 per share, dated December 3,
1999, issued by the Company to James R. Thompson.
27.1 -- Financial Data Schedule.
</TABLE>
25
<PAGE> 1
EXHIBIT 3.3
RESTATED BYLAWS
OF
METAL MANAGEMENT, INC.
<PAGE> 2
REFLECTING AMENDMENTS
ADOPTED THROUGH MARCH 31, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I CORPORATE OFFICES...............................................................................1
1.1 REGISTERED OFFICE...............................................................................1
1.2 OTHER OFFICES...................................................................................1
ARTICLE II MEETINGS OF STOCKHOLDERS........................................................................1
2.1 PLACE OF MEETINGS...............................................................................1
2.2 ANNUAL MEETING..................................................................................1
2.3 SPECIAL MEETING.................................................................................2
2.4 NOTICE OF STOCKHOLDERS' MEETINGS................................................................2
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE....................................................2
2.6 QUORUM..........................................................................................3
2.7 ADJOURNED MEETING; NOTICE.......................................................................3
2.8 VOTING..........................................................................................3
2.9 WAIVER OF NOTICE................................................................................4
2.10 INTENTIONALLY OMITTED...........................................................................4
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING......................................................4
2.12 PROXIES.........................................................................................5
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE...........................................................5
2.14 ADVANCE NOTIFICATION OF STOCKHOLDER NOMINATIONS
FOR DIRECTORS AND OTHER PROPOSALS......................................................5
ARTICLE III DIRECTORS.......................................................................................7
3.1 POWERS..........................................................................................7
3.2 NUMBER OF DIRECTORS.............................................................................7
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.........................................7
3.4 RESIGNATION AND VACANCIES.......................................................................7
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE........................................................8
3.6 FIRST MEETINGS..................................................................................9
3.7 REGULAR MEETINGS................................................................................9
3.8 SPECIAL MEETINGS; NOTICE........................................................................9
3.9 QUORUM.........................................................................................10
3.10 WAIVER OF NOTICE...............................................................................10
3.11 ADJOURNED MEETING; NOTICE......................................................................10
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING..............................................10
3.13 FEES AND COMPENSATION OF DIRECTORS.............................................................11
</TABLE>
<PAGE> 3
REFLECTING AMENDMENTS
ADOPTED THROUGH MARCH 31, 1999
<TABLE>
<S> <C> <C>
3.14 APPROVAL OF LOANS TO OFFICERS..................................................................11
3.15 REMOVAL OF DIRECTORS...........................................................................11
ARTICLE IV COMMITTEES.....................................................................................11
4.1 COMMITTEES OF DIRECTORS........................................................................11
4.2 COMMITTEE MINUTES..............................................................................12
4.3 MEETINGS AND ACTION OF COMMITTEES..............................................................12
4.4 EXECUTIVE COMMITTEE............................................................................13
ARTICLE V OFFICERS.......................................................................................13
5.1 OFFICERS.......................................................................................13
5.2 ELECTION OF OFFICERS...........................................................................13
5.3 SUBORDINATE APPOINTED OFFICERS.................................................................13
5.4 REMOVAL AND RESIGNATION OF OFFICERS............................................................14
5.5 VACANCIES IN OFFICES...........................................................................15
5.6 CHAIRMAN OF THE BOARD; CHIEF EXECUTIVE OFFICER.................................................15
5.7 PRESIDENT......................................................................................15
5.8 VICE PRESIDENTS................................................................................15
5.9 SECRETARY......................................................................................15
5.10 CHIEF FINANCIAL OFFICER........................................................................16
5.11 AUTHORITY AND DUTIES OF OFFICERS...............................................................16
ARTICLE VI INDEMNITY......................................................................................17
6.1 THIRD PARTY ACTIONS............................................................................17
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION..................................................17
6.3 SUCCESSFUL DEFENSE.............................................................................18
6.4 DETERMINATION OF CONDUCT.......................................................................18
6.5 PAYMENT OF EXPENSES IN ADVANCE.................................................................18
6.6 INDEMNITY NOT EXCLUSIVE........................................................................18
6.7 INSURANCE INDEMNIFICATION......................................................................19
6.8 THE CORPORATION................................................................................19
6.9 EMPLOYEE BENEFIT PLANS.........................................................................19
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES....................................20
ARTICLE VII RECORDS AND REPORTS............................................................................20
7.1 MAINTENANCE AND INSPECTION OF RECORDS..........................................................20
7.2 INSPECTION BY DIRECTORS........................................................................21
7.3 ANNUAL STATEMENT TO STOCKHOLDERS...............................................................21
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.................................................21
</TABLE>
<PAGE> 4
REFLECTING AMENDMENTS
ADOPTED THROUGH MARCH 31, 1999
<TABLE>
<S> <C> <C>
ARTICLE VIII GENERAL MATTERS................................................................................21
8.1 CHECKS.........................................................................................21
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS...............................................22
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES.........................................................22
8.4 SPECIAL DESIGNATION ON CERTIFICATES............................................................23
8.5 LOST CERTIFICATES..............................................................................23
8.6 CONSTRUCTION; DEFINITIONS......................................................................23
8.7 DIVIDENDS......................................................................................24
8.8 FISCAL YEAR....................................................................................24
8.9 SEAL...........................................................................................24
8.10 EXECUTIVE COMMITTEE............................................................................24
8.11 STOCK TRANSFER AGREEMENTS......................................................................24
8.12 REGISTERED STOCKHOLDERS........................................................................25
ARTICLE IX AMENDMENTS.....................................................................................25
ARTICLE X CUSTODIAN......................................................................................25
10.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES....................................................25
10.2 DUTIES OF CUSTODIAN............................................................................26
</TABLE>
<PAGE> 5
REFLECTING AMENDMENTS
ADOPTED THROUGH MARCH 31, 1999
RESTATED BYLAWS
OF
METAL MANAGEMENT, INC.
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust Company.
1.2 OTHER OFFICES
The board of directors may at any time establish other offices, including a
principal executive office, at any place or places within or outside of the
State of Delaware.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside the
State of Delaware, designated by the board of directors. In the absence of any
such designation, stockholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date and at
a time designated by the board of directors. At the meeting, directors shall be
elected and any other proper business may be transacted.
1
<PAGE> 6
REFLECTING AMENDMENTS
ADOPTED THROUGH MARCH 31, 1999
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president or
chief executive officer.
If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the board, the president, the
chief executive officer, or the secretary of the corporation. Any of such
officers receiving the request shall cause notice to be promptly given to the
stockholders entitled to vote, in accordance with the provisions of Sections 2.4
and 2.5 of this Article II, that a meeting will be held at the time requested by
the person or persons who called the meeting, not less than thirty-five (35) nor
more than sixty (60) days after the receipt of the request. If the notice is not
given within twenty (20) days after the receipt of the request, the person or
persons requesting the meeting may give the notice. Nothing contained in this
paragraph of this Section 2.3 shall be construed as limiting, fixing, or
affecting the time when a meeting of stockholders called by action of the board
of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and shall be
sent or otherwise given in accordance with Section 2.5 of these bylaws not less
than ten (10) nor more than sixty (60) days before the date of the meeting to
each stockholder entitled to vote at such meeting. The notice shall specify the
place, date, and hour of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2
<PAGE> 7
REFLECTING AMENDMENTS
ADOPTED THROUGH MARCH 31, 1999
2.6 QUORUM
The holders of a majority of the stock issued and outstanding and entitled
to vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business
except as otherwise provided y statute or by the certificate of incorporation.
If, however, such quorum is not present or represented at any meeting of the
stockholders, then the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum is
present or represented. At such adjourned meeting at which a quorum is present
or represented, any business may be transacted that might have been transacted
at the meeting as originally noticed.
2.7 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these bylaws
otherwise require, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business that
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.8 VOTING
The stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners
of stock and to voting trusts and other voting agreements).
Except as provided in the certificate of incorporation, each stockholder
shall be entitled to one vote for each share of capital stock held by such
stockholder. In voting for the election of Directors of the corporation,
stockholders shall not be entitled to cumulate votes.
At a stockholders' meeting at which directors are to be elected, or at
elections held under special circumstances, a stockholder shall not be entitled
to cumulate votes
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(i.e., cast for any candidate a number of votes greater than the number of votes
which such stockholder normally is entitled to cast).
2.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need to be specified in any written waiver of notice unless
so required by the certificate of incorporation or these bylaws.
2.10 INTENTIONALLY OMITTED
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING
In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If the board of director does not so fix a record date:
(i) The record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the date next preceding the day on
which the meeting is held.
(ii) [Intentionally Omitted.]
(iii) The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
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A determination of stockholders of record entitled to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the board of directors may fix a new record date for the adjourned meeting.
2.12 PROXIES
Each stockholder entitled to vote at a meeting may authorize another person
or persons to act for him by a written proxy, signed by the stockholder and
filed with the secretary of the corporation, but no such proxy shall be voted or
acted upon after three (3) years from its date, unless the proxy provides for a
longer period. A proxy shall be deemed signed if the stockholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the stockholder or the stockholder's attorney in
fact. The revocability of proxy that states on its face that it is irrevocable
shall be governed by the provisions of Section 212(c) of the General Corporation
Law of Delaware.
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
2.14 ADVANCE NOTIFICATION OF STOCKHOLDER NOMINATIONS FOR DIRECTORS AND OTHER
PROPOSALS
No stockholder may propose to nominate persons for election to the Board of
Directors at an annual meeting of the stockholders of the corporation or to
bring other business before an annual meeting of the stockholders of the
corporation, unless such stockholder gives timely notice thereof to the
Secretary of the corporation. To be timely, a stockholder's notice must be
addressed to the Secretary of the corporation and received at the principal
executive offices of the corporation not more than one hundred twenty (120) days
and not less than ninety (90) days prior to the first anniversary date
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of the immediately preceding annual meeting; provided, however, that in the
event the annual meeting is called for a date which is not within sixty (60)
days before or after such anniversary date, notice by the stockholder, to be
timely, must be received no later than the close of business on the fifteenth
(15th) day following the day on which notice of the date of the annual meeting
was mailed or public disclosure of the date of the annual meeting was made,
whichever occurs first.
Each stockholder's notice shall set forth: (a) as to each person whom the
stockholder proposes to nominate at the annual meeting for election to the Board
of Directors, (i) the name, age, business address and residential address of
such person, (ii) the principal occupation or employment of such person, (iii)
the class and number of shares of the corporation which are beneficially owned
by such person, (iv) a description of all arrangements or understandings between
such stockholder and such person, (v) all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended, and any other rules of
the Securities and Exchange Commission, (vi) such other information as may be
reasonably required by the corporation the eligibility of such person to serve
as a director of the corporation, and (vii) any such person's written consent to
serve as a director if so elected; (b) as to any other business that such
stockholder proposes to bring before the annual meeting, (i) a description of
the business desired to be brought before the meeting in sufficient detail for
such business to be summarized in the agenda for the meeting, (ii) the reasons
for conducting such business at the meeting, and (iii) any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder giving the notice and
the beneficial owner, if any, whose behalf the nomination or proposal is made,
(i) the name and address of such stockholder, as it appears on the corporation's
books, and of any such beneficial owner. Notwithstanding compliance with the
foregoing requirements, no person proposed to be nominated to the Board of
Directors by a stockholder pursuant to this procedure shall become a nominee for
election to the Board of Directors and no other business shall be considered at
the annual meeting unless the stockholder who has provided the notice, or his
proxy, nominates such person or introduces such business at the meeting, as the
case may be. The presiding officer of the annual meeting shall, if the facts
warrant, refuse to acknowledge a nomination or the consideration of business
which was not made in compliance with the foregoing requirements.
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ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware and
any limitations in the certificate of incorporation or these bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS
The Board of Directors shall consist of no less than four (4) and no
greater than twelve (12) persons. The exact number of directors shall be
established from time to time by a resolution passed by two-thirds of the whole
Board of Directors.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
certificate of incorporation or these bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his successor is elected and qualified or
until his earlier resignation or removal.
Elections of directors need not be by written ballot.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the corporation.
When one or more directors so resigns and the resignation is effective at a
future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in this
section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
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(i) Vacancies and newly created directorships resulting from any increase
in the authorized number of directors elected by all of the stockholders
having the right to vote as a single class may be filled by a majority of
the directors then in office, although less than a quorum, or by a sole
remaining director.
(ii) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provisions of
the certificate of incorporation, vacancies and newly created directorships
of such class or classes or series may be filled by a majority of the
directors elected by such class or classes or series thereof then in
office, or by a sole remaining director so elected.
(iii) Vacancies and newly created directorships resulting from an increase
in the authorized number of directors due to the amendment of Section 3.2
of these By-Laws by a vote of the Board of Directors pursuant to Article
VII of the Certificate of Incorporation may be filled by a majority of the
directors then in office.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the corporation may hold meetings, both regular
and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these
bylaws, members of the board of directors, or any committee designated by the
board of directors, may participate in a meeting of the board of directors, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
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3.6 FIRST MEETINGS
The first meeting of each newly elected board of directors shall be held at
such time and place as shall be fixed by the vote of the stockholders at the
annual meeting and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event of the failure of the stockholders to fix the
time or place of such first meeting of the newly elected board of directors, or
in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.
3.7 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by the
board.
3.8 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes may
be called at any time by the chairman of the board, the president, the chief
executive officer, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone or telecopy to each director or sent by electronic
mail, firstclass mail or telegram, charges prepaid, addressed to each director
at that director's address as it is shown on the records of the corporation. If
the notice is mailed, it shall be deposited in the United States mail at least
four (4) days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone, telecopy, electronic mail or telegram, it
shall be delivered personally or by telephone or transmitted via telecopy or
electronic mail or delivered to the telegraph company, as the case may be, at
least forty-eight (48) hours before the time of the holding of the meeting. Any
oral notice given personally or by telephone may be communicated (i) to the
director or (ii) to a person at the office of the director who the person giving
the notice has reason to believe will promptly communicate it to the director or
(iii) to the director's voice message box. The notice need not specify the
purpose or the place of the meeting, if the meeting is to be held at the
principal executive office of the corporation.
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3.9 QUORUM
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjournment the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum is present.
3.10 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
3.11 ADJOURNED MEETING; NOTICE
If a quorum is not present at any meeting of the board of directors, then
the directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or these
by-laws, any action required or permitted to be taken at any meeting of the
board of directors, or of any committee thereof, may be taken without a meeting
if all members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
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3.13 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these
bylaws, the board of directors shall have the authority to fix the compensation
of directors.
3.14 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
3.15 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of incorporation
or by these bylaws, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of such director's term of office.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution passed by a majority of the whole
board, designate one or more committees, with each committee to consist of one
or more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and
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not disqualified from voting, whether or not he, she or they constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors or
in the bylaws of the corporation, shall have and may exercise all the powers and
authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers that may require it; but no such committee shall have the
power or authority to (i) amend the certificate of incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of directors
as provided in Section 151(a) of the general Corporation Law of Delaware, fix
any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the corporation or the
conversion into, or the exchange of such shares for, shares of any other class
or classes or any other series of the same or any other class or classes of
stock of the corporation), (ii) adopt an agreement of merger or consolidation
under Sections 251 or 252 of the General Corporation Law of Delaware, (iii)
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, (iv) recommend to
the stockholders a dissolution of the corporation or a revocation of
a dissolution, or (v) amend the bylaws of the corporation; and, unless the board
resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the provisions of Article III of these bylaws, Section 3.5
(place of meetings and meetings by telephone), Section 3.7 (regular meetings),
Section 3.8 (special meetings and notice), Section 3.9 (quorum), Section 3.10
(waiver of notice), Section 3.11 (adjournment and notice of adjournment), and
Section 3.12 (action without a meeting), with such changes in the context of
those bylaws as are necessary to substitute the committee and its members for
the board of directors and its members; provided, however, that the time of
regular meetings of committees may also be called
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by resolution of the board of directors and that notice of special meetings of
committees shall also be given to all alternate members, who shall have the
right to attend all meetings of the committee. The board of directors may adopt
rules for the government of any committee not inconsistent with the provisions
of these bylaws.
4.4 EXECUTIVE COMMITTEE
An Executive Committee of the Board of Directors may be authorized to act
on behalf of and in the name of the Board of Directors during the periods
between meetings of the full Board of Directors (which actions may include, as
contemplated by Section 141(c)(1) of the Delaware General Corporation Law, the
authorization of the issuance of stock and the adoption of a certificate of
ownership and merger pursuant to Section 253 of such law).
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, a secretary, and a
treasurer. The corporation may also have, at the discretion of the board of
directors, a chairman of the board, a chief executive officer, a chief financial
officer, one or more vice presidents, one or more assistant secretaries, one or
more assistant treasurers, and any such other officers as may be appointed in
accordance with the provisions of Section 5.3 of these bylaws. Any number of
offices may be held by the same person. Two persons may hold the same office as
coofficers if so specified by the board of directors.
5.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be appointed
in accordance with the provisions of Sections 5.3 or 5.5 of these bylaws, shall
be chosen by the board of directors, subject to the rights, if any, of an
officer under any contract of employment. An officer of the corporation elected
pursuant to this Section 5.2 may also serve as an appointed officer pursuant to
Section 5.3 hereof.
5.3 SUBORDINATE APPOINTED OFFICERS
The board of directors may appoint, or empower the president to appoint,
such other officers and agents as the business of the corporation may require.
Each of such
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appointed officers shall hold office for such period, have such authority, and
perform such duties as are provided in these bylaws (if any) or as the board of
directors or the president, as the case may be, may from time to time determine.
Such appointed officers may have titles such as vice president of the
corporation or a division of the corporation or president of a division of the
corporation, or similar such titles, subject to such limits in appointment power
as the board may determine. An appointed officer, absent specific election by
the board of directors as an elected corporate officer: (a) shall not be
considered an officer elected by the board of directors pursuant to Section 5.2
of these bylaws and shall not have the executive powers or policymaking
authority of officers elected by the board of directors pursuant to Section 5.2
hereof; (b) shall not be considered an "officer" within the meaning of Rule 3b2
or Rule 16a1(f) promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or an "executive officer" of the corporation
within the meaning of Rule 3b7 promulgated under the Exchange Act, and such a
person shall not be given the access to inside information of the corporation
enjoyed by elected officers of the corporation; (c) shall not be considered a
"corporate officer" within the meaning of Section 312 of the California
Corporations Code, except in any such case as is otherwise required by law; and
(d) shall be empowered to represent himself or herself to third parties as an
appointed officer only, and shall only be empowered to execute documents, bind
the corporation or otherwise act on behalf of the corporation as authorized by
the president of the corporation or by resolution of the board of directors.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer elected by the
board of directors, by an officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice, and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
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5.5 VACANCIES IN OFFICES
Any vacancy occurring in any office of the corporation may be filled by
the board of directors.
5.6 CHAIRMAN OF THE BOARD; CHIEF EXECUTIVE OFFICER
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. The chief executive
officer of the corporation, if such an officer be elected, and shall have
general supervision, direction, and control of the business and the officers of
the corporation. He or she shall preside at all meetings of the stockholders and
at all meetings of the board of directors.
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the board of
directors to the chairman of the board, if there be such an officer, the
president shall be the chief operating officer of the corporation and shall,
subject to the control of the board of directors, have the general powers and
duties of management usually vested in the office of president of a corporation
and shall have such other powers and duties as may be prescribed by the board of
directors or these bylaws.
5.8 VICE PRESIDENTS
In the absence or disability of the president, the vice presidents, if any,
elected pursuant to this Section 5.8 and not those appointed pursuant to Section
5.3, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. Such vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors, these bylaws,
the president or the chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors, and
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stockholders. The minutes shall how the time and place of each meeting, whether
regular or special (and, if special, how authorized and the notice given), the
names of those present at directors' meetings or committee meetings, the number
of shares present or represented at stockholders' meetings, and the proceedings
thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the corporation or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the stockholders and of the board of directors required to be given by law or by
these bylaws. He or she shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation with such depositories as may be
designated by the board of directors. He or she shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all his
transactions as chief financial officer and of the financial condition of the
corporation, and shall have other powers and perform such other duties as may be
prescribed by the board of directors or the bylaws.
5.11 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the
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business of the corporation as may be designated from time to time by the board
of directors.
ARTICLE VI
INDEMNITY
6.1 THIRD PARTY ACTIONS
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he or she is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he or she
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he or she reasonable believed to be in
or not opposed to the best interest of the corporation and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he or she is or was a director, officer, employee or
agent of corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he or she acted in good faith and in manner
he or she reasonably believed to be in or not opposed to the best interests of
the corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the Delaware
Court of Chancery or the
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court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper.
6.3 SUCCESSFUL DEFENSE
To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 6.1 and 6.2, or in defense of
any claim, issue or matter therein, he or she shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
6.4 DETERMINATION OF CONDUCT
Any indemnification under Sections 6.1 and 6.2 (unless ordered by a court)
shall be made by only as authorized in the specific case upon a determination
that the indemnification of the director, officer, employee or agent is proper
in the circumstances because he or she has met the applicable standard of
conduct set forth in Sections 6.1 and 6.2. Such determination shall be made (1)
by the Board of Directors or the Executive Committee by a majority vote of a
quorum consisting of directors who were not parties to such action, suit or
proceeding or (2) or if such quorum is not obtainable or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
6.5 PAYMENT OF EXPENSES IN ADVANCE
Expenses incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount if it
shall ultimately be determined that he or she is not entitled to be indemnified
by the corporation as authorized in this Article VI.
6.6 INDEMNITY NOT EXCLUSIVE
The indemnification and advancement of expenses provided or granted
pursuant to the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise,
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both as to action in his official capacity and as to action in another capacity
while holding such office.
6.7 INSURANCE INDEMNIFICATION
The corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation, as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article VI.
6.8 THE CORPORATION
For purposes of this Article VI, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under and subject to the provisions of this Article VI (including,
without limitation the provisions of Section 6.4) with respect to the resulting
or surviving corporation as he or she would have with respect to such
constituent corporation if its separate existence had continued.
6.9 EMPLOYEE BENEFIT PLANS
For purposes of this Article VI, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he or she
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this Article
VI.
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6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VI shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at such
place or places as designated by the board of directors, keep a record of its
stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, during ordinary business hours, for a period of at least ten (10)
days prior to the meeting, either at a place within the city where the meeting
is to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. The list
shall also be produced
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and kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder who is present.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the president, any vice president, the
treasurer, the secretary or assistant secretary of this corporation, or any
other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority granted
herein may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such person
having the authority.
ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of
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money, notes or other evidences of indebtedness that are issued in the name of
or payable to the corporation, and only the persons so authorized shall sign or
endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these by-laws, may
authorize any officer or officers, or agent or agents to enter into any contract
or execute any instrument in the name of and on behalf of the corporation; such
authority may be general or confined to specific instances. Unless so authorized
or ratified by the board of directors or within the agency power of an officer,
no officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of a corporation shall be represented by certificates, provided
that the board of directors of the corporation may provide by resolution or
resolutions that some or all of any or all classes or series of its stock shall
be uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice-chairman of
the board of directors, or the president or vice-president, and by the chief
financial officer or an assistant treasurer, or the secretary or an assistant
secretary of such corporation representing the number of shares registered in
certificate form. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he or she were such
officer, transfer agent or registrar at the date of issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertified partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the
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corporation shall declare a dividend upon partly paid shares of the same class,
bout only upon the basis of the percentage of the consideration actually paid
thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock or
more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these by-laws. Without limiting the generality of
this provision, the singular number includes the plural, the plural number
includes the singular, and the term "person" includes both a corporation and a
natural person.
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8.7 DIVIDENDS
The directors of the corporation, subject to any restrictions contained in
the certificate of incorporation, may declare and pay dividends upon the shares
of its capital stock pursuant to the General Corporation Law of Delaware.
Dividends may be paid in cash, in property, or in shares of the corporation's
capital stock.
The directors of the corporation may set apart out of any of the funds of
the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.8 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolutions of the
board of directors and may be changed by the board of directors.
8.9 SEAL
The corporation shall adopt a corporate seal, which may be altered at
pleasure, and use the same by causing it or a facsimile thereof, to be impressed
or affixed or in any other manner reproduced.
8.10 EXECUTIVE COMMITTEE
Upon surrender to the corporation or the transfer agent of the corporation
of a certificate or shares duly endorsed or accompanied by proper evidence of
succession, assignation or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of stock of the
corporation to restrict the transfer of shares of stock of the corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the General Corporation Law of Delaware.
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8.12 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
AMENDMENTS
The original or other by-laws of the corporation may be adopted, amended,
or repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal by-laws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
the limit their power to adopt, amend or repeal by-laws.
ARTICLE X
CUSTODIAN
10.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES
The Court of Chancery, upon application of any stockholder, may appoint one
or more persons to be custodians and, if the corporation is insolvent, to be
receivers, of and for the corporation when:
(i) at any meeting held for the election of directors the stockholders
are so divided that they have failed to elect successors to directors
whose terms have expired or would have expired upon qualification of
their successors; or
(ii) the business of the corporation is suffering or is threatened with
irreparable injury because the directors are so divided respecting the
management of the affairs of the corporation that the required vote for
action by the board of directors cannot be obtained and the
stockholders are unable to terminate this division; or
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(iii) the corporation has abandoned its business and has failed within
a reasonable time to take steps to dissolve, liquidate or distribute
its assets.
10.2 DUTIES OF CUSTODIAN
The custodian shall have all the powers and title of a receiver appointed
under Section 291 of the General Corporation Law of Delaware but the authority
of the custodian shall be to continue the business of the corporation and not to
liquidate its affairs and distribute its assets, except when the Court of
Chancery otherwise orders and except in cases arising under Sections 226(a)(3)
or 352(a)(2) of the General Corporation Law of Delaware.
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EXHIBIT 10.1
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 EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY
APPLICABLE STATE SECURITIES LAWS.
WARRANT December 3, 1999
To Purchase 50,000 Shares of Common Stock of
Metal Management, Inc. (the "Company")
1. Number of Shares: Exercise Price: Term. This certifies that Richard
L. Measelle ("Holder") is entitled, upon the terms and subject to the vesting
requirements and other conditions set forth herein, to acquire from the Company,
in whole or in part, from time to time up to 50,000 fully paid and nonassessable
shares (the "Shares") of common stock $.01 par value of the Company ("Common
Stock") at a purchase price per Share equal to $2.50. The right to purchase the
shares of Common Stock under this Warrant shall vest on the first anniversary of
the date of grant and shall remain exerciseable until the earlier of (i) 11:59
p.m. Central Time on the six month anniversary of the date of termination of the
Holder's status as a Director of the Company or (ii) 11:59 p.m. Central Time on
December 3, 2004 (the "Exercise Period").
2. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the Holder, in whole or in part, at any time during the
Exercise Period by the surrender of this Warrant and the Notice of Exercise
annexed hereto, all duly completed and executed on behalf of the Holder, 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 Holder at the
address of the Holder appearing on the books of the Company). Payment of the
Exercise Price for the Shares thereby purchased shall be made by cash, certified
or cashier's check or wire transfer payable to the order of the Company, at
10:00 a.m., Central Standard Time, on the day following surrender of this
Warrant and the Notice of Exercise, in an amount equal to the purchase price of
the Shares thereby purchased. Thereupon, the Holder as the holder of this
Warrant, shall be entitled to receive from the Company a stock certificate in
proper form representing the number of Shares so purchased, and a new Warrant in
substantially identical form and dated as of such exercise for the purchase of
that number of Shares equal to the difference, if any, between the number of
Shares subject hereto and the number of Shares as to which this Warrant is so
exercised.
3. Issuance of Shares. Certificates for Shares purchased hereunder
shall be delivered to the Holder promptly after the date on which this Warrant
shall have been exercised in accordance with the terms hereof. The Company
hereby represents and warrants that all Shares that may be issued upon the
exercise of this Warrant will, 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 Holder 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 Holder 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.
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 Holder as the holder would
otherwise be entitled, the Holder 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 Holder
tenders the Exercise Price for one whole share.
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5. No Rights as Shareholders. This Warrant does not entitle the Holder
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 Holder as the holder
of this Warrant. Issuance of certificates for Shares upon the exercise of this
Warrant shall be made without charge to the Holder 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. No Transfer. This Warrant and any rights hereunder are not
transferable by the Holder as the holder hereof, in whole or in part.
8. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the Holder as the registered holder at the
above-mentioned office or agency of the Company, for a new Warrant on
substantially identical form and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name and
address of the Holder 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.
9. 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.
10. Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance, sale and delivery upon the exercise of
this Warrant, such number of Shares, equal to the number of such Shares
purchasable upon the exercise of this Warrant. All such Shares shall be duly
authorized and, when issued upon exercise of this Warrant in accordance with the
terms hereof, will be validly issued and fully paid and nonassessable, with no
liability on the part of the Holder. Such Shares will not be subject to any
preemptive rights.
11. Listing on Securities Exchanges, Etc. The Company will maintain the
listing of all Shares issuable or issued from time to time upon exercise of this
Warrant on each securities exchange or market or trading system on which any
shares of Common Stock are then or at any time thereafter listed or traded, but
only to the extent and for such period of time as such shares of Common Stock
are so listed.
12. 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.
13. Adjustments and Termination 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 Holder as the holder
of this Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon
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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 Holder as
the holder of the stock deliverable upon exercise of this Warrant would have
been entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder 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 of Shares, 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 13(c) or 13(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.
14. Notice of Adjustments: Notices. Whenever the Exercise Price or
number or type of securities issuable hereunder shall be adjusted pursuant to
Section 13 hereof, the Company shall issue and provide to the Holder 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.
15. 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.
16. Attorneys' Fees. In any litigation, arbitration or court
proceeding between the Company and the Holder 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.
3
<PAGE> 4
17. 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 Holder as the holder hereof.
18. 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 Holder as the holder set forth in the
registry maintained by the Company pursuant to Section 8, 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 Holder as the holder may designate by ten-day
advance written notice.
19. Entire Agreement. This Warrant and the forms 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.
IN WITNESS WHEREOF, Metal Management, Inc. has caused this Warrant to
be executed by its duly authorized officer.
Dated: December 3, 1999
METAL MANAGEMENT, INC.
By: /s/ David A. Carpenter
---------------------------------------
Name: David A. Carpenter
Title: Executive Vice President, General
Counsel and Secretary
Address: 500 N. Dearborn Street
Suite 400
Chicago, IL 60610
4
<PAGE> 5
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, 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
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED AND ANY APPLICABLE STATE SECURITIES LAWS."
(b)Any legend required by applicable state law.
5. Please issue a certificate or certificates representing said Shares
in the name of the undersigned.
------------------------------
Richard L. Measelle
1
<PAGE> 6
6. Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned.
Richard L. Measelle
- ----------------------- -----------------------------
[Date] [Signature]
2
<PAGE> 1
EXHIBIT 10.2
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY HAVE BEEN ACQUIRED
SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY
APPLICABLE STATE SECURITIES LAWS.
WARRANT December 3, 1999
To Purchase 50,000 Shares of Common Stock of
Metal Management, Inc. (the "Company")
1. Number of Shares: Exercise Price: Term. This certifies that Richard
L. Measelle ("Holder") is entitled, upon the terms and subject to the vesting
requirements and other conditions set forth herein, to acquire from the Company,
in whole or in part, from time to time up to 50,000 fully paid and nonassessable
shares (the "Shares") of common stock $.01 par value of the Company ("Common
Stock") at a purchase price per Share equal to $2.00. The right to purchase the
shares of Common Stock under this Warrant shall vest as of the date of grant and
shall remain exerciseable until the earlier of (i) 11:59 p.m. Central Time on
the six month anniversary of the date of termination of the Holder's status as a
Director of the Company or (ii) 11:59 p.m. Central Time on December 3, 2004 (the
"Exercise Period").
2. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the Holder, in whole or in part, at any during the Exercise
Period by the surrender of this Warrant and the Notice of Exercise annexed
hereto, all duly completed and executed on behalf of the Holder, 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 Holder at the address of
the Holder appearing on the books of the Company). Payment of the Exercise Price
for the Shares thereby purchased shall be made by cash, certified or cashier's
check or wire transfer payable to the order of the Company, at 10:00 a.m.,
Central Standard Time, on the day following surrender of this Warrant and the
Notice of Exercise, in an amount equal to the purchase price of the Shares
thereby purchased. Thereupon, the Holder as the holder of this Warrant, shall be
entitled to receive from the Company a stock certificate in proper form
representing the number of Shares so purchased, and a new Warrant in
substantially identical form and dated as of such exercise for the purchase of
that number of Shares equal to the difference, if any, between the number of
Shares subject hereto and the number of Shares as to which this Warrant is so
exercised.
3. Issuance of Shares. Certificates for Shares purchased hereunder
shall be delivered to the Holder promptly after the date on which this Warrant
shall have been exercised in accordance with the terms hereof. The Company
hereby represents and warrants that all Shares that may be issued upon the
exercise of this Warrant will, 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 Holder 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 Holder 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.
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 Holder as the holder would
otherwise be entitled, the Holder 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 Holder
tenders the Exercise Price for one whole share.
1
<PAGE> 2
5. No Rights as Shareholders. This Warrant does not entitle the Holder
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 Holder as the holder
of this Warrant. Issuance of certificates for Shares upon the exercise of this
Warrant shall be made without charge to the Holder 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. No Transfer. This Warrant and any rights hereunder are not
transferable by the Holder as the holder hereof, in whole or in part.
8. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the Holder as the registered holder at the
above-mentioned office or agency of the Company, for a new Warrant on
substantially identical form and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name and
address of the Holder 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.
9. 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.
10. Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance, sale and delivery upon the exercise of
this Warrant, such number of Shares, equal to the number of such Shares
purchasable upon the exercise of this Warrant. All such Shares shall be duly
authorized and, when issued upon exercise of this Warrant in accordance with the
terms hereof, will be validly issued and fully paid and nonassessable, with no
liability on the part of the Holder. Such Shares will not be subject to any
preemptive rights.
11. Listing on Securities Exchanges, Etc. The Company will maintain the
listing of all Shares issuable or issued from time to time upon exercise of this
Warrant on each securities exchange or market or trading system on which any
shares of Common Stock are then or at any time thereafter listed or traded, but
only to the extent and for such period of time as such shares of Common Stock
are so listed.
12. 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.
13. Adjustments and Termination 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 Holder as the holder
of this Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon
2
<PAGE> 3
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 Holder as
the holder of the stock deliverable upon exercise of this Warrant would have
been entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder 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 of Shares, 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 13(c) or 13(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.
14. Notice of Adjustments: Notices. Whenever the Exercise Price or
number or type of securities issuable hereunder shall be adjusted pursuant to
Section 13 hereof, the Company shall issue and provide to the Holder 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.
15. 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.
16. Attorneys' Fees. In any litigation, arbitration or court proceeding
between the Company and the Holder 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.
3
<PAGE> 4
17. 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 Holder as the holder hereof.
18. 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 Holder as the holder set forth in the
registry maintained by the Company pursuant to Section 8, 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 Holder as the holder may designate by ten-day
advance written notice.
19. Entire Agreement. This Warrant and the forms 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.
IN WITNESS WHEREOF, Metal Management, Inc. has caused this Warrant to
be executed by its duly authorized officer.
Dated: December 3, 1999
METAL MANAGEMENT, INC.
By: /s/ David A. Carpenter
---------------------------------------
Name: David A. Carpenter
Title: Executive Vice President, General
Counsel and Secretary
Address: 500 N. Dearborn Street
Suite 400
Chicago, IL 60610
4
<PAGE> 5
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, 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
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED AND ANY APPLICABLE STATE SECURITIES LAWS."
(b)Any legend required by applicable state law.
5. Please issue a certificate or certificates representing said Shares
in the name of the undersigned.
------------------------------
Richard L. Measelle
1
<PAGE> 6
6. Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned.
Richard L. Measelle
- ----------------------- -----------------------------
[Date] [Signature]
2
<PAGE> 1
EXHIBIT 10.3
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 EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY
APPLICABLE STATE SECURITIES LAWS.
WARRANT December 3, 1999
To Purchase 50,000 Shares of Common Stock of
Metal Management, Inc. (the "Company")
1. Number of Shares: Exercise Price: Term. This certifies that Richard
L. Measelle ("Holder") is entitled, upon the terms and subject to the vesting
requirements and other conditions set forth herein, to acquire from the Company,
in whole or in part, from time to time up to 50,000 fully paid and nonassessable
shares (the "Shares") of common stock $.01 par value of the Company ("Common
Stock") at a purchase price per Share equal to $3.50. The right to purchase the
shares of Common Stock under this Warrant shall vest on the second anniversary
of the date of grant and shall remain exerciseable until the earlier of (i)
11:59 p.m. Central Time on the six month anniversary of the date of termination
of the Holder's status as a Director of the Company or (ii) 11:59 p.m. Central
Time on December 3, 2004 (the "Exercise Period").
2. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the Holder, in whole or in part, at any 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 Holder, 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 Holder at the
address of the Holder appearing on the books of the Company). Payment of the
Exercise Price for the Shares thereby purchased shall be made by cash, certified
or cashier's check or wire transfer payable to the order of the Company, at
10:00 a.m., Central Standard Time, on the day following surrender of this
Warrant and the Notice of Exercise, in an amount equal to the purchase price of
the Shares thereby purchased. Thereupon, the Holder as the holder of this
Warrant, shall be entitled to receive from the Company a stock certificate in
proper form representing the number of Shares so purchased, and a new Warrant in
substantially identical form and dated as of such exercise for the purchase of
that number of Shares equal to the difference, if any, between the number of
Shares subject hereto and the number of Shares as to which this Warrant is so
exercised.
3. Issuance of Shares. Certificates for Shares purchased hereunder
shall be delivered to the Holder promptly after the date on which this Warrant
shall have been exercised in accordance with the terms hereof. The Company
hereby represents and warrants that all Shares that may be issued upon the
exercise of this Warrant will, 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 Holder 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 Holder 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.
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 Holder as the holder would
otherwise be entitled, the Holder 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 Holder
tenders the Exercise Price for one whole share.
1
<PAGE> 2
5. No Rights as Shareholders. This Warrant does not entitle the Holder
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 Holder as the holder
of this Warrant. Issuance of certificates for Shares upon the exercise of this
Warrant shall be made without charge to the Holder 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. No Transfer. This Warrant and any rights hereunder are not
transferable by the Holder as the holder hereof, in whole or in part.
8. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the Holder as the registered holder at the
above-mentioned office or agency of the Company, for a new Warrant on
substantially identical form and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name and
address of the Holder 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.
9. 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.
10. Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance, sale and delivery upon the exercise of
this Warrant, such number of Shares, equal to the number of such Shares
purchasable upon the exercise of this Warrant. All such Shares shall be duly
authorized and, when issued upon exercise of this Warrant in accordance with the
terms hereof, will be validly issued and fully paid and nonassessable, with no
liability on the part of the Holder. Such Shares will not be subject to any
preemptive rights.
11. Listing on Securities Exchanges, Etc. The Company will maintain the
listing of all Shares issuable or issued from time to time upon exercise of this
Warrant on each securities exchange or market or trading system on which any
shares of Common Stock are then or at any time thereafter listed or traded, but
only to the extent and for such period of time as such shares of Common Stock
are so listed.
12. 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.
13. Adjustments and Termination 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 Holder as the holder
of this Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon
2
<PAGE> 3
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 Holder as
the holder of the stock deliverable upon exercise of this Warrant would have
been entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder 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 of Shares, 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 13(c) or 13(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.
14. Notice of Adjustments: Notices. Whenever the Exercise Price or
number or type of securities issuable hereunder shall be adjusted pursuant to
Section 13 hereof, the Company shall issue and provide to the Holder 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.
15. 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.
16. Attorneys' Fees. In any litigation, arbitration or court proceeding
between the Company and the Holder 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.
3
<PAGE> 4
17. 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 Holder as the holder hereof.
18. 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 Holder as the holder set forth in the
registry maintained by the Company pursuant to Section 8, 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 Holder as the holder may designate by ten-day
advance written notice.
19. Entire Agreement. This Warrant and the forms 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.
IN WITNESS WHEREOF, Metal Management, Inc. has caused this Warrant to
be executed by its duly authorized officer.
Dated: December 3, 1999
METAL MANAGEMENT, INC.
By: /s/ David A. Carpenter
--------------------------------
Name: David A. Carpenter
Title: Executive Vice President, General
Counsel and Secretary
Address: 500 N. Dearborn Street
Suite 400
Chicago, IL 60610
4
<PAGE> 5
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, 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
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED AND ANY APPLICABLE STATE SECURITIES LAWS."
(b)Any legend required by applicable state law.
5. Please issue a certificate or certificates representing said Shares
in the name of the undersigned.
------------------------------
Richard L. Measelle
1
<PAGE> 6
6. Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned.
Richard L. Measelle
- ----------------------- -----------------------------
[Date] [Signature]
2
<PAGE> 1
EXHIBIT 10.4
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 EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY
APPLICABLE STATE SECURITIES LAWS.
WARRANT December 3, 1999
To Purchase 33,333 Shares of Common Stock of
Metal Management, Inc. (the "Company")
1. Number of Shares: Exercise Price: Term. This certifies that Patrick
J. Ottensmeyer ("Holder") is entitled, upon the terms and subject to the vesting
requirements and other conditions set forth herein, to acquire from the Company,
in whole or in part, from time to time up to 33,333 fully paid and nonassessable
shares (the "Shares") of common stock $.01 par value of the Company ("Common
Stock") at a purchase price per Share equal to $2.50. The right to purchase the
shares of Common Stock under this Warrant shall vest on the first anniversary of
the date of grant and shall remain exerciseable until the earlier of (i) 11:59
p.m. Central Time on the six month anniversary of the date of termination of the
Holder's status as a Director of the Company or (ii) 11:59 p.m. Central Time on
December 3, 2004 (the "Exercise Period").
2. Exercise of Warrant. The purchase rights represented by this
Warrant are exercisable by the Holder, in whole or in part, at any time during
the Exercise Period by the surrender of this Warrant and the Notice of Exercise
annexed hereto, all duly completed and executed on behalf of the Holder, 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 Holder at the
address of the Holder appearing on the books of the Company). Payment of the
Exercise Price for the Shares thereby purchased shall be made by cash, certified
or cashier's check or wire transfer payable to the order of the Company, at
10:00 a.m., Central Standard Time, on the day following surrender of this
Warrant and the Notice of Exercise, in an amount equal to the purchase price of
the Shares thereby purchased. Thereupon, the Holder as the holder of this
Warrant, shall be entitled to receive from the Company a stock certificate in
proper form representing the number of Shares so purchased, and a new Warrant in
substantially identical form and dated as of such exercise for the purchase of
that number of Shares equal to the difference, if any, between the number of
Shares subject hereto and the number of Shares as to which this Warrant is so
exercised.
3. Issuance of Shares. Certificates for Shares purchased hereunder
shall be delivered to the Holder promptly after the date on which this Warrant
shall have been exercised in accordance with the terms hereof. The Company
hereby represents and warrants that all Shares that may be issued upon the
exercise of this Warrant will, 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 Holder 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 Holder 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.
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 Holder as the holder would
otherwise be entitled, the Holder 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 Holder
tenders the Exercise Price for one whole share.
1
<PAGE> 2
5. No Rights as Shareholders. This Warrant does not entitle the Holder
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 Holder as the holder
of this Warrant. Issuance of certificates for Shares upon the exercise of this
Warrant shall be made without charge to the Holder 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. No Transfer. This Warrant and any rights hereunder are not
transferable by the Holder as the holder hereof, in whole or in part.
8. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the Holder as the registered holder at the
above-mentioned office or agency of the Company, for a new Warrant on
substantially identical form and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name and
address of the Holder 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.
9. 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.
10. Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance, sale and delivery upon the exercise of
this Warrant, such number of Shares, equal to the number of such Shares
purchasable upon the exercise of this Warrant. All such Shares shall be duly
authorized and, when issued upon exercise of this Warrant in accordance with the
terms hereof, will be validly issued and fully paid and nonassessable, with no
liability on the part of the Holder. Such Shares will not be subject to any
preemptive rights.
11. Listing on Securities Exchanges, Etc. The Company will maintain
the listing of all Shares issuable or issued from time to time upon exercise of
this Warrant on each securities exchange or market or trading system on which
any shares of Common Stock are then or at any time thereafter listed or traded,
but only to the extent and for such period of time as such shares of Common
Stock are so listed.
12. 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.
13. Adjustments and Termination 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 Holder as the holder
of this Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon
2
<PAGE> 3
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 Holder as
the holder of the stock deliverable upon exercise of this Warrant would have
been entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder 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 of Shares, 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 13(c) or 13(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.
14. Notice of Adjustments: Notices. Whenever the Exercise Price or
number or type of securities issuable hereunder shall be adjusted pursuant to
Section 13 hereof, the Company shall issue and provide to the Holder 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.
15. 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.
16. Attorneys' Fees. In any litigation, arbitration or court
proceeding between the Company and the Holder 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.
3
<PAGE> 4
17. 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 Holder as the holder hereof.
18. 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 Holder as the holder set forth in the
registry maintained by the Company pursuant to Section 8, 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 Holder as the holder may designate by ten-day
advance written notice.
19. Entire Agreement. This Warrant and the forms 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.
IN WITNESS WHEREOF, Metal Management, Inc. has caused this Warrant to
be executed by its duly authorized officer.
Dated: December 3, 1999
METAL MANAGEMENT, INC.
By: /s/ David A. Carpenter
--------------------------------
Name: David A. Carpenter
Title: Executive Vice President, General
Counsel and Secretary
Address: 500 N. Dearborn Street
Suite 400
Chicago, IL 60610
4
<PAGE> 5
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, 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
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED AND ANY APPLICABLE STATE SECURITIES LAWS."
(b)Any legend required by applicable state law.
5. Please issue a certificate or certificates representing said Shares
in the name of the undersigned.
------------------------------
Patrick J. Ottensmeyer
1
<PAGE> 6
6. Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned.
Patrick J. Ottensmeyer
- ----------------------- -----------------------------
[Date] [Signature]
2
<PAGE> 1
EXHIBIT 10.5
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 EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY
APPLICABLE STATE SECURITIES LAWS.
WARRANT December 3, 1999
To Purchase 33,334 Shares of Common Stock of
Metal Management, Inc. (the "Company")
1. Number of Shares: Exercise Price: Term. This certifies that Patrick
J. Ottensmeyer ("Holder") is entitled, upon the terms and subject to the vesting
requirements and other conditions set forth herein, to acquire from the Company,
in whole or in part, from time to time up to 33,334 fully paid and nonassessable
shares (the "Shares") of common stock $.01 par value of the Company ("Common
Stock") at a purchase price per Share equal to $2.00. The right to purchase the
shares of Common Stock under this Warrant shall vest as of the date of grant and
shall remain exerciseable until the earlier of (i) 11:59 p.m. Central Time on
the six month anniversary of the date of termination of the Holder's status as a
Director of the Company or (ii) 11:59 p.m. Central Time on December 3, 2004 (the
"Exercise Period").
2. Exercise of Warrant. The purchase rights represented by this
Warrant are exercisable by the Holder, in whole or in part, at any during the
Exercise Period by the surrender of this Warrant and the Notice of Exercise
annexed hereto, all duly completed and executed on behalf of the Holder, 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 Holder at the
address of the Holder appearing on the books of the Company). Payment of the
Exercise Price for the Shares thereby purchased shall be made by cash, certified
or cashier's check or wire transfer payable to the order of the Company, at
10:00 a.m., Central Standard Time, on the day following surrender of this
Warrant and the Notice of Exercise, in an amount equal to the purchase price of
the Shares thereby purchased. Thereupon, the Holder as the holder of this
Warrant, shall be entitled to receive from the Company a stock certificate in
proper form representing the number of Shares so purchased, and a new Warrant in
substantially identical form and dated as of such exercise for the purchase of
that number of Shares equal to the difference, if any, between the number of
Shares subject hereto and the number of Shares as to which this Warrant is so
exercised.
3. Issuance of Shares. Certificates for Shares purchased hereunder
shall be delivered to the Holder promptly after the date on which this Warrant
shall have been exercised in accordance with the terms hereof. The Company
hereby represents and warrants that all Shares that may be issued upon the
exercise of this Warrant will, 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 Holder 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 Holder 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.
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 Holder as the holder would
otherwise be entitled, the Holder 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 Holder
tenders the Exercise Price for one whole share.
1
<PAGE> 2
5. No Rights as Shareholders. This Warrant does not entitle the Holder
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 Holder as the holder
of this Warrant. Issuance of certificates for Shares upon the exercise of this
Warrant shall be made without charge to the Holder 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. No Transfer. This Warrant and any rights hereunder are not
transferable by the Holder as the holder hereof, in whole or in part.
8. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the Holder as the registered holder at the
above-mentioned office or agency of the Company, for a new Warrant on
substantially identical form and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name and
address of the Holder 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.
9. 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.
10. Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance, sale and delivery upon the exercise of
this Warrant, such number of Shares, equal to the number of such Shares
purchasable upon the exercise of this Warrant. All such Shares shall be duly
authorized and, when issued upon exercise of this Warrant in accordance with the
terms hereof, will be validly issued and fully paid and nonassessable, with no
liability on the part of the Holder. Such Shares will not be subject to any
preemptive rights.
11. Listing on Securities Exchanges, Etc. The Company will maintain
the listing of all Shares issuable or issued from time to time upon exercise of
this Warrant on each securities exchange or market or trading system on which
any shares of Common Stock are then or at any time thereafter listed or traded,
but only to the extent and for such period of time as such shares of Common
Stock are so listed.
12. 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.
13. Adjustments and Termination 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 Holder as the holder
of this Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon
2
<PAGE> 3
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 Holder as
the holder of the stock deliverable upon exercise of this Warrant would have
been entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder 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 of Shares, 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 13(c) or 13(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.
14. Notice of Adjustments: Notices. Whenever the Exercise Price or
number or type of securities issuable hereunder shall be adjusted pursuant to
Section 13 hereof, the Company shall issue and provide to the Holder 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.
15. 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.
16. Attorneys' Fees. In any litigation, arbitration or court proceeding
between the Company and the Holder 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.
3
<PAGE> 4
17. 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 Holder as the holder hereof.
18. 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 Holder as the holder set forth in the
registry maintained by the Company pursuant to Section 8, 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 Holder as the holder may designate by ten-day
advance written notice.
19. Entire Agreement. This Warrant and the forms 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.
IN WITNESS WHEREOF, Metal Management, Inc. has caused this Warrant to
be executed by its duly authorized officer.
Dated: December 3, 1999
METAL MANAGEMENT, INC.
By: /s/ David A. Carpenter
---------------------------------
Name: David A. Carpenter
Title: Executive Vice President, General
Counsel and Secretary
Address: 500 N. Dearborn Street
Suite 400
Chicago, IL 60610
4
<PAGE> 5
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, 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
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED AND ANY APPLICABLE STATE SECURITIES LAWS."
(b)Any legend required by applicable state law.
5. Please issue a certificate or certificates representing said Shares
in the name of the undersigned.
------------------------------
Patrick J. Ottensmeyer
1
<PAGE> 6
6. Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned.
Patrick J. Ottensmeyer
- ----------------------- -----------------------------
[Date] [Signature]
2
<PAGE> 1
EXHIBIT 10.6
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 EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY
APPLICABLE STATE SECURITIES LAWS.
WARRANT December 3, 1999
To Purchase 33,333 Shares of Common Stock of
Metal Management, Inc. (the "Company")
1. Number of Shares: Exercise Price: Term. This certifies that Patrick
J. Ottensmeyer ("Holder") is entitled, upon the terms and subject to the vesting
requirements and other conditions set forth herein, to acquire from the Company,
in whole or in part, from time to time up to 33,333 fully paid and nonassessable
shares (the "Shares") of common stock $.01 par value of the Company ("Common
Stock") at a purchase price per Share equal to $3.50. The right to purchase the
shares of Common Stock under this Warrant shall vest on the second anniversary
of the date of grant and shall remain exerciseable until the earlier of (i)
11:59 p.m. Central Time on the six month anniversary of the date of termination
of the Holder's status as a Director of the Company or (ii) 11:59 p.m. Central
Time on December 3, 2004 (the "Exercise Period").
2. Exercise of Warrant. The purchase rights represented by this
Warrant are exercisable by the Holder, in whole or in part, at any 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 Holder, 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 Holder at the
address of the Holder appearing on the books of the Company). Payment of the
Exercise Price for the Shares thereby purchased shall be made by cash, certified
or cashier's check or wire transfer payable to the order of the Company, at
10:00 a.m., Central Standard Time, on the day following surrender of this
Warrant and the Notice of Exercise, in an amount equal to the purchase price of
the Shares thereby purchased. Thereupon, the Holder as the holder of this
Warrant, shall be entitled to receive from the Company a stock certificate in
proper form representing the number of Shares so purchased, and a new Warrant in
substantially identical form and dated as of such exercise for the purchase of
that number of Shares equal to the difference, if any, between the number of
Shares subject hereto and the number of Shares as to which this Warrant is so
exercised.
3. Issuance of Shares. Certificates for Shares purchased hereunder
shall be delivered to the Holder promptly after the date on which this Warrant
shall have been exercised in accordance with the terms hereof. The Company
hereby represents and warrants that all Shares that may be issued upon the
exercise of this Warrant will, 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 Holder 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 Holder 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.
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 Holder as the holder would
otherwise be entitled, the Holder 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 Holder
tenders the Exercise Price for one whole share.
1
<PAGE> 2
5. No Rights as Shareholders. This Warrant does not entitle the Holder
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 Holder as the holder
of this Warrant. Issuance of certificates for Shares upon the exercise of this
Warrant shall be made without charge to the Holder 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. No Transfer. This Warrant and any rights hereunder are not
transferable by the Holder as the holder hereof, in whole or in part.
8. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the Holder as the registered holder at the
above-mentioned office or agency of the Company, for a new Warrant on
substantially identical form and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name and
address of the Holder 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.
9. 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.
10. Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance, sale and delivery upon the exercise of
this Warrant, such number of Shares, equal to the number of such Shares
purchasable upon the exercise of this Warrant. All such Shares shall be duly
authorized and, when issued upon exercise of this Warrant in accordance with the
terms hereof, will be validly issued and fully paid and nonassessable, with no
liability on the part of the Holder. Such Shares will not be subject to any
preemptive rights.
11. Listing on Securities Exchanges, Etc. The Company will maintain
the listing of all Shares issuable or issued from time to time upon exercise of
this Warrant on each securities exchange or market or trading system on which
any shares of Common Stock are then or at any time thereafter listed or traded,
but only to the extent and for such period of time as such shares of Common
Stock are so listed.
12. 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.
13. Adjustments and Termination 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 Holder as the holder
of this Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon
2
<PAGE> 3
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 Holder as
the holder of the stock deliverable upon exercise of this Warrant would have
been entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder 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 of Shares, 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 13(c) or 13(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.
14. Notice of Adjustments: Notices. Whenever the Exercise Price or
number or type of securities issuable hereunder shall be adjusted pursuant to
Section 13 hereof, the Company shall issue and provide to the Holder 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.
15. 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.
16. Attorneys' Fees. In any litigation, arbitration or court
proceeding between the Company and the Holder 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.
3
<PAGE> 4
17. 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 Holder as the holder hereof.
18. 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 Holder as the holder set forth in the
registry maintained by the Company pursuant to Section 8, 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 Holder as the holder may designate by ten-day
advance written notice.
19. Entire Agreement. This Warrant and the forms 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.
IN WITNESS WHEREOF, Metal Management, Inc. has caused this Warrant to
be executed by its duly authorized officer.
Dated: December 3, 1999
METAL MANAGEMENT, INC.
By: /s/ David A. Carpenter
------------------------------
Name: David A. Carpenter
Title: Executive Vice President,
General Counsel and
Secretary
Address: 500 N. Dearborn Street
Suite 400
Chicago, IL 60610
4
<PAGE> 5
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, 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
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED AND ANY APPLICABLE STATE SECURITIES LAWS."
(b)Any legend required by applicable state law.
5. Please issue a certificate or certificates representing said Shares
in the name of the undersigned.
------------------------------
Patrick J. Ottensmeyer
1
<PAGE> 6
6. Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned.
Patrick J. Ottensmeyer
- ----------------------- ----------------------------
[Date] [Signature]
2
<PAGE> 1
EXHIBIT 10.7
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 EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY
APPLICABLE STATE SECURITIES LAWS.
WARRANT December 3, 1999
To Purchase 50,000 Shares of Common Stock of
Metal Management, Inc. (the "Company")
1. Number of Shares: Exercise Price: Term. This certifies that James R.
Thompson ("Holder") is entitled, upon the terms and subject to the vesting
requirements and other conditions set forth herein, to acquire from the Company,
in whole or in part, from time to time up to 50,000 fully paid and nonassessable
shares (the "Shares") of common stock $.01 par value of the Company ("Common
Stock") at a purchase price per Share equal to $2.50. The right to purchase the
shares of Common Stock under this Warrant shall vest on the first anniversary of
the date of grant and shall remain exerciseable until the earlier of (i) 11:59
p.m. Central Time on the six month anniversary of the date of termination of the
Holder's status as a Director of the Company or (ii) 11:59 p.m. Central Time on
December 3, 2004 (the "Exercise Period").
2. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the Holder, in whole or in part, at any time during the
Exercise Period by the surrender of this Warrant and the Notice of Exercise
annexed hereto, all duly completed and executed on behalf of the Holder, 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 Holder at the
address of the Holder appearing on the books of the Company). Payment of the
Exercise Price for the Shares thereby purchased shall be made by cash, certified
or cashier's check or wire transfer payable to the order of the Company, at
10:00 a.m., Central Standard Time, on the day following surrender of this
Warrant and the Notice of Exercise, in an amount equal to the purchase price of
the Shares thereby purchased. Thereupon, the Holder as the holder of this
Warrant, shall be entitled to receive from the Company a stock certificate in
proper form representing the number of Shares so purchased, and a new Warrant in
substantially identical form and dated as of such exercise for the purchase of
that number of Shares equal to the difference, if any, between the number of
Shares subject hereto and the number of Shares as to which this Warrant is so
exercised.
3. Issuance of Shares. Certificates for Shares purchased hereunder
shall be delivered to the Holder promptly after the date on which this Warrant
shall have been exercised in accordance with the terms hereof. The Company
hereby represents and warrants that all Shares that may be issued upon the
exercise of this Warrant will, 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 Holder 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 Holder 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.
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 Holder as the holder would
otherwise be entitled, the Holder 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 Holder
tenders the Exercise Price for one whole share.
1
<PAGE> 2
5. No Rights as Shareholders. This Warrant does not entitle the Holder
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 Holder as the holder
of this Warrant. Issuance of certificates for Shares upon the exercise of this
Warrant shall be made without charge to the Holder 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. No Transfer. This Warrant and any rights hereunder are not
transferable by the Holder as the holder hereof, in whole or in part.
8. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the Holder as the registered holder at the
above-mentioned office or agency of the Company, for a new Warrant on
substantially identical form and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name and
address of the Holder 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.
9. 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.
10. Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance, sale and delivery upon the exercise of
this Warrant, such number of Shares, equal to the number of such Shares
purchasable upon the exercise of this Warrant. All such Shares shall be duly
authorized and, when issued upon exercise of this Warrant in accordance with the
terms hereof, will be validly issued and fully paid and nonassessable, with no
liability on the part of the Holder. Such Shares will not be subject to any
preemptive rights.
11. Listing on Securities Exchanges, Etc. The Company will maintain the
listing of all Shares issuable or issued from time to time upon exercise of this
Warrant on each securities exchange or market or trading system on which any
shares of Common Stock are then or at any time thereafter listed or traded, but
only to the extent and for such period of time as such shares of Common Stock
are so listed.
12. 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.
13. Adjustments and Termination 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 Holder as the holder
of this Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon
2
<PAGE> 3
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 Holder as
the holder of the stock deliverable upon exercise of this Warrant would have
been entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder 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 of Shares, 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 13(c) or 13(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.
14. Notice of Adjustments: Notices. Whenever the Exercise Price or
number or type of securities issuable hereunder shall be adjusted pursuant to
Section 13 hereof, the Company shall issue and provide to the Holder 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.
15. 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.
16. Attorneys' Fees. In any litigation, arbitration or court proceeding
between the Company and the Holder 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.
3
<PAGE> 4
17. 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 Holder as the holder hereof.
18. 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 Holder as the holder set forth in the
registry maintained by the Company pursuant to Section 8, 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 Holder as the holder may designate by ten-day
advance written notice.
19. Entire Agreement. This Warrant and the forms 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.
IN WITNESS WHEREOF, Metal Management, Inc. has caused this Warrant to
be executed by its duly authorized officer.
Dated: December 3, 1999
METAL MANAGEMENT, INC.
By: /s/ David A. Carpenter
-------------------------------
Name: David A. Carpenter
Title: Executive Vice President, General
Counsel and Secretary
Address: 500 N. Dearborn Street
Suite 400
Chicago, IL 60610
4
<PAGE> 5
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, 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
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED AND ANY APPLICABLE STATE SECURITIES LAWS."
(b)Any legend required by applicable state law.
5. Please issue a certificate or certificates representing said Shares
in the name of the undersigned.
------------------------------
James R. Thompson
1
<PAGE> 6
6. Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned.
James R. Thompson
- ----------------------- -----------------------------
[Date] [Signature]
2
<PAGE> 1
EXHIBIT 10.8
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 EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY
APPLICABLE STATE SECURITIES LAWS.
WARRANT December 3, 1999
To Purchase 50,000 Shares of Common Stock of
Metal Management, Inc. (the "Company")
1. Number of Shares: Exercise Price: Term. This certifies that James
R. Thompson ("Holder") is entitled, upon the terms and subject to the vesting
requirements and other conditions set forth herein, to acquire from the Company,
in whole or in part, from time to time up to 50,000 fully paid and nonassessable
shares (the "Shares") of common stock $.01 par value of the Company ("Common
Stock") at a purchase price per Share equal to $2.00. The right to purchase the
shares of Common Stock under this Warrant shall vest as of the date of grant and
shall remain exerciseable until the earlier of (i) 11:59 p.m. Central Time on
the six month anniversary of the date of termination of the Holder's status as a
Director of the Company or (ii) 11:59 p.m. Central Time on December 3, 2004 (the
"Exercise Period").
2. Exercise of Warrant. The purchase rights represented by this
Warrant are exercisable by the Holder, in whole or in part, at any during the
Exercise Period by the surrender of this Warrant and the Notice of Exercise
annexed hereto, all duly completed and executed on behalf of the Holder, 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 Holder at the
address of the Holder appearing on the books of the Company). Payment of the
Exercise Price for the Shares thereby purchased shall be made by cash, certified
or cashier's check or wire transfer payable to the order of the Company, at
10:00 a.m., Central Standard Time, on the day following surrender of this
Warrant and the Notice of Exercise, in an amount equal to the purchase price of
the Shares thereby purchased. Thereupon, the Holder as the holder of this
Warrant, shall be entitled to receive from the Company a stock certificate in
proper form representing the number of Shares so purchased, and a new Warrant in
substantially identical form and dated as of such exercise for the purchase of
that number of Shares equal to the difference, if any, between the number of
Shares subject hereto and the number of Shares as to which this Warrant is so
exercised.
3. Issuance of Shares. Certificates for Shares purchased hereunder
shall be delivered to the Holder promptly after the date on which this Warrant
shall have been exercised in accordance with the terms hereof. The Company
hereby represents and warrants that all Shares that may be issued upon the
exercise of this Warrant will, 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 Holder 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 Holder 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.
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 Holder as the holder would
otherwise be entitled, the Holder 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 Holder
tenders the Exercise Price for one whole share.
1
<PAGE> 2
5. No Rights as Shareholders. This Warrant does not entitle the Holder
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 Holder as the holder
of this Warrant. Issuance of certificates for Shares upon the exercise of this
Warrant shall be made without charge to the Holder 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. No Transfer. This Warrant and any rights hereunder are not
transferable by the Holder as the holder hereof, in whole or in part.
8. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the Holder as the registered holder at the
above-mentioned office or agency of the Company, for a new Warrant on
substantially identical form and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name and
address of the Holder 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.
9. 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.
10. Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance, sale and delivery upon the exercise of
this Warrant, such number of Shares, equal to the number of such Shares
purchasable upon the exercise of this Warrant. All such Shares shall be duly
authorized and, when issued upon exercise of this Warrant in accordance with the
terms hereof, will be validly issued and fully paid and nonassessable, with no
liability on the part of the Holder. Such Shares will not be subject to any
preemptive rights.
11. Listing on Securities Exchanges, Etc. The Company will maintain the
listing of all Shares issuable or issued from time to time upon exercise of this
Warrant on each securities exchange or market or trading system on which any
shares of Common Stock are then or at any time thereafter listed or traded, but
only to the extent and for such period of time as such shares of Common Stock
are so listed.
12. 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.
13. Adjustments and Termination 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 Holder as the holder
of this Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon
2
<PAGE> 3
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 Holder as
the holder of the stock deliverable upon exercise of this Warrant would have
been entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder 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 of Shares, 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 13(c) or 13(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.
14. Notice of Adjustments: Notices. Whenever the Exercise Price or
number or type of securities issuable hereunder shall be adjusted pursuant to
Section 13 hereof, the Company shall issue and provide to the Holder 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.
15. 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.
16. Attorneys' Fees. In any litigation, arbitration or court
proceeding between the Company and the Holder 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.
3
<PAGE> 4
17. 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 Holder as the holder hereof.
18. 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 Holder as the holder set forth in the
registry maintained by the Company pursuant to Section 8, 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 Holder as the holder may designate by ten-day
advance written notice.
19. Entire Agreement. This Warrant and the forms 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.
IN WITNESS WHEREOF, Metal Management, Inc. has caused this Warrant to
be executed by its duly authorized officer.
Dated: December 3, 1999
METAL MANAGEMENT, INC.
By: /s/ David A. Carpenter
------------------------------
Name: David A. Carpenter
Title: Executive Vice President, General
Counsel and Secretary
Address: 500 N. Dearborn Street
Suite 400
Chicago, IL 60610
4
<PAGE> 5
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, 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
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED AND ANY APPLICABLE STATE SECURITIES LAWS."
(b)Any legend required by applicable state law.
5. Please issue a certificate or certificates representing said Shares
in the name of the undersigned.
------------------------------
James R. Thompson
1
<PAGE> 6
6. Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned.
James R. Thompson
- ----------------------- -----------------------------
[Date] [Signature]
2
<PAGE> 1
EXHIBIT 10.9
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 EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY
APPLICABLE STATE SECURITIES LAWS.
WARRANT December 3, 1999
To Purchase 50,000 Shares of Common Stock of
Metal Management, Inc. (the "Company")
1. Number of Shares: Exercise Price: Term. This certifies that James R.
Thompson ("Holder") is entitled, upon the terms and subject to the vesting
requirements and other conditions set forth herein, to acquire from the Company,
in whole or in part, from time to time up to 50,000 fully paid and nonassessable
shares (the "Shares") of common stock $.01 par value of the Company ("Common
Stock") at a purchase price per Share equal to $3.50. The right to purchase the
shares of Common Stock under this Warrant shall vest on the second anniversary
of the date of grant and shall remain exerciseable until the earlier of (i)
11:59 p.m. Central Time on the six month anniversary of the date of termination
of the Holder's status as a Director of the Company or (ii) 11:59 p.m. Central
Time on December 3, 2004 (the "Exercise Period").
2. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by the Holder, in whole or in part, at any 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 Holder, 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 Holder at the
address of the Holder appearing on the books of the Company). Payment of the
Exercise Price for the Shares thereby purchased shall be made by cash, certified
or cashier's check or wire transfer payable to the order of the Company, at
10:00 a.m., Central Standard Time, on the day following surrender of this
Warrant and the Notice of Exercise, in an amount equal to the purchase price of
the Shares thereby purchased. Thereupon, the Holder as the holder of this
Warrant, shall be entitled to receive from the Company a stock certificate in
proper form representing the number of Shares so purchased, and a new Warrant in
substantially identical form and dated as of such exercise for the purchase of
that number of Shares equal to the difference, if any, between the number of
Shares subject hereto and the number of Shares as to which this Warrant is so
exercised.
3. Issuance of Shares. Certificates for Shares purchased hereunder
shall be delivered to the Holder promptly after the date on which this Warrant
shall have been exercised in accordance with the terms hereof. The Company
hereby represents and warrants that all Shares that may be issued upon the
exercise of this Warrant will, 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 Holder 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 Holder 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.
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 Holder as the holder would
otherwise be entitled, the Holder 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 Holder
tenders the Exercise Price for one whole share.
1
<PAGE> 2
5. No Rights as Shareholders. This Warrant does not entitle the Holder
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 Holder as the holder
of this Warrant. Issuance of certificates for Shares upon the exercise of this
Warrant shall be made without charge to the Holder 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. No Transfer. This Warrant and any rights hereunder are not
transferable by the Holder as the holder hereof, in whole or in part.
8. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the Holder as the registered holder at the
above-mentioned office or agency of the Company, for a new Warrant on
substantially identical form and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name and
address of the Holder 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.
9. 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.
10. Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance, sale and delivery upon the exercise of
this Warrant, such number of Shares, equal to the number of such Shares
purchasable upon the exercise of this Warrant. All such Shares shall be duly
authorized and, when issued upon exercise of this Warrant in accordance with the
terms hereof, will be validly issued and fully paid and nonassessable, with no
liability on the part of the Holder. Such Shares will not be subject to any
preemptive rights.
11. Listing on Securities Exchanges, Etc. The Company will maintain the
listing of all Shares issuable or issued from time to time upon exercise of this
Warrant on each securities exchange or market or trading system on which any
shares of Common Stock are then or at any time thereafter listed or traded, but
only to the extent and for such period of time as such shares of Common Stock
are so listed.
12. 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.
13. Adjustments and Termination 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 Holder as the holder
of this Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon
2
<PAGE> 3
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 Holder as
the holder of the stock deliverable upon exercise of this Warrant would have
been entitled in such merger or consolidation if this Warrant had been exercised
immediately before such merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder 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 of Shares, 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 13(c) or 13(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.
14. Notice of Adjustments: Notices. Whenever the Exercise Price or
number or type of securities issuable hereunder shall be adjusted pursuant to
Section 13 hereof, the Company shall issue and provide to the Holder 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.
15. 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.
16. Attorneys' Fees. In any litigation, arbitration or court proceeding
between the Company and the Holder 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.
3
<PAGE> 4
17. 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 Holder as the holder hereof.
18. 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 Holder as the holder set forth in the
registry maintained by the Company pursuant to Section 8, 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 Holder as the holder may designate by ten-day
advance written notice.
19. Entire Agreement. This Warrant and the forms 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.
IN WITNESS WHEREOF, Metal Management, Inc. has caused this Warrant to
be executed by its duly authorized officer.
Dated: December 3, 1999
METAL MANAGEMENT, INC.
By: /s/ David A. Carpenter
--------------------------------
Name: David A. Carpenter
Title: Executive Vice President, General
Counsel and Secretary
Address: 500 N. Dearborn Street
Suite 400
Chicago, IL 60610
4
<PAGE> 5
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, 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
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED AND ANY APPLICABLE STATE SECURITIES LAWS."
(b)Any legend required by applicable state law.
5. Please issue a certificate or certificates representing said Shares
in the name of the undersigned.
------------------------------
James R. Thompson
1
<PAGE> 6
6. Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned.
James R. Thompson
- ----------------------- -----------------------------
[Date] [Signature]
2
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 840,000
<SECURITIES> 0
<RECEIVABLES> 144,420,000
<ALLOWANCES> 2,385,000
<INVENTORY> 65,056,000
<CURRENT-ASSETS> 218,926,000
<PP&E> 208,485,000
<DEPRECIATION> 40,394,000
<TOTAL-ASSETS> 696,594,000
<CURRENT-LIABILITIES> 92,338,000
<BONDS> 207,263,000
0
9,993,000
<COMMON> 565,000
<OTHER-SE> 216,055,000
<TOTAL-LIABILITY-AND-EQUITY> 696,594,000
<SALES> 643,882,000
<TOTAL-REVENUES> 643,882,000
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<TOTAL-COSTS> 565,004,000
<OTHER-EXPENSES> 66,355,000
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<INTEREST-EXPENSE> 27,828,000
<INCOME-PRETAX> (14,877,000)
<INCOME-TAX> (4,285,000)
<INCOME-CONTINUING> (10,592,000)
<DISCONTINUED> 41,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,809,000)
<EPS-BASIC> (0.22)
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