-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LhrjRtwJlpqS8s9TkPzNftN2PgSp+wcmS7VVuf+Q5EtQpQARJKA9kJwdPywUxQdS l/5Bu2fx1D/4JIsahHW5SA== 0000950131-97-007448.txt : 19971229 0000950131-97-007448.hdr.sgml : 19971229 ACCESSION NUMBER: 0000950131-97-007448 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19971224 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: METAL MANAGEMENT INC CENTRAL INDEX KEY: 0000795665 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISC DURABLE GOODS [5090] IRS NUMBER: 942835068 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-37978 FILM NUMBER: 97744348 BUSINESS ADDRESS: STREET 1: 500 N DEARBORN ST STREET 2: STE 405 CITY: CHICAGO STATE: IL ZIP: 60610 BUSINESS PHONE: 3126450700 MAIL ADDRESS: STREET 1: 500 N. DEARBORN STREET STREET 2: SUITE 405 CITY: CHICAGO STATE: IL ZIP: 60610 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL PARAMETRICS CORP /DE/ DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SAMSTOCK LLC CENTRAL INDEX KEY: 0001051877 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 364156890 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: TWO NORTH RIVERSIDE PLAZA CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3124664010 MAIL ADDRESS: STREET 1: TWO NORTH RIVERSIDE PLAZA CITY: CHICAGO STATE: IL ZIP: 60606 SC 13D 1 SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 Metal Management, Inc. ________________________________________________________________________________ (Name of Issuer) Common Stock, Par Value $.01 per share ________________________________________________________________________________ (Title of Class of Securities) 591097100 _______________________________________________________________ (CUSIP Number) Alisa M. Singer Rosenberg & Liebentritt Two North Riverside Plaza, Suite 1600 Chicago, Illinois 60606 ________________________________________________________________________________ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 19, 1997 _______________________________________________________________ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [_]. (Page 1 of 9) Exhibit Index Appears on Page 9 - ----------------------- --------------------- CUSIP NO. 591097100 13D PAGE 2 OF 9 PAGES - ----------------------- --------------------- - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Samstock, L.L.C. FEIN: 36-4156890 - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP 2 (a) [_] (b) [X] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS 4 WC - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF 2,070,588(1)(2) SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 0 OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 2,070,588(1) PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER 10 0 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 2,070,588(1) - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 6.9%(1) - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON* 14 OO - ------------------------------------------------------------------------------ (1) Includes 600,000 shares which Samstock, L.L.C. has the right to purchase under the warrant described in Item 3 herein, which warrant is exercisable within 60 days. (2) The power of Samstock, L.L.C. to vote these shares beneficially owned is subject to limitations contained in the Amended and Restated Stockholders' Agreement described in Item 4 herein. Item 1. Security and Issuer. -------------------- This Statement relates to the common stock, par value $.01 per share (the "Common Stock"), of Metal Management, Inc., a Delaware corporation (the "Issuer"), which has its principal executive offices at 500 North Dearborn Street, Suite 405, Chicago, Illinois 60610. Item 2. Identity and Background. ------------------------ (a-c) and (f) This Statement is being filed by Samstock, L.L.C., a Delaware limited liability company ("Samstock"). The sole member of Samstock is SZ Investments, L.L.C., a Delaware limited liability company ("SZI"), the managing member of which is Zell General Partnership, Inc., an Illinois corporation ("ZGP"). Additional information concerning SZI and ZGP is set forth in Appendix A hereto. The principal business of Samstock, SZI and ZGP is general investments. The business address of each of Samstock, SZI and ZGP is Two North Riverside Plaza, Chicago, Illinois 60606. (d) and (e) Neither Samstock nor, to the best knowledge of Samstock, SZI or ZGP or any of the persons listed in Appendix A hereto, has during the last five years (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was, or is, subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. -------------------------------------------------- On December 19, 1997 (the "Closing Date"), pursuant to the Stock Purchase Agreement described in Item 4 below, Samstock acquired 1,470,588 shares of Common Stock (the "Initial Shares") from the Issuer, together with a warrant to purchase an additional 600,000 shares of Common Stock from the Issuer (the "Warrant", and the shares covered by the Warrant together with the Initial Shares are sometimes referred to as the "Purchased Shares"). The aggregate amount of funds used in acquiring the Initial Shares and the Warrant was $24,999,996. All funds used in acquiring the Initial Shares and the Warrant were obtained from the working capital of Samstock. Item 4. Purpose of the Transaction. --------------------------- The acquisition of the Initial Shares and the Warrant was effected for the purpose of investing in the Issuer. Samstock and the Issuer entered into a Securities Purchase Agreement dated as of December 19, 1997 (the "Stock Purchase Agreement"), pursuant to which Samstock acquired the Initial Shares and the Warrant. The Stock Purchase Agreement provides certain standstill provisions; until one year from the Closing Date, Samstock and its affiliates will not: (i) propose any transaction between Samstock and the Issuer and/or its securities holders involving any of the Issuer's securities or securities holders, (ii) acquire or assist, advise or encourage any other person in acquiring, directly or indirectly, control of the Issuer or (iii) request or assist another in calling for an annual meeting of the stockholders of the Issuer. The Stock Purchase Agreement also grants Samstock the right to designate either Mr. Samuel Zell or Mr. Rod Dammeyer, about each of whom information is set forth in Appendix A hereto, to the Issuer's Board of Directors, upon terms set forth in the Restated Stockholders' Agreement (as hereinafter defined). The Stock Purchase Agreement is attached hereto as Exhibit 1 and is incorporated herein by reference. Page 3 of 9 Pages Under the terms of the Warrant, Samstock has the right, prior to 11:59 p.m. Central Time on December 18, 2002, to purchase (i) up to 400,000 shares of Common Stock at an exercise price of $20 per share and (ii) up to 200,000 shares of Common Stock at an exercise price of $23 per share. The Issuer may require Samstock to exercise the Warrant in whole or in part after the completion by the Issuer of one or more public offerings aggregating at least 3,000,000 shares of Common Stock if the average closing bid price of the Common Stock for the preceding 60 trading days is at least $31 per share. The number of shares, type of security and exercise price of the shares covered by the Warrant are subject to adjustment to prevent dilution. The Warrant is attached hereto as Exhibit 2 and is incorporated herein by reference. In connection with the acquisition of the Initial Shares and the Warrant, Samstock and the Issuer entered into a Shelf Registration Rights Agreement dated as of December 19, 1997 (the "Shelf Registration Agreement"), pursuant to which the Issuer agreed to prepare and file, within 120 days of the Closing Date, a registration statement on Form S-3 covering the resale of the Purchased Shares and to list such shares for quotation on the Nasdaq National Market. The Shelf Registration Agreement requires the Issuer to cause the Form S-3 to become effective as soon as possible after its filing and to maintain the registration statement's effectiveness until all of the registered securities are sold or until, in the reasonable opinion of Issuer's counsel, all of the unsold registered shares may be immediately sold to the public without registration and without regard to the amount which may be sold by a holder thereof at a given time. The Shelf Registration Agreement is attached hereto as Exhibit 3 and is incorporated herein by reference. Also in connection with the acquisition of the Initial Shares and the Warrant, Samstock and the Issuer entered into an Amended and Restated Registration Rights Agreement dated as of December 19, 1997 (the "Restated Registration Agreement") with each of T. Benjamin Jennings, Gerard M. Jacobs, Albert A. Cozzi, Frank J. Cozzi and Gregory P. Cozzi (collectively, the "Other Stockholders"). The Restated Registration Agreement amends and restates in its entirety the Registration Rights Agreement dated as of December 1, 1997 between the Issuer and the Other Stockholders for the purpose of extending to Samstock's Purchased Shares certain demand and piggyback registration rights contained in the original agreement. The piggyback registration rights commence December 1, 1999 and apply to registration statements filed by the Issuer during the five- year period thereafter. The demand registration rights may be exercised by the written request of Samstock and Other Stockholders who in the aggregate own at least 25% of the then-outstanding number of shares of Common Stock which are registrable under the Restated Registration Agreement. The Issuer is only obligated to file one registration statement pursuant to the demand registration rights; however, if Samstock or one or more Other Stockholders does not offer to include its registrable securities in the first demand registration statement, then not less than nine months after the Issuer's last demand or piggyback registration statement, Samstock or the Other Stockholder, as the case may be, shall be entitled to one separate demand covering all of its registrable securities which have not been previously sold under Rule 144 of the Securities Act of 1933 (as amended, the "Securities Act"). The Restated Registration Rights Agreement is attached hereto as Exhibit 4 and is incorporated herein by reference. As of December 19, 1997, Samstock also entered into an Amended and Restated Stockholders' Agreement with the Issuer and the Other Stockholders (the "Restated Stockholders' Agreement"). The Restated Stockholders' Agreement amends and restates in its entirety the prior stockholders' agreement between the Issuer and the Other Stockholders in order to, among other things, provide for Samstock's designee on the Issuer's Board of Directors as long as no more than three years have elapsed since the closing under the Stock Purchase Agreement and Samstock and its Permitted Transferees (as defined in the Restated Stockholders' Agreement) have not sold or otherwise disposed of more than one- third of the Initial Shares (collectively, the "Purchaser Condition"). Under the Restated Stockholders' Agreement Samstock has agreed to vote all of its shares of Common Stock for the directors listed therein and to cause its Board designee to vote for the election of certain officers. Under the Restated Stockholders' Agreement, Samstock has the right to participate in certain tag along rights so long as Samstock and its Page 4 of 9 Pages Permitted Transferees have not disposed of more than 50% of the aggregate number of Purchased Shares. The Restated Stockholders' Agreement contains other provisions restricting the transfer of Common Stock. For a period of one year from the date of the Restated Stockholders' Agreement, Samstock shall not, directly or indirectly, sell, assign, transfer, pledge, hypothecate, encumber or otherwise dispose of the Purchased Shares or any other shares of Common Stock acquired by Samstock, except (i) to a Permitted Transferee, (ii) pursuant to the tag along rights described above, (iii) in sales registered under the Securities Act or (iii) pledges or hypothecations which are part of a bona fide financing transaction. The Restated Stockholders' Agreement also contains provisions for management of the Issuer, as contained in the original stockholders' agreement. The Restated Stockholders' Agreement shall remain in full force and effect with respect to Samstock until (i) the Purchaser Condition no longer remains satisfied and (ii) Samstock and/or its Permitted Transferees have sold or otherwise disposed of more than 50% of the Purchased Shares. The Restated Stockholders' Agreement is attached hereto as Exhibit 5 and is incorporated herein by reference. The summaries contained in this Statement of certain provisions of each of the Stock Purchase Agreement, Warrant, Shelf Registration Agreement, Restated Registration Agreement and Restated Stockholders' Agreement are not intended to be complete and are qualified in their entirety by reference to each respective agreement attached as an Exhibit hereto and incorporated herein by reference. Samstock intends to continue to review its investment in the Common Stock and, from time to time depending upon certain factors, including without limitation the financial performance of the Issuer, the availability and price of shares of Common Stock and other general market and investment conditions, may determine to acquire through open market purchases or otherwise additional shares of Common Stock, or may determine to sell through the open market or otherwise, in each case, subject to the limitations of each of the Stock Purchase Agreement and the Restated Stockholders' Agreement described above. Except as stated above, neither Samstock nor, to the best knowledge of Samstock, SZI or ZGP or any of the persons listed in Appendix A hereto, has any plans or proposals of the types referred to in clauses (a) through (j) of Item 4 of Schedule 13D, as promulgated by the Securities and Exchange Commission. Item 5. Interest In Securities Of The Issuer. ------------------------------------- (a) and (b) To the best knowledge of Samstock, there are 29,530,653 shares of Common Stock outstanding as of the date hereof./1/ As of the date hereof, the 1,470,588 Initial Shares beneficially owned by Samstock represent approximately 4.9 % of the Common Stock issued and outstanding. The additional 600,000 shares covered by the Warrant represent approximately 2.0% of the Common Stock issued and outstanding,2 and the aggregate 2,070,588 Purchased Shares represent approximately 6.9% of the Common Stock issued and outstanding./2/ Subject to the limitations of the Restated Stockholders' Agreement as described above, Samstock currently has the sole power to vote or to direct the vote of the shares of Common Stock acquired by it. Samstock also has the power to dispose of or to direct the disposition of its shares of Common Stock, subject to certain limitations under the Stock Purchase Agreement and Restated Stockholders' Agreement as described more fully in Item 4. - ------------------------ /1/ As disclosed to Samstock by the Issuer in Schedule 3.5 of the Stock Purchase Agreement with the addition of the Initial Shares issued on December 19, 1997. /2/ On a fully-diluted basis with respect only to the number of shares covered by the Warrant. Page 5 of 9 Pages At the date hereof, neither Samstock, nor to the best knowledge of Samstock, any of SZI, ZGP or the persons listed in Appendix A hereto owns any shares of Common Stock other than the Purchased Shares owned by Samstock, as described herein. (c) During the last sixty days, the only transaction in the Common Stock effected by Samstock, or to the best knowledge of Samstock, SZI, ZGP or any of the persons listed in Appendix A hereto, was the transaction which occurred on December 19, 1997, as described herein. (d) No person other than Samstock has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of the shares of Common Stock owned by Samstock. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings Or Relationships With Respect to Securities of the Issuer. ------------------------------------------------------- Except for the matters described herein, neither Samstock nor, to the best knowledge of Samstock, any of SZI, ZGP or the persons listed in Appendix A hereto has any contract, arrangement, understanding or relationship with any person with respect to any securities of the Issuer. Item 7. Material To Be Filed As Exhibits -------------------------------- Exhibit 1 - Securities Purchase Agreement* Exhibit 2 - Warrant Exhibit 3 - Shelf Registration Rights Agreement* Exhibit 4 - Amended and Restated Registration Rights Agreement* Exhibit 5 - Amended and Restated Stockholders' Agreement* - ------------------------------- * Filed herewith. Page 6 of 9 Pages APPENDIX A SCHEDULE 13D CUSIP NUMBER 591097100 SZ INVESTMENTS, L.L.C. is a Delaware limited liability company whose managing member is Zell General Partnership, Inc., and its non-managing members are Alphabet Partners and ZFT Partnership. ZELL GENERAL PARTNERSHIP, INC. is an Illinois corporation whose sole shareholder is the Samuel Zell Revocable Trust and whose sole director is Samuel Zell. SAMUEL ZELL is President of Zell General Partnership, Inc. ROD DAMMEYER, DONALD J. LIEBENTRITT and SHELI Z. ROSENBERG are each a Vice President of Zell General Partnership, Inc. Messrs. Zell, Dammeyer and Liebentritt and Ms. Rosenberg are all citizens of the United States of America. Page 7 of 9 Pages SIGNATURE After reasonable inquiry and to the best of the undersigned's knowledge and belief, the undersigned certify that the information set forth in the statement is true, complete and correct. DATED: December 22, 1997 SAMSTOCK, L.L.C., by SZ INVESTMENTS, L.L.C., its sole member, by ZELL GENERAL PARTNERSHIP, INC., its sole member By: /s/ Sheli Z. Rosenberg ---------------------- Name: Sheli Z. Rosenberg Title: Vice President Page 8 of 9 Pages EXHIBIT INDEX
Exhibit Number Description - -------------- ----------- 1 Securities Purchase Agreement, dated as of December 19, 1997* 2 Warrant, dated as of December 19, 1997* 3 Shelf Registration Rights Agreement, dated as of December 19, 1997* 4 Amended and Restated Registration Rights Agreement, dated as of December 19, 1997* 5 Amended and Restated Stockholders' Agreement, dated as of December 19, 1997*
____________________________________ * Filed herewith. Page 9 of 9 Pages EX-99.1 2 SECURITIES PURCHASE AGREEMENT DATED 12/19/97 Exhibit 1 SECURITIES PURCHASE AGREEMENT ----------------------------- SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of December 19, 1997, by and among Metal Management, Inc., a Delaware corporation (the "Company"), and Samstock, L.L.C., a Delaware limited liability company ("Purchaser"). RECITALS A. The Company wishes to issue and sell to Purchaser, and Purchaser wishes to buy from the Company, on the terms and subject to the conditions set forth in this Agreement in the aggregate (i) 1,470,588 shares (the "Shares") of the Company's Common Stock, $.01 par value per share (the "Common Stock"), representing approximately 5.2% of the Common Stock outstanding, or 3.6% of the Fully Diluted Common Stock (as hereinafter defined), together with (ii) a warrant (the "Warrant") in the form of Exhibit A hereto to purchase an additional 600,000 shares of the Common Stock (the "Warrant Shares"), representing approximately 1.5% of the Fully Diluted Common Stock. The Warrant Shares shall have an exercise price (subject to adjustment as provided in the Warrant) of $20.00 per share for 400,000 Warrant Shares and $23.00 per share for 200,000 Warrant Shares. The Shares, the Warrant and the Warrant Shares are collectively referred to herein as the "Securities" and each as a "Security". B. The Company has agreed to effect the registration of the Shares and the Warrant Shares under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a Shelf Registration Rights Agreement of even date herewith among the Company and Purchaser (the "Shelf Registration Rights Agreement") and an Amended and Restated Registration Rights Agreement dated as of the date hereof among the Company, Purchaser, T. Benjamin Jennings, Gerard M. Jacobs, Albert A. Cozzi, Frank J. Cozzi and Gregory P. Cozzi (the "Amended and Restated Registration Rights Agreement"). C. The sale of the Shares and the Warrant by the Company to Purchaser will be effected in reliance upon the exemption from securities registration afforded by the provisions of Regulation D ("Regulation D"), as promulgated by the Securities and Exchange Commission (the "Commission") under the Securities Act. The Company and the Purchasers hereby agree as follows: 1. PURCHASE AND SALE OF THE SHARES AND THE WARRANT. ----------------------------------------------- 1.1 Agreement to Purchase and Sell. Upon the terms and subject to the satisfaction of the conditions set forth herein, the Company agrees to sell at the Closing (as defined below), and Purchaser agrees to purchase 1,470,588 Shares at a purchase price of $17.00 per Share, together with the Warrants in each case free and clear of all Liens (as hereinafter defined). 1.2 Closing. Subject to the satisfaction of the conditions set forth herein, the closing of the purchase and sale of the Shares and the Warrant will be deemed to occur when this Agreement and the other Transaction Documents (as defined below), have been executed and delivered by the Company and Purchaser, and full payment of the Purchase Price has been made by Purchaser by wire transfer of immediately available funds to an account designated by the Company against delivery by the Company of duly executed certificates to Purchaser representing the Shares purchased by Purchaser hereunder, as well as the Warrant to be delivered in connection therewith (the "Closing"). The date on which the Closing is deemed to take place is referred to herein as the "Closing Date". The aggregate Purchase Price for all of the Shares and the Warrant to be purchased by Purchaser at the Closing (assuming the satisfaction of the conditions described in Section 5 below) shall be Twenty-Four Million Nine Hundred Ninety-Nine Thousand Nine Hundred Ninety-Six and 00/100 Dollars ($24,999,996.00). 1.3 Certain Definitions. When used herein: (A) "business day" shall mean any day on which the New York Stock Exchange and commercial banks in the city of New York are open for business; (B) an "affiliate" of a party shall mean any person or entity controlling, controlled by or under common control with that party; (C) "control" shall mean, with respect to an entity, the ability to direct the business, operations or management of such entity, whether through an equity interest therein or otherwise; (D) "subsidiary" shall mean any entity in which the Company has an equity interest of 50% or greater; (E) "Fully Diluted Common Stock" shall mean the total number of shares of Common Stock outstanding after taking into account the following: (i) all shares of Common Stock outstanding (exclusive of the Shares), (ii) all Shares and Warrant Shares (assuming full exercise of the Warrant and issuance of all Warrant Shares), (iii) all shares of Common Stock issuable upon conversion, exchange or other exercise of the Company's Equity Securities outstanding, and (iv) adjustments needed to account or adjust for stock splits, stock dividends, recapitalizations, recombinations and similar events; (F) "Equity Securities" shall mean, with respect to the Company or any subsidiary, as the case may be: (i) any class or series of common stock, preferred stock or other capital stock, whether voting or non-voting, including, without limitation, with respect to the Company, Common Stock, Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, (ii) any other equity securities issued by the Company or such subsidiary, as the case may be, whether now or hereafter authorized for issuance by the Company's or such subsidiary's, as the case may be, Certificate of Incorporation, (iii) any debt, hybrid or other securities issued by the Company or such subsidiary, as the case may be, which are convertible into, exercisable for or exchangeable for any other Equity Securities, whether now or hereafter authorized for issuance by the Company's or such subsidiary's, as the case may be, Certificate of Incorporation, (iv) any equity equivalents (including, without limitation, stock appreciation rights, phantom stock or similar rights), interests in the ownership or earnings of the Company or such subsidiary, as the -2- case may be, or other similar rights, (v) any written or oral rights, options, warrants, subscriptions, calls, preemptive rights, rescission rights or other rights to subscribe for, purchase or otherwise acquire any of the foregoing, (vi) any written or oral obligation of the Company or such subsidiary, as the case may be, to issue, deliver or sell, any of the foregoing, (vii) any written or oral obligations of the Company or such subsidiary, as the case may be, to repurchase, redeem or otherwise acquire any Equity Securities, and (viii) any bonds, debentures, notes or other indebtedness of the Company or such subsidiary, as the case may be, having the right to vote (or convertible into, or exchangeable for securities having the right to vote) on any matters on which the stockholders of the Company or such subsidiary, as the case may be, may vote; and (G) "Lien" shall mean any preemptive or similar rights of any third party, purchase options, calls, proxies, voting trusts, voting agreements, judgments, pledges, charges, taxes, assessments, levies, escrows, rights of first refusal or first offer, transfer restrictions, mortgages, indentures, claims, liens, equities, mortgages, deeds of trust, deeds to secure debt, security interests and other encumbrances of every kind and nature whatsoever, whether arising by agreement, operation of law or otherwise, other than any created by Purchaser. 2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. ----------------------------------------------- Purchaser, solely with respect to it, hereby makes the following representations and warranties to the Company (which shall be true as of the date hereof and as of the Closing Date) and agrees with the Company that: 2.1 Authorization; Enforceability. Purchaser is duly and validly organized, validly existing and in good standing as a limited liability company under the laws of the State of Delaware with full power and authority to purchase the Shares and the Warrant and to execute and deliver this Agreement. This Agreement constitutes Purchaser's valid and legally binding obligation, enforceable in accordance with its terms, except as such enforcement may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors' rights generally and (ii) general principles of equity. 2.2 Accredited Investor; Investment Intent. Purchaser is an accredited investor as that term is defined in Rule 501 of Regulation D, and is acquiring the Shares and the Warrant solely for its own account for investment purposes as a principal and not with a present view to the public resale or distribution of all or any part thereof, except pursuant to sales that are exempt from the registration requirements of the Securities Act and/or sales registered under the Securities Act; provided, however that in making such representation, Purchaser does not agree to hold the Securities for any minimum or specific term and reserves the right to sell, transfer or otherwise dispose of the Securities at any time in accordance with the provisions of this Agreement and with Federal and state securities laws applicable to such sale, transfer or disposition. -3- 2.3 Information. The Company has provided Purchaser with, and Purchaser has reviewed, the written information regarding the Company set forth on Schedule 2.3, and has granted to Purchaser the opportunity to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the business, operations and financial condition of the Company and materials relating to the terms and conditions of the purchase and sale of the Shares and the Warrant hereunder. Neither such information nor any other investigation conducted by Purchaser or any of its representatives shall modify, amend or otherwise affect Purchaser's right to rely on the Company's representations and warranties contained in this Agreement. 2.4 Limitations on Disposition. Purchaser acknowledges that, except as provided in the Shelf Registration Rights Agreement or the Amended and Restated Registration Rights Agreement, the Securities have not been and are not being registered under the Securities Act and may not be transferred or resold without registration under the Securities Act or unless pursuant to an exemption therefrom. Purchaser agrees not to sell, transfer or otherwise dispose of the Securities unless and until: (a) there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or (b) (i) Purchaser shall have notified the Company in advance of the proposed disposition, and (ii) if reasonably requested by the Company, Purchaser shall have furnished the Company with an opinion of counsel (the cost of which shall be borne by the Purchaser), reasonably satisfactory to the Company, that such disposition will not require registration under the Securities Act. It is agreed that no opinion of counsel will be required for the transfer of the Securities to an affiliate of Purchaser or with respect to a sale thereof made pursuant to Rule 144 under the Securities Act ("Rule 144"). 2.5 Legend. Purchaser understands that the certificates representing the Securities may bear at issuance, in addition to any restrictive legend required pursuant to the Amended and Restated Stockholders Agreement, a restrictive legend in substantially the following form: "The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and may not be sold, transferred or assigned in the absence of an effective registration statement under the Securities Act and any such state law or an exemption from the registration requirements thereunder." Notwithstanding the foregoing, it is agreed that, as long as the sale of the Warrant Shares are registered pursuant to an effective registration statement or such shares are eligible for resale under Rule 144(k), the Warrant Shares shall be issued upon exercise of the Warrant pursuant to the terms of the Warrant, without any legend or other restrictive language. The legend set forth above shall be removed and the Company shall issue a new certificate without such legend to the -4- holder of any Security upon which it is stamped if (i) the sale of such Security is registered under the Securities Act, (ii) such holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions (the cost of which shall be borne by the Purchaser) to the effect that such Security can be sold publicly without registration under the Securities Act or (iii) such holder provides the Company with reasonable assurances that such Security can be sold pursuant to Rule 144 without any restriction as to the number of shares of such Security that can then be immediately resold. 2.6 No Reliance by Purchaser. Purchaser acknowledges that (i) it has such knowledge in business and financial matters as to be fully capable of evaluating this Agreement, the other Transaction Documents (as defined below) and the transactions contemplated hereby and thereby, (ii) it is not relying on any advice or representation of the Company in connection with entering into this Agreement, the other Transaction Documents or such transactions (other than the representations made by the Company in this Agreement and the other Transaction Documents, and in the written information described in paragraph 2.3 above), (iii) it has not received from the Company any assurance or guarantee as to the merits (whether legal, regulatory, tax, financial or otherwise) of entering into this Agreement or the other Transaction Documents or the performance of its obligations hereunder and thereunder, and (iv) it has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that it has deemed necessary, and has entered into this Agreement and the other Transaction Documents based on its own independent judgment and on the advice of its advisors as it has deemed necessary, and not on any view (whether written or oral) expressed by the Company. 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby makes the following representations, warranties and covenants to Purchaser (which shall be true as the date hereof and as of the Closing Date, provided that the representations and warranties made by the Company in paragraph 3.18 hereof shall be true as of the date specified therein) and agrees with Purchaser that: 3.1 Organization, Good Standing and Qualification. Each of the Company and its subsidiaries is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has all requisite power and authority, corporate and otherwise, to carry on its business as now conducted. Each of the Company and its subsidiaries is duly qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect on the consolidated business or financial condition of the Company and its subsidiaries taken as a whole. 3.2 Authorization; Consents. The Company has the requisite corporate power and authority to enter into and perform this Agreement, the Registration Rights Agreement and the Warrant, to issue and sell the Shares and the Warrant to Purchaser in accordance with the terms hereof, and to issue the Warrant Shares upon exercise of the Warrant in accordance with its terms. All corporate action on the part of the Company by its officers, directors and stockholders necessary for the authorization, execution and delivery of, and the performance by the Company -5- of its obligations under: (i) this Agreement; (ii) the Registration Rights Agreement; (iii) the Warrant; (iv) the Amended and Restated Registration Rights Agreement; (v) the Amended and Restated Stockholders' Agreement dated as of the date hereof among the Company, Purchaser, T. Benjamin Jennings, Gerard M. Jacobs, Albert A. Cozzi, Frank J. Cozzi and Gregory P. Cozzi (the "Amended and Restated Stockholders' Agreement"); and (vi) all other agreements, documents, certificates or other instruments delivered by the Company at the Closing (the instruments described in (i), (ii), (iii), (iv), (v) and (vi) being collectively referred to herein as the "Transaction Documents") has been obtained and no further consent or authorization of the Company, its Board of Directors or its stockholders is required. 3.3 Enforcement. The Transaction Documents constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except as such enforcement may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors' rights generally and (ii) general principles of equity. Except as otherwise provided in the Transaction Documents, the Company has obtained all governmental or regulatory consents and approvals required for it to execute, deliver and perform its obligations under the Transaction Documents. 3.4 Disclosure Documents; Material Agreements; Other Information. The Company has filed with the Commission: (i) the Company's Annual Report on Form 10-K for the year ended March 31, 1997; (ii) Quarterly Reports on Form 10-Q and 10-Q/A for the quarters ended January 31, 1996, June 30, 1996, September 30, 1996, December 31, 1996, June 30, 1997 and September 30, 1997; (iii) Transition Report on Form 10-Q for the period from November 1, 1995 through March 31, 1996; (iv) all Current Reports on Form 8-K required to be filed with the Commission since January 31, 1996; (v) the Company's definitive Proxy Statement for its 1995 Annual Meeting of Shareholders; (vi) the Company's definitive proxy statement for its 1997 Annual Meeting of Shareholders, a copy of which has been provided to Purchaser (the "Proxy Statement"); (vii) any amendments to the foregoing; and (viii) all schedules and exhibits attached thereto (collectively, the "Disclosure Documents"). Except as described in the 1997 Proxy Statement, and except for the transactions contemplated hereby, the Company is not aware of any event that would require the filing of a Form 8-K within fifteen (15) days following the Closing Date. Each Disclosure Document, as of the date of the filing thereof with the Commission, conformed in all material respects to the requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations thereunder and, as of the date of such filing or, if such Disclosure Document was subsequently amended, as of the date of the filing of any amendment thereto with the Commission, such Disclosure Document did not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. All material agreements required to be filed as exhibits to the Disclosure Documents have been filed as required. The written information provided to such Purchaser as described in paragraph 2.3 above does not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Except as set forth in the financial statements of the Company included in the Disclosure Documents, the Company -6- has no liabilities, contingent or otherwise, other than liabilities incurred in the ordinary course of business which, under generally accepted accounting principles, are not required to be reflected in such financial statements and which, individually or in the aggregate, are not material to the business, operations or financial condition of the Company and its subsidiaries taken as a whole. 3.5 Capitalization. The capitalization of the Company as of the date hereof, including the authorized capital stock, the number of shares issued and outstanding, the number of shares reserved for issuance pursuant to the Company's stock option plans, the number of shares reserved for issuance pursuant to securities exercisable for, or convertible into or exchangeable for any shares of Common Stock and the number of shares initially to be reserved for issuance upon exercise of the Warrant is set forth on Schedule 3.5 hereto. All of such outstanding shares of capital stock have been, or upon issuance will be, validly issued, fully paid and non-assessable. No shares of the capital stock of the Company are subject to preemptive rights or any other similar rights of the stockholders of the Company or any liens or encumbrances created by or through the Company. Except as disclosed on Schedule 3.5, or as contemplated herein, as of the date of this Agreement and as of the Closing Date, there are no outstanding Equity Securities of the Company or any subsidiary. The Shares shall represent approximately 3.6% of the Fully Diluted Common Stock and 5.2% of the outstanding shares of Common Stock as of the Closing Date. The Warrant Shares shall represent approximately 1.5% of the Fully Diluted Common Stock as of the Closing Date. 3.6 Valid Issuance. The Shares are duly authorized and, when issued, sold and delivered in accordance with the terms hereof: (i) will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens; and (ii) based in part upon the representations of Purchaser in this Agreement, will be issued, sold and delivered in compliance with all applicable Federal and state securities laws. The Warrant Shares are duly authorized and reserved for issuance and, upon exercise of the Warrant in accordance with its terms, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. Upon payment of the Purchase Price at the Closing, Purchaser will acquire good and marketable title to the Shares, free and clear of all Liens. Upon payment of the Purchase Price at the Closing, Purchaser will acquire good and marketable title to the Warrant, free and clear of all Liens. Upon exercise of the Warrant in accordance with its terms, including payment of the consideration in the form and amount specified therein, Purchaser will acquire good and marketable title to the Warrant Shares, free and clear of all Liens. 3.7 No Conflict with Other Instruments. Neither the Company nor any of its subsidiaries is in violation of any provisions of its Certificate of Incorporation or Bylaws as amended and in effect on and as of the date hereof; the Company is not in default (and no event has occurred which, with notice or lapse of time or both, would constitute a default) under any material provision of any material instrument or contract to which it is a party or by which it is bound, or of any provision of any Federal or state judgment, writ, decree, order, statute, rule or governmental regulation applicable to the Company, which would have a material adverse effect on the business, operations or financial condition of the Company and its subsidiaries taken as a whole. The execution, delivery and performance of this Agreement and the other Transaction -7- Documents, and the consummation of the transactions contemplated hereby and thereby (including without limitation the issuance and reservation for issuance of the Warrant Shares) will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument or contract or an event which results in the creation of any lien, charge or encumbrance upon any assets of the Company. 3.8 Financial Condition; Taxes; Litigation. 3.8.1 The Company's financial condition is, in all material respects, as described in the Disclosure Documents, except for changes in the ordinary course of business and normal year-end adjustments that are not, in the aggregate, materially adverse to the Company. Except as otherwise described in the Disclosure Documents, as of the date hereof and as of the Closing there has been no material adverse change to the Company's business, operations, properties, financial condition or results of operations since the date of the Company's most recent audited financial statements contained in the Disclosure Documents. 3.8.2 The Company has filed all tax returns required to be filed by it and paid all taxes which are due, except for taxes which it reasonably disputes or which could not reasonably be expected to have a material adverse effect on the consolidated business or financial condition of the Company. 3.8.3 Except as set forth on Schedule 3.8.3, the Company is not the subject of any pending or, to its knowledge, threatened investigation or administrative or legal proceeding by the Internal Revenue Service, the taxing authorities of any state or local jurisdiction, the Commission or any state securities commission or other governmental entity which could reasonably be expected to have a material adverse effect on the business, operations or financial condition of the Company and its subsidiaries taken as a whole. 3.8.4 Except as set forth on Schedule 3.8.4, there is no material claim, litigation or administrative proceeding pending, or, to the best of the Company's knowledge, threatened, against the Company or against any officer, director or employee of the Company in connection with such person's employment therewith. The Company is not a party to or subject to the provisions of, any order, writ, injunction, judgment or decree of any court or government agency or instrumentality which could reasonably be expected to have a material adverse effect on the business, operations or financial condition of the Company and its subsidiaries taken as a whole. 3.9 Reporting Company; Form S-3. The Company is subject to the reporting requirements of the Exchange Act, has a class of securities registered under Section 12 of the Exchange Act, and has filed all reports required thereby. The Company is eligible to register for resale shares of its Common Stock on a registration statement on Form S-3 under the Securities Act. 3.10 No Reliance by Company. The Company acknowledges that (i) it has such knowledge in business and financial matters as to be fully capable of evaluating this Agreement, -8- the other Transaction Documents and the transactions contemplated hereby and thereby, (ii) it is not relying on any advice or representation of Purchaser in connection with entering into this Agreement, the other Transaction Documents or such transactions (other than the representations made by Purchaser in this Agreement and the other Transaction Documents), (iii) it has not received from Purchaser any assurance or guarantee as to the merits (whether legal, regulatory, tax, financial or otherwise) of entering into this Agreement or the other Transaction Documents or the performance of its obligations hereunder and thereunder, and (iv) it has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that it has deemed necessary, and has entered into this Agreement and the other Transaction Documents based on its own independent judgment and on the advice of its advisors as it has deemed necessary, and not on any view (whether written or oral) expressed by Purchaser. 3.11 Acknowledgment of Dilution. The Company acknowledges that the issuance of the Warrant Shares upon exercise of the Warrant Shares in accordance with its terms may result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligation to issue Warrant Shares upon exercise of the Warrant in accordance with its terms is unconditional and absolute regardless of the effect of any such dilution. 3.12 Registration Rights; Rights of Participation. Except as described on Schedule 3.12 hereto, (A) the Company has not granted or agreed to grant to any person or entity any rights (including "piggy-back" registration rights) to have any securities of the Company registered with the Commission or any other governmental authority and (B) no person or entity, including, but not limited to, current or former shareholders of the Company, underwriters, brokers, agents or other third parties, has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement or any other Transaction Document which has not been waived. 3.13 Trading on Nasdaq. The Common Stock is authorized for quotation on the Nasdaq National Market, and trading in the Common Stock on Nasdaq has not been suspended as of the date hereof and as of the Closing Date. 3.14 Solicitation. Neither the Company nor any of its subsidiaries or affiliates, nor any person acting on its or their behalf, (i) has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Shares and the Warrant; or (ii) has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under any circumstances that would require registration of the Shares or the Warrant under the Securities Act. 3.15 Fees. The Company is not obligated to pay any compensation or other fee, cost or related expenditure to any underwriter, broker, agent or other representative in connection with the transactions contemplated hereby. -9- 3.16 Foreign Corrupt Practices. Neither the Company, nor any of its subsidiaries nor any director, officer, agent, employee or other person acting on behalf of the Company or any subsidiary has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee, (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee. 3.17 Pending Acquisitions. With respect to any acquisition of assets or securities by the Company or any of its subsidiaries, the agreement for which has been executed as of the date of this Agreement, the closing of such acquisition, and the obligations of the parties thereunder, are not conditioned in any respect on the maintenance at any given level of the closing bid, ask or sale price of the Common Stock as quoted by Nasdaq. 3.18 Environmental Matters. Except as set forth in the Disclosure Documents or on Schedule 3.18 hereof, the following representations and warranties shall be true with respect to the Company and its subsidiaries (and only those subsidiaries owned by the Company as of May 16, 1997) as of May 16, 1997: 3.18.1 To the best of the Company's knowledge, the Company and each of its subsidiaries is in material compliance with all Environmental, Health and Safety Laws (as defined below) governing its business, operations, properties and assets. Neither the Company nor any of its subsidiaries is currently liable for any penalties, fines or forfeitures for failure to comply with any Environmental, Health and Safety Laws. 3.18.2 The Company and each of its subsidiaries has obtained, or caused to be obtained, and to the best of the Company's knowledge, is in material compliance with, all applicable and material licenses, certificates, permits, approvals and registrations required by the Environmental, Health and Safety Laws (collectively, "Licenses"). There are no administrative or judicial investigations, notices, claims or other proceedings pending or threatened by any governmental authority or third parties against the Company or any of its subsidiaries, their respective businesses, operations, properties or assets, which question the validity or entitlement of the Company or any of its subsidiaries to any License wherein an unfavorable decision, ruling or finding could have a material adverse effect on the Company or any of its subsidiaries. 3.18.3 Neither the Company nor any of its subsidiaries has received or is aware of any non-compliance order, warning letter, investigation, notice of violation, claim, suit, action, judgment or administrative or judicial proceeding pending or threatened against or involving the Company or any of its subsidiaries, issued by any governmental authority or third party with respect to any Environmental, Health and Safety Laws, which has not been resolved to the satisfaction of the issuing governmental authority or third party and which could have a material adverse effect on the Company or any of its subsidiaries. -10- 3.18.4 To the best of the Company's knowledge, neither the Company nor any of its subsidiaries has generated, manufactured, used, transported, transferred, stored, handled, treated, Discharged, Released or disposed of, nor has it allowed or arranged for any third parties to generate, manufacture, use, transport, transfer, store, handle, treat, Discharge, Release or dispose of, Hazardous Substances or other Waste (as defined below) to or at any location other than a site lawfully permitted to receive such Hazardous Substances or other waste for such purposes, nor has it performed, arranged for or allowed by any method or procedure such generation, manufacture, use, transportation, transfer, storage, treatment, spillage, leakage, dumping, Discharge, Release or disposal in material contravention of any Environmental, Health and Safety Laws. To the best of the Company's knowledge, neither the Company nor any of its subsidiaries has generated, manufactured, used, stored, handled, treated, Discharged, Released or disposed of, or allowed or arranged for any third parties to generate, manufacture, use, store, handle, treat, spill, leak, dump, discharge, release or dispose of, any material quantities of Hazardous Substances or other waste upon property currently or previously owned or leased by it, except as permitted by law. For purposes of this Agreement, the term "Hazardous Substances" means any toxic or hazardous substance, material, or waste, any other contaminant, pollutant or constituent thereof, whether liquid, solid, semi-solid, sludge and/or gaseous, including without limitation, chemicals, compounds, metals, by-products, pesticides, asbestos containing materials, petroleum or petroleum products, and polychlorinated biphenyls, the presence of which requires investigation or remediation under any Environmental, Health and Safety Laws or which are or become regulated, listed or controlled by, under or pursuant to any Environmental Health and Safety Laws. For purposes of this Agreement, the term "Waste" means agricultural wastes, biomedical wastes, biological wastes, bulky wastes, construction and demolition debris, garbage, household wastes, industrial solid wastes, liquid wastes, recyclable materials, sludge, solid wastes, special wastes, used oils, white goods, and yard trash. 3.18.5 To the best of the Company's knowledge, neither the Company nor any of its subsidiaries has caused, nor allowed to be caused or permitted, either by action or inaction, a Release or Discharge, or threatened Release or Discharge, of any material quantity of Hazardous Substances on, into or beneath the surface of any parcel of the Owned Properties or the Leased Premises or to any properties adjacent thereto which would have a material adverse effect on the Company or its subsidiaries. To the best of the Company's knowledge, there has not occurred, nor is there presently occurring, a Release or Discharge, or, threatened Release or Discharge, of any material quantity of Hazardous Substances on, into or beneath the surface of any parcel of the Owned Properties or the Leased Premises or to any properties adjacent thereto which would have a material adverse effect on the Company or its subsidiaries. For purposes of this Agreement, the terms "Release" and "Discharge" shall have the meanings given them in the Environmental, Health and Safety Laws. 3.18.6 To the best of the Company's knowledge, neither the Company nor any of its subsidiaries has generated, handled, manufactured, treated, stored, used, shipped, transported, transferred or disposed of, nor has it allowed or arranged, by contract, agreement or otherwise, for any third parties to generate, handle, manufacture, treat, store, use, ship, transport, transfer or dispose of, any Hazardous Substances or other Waste to or at a site which, pursuant to -11- CERCLA or any similar state law, has been placed or been proposed for placement on the National Priorities List or its state equivalent. Neither the Company nor any of its subsidiaries has received notice, and neither the Company nor any of its subsidiaries has knowledge of any facts which could give rise to any notice, that the Company or any of its subsidiaries is a potentially responsible party for a federal or state environmental cleanup site or for corrective action under Environmental Health and Safety Laws. Neither the Company nor any of its subsidiaries has submitted or was required to submit any notice pursuant to Section 103(c) of CERCLA with respect to the Leased Premises or the Owned Properties. Neither the Company nor any of its subsidiaries has received any written request for information in connection with any federal or state environmental cleanup site, or in connection with any of the real property or premises where the Company or any of its subsidiaries has transported, transferred or disposed of other Wastes. Neither the Company nor any of its subsidiaries has been required to or has undertaken any response or remedial actions or clean-up actions of any kind at the request of any governmental authorities or at the request of any other third party. To the best of the Company's knowledge, neither the Company nor any of its subsidiaries has any material liability under any Environmental, Health and Safety Laws for personal injury, property damage, natural resource damage, or clean up obligations. 3.18.7 To the best of the Company's knowledge, there are no Aboveground Storage Tanks or Underground Storage Tanks on the Owned Properties or the Leased Premises. For purposes of this Agreement, the terms "Aboveground Storage Tanks" and "Underground Storage Tanks" shall have the meanings given them in Section 6901 et seq., as amended, of RCRA, or any applicable state or local statute, law, ordinance, code, rule, regulation, order, ruling or decree governing Aboveground Storage Tanks or Underground Storage Tanks. 3.18.8 Schedule 3.18 identifies (i) all material environmental audits, assessments or occupational health studies, of which the Company is aware, undertaken by the Company, its subsidiaries or their agents, or by any governmental authority, or by any third party, relating to or affecting the Company, its subsidiaries or any of the Leased Premises or the Owned Properties; and (ii) all material citations issued under OSHA, or similar state or local statutes, laws, ordinances, codes, rules, regulations, orders, rulings or decrees, relating to or affecting the Company or any of its subsidiaries or any of the Leased Premises or the Owned Properties. 3.18.9 Schedule 3.18 contains a list of the assets of the Company and its subsidiaries which have been confirmed to contain "Asbestos" or "Asbestos- Containing Material" (as such terms are identified under the Environmental, Health and Safety Laws). The Company and each of its subsidiaries has operated and continues to operate in material compliance with all Environmental, Health and Safety Laws governing the handling, use and exposure to and disposal of asbestos or asbestos-containing materials. There are no claims, actions, suits, governmental investigations or proceedings before any governmental authority or third party pending, or threatened against or directly affecting the Company, any of its subsidiaries, or any of their respective assets or operations relating to the use, handling or exposure to and disposal of asbestos or asbestos-containing materials in connection with their assets and operations. -12- 3.18.10 As used in this Agreement, "Environmental Health and Safety Laws" means all federal, state, regional or local statutes, laws, rules, regulations, codes, orders, plans, injunctions, decrees, rulings, and changes or ordinances or judicial or administrative interpretations thereof, any of which govern (or purport to govern) or relate to pollution, protection of the environment, public health and safety, air emissions, water discharges, hazardous or toxic substances, solid or hazardous waste or occupational health and safety, as any of these terms are or may be defined in such statutes, laws, rules, regulations, codes, orders, plans, injunctions, decrees, rulings and changes or ordinances, or judicial or administrative interpretations thereof, including, without limitation, the United States Department of Transportation Table (49 CFR 172, 101) or by the Environmental Protection Agency as hazardous substances (40 CFR Part 302) and any amendments thereto; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C. Section 9601, et seq. (collectively, "CERCLA"); the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and subsequent Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. section 6901 et seq. (collectively "RCRA"); the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section 1801, et seq.; the Clean Water Act, as amended, 33 U.S.C. Section 1311, et seq.; the Clean Air Act, as amended (42 U.S.C. Section 7401-7642); Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act as amended, 7 U.S.C. Section 136- 136y ("FIFRA"); the Emergency Planning and Community Right-to-Know Act of 1986 as amended, 42 U.S.C. Section 11001, et seq. (Title III of SARA) ("EPCRA"); the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Section 651, et seq. ("OSHA"); any similar state statute, or regulations implementing such statutes, laws, ordinances, codes, rules, regulations, orders, rulings, or decrees, or which has been or shall be determined or interpreted at any time by any governmental authority to be a hazardous or toxic substance regulated under any other statute, law, regulation, order, code, rule, order, or decree. 3.18.11 Schedule 3.18 identifies the operations and activities, and locations thereof, which have been conducted and are being conducted by the Company or any of its subsidiaries on any of the Owned Properties or the Leased Premises which have involved the generation, accumulation, storage, treatment, transportation, labeling, handling, manufacturing, use, spilling, leaking, dumping, discharging, release or disposal of any material quantities of Hazardous Substances. 3.18.12 To the best of the Company's knowledge, none of the Owned Properties or Leased Premises presently includes, or has been constructed upon, any "Wetlands" as defined under applicable Environmental, Health and Safety Laws. 3.18.13 Unless otherwise specified herein, as used in Section 3.18, the terms "Owned Properties" and "Leased Premises" are deemed to refer only to the properties currently owned or leased by the Company. -13- 4. COVENANTS. 4.1 Covenants of the Company. The Company hereby agrees and covenants with Purchaser as follows: 4.1.1 Corporate Existence. The Company shall, so long as Purchaser beneficially owns any Securities, maintain its corporate existence in good standing and shall pay all its taxes when due except for taxes which the Company reasonably disputes or which could not reasonably be expected to have a material adverse effect on the business, operations or financial condition of the Company and its subsidiaries taken as a whole. 4.1.2 Form D; Blue-Sky Qualification. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to Purchaser promptly after such filing. The Company shall, on or before the Closing, take such action as is necessary to qualify the Shares and the Warrant Shares for sale under applicable state or "blue-sky" laws or obtain an exemption therefrom, and shall provide evidence of any such action to Purchaser at or prior to the Closing. 4.1.3 Reporting Status. As long as Purchaser or any affiliate of Purchaser beneficially owns any Securities and until the date on which any of the foregoing may be sold to the public pursuant to Rule 144(k) (or any successor rule or regulation), (i) the Company shall timely file with the Commission all reports required to be so filed pursuant to the Exchange Act and (ii) the Company shall not terminate its status as an issuer required by the Exchange Act to file reports thereunder even if the Exchange Act or the rules or regulations thereunder would permit such termination. The Company will issue a press release (the form and content of which shall be subject to Purchaser's prior written comment) describing the transactions contemplated by this Agreement no later than the business day following the Closing Date. 4.1.4 Use of Proceeds. The Company shall use the proceeds from the sale of the Shares and Warrant for general corporate purposes and shall not use such proceeds to make a loan to or an investment in any other corporation, partnership or other entity, provided that the Company may use such proceeds as full or partial consideration for the purchase of more than 50% of the voting equity or substantially all of the assets of any corporation, partnership or other entity. 4.1.5 Quotation on Nasdaq. The Company shall promptly secure the designation and quotation of the Warrant Shares on the Nasdaq National Market and shall use its best efforts to maintain the designation and quotation, or listing, of the shares of Common Stock on the Nasdaq National Market or, if not quoted on such market, the New York Stock Exchange or other national securities exchange. 4.1.6 Use of Purchaser Name. The Company shall not use, directly or indirectly, Purchaser's name in any advertisement, announcement, press release or other similar -14- communication unless it has received the prior written consent of Purchaser for the specific use contemplated, or except as it may be required to do so, in the reasonable opinion of counsel to the Company, pursuant to applicable law or regulation, provided, whenever practicable, the Company first consults with Purchaser concerning the timing, form and content of such use before such use is made. 4.1.7 Company's Instructions to Transfer Agent. On or prior to the Closing, the Company shall execute and deliver a letter to its transfer agent (the "Transfer Agent"), thereby appointing the Transfer Agent as the Company's exercise agent and irrevocably instructing the Transfer Agent: (i) to issue certificates representing the Warrant Shares upon exercise of the Warrant in accordance with its terms upon receipt of a valid exercise from Purchaser; (ii) to issue certificates representing the number of Warrant Shares specified in such exercise notice, free of any restrictive legend, in the name of Purchaser or its nominee as long as the sale of the Warrant Shares is registered pursuant to an effective registration statement or such shares are eligible for resale under Rule 144(k); and (iii) to deliver certificates to such Purchaser no later than the close of business on the later to occur of (i) the third (3rd) business day following the date of exercise and (ii) the business day following the day on which the Warrant is received by the Company. As long as purchases and sales of shares of Common Stock are eligible for settlement at the Depository Trust Company ("DTC"), the Company may instruct the Transfer Agent that, in lieu of delivering physical certificates to Purchaser upon exercise of the Warrant, the Transfer Agent may effect delivery of Warrant Shares by crediting the account of Purchaser or its nominee at DTC for the number of shares for which delivery is required hereunder within the time frame specified above for delivery of certificates. The Company represents to and agrees with Purchaser that it will not give any instruction to the Transfer Agent that will conflict with the foregoing instruction or otherwise restrict Purchaser's right to exercise the Warrant or receive Warrant Shares in accordance with the terms of the Warrant, the Registration Rights Agreement and this Agreement, respectively. In the event the Company's relationship with the Transfer Agent should be terminated for any reason, the Transfer Agent shall continue acting as transfer agent pursuant to the terms hereof until such time that a successor transfer agent is appointed by the Company and agrees to be bound by the terms hereof. 4.1.8 Reservation of Shares. As long as the Warrant has not expired and all of the Warrant Shares issuable thereunder have not been issued, the Company at all times shall have authorized and reserved for issuance the number of shares of Common Stock remaining issuable thereunder. 4.1.9 Board Representation. Until the third anniversary of the Closing Date, so long as Purchaser and its affiliates do not sell or otherwise dispose of more than one-third of the Shares and the Warrant Shares (on an as exercised basis), other than to affiliates of Purchaser: (a) Purchaser shall be entitled to designate one director to the Company's board of directors; and (b) the Company shall take all necessary or appropriate action to assist in the nomination and election of Purchaser's designee as a director of the Company, with such designee's initial term of office to begin no later than six months after the Closing Date, provided, that the director so designated by Purchaser shall be either Mr. Sam Zell or Mr. Rod F. Dammeyer. -15- 4.2 Covenant of Purchaser. No Tender Offers. For a period of one year from the Closing Date, unless such shall have been specifically invited by the Company, neither Purchaser nor any of its affiliates (as defined under the Securities Exchange Act of 1934, as amended) (other than any public affiliates) will: (i) propose to the Company or any other person any transaction between Purchaser and the Company and/or its security holders or involving any of its securities or security holders, whether by merger, tender offer or otherwise; (ii) acquire, or assist, advise or encourage any other persons in acquiring, directly or indirectly, control of the Company, whether by solicitation of proxies or otherwise, or any of the Company's securities, businesses or assets; or (iii) request or demand the call, or participate with or in any way assist any other person in requesting or demanding the call of a special or annual meeting of shareholders. Purchaser also agrees that the Company shall be entitled to equitable relief, including injunction, in the event of any breach of the provisions of this paragraph; provided, however, that, notwithstanding anything to the contrary in this Section 4.2, Purchaser shall be entitled to sell or pledge the Shares, the Warrant and the Warrant Shares to any party whatsoever. 5. CONDITIONS TO CLOSING. 5.1 Conditions to Purchaser's Obligations at Closing. Purchaser's obligations at the Closing, including without limitation its obligation to purchase the Shares and the Warrant, are conditioned upon the fulfillment of each of the following events: 5.1.1 the representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects as of the date of the Closing as if made on such date; provided that the representations and warranties made by the Company in paragraph 3.18 shall be true and correct in all material respects as of the date specified therein; 5.1.2 the Company shall have complied with or performed all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed by the Company on or before the Closing; 5.1.3 the Company shall have delivered to Purchaser a certificate, signed by an officer of the Company, certifying that the conditions specified in paragraphs 5.1.1 and 5.1.2 above have been fulfilled; 5.1.4 the Company shall have delivered to Purchaser an opinion of counsel for the Company, dated as of the date of the Closing, in the form attached as Exhibit 5.1.4 hereto; 5.1.5 the Company and the other parties thereto shall have executed and delivered the Shelf Registration Rights Agreement, the Amended and -16- Restated Registration Rights Agreement and the Amended and Restated Stockholders' Agreement; 5.1.6 the Common Stock shall be designated for quotation and actively traded on the Nasdaq National Market; 5.1.7 there shall have been no material adverse changes in the consolidated business or financial condition of the Company and its subsidiaries taken as a whole since the date of the Company's most recent audited financial statements contained in the Disclosure Documents; and 5.1.8 the Company shall have authorized and reserved for issuance upon exercise of the Warrant in full the number of shares of Common Stock issuable thereunder. 5.2 Conditions to Company's Obligations at Closing. The Company's obligations at the Closing are conditioned upon the fulfillment of each of the following events: 5.2.1 the representations and warranties of Purchaser shall be true and correct in all material respects as of the date of the Closing as if made on such date; 5.2.2 Purchaser shall have complied with or performed all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed by Purchaser on or before the Closing; and 5.2.3 Purchaser shall have delivered to the Company a certificate, signed by an officer of Purchaser, certifying that the conditions specified in paragraphs 5.2.1 and 5.2.2 above have been fulfilled. 6. INDEMNIFICATION. The Company agrees to indemnify and hold harmless Purchaser and its officers, directors, employees and agents, and each person who controls Purchaser within the meaning of the Securities Act or the Exchange Act (each, a "Purchaser Indemnified Party") against any losses, claims, damages, liabilities or reasonable out-of-pocket expenses (including the reasonable fees and disbursements of counsel) as incurred, joint or several, to which it, they or any of them, may become subject and not otherwise reimbursed, arising out of or in connection with the breach by the Company of any of its representations, warranties or covenants made herein. In addition, in the event of a breach or inaccuracy (a) by Cozzi Iron & Metal, Inc. ("Cozzi"), Albert A. Cozzi, Frank J. Cozzi or Gregory P. Cozzi (the "Cozzi Shareholders") of the representation and warranty contained in Section 4.13 of that certain Agreement and Plan of Merger dated May 16, 1997 by and among Cozzi, the Cozzi Shareholders, the Company and CIM Acquisition Co. (the "Cozzi Agreement"), and/or (b) by the Isaac Corporation, Ferrex Trading Corporation, Paulding Recycling, Inc., Briquetting Corporation of America (the "Isaac Companies"), or any of the -17- former shareholders of the Isaac Companies (the "Isaac Shareholders") of the representation and warranty contained in Section 4.13 of that certain Purchase Agreement and Plan of Merger dated June 23, 1997 by and among the Isaac Companies, the Isaac Shareholders, the Company and Isaac Acquisition Corporation (the "Isaac Agreement"), for which the Company is entitled to indemnification pursuant to the Cozzi Agreement or the Isaac Agreement, as the case may be, the Company shall indemnify and hold harmless Purchaser against any losses, claims, damages, liabilities or reasonable out-of-pocket expenses (including the reasonable costs and disbursements of counsel) incurred by Purchaser as a result of such breach or inaccuracy. Purchaser agrees to indemnify and hold harmless the Company and its officers, directors, employees and agents, and each person who controls the Company within the meaning of the Securities Act or the Exchange Act (each, a "Company Indemnified Party") (a Purchaser Indemnified Party and a Company Indemnified Party are each hereinafter referred to as an "Indemnified Party") against any losses, claims, damages, liabilities or expenses (including the fees and disbursements of counsel) as incurred, joint or several, to which it, they or any of them, may become subject and not otherwise reimbursed, arising out of or in connection with the breach by Purchaser of any of its representations, warranties or covenants made herein. Promptly after receipt by an Indemnified Party of notice of the commencement of any action pursuant to which indemnification may be sought hereunder, such Indemnified Party will, if a claim in respect thereof is to be made against the other party (the "Indemnifying Party"), deliver to the Indemnifying Party a written notice of the commencement thereof and, upon delivery to the Indemnified Party of the Indemnifying Party's undertaking and agreement that such claim is within the scope of the Indemnifying Party's indemnity to the Indemnified Party under this Agreement, the Indemnifying Party shall have the right to participate in and to assume the defense thereof with counsel reasonably selected by the Indemnifying Party, provided, however, that an Indemnified Party shall have the right to retain its own counsel, with the reasonably incurred fees and expenses of such counsel to be paid by the Company, if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential conflicts of interest under applicable standards of professional conduct between such Indemnified Party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the Indemnifying Party within a reasonable time of the commencement of any such action will not relieve the Indemnifying Party of any of its obligations hereunder with respect to such action except to the extent such failure is prejudicial to the Indemnifying Party's ability to defend any such action. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of pending or threatened action in respect of which an Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party unless such settlement includes an unconditional release of such Indemnified Party from all liability on any claims that are the subject matter of such action. An Indemnifying Party will not be liable for any settlement of any action or claim effected without its written consent. -18- 7. MISCELLANEOUS. 7.1 Survival; Severability. The representations and warranties made by the parties herein shall survive the Closing until the sooner to occur of the date which is (i) eighteen (18) months from the date hereof or (ii) the first date on which the Purchaser no longer owns any Shares or Warrant Shares (on an as exercised basis), notwithstanding any due diligence investigation made by or on behalf of the Purchaser. No claim may be asserted by Purchaser for any breach or misrepresentation of any representation or warranty of the Company after such representations and warranties have expired; provided, however, that any claims first asserted within the survival period shall not thereafter be barred. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that no such severability shall be effective if it materially changes the economic benefit of this Agreement to either party. 7.2 Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. The Purchaser may assign its rights hereunder (other than those under Section 4.1.9 hereof), in connection with any private sale or transfer of the Shares, so long as, as a condition precedent to such transfer, the transferee executes an acknowledgment agreeing to be bound by the applicable provisions of this Agreement, in which case the term "Purchaser" shall be deemed to refer to such transferee as though such transferee were an original signatory hereto. 7.3 Injunctive Relief. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to Purchaser and that the remedy or remedies at law for any such breach will be inadequate and agrees, in the event of any such breach, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate and specific performance of such obligations without the necessity of showing economic loss. 7.4 Governing Law; Jurisdiction. This Agreement shall be governed by and construed under the laws of the State of Delaware without regard to the conflict of laws provisions thereof. Each party hereby irrevocably submits to the jurisdiction of the state and federal courts sitting in the City of Wilmington, Delaware for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service -19- shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. 7.5 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. 7.6 Headings. The headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 7.7 Notices. Any notice, demand or request required or permitted to be given by any party to any other party pursuant to the terms of this Agreement shall be in writing and shall be deemed given: (i) when delivered personally or by verifiable facsimile transmission (with a hard copy to follow) on or before 5:00 p.m., eastern time, on a business day or, if such day is not a business day, on the next succeeding business day; (ii) on the next business day after timely delivery to an overnight courier; and (iii) on the third business day after deposit in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed to the parties as follows: If to the Company: Metal Management, Inc. 500 North Dearborn Street Suite 405 Chicago, Illinois 60610 Attn: Gerard M. Jacobs Fax: (312) 645-0714 With a copy to: Shefsky & Froelich Ltd. 444 North Michigan Avenue Suite 2500 Chicago, Illinois 60611 Attn: Stuart M. Savitz. Esq. Fax: (312) 527-5921 If to Purchaser: Samstock, L.L.C. Two North Riverside Plaza Suite 600 Chicago, Illinois 60606 -20- Attn: Rod F. Dammeyer Fax: (312) 454-0610 With a copy to: Rosenberg & Liebentritt, P.C. Two North Riverside Plaza Suite 1600 Chicago, Illinois 60606 Attn: Joseph M. Paolucci Fax: (312) 454-0335 or to such other address or fax number as any party shall specify in writing to the other parties. 7.8 Expenses. Except as otherwise specified herein, each of the Company and each Purchaser shall pay all costs and expenses that it incurs in connection with the negotiation, execution, delivery and performance of this Agreement. 7.9 Entire Agreement; Amendments. This Agreement and the other Transaction Documents constitute the entire agreement between the parties with regard to the subject matter hereof and thereof, superseding all prior agreements or understandings, whether written or oral, between or among the parties. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and Purchaser, and no provision hereof may be waived other than by a written instrument signed by the party against whom enforcement of any such waiver is sought. -21- IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first-above written. METAL MANAGEMENT, INC., a Delaware corporation By: ---------------------------------- Name: -------------------------------- Title: ------------------------------- SAMSTOCK, L.L.C., a Delaware limited liability company By: SZ Investments, L.L.C., its managing member By: Zell General Partnership, Inc., its managing member By: /s/ Rod Dammeyer ----------------------------------- Name: Rod Dammeyer --------------------------------- Title: Vice President -------------------------------- -22- EX-99.2 3 WARRANT, DATED 12/19/97 Exhibit 2 THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL, SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY APPLICABLE STATE SECURITIES LAWS. No. SAM-1 WARRANT December 19, 1997 ----- To Purchase 600,000 Shares of Common Stock of Metal Management, Inc. (the "Company") 1. Number of Shares; Exercise Price; Term. This certifies that, in consideration of purchasing 1,470,588 shares of the Company's common stock, $.01 per value per share ("Common-Stock"), Samstock, L.L.C., a Delaware limited liability company ("Investor"), is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time after the date hereof and at or prior to 11:59 p.m. Central Time, on December 18, 2002 (the "Expiration Time"), but not thereafter, to acquire from the Company, in whole or in part, from time to time, up to 400,000 fully paid and nonassessable shares (the "Shares") of Common Stock at a purchase price of Twenty Dollars ($20.00) per Share, as adjusted pursuant to Section 10 hereof for 400,000 Shares, and up to 200,000 Shares of Common Stock at a purchase price of Twenty-Three Dollars ($23.00) per Share, as adjusted pursuant to Section 10 hereof for 200,000 Shares (in either case the "Exercise Price"). The number of Shares, type of security and Exercise Price are subject to adjustment as provided herein, and all references to "Common Stock" and "Exercise Price" herein shall be deemed to include any such adjustment or series of adjustments. 2. Exercise of Warrant. ------------------- (a) Exercise Provisions. The purchase rights represented by this Warrant are exercisable by the Investor or its successors and assigns, in whole or in part, at any time, or from time to time, prior to the Expiration Time, by the surrender of this Warrant and the Notice of Exercise annexed hereto, all duly completed and executed on behalf of the Investor, at the office of the Company in Chicago, Illinois (or such other office or agency of the Company as it may designate by notice in writing to the Investor at the address of the Investor appearing on the books of the Company), and upon payment of the Exercise Price for the Shares thereby purchased (by cash, certified or cashier's check or wire transfer payable to the order of the Company, at the time of exercise in an amount equal to the purchase price of the Shares thereby purchased). Thereupon, the Investor as the holder of this Warrant, shall be entitled to receive from the Company a stock certificate in proper form representing the number of Shares so purchased, and a new Warrant in substantially identical form and dated as of such exercise for the purchase of that number of Shares equal to the difference, if any, between the number of Shares subject hereto and the number of Shares as to which this Warrant is so exercised. (b) Mandatory Exercise. Upon the occurrence of the Mandatory Exercise Conditions (as defined below), and at any time thereafter prior to the Expiration Time, the Company shall have the right, upon not less than fifteen (15) days written notice to Investor (the "Mandatory Exercise Notice"), to require the Investor to immediately exercise this Warrant, in whole or in part, for the Exercise Price and upon the terms and conditions of this Warrant. The "Mandatory Exercise Conditions" shall mean: (i) the Company shall have completed, following the date of this Warrant, one or more public offerings aggregating a total of not less than three million shares of Common Stock of the Company; and (ii) the average closing bid price for the Company's Common Stock for the sixty (60) trading days occurring immediately prior to (but not including) the date of the Mandatory Exercise Notice is not less than Thirty Dollars ($31.00) per share (subject to adjustments for stock splits, stock dividends, combinations, reclassifications or other similar events). 3. Issuance of Shares. Certificates for Shares purchased hereunder shall be delivered to the Investor within a reasonable time after the date on which this Warrant shall have been exercised in accordance with the terms hereof. All Shares that may be issued upon the exercise of this Warrant shall, upon such exercise, be duly and validly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issuance thereof (other than liens or charges created by or imposed upon the Investor as the holder of the Warrant or taxes in respect of any transfer occurring contemporaneously or otherwise specified herein). The Company agrees that the Shares so issued shall be and shall for all purposes be deemed to have been issued to the Investor as the record owner of such Shares as of the close of business on the date on which this Warrant shall have been exercised or converted in accordance with the terms hereof. In the event of any exercise of the rights represented by this Warrant, certificates for the shares of Common Stock so purchased shall be delivered to Investor within a reasonable time and, unless this Warrant has been fully exercised or has expired, a new Warrant of identical terms and provisions as those hereof, representing the shares with respect to which this Warrant shall not have been exercised shall also be issued to Investor within such time. 4. No Fractional Shares or Scrip. No fractional Shares or scrip representing fractional Shares shall be issued upon the exercise of this Warrant. In lieu of any fractional Share to which the Investor as the holder would otherwise be entitled, the Investor shall be entitled, at his option, to receive either (i) a cash payment equal to the excess of fair market value for such fractional Share above the Exercise Price for such fractional share (as determined in good faith by the Company) or (ii) a whole Share if the Investor tenders the Exercise Price for one whole share. 5. No Rights as Shareholders. This Warrant does not entitle the Investor as a holder hereof to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. -2- 6. Charges, Taxes and Expenses. Certificates for Shares issued upon exercise of this Warrant shall be issued in the name of the Investor as the holder of this Warrant. Issuance of certificates for Shares upon the exercise of this Warrant shall be made without charge to the Investor for any issue or transfer tax or other incidental expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company. 7. Exchange and Registry of Warrant. This Warrant is exchangeable, upon the surrender hereof by the Investor as the registered holder at the office or agency of the Company referenced in Section 2 above, for a new Warrant on substantially identical form and dated as of such exchange. The Company shall maintain at the office or agency referenced in Section 2 above, a registry showing the name and address of the Investor as the registered holder of this Warrant. This Warrant may be surrendered for exchange or exercise, in accordance with its terms, at the office of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry. 8. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in the case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation and reissuance, in lieu of this Warrant. 9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday or a Sunday or a legal holiday. 10. Adjustments of Rights. The purchase price per Share and the number of Shares purchasable hereunder are subject to adjustment from time to time as follows: (a) Merger or Consolidation. If at any time there shall be a merger or a consolidation of the Company with or into another corporation when the Company is not the surviving corporation, then, as part of such merger or consolidation, lawful provision shall be made so that the Investor as the holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the aggregate Exercise Price then in effect, the number of shares of stock or other securities or property (including cash) of the successor corporation resulting from such merger or consolidation, to which the Investor as the holder of the stock deliverable upon exercise of this Warrant would have been entitled in such merger or consolidation if this Warrant had been exercised immediately before such merger or consolidation. In any such case, appropriate adjustment shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Investor as the holder of this Warrant after the merger or consolidation. This provision shall apply to successive mergers or consolidations. -3- (b) Reclassification, Recapitalization, etc. If the Company at any time shall, by subdivision, combination or reclassification of securities, recapitalization, automatic conversion, or other similar event affecting the number or character of outstanding Shares, or otherwise, change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such subdivision, combination, reclassification or other change. (c) Split, Subdivision or Combination of Shares. If the Company at any time while this Warrant remains outstanding and unexpired shall split, subdivide or combine the securities as to which purchase rights under this Warrant exist, the Exercise Price shall be proportionately decreased in the case of a split or subdivision or proportionately increased in the case of a combination. (d) Common Stock Dividends. If the Company at any time while this Warrant is outstanding and unexpired shall pay a dividend with respect to Common Stock payable in Shares, or make any other distribution with respect to Common Stock, then the Exercise Price shall be adjusted, from and after the date of determination of the shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Exercise Price in effect immediately prior to such date of determination by a fraction (i) the numerator of which shall be the total number of Shares outstanding immediately prior to such dividend or distribution, and (ii) the denominator of which shall be the total number of Shares outstanding immediately after such dividend or distribution. This paragraph shall apply only if and to the extent that, at the time of such event, this Warrant is then exercisable for Common Stock. (e) Adjustment of Number of Shares. Upon each adjustment in the Exercise Price pursuant to 10(c) or 10(d) hereof, the number of Shares purchasable hereunder shall be adjusted, to the nearest whole Share, to the product obtained by multiplying the number of Shares purchasable immediately prior to such adjustment in the Exercise Price by a fraction (i) the numerator of which shall be the Exercise Price immediately prior to such adjustment, and (ii) the denominator of which shall be the Exercise Price immediately after such adjustment. 11. Notice of Adjustments; Notices. Whenever the Exercise Price or number or type of securities issuable hereunder shall be adjusted pursuant to Section 10 hereof, the Company shall issue and provide to the Investor as the holder of this Warrant a certificate signed by an officer of the Company setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Exercise Price and number of Shares purchasable hereunder after giving effect to such adjustment. 12. Governing Law. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of Delaware and for all purposes shall be construed in accordance with and governed by the laws of said state, without giving effect to the conflict of laws principles. -4- 13. Attorneys' Fees. In any litigation, arbitration or court proceeding between the Company and the Investor as the holder of this Warrant relating hereto, the prevailing party shall be entitled to reasonable attorneys' fees and expenses incurred in enforcing this Warrant. 14. Amendments. This Warrant may be amended and the observance of any term of this Warrant may be waived only with the written consent of the Company and the Investor as the holder hereof. 15. Notice. All notices hereunder shall be in writing and shall be effective (a) on the day on which delivered if delivered personally or transmitted by telex or telegram or telecopier with evidence of receipt, (b) one business day after the date on which the same is delivered to a nationally recognized overnight courier service with evidence of receipt, or (c) five business days after the date on which the same is deposited, postage prepaid, in the U.S. mail, sent by certified or registered mail, return receipt requested, and addressed to the party to be notified at the address indicated below for the Company, or at the address for the Investor as the holder set forth in the registry maintained by the Company pursuant to Section 7, or at such other address and/or telecopy or telex number and/or to the attention of such other person as the Company or the Investor as the holder may designate by ten-day advance written notice. 16. Entire Agreement. This Warrant and the form attached hereto contain the entire Agreement between the parties with respect to the subject matter hereof and supersede all prior and contemporaneous arrangements or undertakings with respect thereto. 17. Transfer. This Warrant may be transferred to any person or entity, at any time, in whole, or from time to time, in part, without the Company's consent, upon delivery of notice to the Company. IN WITNESS WHEREOF, Metal Management, Inc. has caused this Warrant to be executed by its duly authorized officer. Dated: December 19, 1997 METAL MANAGEMENT, INC. By: /s/ Gerard M. Jacobs ------------------------------------- Name: Gerard M. Jacobs ----------------------------------- Title: Chief Executive Officer ---------------------------------- Address: 500 North Dearborn Street Suite 405 Chicago, Illinois 60610 -5- NOTICE OF EXERCISE ------------------ To: Metal Management, Inc. 1. The undersigned hereby elects to purchase ________________ shares (the "Shares") of common stock $.01 par value of Metal Management, Inc. (the "Company") pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price and any transfer taxes payable pursuant to the terms of the Warrant, together with an investment Representation Statement in form and substance satisfactory to legal counsel to the Company. 2. The Shares to be received by the undersigned upon exercise of the Warrant are being acquired for its own account, not as a nominee or agent, and not with a view to resale or distribution of any part thereof, and the undersigned has no present intention of selling, granting any participation in, or otherwise distributing the same, except in compliance with applicable federal and state securities laws. The undersigned further represents that it does not have any contract, undertaking, Agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to the Shares. The undersigned believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares. 3. The undersigned understands that the Shares are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in transactions not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act of 1933, as amended (the "Act"), only in certain limited circumstances. In this connection, the undersigned represents that it is familiar with Rule 144 of the Act, as presently in effect, and understands the resale limitations imposed thereby and by the Act. 4. The undersigned understands the certificates evidencing the Shares may bear one or all of the following legends: (a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT." (b) Any legend required by applicable state law. 5. Please issue a certificate or certificates representing said Shares in the name of the undersigned. ----------------------------------------- [Name] 6. Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned. ----------------------------------------- [Name] - ------------------------ ----------------------------------------- [Date] [Signature] -2- - ------------- COMPARISON OF FOOTERS ------------- - -FOOTER 1- ========== SMS/317023/121697/8:35pm/SDF/22621 ================================== -3- EX-99.3 4 SHELF REGISTRATION RIGHTS AGREEMENT,DATED 12/19/97 Exhibit 3 SHELF REGISTRATION RIGHTS AGREEMENT ----------------------------------- SHELF REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of December 19, 1997, by and among Metal Management, Inc., a Delaware corporation (the "Company"), and Samstock, L.L.C., a Delaware limited liability company ("Purchaser"). RECITALS A. The Company has agreed, on the terms and subject to the conditions set forth in the Securities Purchase Agreement of even date herewith (the "Securities Purchase Agreement"), to issue and sell to Purchaser in the aggregate (i) 1,470,588 shares (the "Shares") of the Company's Common Stock, $.01 par value per share (the "Common Stock"), and (ii) a warrant (the "Warrant") to purchase an additional 600,000 shares of Common Stock (the "Warrant Shares"). B. In order to induce the Purchaser to enter into the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended (the "Securities Act"), and under applicable state securities laws. Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Securities Purchase Agreement. In consideration of Purchaser entering into the Securities Purchase Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. DEFINITIONS. ------------ For purposes of this Agreement, the following terms shall have the meanings specified: (a) "Filing Deadline" means 120 days following the Closing Date; (b) "Registration Deadline" means 180 days following the Closing Date; (c) "Holder" means any person owning or having the right to acquire, through exercise of the Warrant, Registrable Securities, including initially Purchaser and thereafter any permitted assignee thereof; (d) "Register", "registered" and "registration" refer to a registration effected by preparing and filing a shelf registration statement or statements in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act ("Rule 415") or any successor rule providing for the offering of securities on a continuous basis ("Registration Statement"), and the declaration or ordering of effectiveness of the Registration Statement by the Securities and Exchange Commission (the "Commission"); and (e) "Registrable Securities" means (i) Shares and the Warrant Shares, and (ii) any shares of capital stock issued or issuable from time to time (with any adjustments) in replacement of, in exchange for or otherwise in respect of such shares. 2. MANDATORY REGISTRATION. ---------------------- (a) On or before Filing Deadline, the Company shall prepare and file a Registration Statement on Form S-3 (or, if Form S-3 is not available, on such form of Registration Statement as is then available to effect a registration of the Registrable Securities as a "shelf" registration statement under Rule 415) covering the resale of the Shares and the Warrant Shares and including in the "plan of distribution" and the definition of "selling shareholder" pledgees, donees, transferees or other successors in interest of the selling shareholders. The Registration Statement shall state, to the extent permitted by Rule 416 under the Securities Act, that it also covers such indeterminate number of shares of Common Stock as may be required to prevent dilution resulting from stock splits, stock dividends or similar events. (b) The Company shall cause the Registration Statement to become effective as soon as practicable following the filing thereof but in no event later than the Registration Deadline, and shall submit to the Commission, within five (5) business days after the Company learns that no review of the Registration Statement will be made by the staff of the Commission or that the staff of the Commission has no further comments on the Registration Statement, as the case may be, a request for acceleration of the effectiveness of the Registration Statement to a time and date not later than forty-eight (48) hours after the submission of such request, and maintain the effectiveness of the Registration Statement until the earlier to occur of (i) the date on which all of the Registrable Securities have been sold and (ii) the date on which all of the remaining Registrable Securities (in the reasonable opinion of counsel to the Purchaser) may be immediately sold to the public without registration and without regard to the amount of Registrable Securities which may be sold by a Holder thereof at a given time (the "Registration Period"). (c) The Filing Deadline and the Registration Deadline shall be extended by the number of days (not exceeding an aggregate for both such dates, when taken together, of thirty (30) days) during (i) any period in which the Company has been advised by its outside counsel that the Registration Statement will not be accepted for filing by the Commission as a result of the Company then having on file a registration statement which has not yet gone effective or a proxy statement that is then being reviewed by the Commission (a "Filing Delay Period"), and (ii) any period in which the Board of Directors of the Company determines in good faith (A) that an amendment or supplement to the Registration Statement or prospectus contained therein is necessary in order to correct a material misstatement made therein or to include information the absence of which would render the Registration Statement or such prospectus materially misleading and (B) that the disclosure of such information at such time would be detrimental to the business or prospects of the Company; provided that no such period specified in this clause (ii) may exceed ten (10) days unless, prior to the end of such ten day period, the Company obtains the written advice of its outside legal counsel that an amendment or supplement to the -2- Registration Statement or prospectus contained therein is necessary in order to correct a material misstatement made therein or to include information the absence of which would render the Registration Statement or such prospectus materially misleading (a "Standstill Period"). (d) If (A) the Registration Statement (i) is not filed by the Filing Deadline or (ii) is not declared effective by the Commission on or before the Registration Deadline, (B) after the Registration Statement has been declared effective by the Commission, sales of Registrable Securities cannot be made by a Holder under the Registration Statement for any reason not within the exclusive control of such Holder, or (C) the Common Stock is not included for quotation on the Nasdaq National Market ("Nasdaq") or listed on the New York Stock Exchange (the "NYSE") or other national securities exchange at any time after the Registration Deadline, the Company shall pay to such Holder an amount equal to the lesser of (x) two percent (2%) per month and (y) the highest rate permitted by applicable law, times the aggregate purchase price of the Shares, the Warrant and/or the Warrant Shares held by such Holder, accruing daily and compounded monthly, (I) from the Filing Deadline until the date on which the Registration Statement is filed with the Commission, (II) from the Registration Deadline until the date on which the Registration Statement is declared effective, (III) from the date on which the Registration Statement is unavailable for sales of Registrable Securities by a Holder until the Registration Statement becomes available for sales of Registrable Securities; provided that the Registration Statement will not be considered unavailable for the number of days occurring during a Standstill Period which takes place after the effectiveness of the Registration Statement, or (IV) from the date on which the Common Stock is no longer quoted or listed on Nasdaq, the NYSE or such other exchange until the date on which the Common Stock becomes so listed or quoted, as the case may be. The amounts paid or payable by the Company hereunder shall be in addition to any other remedies available to Purchaser at law or in equity or pursuant to the terms of any other Transaction Document. Payments of cash pursuant hereto shall be made within five (5) days after the end of each period that gives rise to such obligation, provided that, if any such period extends for more than thirty (30) days, payments shall be made at the end of each thirty-day period. 3. OBLIGATIONS OF THE COMPANY. -------------------------- In addition to performing its obligations under paragraphs 2(a) and (b) above, the Company shall: (a) prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the Securities Act or to maintain the effectiveness of the Registration Statement during the Registration Period, or as may be reasonably requested by a Holder in order to incorporate information concerning such Holder or such Holder's intended method of distribution; (b) secure the designation and quotation of the Registrable Securities on the Nasdaq National Market; -3- (c) furnish to each Holder such number of copies of the prospectus included in such Registration Statement, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as such Holder may reasonably request in order to facilitate the disposition of such Holder's Registrable Securities; (d) use its best efforts to register or qualify the Registrable Securities under the securities or "blue sky" laws of such jurisdictions within the United States as shall be reasonably requested from time to time by a Holder, and do any and all other acts or things which may be necessary or advisable to enable such Holder to consummate the public sale or other disposition of the Registrable Securities in such jurisdictions; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such jurisdiction; (e) in the event of an underwritten public offering of the Registrable Securities, enter into and perform its obligations under an underwriting agreement, in usual and customary form reasonably acceptable to the Company, with the managing underwriter of such offering; (f) notify each Holder immediately upon the occurrence of any event as a result of which the prospectus included in such Registration Statement, as then in effect, contains an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and as promptly as practicable, prepare, file and furnish to each Holder a reasonable number of copies of a supplement or an amendment to such prospectus as may be necessary so that such prospectus does not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (g) use its best efforts to prevent the issuance of any stop order or other order suspending the effectiveness of such Registration Statement and, if such an order is issued, to obtain the withdrawal thereof at the earliest possible time and to notify each Holder of the issuance of such order and the resolution thereof; (h) furnish to each Holder, on the date that such Registration Statement becomes effective, (x) an opinion, dated such date, of outside counsel representing the Company addressed to such Holder and in form and substance as is customarily given to underwriters in an underwritten public offering, and (y) in the case of an underwriting, a letter, dated such date, from the Company's independent certified public accountants, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to each Holder; and (i) permit counsel for each Holder to review such Registration Statement and all amendments and supplements thereto, and provide such counsel with the opportunity to conduct a reasonable inquiry of the Company's financial and other records during normal business hours and make available its officers, directors and employees for questions regarding -4- information contained in such Registration Statement, amendments or supplements, a reasonable period of time prior to the filing thereof with the Commission. 4. OBLIGATIONS OF EACH HOLDER. -------------------------- In connection with the registration of the Registrable Securities pursuant to the Registration Statement, each Holder shall: (a) furnish to the Company such information regarding itself and the intended method of disposition of Registrable Securities as the Company shall reasonably request in order to effect the registration thereof; and (b) upon receipt of any notice from the Company of the happening of any event of the kind described in paragraph 4(f) or 4(g) above, immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement until the Registration has been amended in accordance with paragraph 4(f) or until withdrawal of the stop order referred to in paragraph 4(g), as the case may be. 5. INDEMNIFICATION. --------------- In the event that any Registrable Securities are included in a Registration Statement under this Agreement: (a) To the extent permitted by law, the Company shall indemnify and hold harmless each Holder, the officers, directors, employees, agents and representatives of such Holder, and each person, if any, who controls such Holder within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the "1934 Act"), against any losses, claims, damages, liabilities or reasonable out-of-pocket expenses (whether joint or several) (collectively, including legal or other expenses reasonably incurred in connection with investigating or defending same, "Losses"), insofar as any such Losses arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (collectively, "Violations"). The Company will reimburse such Holder, and each such officer, director, employee, agent, representative or controlling person for any legal or other expenses as reasonably incurred by any such entity or person in connection with investigating or defending any Loss; provided, however, that the foregoing indemnity shall not apply to amounts paid in settlement of any Loss if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be obligated to indemnify any person for any Loss to the extent that such Loss arises out of or is based upon and in conformity with written information furnished by such person expressly for use in such Registration Statement; and provided, further, that the Company shall not be required to -5- indemnify any person to the extent that any Loss results from such person selling Registrable Securities (i) to a person to whom there was not sent or given, at or prior to the written confirmation of the sale of such shares, a copy of the prospectus, as most recently amended or supplemented, if the Company has previously furnished or made available copies thereof or (ii) during any period following written notice by the Company to such Holder of an event described in Section 4(f) or 4(g). (b) To the extent permitted by law, each Holder, acting severally and not jointly, shall indemnify and hold harmless the Company, the officers, directors, employees, agents and representatives of the Company, and each person, if any, who controls the Company within the meaning of the Securities Act or the 1934 Act, against any Losses to the extent (and only to the extent) that any such Losses arise out of or are based upon and in conformity with written information furnished by such Holder expressly for use in such Registration Statement; and such Holder will reimburse any legal or other expenses as reasonably incurred by the Company and any such officer, director, employee, agent, representative, or controlling person, in connection with investigating or defending any such Loss; provided, however, that the foregoing indemnity shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of such Holder, which consent shall not be unreasonably withheld; provided, that, in no event shall any indemnity under this subsection 6(b) exceed the net purchase price of securities sold by such Holder under the Registration Statement. (c) Promptly after receipt by an indemnified party under this Section 6 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the reasonably incurred fees and expenses of one such counsel to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate under applicable standards of professional conduct due to actual or potential conflicting interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, to the extent prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 6 with respect to such action, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 6 or with respect to any other action. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 6 is unavailable or insufficient to hold harmless an indemnified party for any reason, the Company and each Holder agree, severally and not jointly, to contribute to the aggregate Losses to which the Company or such Holder may be subject in such proportion as is appropriate to reflect the relative fault of the Company and such Holder in connection with the statements or -6- omissions which resulted in such Losses; provided, however, that in no case shall such Holder be responsible for any amount in excess of the net purchase price of securities sold by it under the Registration Statement. Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by the Company or by such Holder. The Company and each Holder agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation. For purposes of this Section 6, each person who controls a Holder within the meaning of either the Securities Act or the 1934 Act and each officer, director, employee, agent or representative of such Holder shall have the same rights to contribution as such Holder, and each person who controls the Company within the meaning of either the Securities Act or the Exchange Act and each officer, director, employee, agent or representative of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). (e) The obligations of the Company and each Holder under this Section 6 shall survive the conversion or redemption, if any, of the Preferred Shares, the completion of any offering of Registrable Securities pursuant to a Registration Statement under this Agreement, or otherwise. 6. REPORTS. ------- With a view to making available to each Holder the benefits of Rule 144 under the Securities Act ("Rule 144") and any other rule or regulation of the Commission that may at any time permit such Holder to sell securities of the Company to the public without registration, the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144; (b) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the 1934 Act; and (c) furnish to such Holder, so long as such Holder owns any Registrable Securities, and until such Registrable Securities are eligible for sale pursuant to Rule 144(k), forthwith upon request (i) a written statement by the Company, if true, that it has complied with the reporting requirements of Rule 144, the Securities Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing such Holder of any rule or regulation of the Commission which permits the selling of any such securities without registration. -7- 7. MISCELLANEOUS. ------------- (a) Expenses of Registration. All expenses, other than underwriting discounts and commissions and fees and expenses of counsel to each Holder, incurred in connection with the registrations, filings or qualifications described herein, including (without limitation) all registration, filing and qualification fees, printers' and accounting fees, the fees and disbursements of counsel for the Company, and the fees and disbursements incurred in connection with the opinion and letter described in paragraph 4(h) hereof, shall be borne by the Company. (b) Amendment; Waiver. Any provision of this Agreement may be amended only pursuant to a written instrument executed by the Company and each Holder. Any waiver of the provisions of this Agreement may be made only pursuant to a written instrument executed by the party against whom enforcement is sought. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each Holder, each future Holder, and the Company. (c) Notices. Any notice, demand or request required or permitted to be given by the Company or a Holder pursuant to the terms of this Agreement shall be in writing and shall be deemed given (i) when delivered personally or when sent by verifiable facsimile transmission (with a hard copy to follow), (ii) on the next business day after timely delivery to an overnight courier and (iii) on the third business day after deposit in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed to the parties at the addresses set forth in the Securities Purchase Agreement, or to such other address or fax number as any party shall notify the others in accordance herewith. (d) Termination. This Agreement shall terminate on the earlier to occur of (a) the end of the Registration Period and (b) the date on which all of the Registrable Securities have been publicly distributed; but any such termination shall be without prejudice to (i) the parties' rights and obligations arising from breaches of this Agreement occurring prior to such termination and (ii) the indemnification obligations under this Agreement. (e) Assignment. The rights of a Holder hereunder shall be assigned automatically to any transferee of the Warrant Shares or Registrable Securities from such Holder as long as: (i) the Company is, within a reasonable period of time following such transfer, furnished with written notice of the name and address of such transferee, (ii) the transferee agrees in writing with the Company to be bound by all of the provisions hereof and (iii) such transfer is made in accordance with the applicable requirements of the Securities Purchase Agreement. (f) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflict of laws provisions thereof. -8- IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first-above written. METAL MANAGEMENT, INC., a Delaware corporation By:_____________________________________________ Name:___________________________________________ Title:__________________________________________ SAMSTOCK, L.L.C., a Delaware limited liability company By: SZ Investments, L.L.C., its managing member By: Zell General Partnership, Inc., its managing member By: /s/ Rod Dammeyer --------------------------------------- Name: Rod Dammeyer ------------------------------------- Title: Vice President ------------------------------------ 316230.5 -9- EX-99.4 5 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT Exhibit 4 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT This Amended and Restated Registration Rights Agreement (the "Agreement") is made and entered into as of the 19th day of December, 1997, by and between Metal Management, Inc., a Delaware corporation (the "Company"), and T. Benjamin Jennings, Gerard M. Jacobs, Albert A. Cozzi, Frank J. Cozzi, Gregory P. Cozzi and Samstock, L.L.C., a Delaware limited liability company (each a "Stockholder" and collectively the "Stockholders"). RECITALS A. The Stockholders and the Company are parties to that certain Amended and Restated Stockholders' Agreement dated of even date herewith (the "Stockholders' Agreement"), pursuant to which each Stockholder has agreed to certain restrictions on the transfer of their shares of common stock, par value $.01 per share of the Company (the "Common Stock"). B. T. Benjamin Jennings, Gerard M. Jacobs, Albert A. Cozzi, Frank J. Cozzi, Gregory P. Cozzi, together with the Corporation, entered into a Registration Rights Agreement dated as of December 1, 1997 (the "Original Registration Rights Agreement"). C. Pursuant to that certain Securities Purchase Agreement (the "Securities Purchase Agreement") dated as of December 19, 1997, by and between the Corporation and Samstock, L.L.C., a Delaware limited liability company (the "Purchaser"), Purchaser acquired 1,470,588 shares of Common Stock and a warrant to purchase an additional 600,000 shares of Common Stock. D. The parties to the Original Registration Rights Agreement desire to amend and restate the Original Registration Rights Agreement in its entirety to, among other things, include Purchaser as a party to the Agreement. NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the parties hereto agree that the Original Registration Rights Agreement is amended and restated in its entirety to read as follows: 1. (a) Piggyback Registration. If, at any time during the five-year period commencing December 1, 1999, the Company shall file a registration statement (other than a registration statement on Form S-4, Form S-8, or any successor form) with the Securities and Exchange Commission (the "Commission") while any Registrable Securities (as hereinafter defined) are outstanding, the Company shall give all the Stockholders who are then holders of any Registrable Securities (the "Eligible Holders") at least 30 days' prior written notice of the filing of such registration statement. If requested by an Eligible Holder in writing within 20 days after receipt of any such notice, the Company shall, at the Company's sole expense (other than the fees and disbursements of counsel for the Eligible Holders, and the underwriting discounts, if any, payable in respect of the Registrable Securities sold by any Eligible Holder), register all or, at each Eligible Holder's option, any portion of the Registrable Securities of any Eligible Holders who shall have made such request, concurrently with the registration of such other securities, all to the extent requisite to permit the public offering and sale of the Registrable Securities through the facilities of all appropriate securities exchanges, if any, on which the Company's Common Stock is being sold or on the over-the- counter market, and will use its best efforts through its officers, directors, auditors, and counsel to cause such registration statement to become effective as promptly as practicable. Notwithstanding the foregoing, if the managing underwriter of any such offering shall advise the Company in writing that, in its opinion, the distribution of all or a portion of the Registrable Securities requested to be included in the registration concurrently with the securities being registered by the Company would materially adversely affect the distribution of such securities by the Company for its own account, then any Eligible Holder who shall have requested registration of his or its Registrable Securities shall delay the offering and sale of such Registrable Securities (or the portions thereof so designated by such managing underwriter) for such period, not to exceed 120 days (the "Delay Period"), as the managing underwriter shall request. As used herein, "Registrable Securities" shall mean (i) the shares of Common Stock owned by the Stockholders on the date hereof as set forth on Schedule 1(a) and (ii) the shares of Common Stock for which the options and warrants listed on Schedule 1(a) are exercised, which, with respect to each Stockholder, have not been previously sold pursuant to a registration statement or Rule 144 promulgated under the Securities Act of 1933, as amended (the "Securities Act"). (b) Demand Registration. If, at any time during the five-year period commencing December 1, 1999, the Company shall receive a written request from Eligible Holders who in the aggregate own at least 25% of the total number of shares of Common Stock then included (or upon such exercises would be included) in the Registrable Securities (the "Majority Holders"), to register the sale of all or part of such Registrable Securities, the Company shall, as promptly as practicable, at the Company's sole cost and expense (other than the fees and disbursements of counsel for the Eligible Holders, and the underwriting discounts if any, payable in respect of the Registrable Securities sold by the Eligible Holders), prepare and file with the Commission a registration statement sufficient to permit the public offering and sale of the Registrable Securities through the facilities of all appropriate securities exchanges, if any, on which the Company's Common Stock is being sold or on the over-the-counter market, and will use its best efforts through its officers, directors, auditors, and counsel to cause such registration statement to become effective as promptly as practicable; provided, however, that the Company shall only be obligated to file one such registration statement; provided further, however, that if an undersigned Eligible Holder does not offer to include any portion of its Registrable Securities in the registration statement so prepared, then such Eligible Holder shall be entitled to one separate demand covering all of his Registrable Securities which have not been previously sold pursuant to Rule 144 under the Securities Act. The Company shall not be obligated to effect any registration of its securities pursuant to this Section 1(b) within nine months after the effective date of a previous registration statement prepared and filed in accordance with Section 1(a) or 1(b). Within three business days after receiving any request contemplated by this Section 1(b), the Company shall give written notice to all the other Eligible Holders, advising each of them that the Company is proceeding with such registration and offering to include therein all or any portion of any such other Eligible Holder's Registrable Securities, provided that the Company receives a written request to do so from such Eligible Holder within 30 days after receipt by him or it of the Company's notice. 2 (c) In the event of a registration pursuant to the provisions of this Section 1, the Company shall use its best efforts to cause the Registrable Securities so registered to be registered or qualified for sale under the securities or blue sky laws of such jurisdictions as the Eligible Holder or such holders may reasonably request; provided, however, that the Company shall not be required to qualify to do business in any state by reason of this Section 1(c) in which it is not otherwise required to qualify to do business. (d) The Company shall keep effective any registration or qualification contemplated by this Section 1 and shall from time to time amend or supplement each applicable registration statement, preliminary prospectus, final prospectus, application, document and communication for such period of time as shall be required to permit the Eligible Holders to complete the offer and sale of the Registrable Securities covered thereby. The Company shall in no event be required to keep any such registration or qualification in effect for a period in excess of nine months from the date on which the Eligible Holders are first free to sell such Registrable Securities; provided, however, that, if the Company is required to keep any such registration or qualification in effect with respect to securities other than the Registrable Securities beyond such period, the Company shall keep such registration or qualification in effect as it relates to the Registrable Securities for so long as such registration or qualification remains or is required to remain in effect in respect of such other securities. (e) In the event of a registration pursuant to the provisions of this Section 1, the Company shall furnish to each Eligible Holder such number of copies of the registration statement and of each amendment and supplement thereto (in each case, including all exhibits), such reasonable number of copies of each prospectus contained in such registration statement and each supplement or amendment thereto (including each preliminary prospectus), all of which shall conform to the requirements of the Securities Act and the rules and regulations thereunder, and such other documents, as any Eligible Holder may reasonably request to facilitate the disposition of the Registrable Securities included in such registration. (f) In the event of a registration pursuant to the provisions of this Section 1, the Company shall furnish each Eligible Holder of any Registrable Securities so registered with an opinion of its counsel (reasonably acceptable to the Eligible Holders) to the effect that (i) the registration statement has become effective under the Securities Act and no order suspending the effectiveness of the registration statement, preventing or suspending the use of the registration statement, any preliminary prospectus, any final prospectus, or any amendment or supplement thereto has been issued, nor has the Commission or any securities or blue sky authority of any jurisdiction instituted or threatened to institute any proceedings with respect to such an order, (ii) the registration statement and each prospectus forming a part thereof (including each preliminary prospectus), and any amendment or supplement thereto, comply as to form with the Securities Act and the rules and regulations thereunder, and (iii) such counsel has no knowledge of any material misstatement or omission in such registration statement or any prospectus, as amended or supplemented. Such opinion shall also state the jurisdictions in which the Registrable Securities have been registered or qualified for sale pursuant to the provisions of Section 1(c). 3 (g) The Company agrees that until all the Registrable Securities have been sold under a registration statement or pursuant to Rule 144 under the Securities Act, it shall use its best efforts to keep current in filing all reports, statements and other materials required to be filed with the Commission to permit holders of the Registrable Securities to sell such securities under Rule 144. (h) The Company shall notify the Eligible Holders of the Registrable Securities promptly when such registration statement has become effective or a supplement to any prospectus forming a part of such registration statement has been filed. (i) The Company shall promptly notify the Eligible Holders of the Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the reasonable request of the Eligible Holders of the Registrable Securities prepare and furnish to them such number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made. (j) If requested by the underwriter for any underwritten offering of Registrable Securities on behalf of an Eligible Holder of Registrable Securities pursuant to a registration requested under Section 1(b), the Company and such Eligible Holder of Registrable Securities will enter into an underwriting agreement with such underwriter for such offering, which shall be reasonably satisfactory in substance and form to the Company and the Company's counsel, such Eligible Holder of Registrable Securities and the underwriter, and such agreement shall contain such representations and warranties by the Company and such Eligible Holder of Registrable Securities and such other terms and provisions as are customarily contained in an underwriting agreement with respect to secondary distributions solely by selling stockholders, including, without limitation, indemnities substantially to the effect and to the extent provided in Section 2 hereof. 2. Indemnification. (a) Subject to the conditions set forth below, the Company agrees to indemnify and hold harmless each Eligible Holder, its officers, directors, partners, employees, agents, and counsel, and each person, if any, who controls any such person within the meaning of Section 15 of the Securities Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and against any and all loss, liability, charge, claim, damage, and expense whatsoever (which shall include, for all purposes of this Section 2, but not be limited to, reasonable attorneys' fees and any and all reasonable expenses whatsoever incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), 4 as and when incurred, arising out of, based upon, or in connection with (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any registration statement, preliminary prospectus, or final prospectus (as from time to time amended and supplemented), or any amendment or supplement thereto, relating to the sale of any of the Registrable Securities or (B) in any application or other document or communication (in this Section 2 collectively called an "application") executed by or on behalf of the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to register or qualify any of the Registrable Securities under the securities or blue sky laws thereof or filed with the Commission or any securities exchange; or any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements made therein not misleading, unless (x) such statement or omission was made in reliance upon and in conformity with written information furnished to the Company with respect to such Eligible Holder by or on behalf of such person expressly for inclusion in any registration statement, preliminary prospectus, or final prospectus, or any amendment or supplement thereto, or in any application, as the case may be, or (y) such loss, liability, charge, claim, damage or expense arises out of such Eligible Holder's failure to comply with the terms and provisions of this Agreement, or (ii) any breach of any representation, warranty, covenant, or agreement of the Company contained in this Agreement. The foregoing agreement to indemnify shall be in addition to any liability the Company may otherwise have, including liabilities arising under this Agreement. If any action is brought against any Eligible Holder or any of its officers, directors, partners, employees, agents, or counsel, or any controlling persons of such person (an "indemnified party") in respect of which indemnity may be sought against the Company pursuant to the foregoing paragraph, such indemnified party or parties shall promptly notify the Company in writing of the institution of such action (but the failure so to notify shall not relieve the Company from any liability other than pursuant to this Section 2(a)) and the Company shall promptly assume the defense of such action, including the employment of counsel (reasonably satisfactory to such indemnified party or parties), provided that the indemnified party shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless the employment of such counsel shall have been authorized in writing by the Company in connection with the defense of such action or the Company shall not have promptly employed counsel reasonably satisfactory to such indemnified party or parties, or such indemnified party or parties shall have reasonably concluded that there may be one or more legal defenses available to it or them or to other indemnified parties which are different from or additional to those available to the Company, in any of which events such fees and expenses shall be borne by the Company and the Company shall not have the right to direct the defense of such action on behalf of the indemnified party or parties. Anything in this Section 2 to the contrary notwithstanding, the Company shall not be liable for any settlement of any such claim or action effected without its written consent, which shall not be unreasonably withheld. The Company shall not, without the prior written consent of each indemnified party that is not released as described in this sentence, settle or compromise any action, or permit a default or consent to the entry of judgment in or otherwise seek to terminate any pending or threatened action, in respect of which indemnity may be sought hereunder (whether or not any indemnified party is a party thereto), unless such 5 settlement, compromise, consent, or termination includes an unconditional release of each indemnified party from all liability in respect of such action. The Company agrees promptly to notify Eligible Holders of the commencement of any litigation or proceedings against the Company or any of its officers or directors in connection with the sale of any Registrable Securities or any preliminary prospectus, prospectus, registration statement, or amendment or supplement thereto, or any application relating to any sale of any Registrable Securities. (b) Each Eligible Holder agrees to indemnify and hold harmless the Company, each director of the Company, each officer of the Company who shall have signed any registration statement covering Registrable Securities held by such Eligible Holder, each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, and its or their respective counsel, to the same extent as the foregoing indemnity from the Company to such Eligible Holder in Section 2(a), but only with respect to statements or omissions, if any, made in any registration statement, preliminary prospectus, or final prospectus (as from time to time amended and supplemented), or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information furnished to the Company with respect to such Eligible Holder by or on behalf of such Eligible Holder, expressly for inclusion in any such registration statement, preliminary prospectus, or final prospectus, or any amendment or supplement thereto, or in any application, as the case may be. If any action shall be brought against the Company or any other person so indemnified based on any such registration statement, preliminary prospectus, or final prospectus or any amendment or supplement thereto, or in any application, and in respect of which indemnity may be sought against such Eligible Holder pursuant to this Section 2(b), such Eligible Holder shall have the rights and duties given to the Company, and the Company and each other person so indemnified shall have the rights and duties given to the indemnified parties, by the provisions of Section 2(a). (c) To provide for just and equitable contribution, if (i) an indemnified party makes a claim for indemnification pursuant to Section 2(a) or 2(b) (subject to the limitations thereof) but it is found in a final judicial determination, not subject to further appeal, that such indemnification may not be enforced in such case, even though this Agreement expressly provides for indemnification in such cases, or (ii) any indemnified or indemnifying party seeks contribution under the Securities Act, the Exchange Act or otherwise, then the Company (including for this purpose any contribution made by or on behalf of any director of the Company, any officer of the Company who signed any such registration statement, any controlling person of the Company, and its or their respective counsel), as one entity, and the Eligible Holders of the Registrable Securities, included in such registration in the aggregate (including for this purpose any contribution by or on behalf of an indemnified party), as a second entity, shall contribute to the losses, liabilities, claims, damages, and expenses whatsoever to which any of them may be subject, on the basis of relevant equitable considerations such as the relative fault of the Company and such Eligible Holders in connection with the facts which resulted in such losses, liabilities, claims, damages, and expenses. The relative fault, in the case of an untrue statement, alleged untrue statement, omission, or alleged omission shall be determined by, among other things, whether such statement, alleged statement, omission, or alleged omission relates to information 6 supplied by the Company or by such Eligible Holders, and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement, alleged statement, omission, or alleged omission. The Company and Eligible Holders agree that it would be unjust and inequitable if the respective obligations of the Company and the Eligible Holders for contribution were determined by pro rata or per capita allocation of the aggregate losses, liabilities, claims, damages, and expenses (even if each Eligible Holder and the other indemnified parties were treated as one entity for such purpose) or by any other method of allocation that does not reflect the equitable considerations referred to in this Section 2(c). In no case shall any Eligible Holder be responsible for a portion of the contribution obligation imposed on all Eligible Holders in excess of its pro rata share based on the number of shares of Common Stock owned by him and included in such registration as compared to the number of shares of Common Stock owned by all Eligible Holders and included in such registration. No person guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation. For purposes of this Section 2(c), each person, if any, who controls any Eligible Holder within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act and each officer, director, partner, employee, agent, and counsel of Eligible Holder or control person shall have the same rights to contribution as such Eligible Holder or control person and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, each officer of the Company who shall have signed any such registration statement, each director of the Company, and its or their respective counsel shall have the same rights to contribution as the Company, subject in each case to the provisions of this Section 2(c). Anything in this Section 2(c) to the contrary notwithstanding, no party shall be liable for contribution with respect to the settlement of any claim or action effected without its written consent. This Section 2(c) is intended to supersede any right to contribution under the Securities Act, the Exchange Act or otherwise. 3. Miscellaneous. ------------- (a) Remedies. In the event of a breach by the Company of its obligations under this Agreement, each Stockholder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. (b) Agreements and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, unless such amendment, modification or supplement is in writing and signed by the parties hereto. (c) Notices. All notices and other communications provided for or permitted hereunder shall be made in accordance with the provision of the Stockholders' Agreement. (d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation 7 and without the need for an express assignment, subsequent holders of the Registrable Securities subject to the terms hereof. (e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (f) Headings. The headings in this Agreement are for convenience of references only and shall not limit or otherwise affect the meaning hereof. (g) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without reference to its conflicts of law provisions. (h) Severability. In the event that any one or more of the provisions contained herein, or the application hereof in any circumstance is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provisions contained herein shall not be affected or impaired thereby. (i) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of this agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises warranties or undertakings, other than those set forth or referred to herein, concerning the registration rights granted by the Company pursuant to this Agreement. 8 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above. METAL MANAGEMENT, INC. By: --------------------------------------- T. Benjamin Jennings, Chairman and Chief Development Officer --------------------------------------- T. BENJAMIN JENNINGS --------------------------------------- GERARD M. JACOBS --------------------------------------- ALBERT A. COZZI --------------------------------------- FRANK J. COZZI --------------------------------------- GREGORY P. COZZI SAMSTOCK, L.L.C., a Delaware limited liability company By: SZ Investments, L.L.C., it managing member By: Zell General Partnership, Inc., its managing member By: /s/ Rod Dammeyer ------------------------------- Name: Rod Dammeyer ------------------------------ Title: Vice President ----------------------------- 9 EX-99.5 6 AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT Exhibit 5 - -------------------------------------------------------------------------------- AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT for METAL MANAGEMENT, INC. Dated: December 19, 1997 -- - -------------------------------------------------------------------------------- TABLE OF CONTENTS
ARTICLE I CORPORATE STRUCTURE AND OPERATION....................................... 2 1.1 Board of Directors................................................. 2 (a) Board Size.................................................... 2 (b) Election of Directors......................................... 2 (c) Removal....................................................... 3 (d) Vacancies..................................................... 3 (e) Selection of Nominees......................................... 3 1.2 Management Provisions.............................................. 4 1.3 Committees......................................................... 5 1.4 Election of Officers............................................... 5 1.5 Agreement to Vote Shares........................................... 5 ARTICLE II RESTRICTIONS UPON AND OBLIGATIONS WITH RESPECT TO DISPOSITION OF SHARES.........................................6 2.1 Certain Definitions................................................ 6 2.2 General Restriction; Cozzi Stockholders and JJ Stockholders........ 6 2.3 General Restriction; Purchaser..................................... 6 2.4 First Refusal Options.............................................. 7 (a) Receipt of Offer.............................................. 7 (b) Order of First Refusal Options................................ 7 (c) Place of Closing.............................................. 9 (d) Date of Closing............................................... 9 (e) Deliveries at Closing......................................... 9 (f) Right to Accept............................................... 9 2.5 Tag Along Rights................................................... 9 2.6 Effect of Giving of Notice.........................................10 2.7 Restrictive Legend on Securities...................................10 2.8 Permitted Transfers................................................10 2.9 Requirements for Transfer..........................................12 2.10 Rights and Obligations of Transferor...............................12 ARTICLE III GENERAL PROVISIONS......................................................12 3.1 Term of This Agreement.............................................12 3.2 Remedies...........................................................12 3.3 Notices............................................................13 3.4 Legal Fees.........................................................15 3.5 Successors and Assigns.............................................15 3.6 Governing Law......................................................15 3.7 Further Assurances.................................................15 3.8 Counterparts.......................................................15 3.9 Headings...........................................................15 3.10 Entire Agreement...................................................15 3.11 Severability.......................................................15 3.12 Waivers............................................................16 3.13 Gender References..................................................16
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT -------------------------------------------- THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT ("Agreement"), made and entered into as of the 19th day of December, 1997, by and among T. Benjamin Jennings ("TBJ"), Gerard M. Jacobs ("GMJ"), Albert A. Cozzi ("AAC"), Frank J. Cozzi ("FJC"), Gregory P. Cozzi ("GPC") and Samstock, L.L.C., a Delaware limited liability company ("Purchaser")(each a "Stockholder" and collectively the "Stockholders") and Metal Management, Inc., a Delaware corporation (the "Corporation"). R E C I T A L S A. Pursuant to that certain Agreement and Plan of Merger dated May 16, 1997 (the "Merger Agreement") among the Corporation, CIM Acquisition, Co., Cozzi Iron & Metal, Inc., AAC, FJC and GPC (AAC, FJC and GPC being sometimes hereinafter referred to collectively as the "Cozzi Stockholders"), the Cozzi Stockholders received 11,404,748 shares of common stock, $.01 par value per share, of the Corporation (the "Common Stock"). B. TBJ and GMJ (the "JJ Stockholders") currently own an aggregate of 1,020,000 shares of the Common Stock of the Corporation. C. The Cozzi Stockholders and the JJ Stockholders, together with the Corporation, entered into a Stockholders' Agreement dated as of December 1, 1997 (the "Original Stockholders Agreement"). D. Pursuant to that certain Securities Purchase Agreement (the "Securities Purchase Agreement") dated as of December 19, 1997, by and between the Corporation and Purchaser, Purchaser acquired 1,470,588 shares of Common Stock and a warrant to purchase an additional 600,000 shares of Common Stock (the shares of Common Stock acquired by Purchaser pursuant to the Securities Purchase Agreement, including the shares of Common Stock issuable upon exercise of the warrant, the "Purchaser Shares"). E. The parties to the Original Stockholders' Agreement desire to amend and restate the Original Stockholders' Agreement in its entirety to, among other things, include Purchaser as a party to certain provisions of the Agreement. NOW, THEREFORE, in consideration of the mutual covenants and provisions herein set forth, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the original Stockholders' Agreement is amended and restated in its entirety to read as follows: 1 ARTICLE I ---------- CORPORATE STRUCTURE AND OPERATION --------------------------------- 1.1 Board of Directors. (a) Board Size. So long as the Purchaser Condition is satisfied, the Board of Directors of the Corporation shall consist of an odd number of Directors, which shall be not less than nine (9) nor more than seventeen (17). At any time at which the Purchaser Condition is not satisfied, the Board of Directors of the Corporation shall consist of an even number of directors, which shall be not less than eight (8) nor more than sixteen (16). For purposes of this Agreement, the "Purchaser Condition" shall be satisfied if both: (i) no more than three (3) years have elapsed since the Closing Date under the Securities Purchase Agreement; and (ii) Purchaser and its Permitted Transferees have not sold or otherwise disposed of more than one-third (1/3) of the Purchaser Shares. (b) Election of Directors. At all meetings (and written actions in lieu of meetings) of stockholders of the Corporation at which directors are to be elected, each Stockholder shall vote all of such Stockholder's shares of Common Stock to elect as directors of the Corporation the persons nominated in accordance with the following provisions: (i) The JJ Stockholders shall have the right to nominate that number of persons (each, a "JJ Director") constituting: (A) at any time at which the total number of Directors of the Corporation is an even number, one- half (1/2) of such total; or (B) at any time at which the total number of Directors of the Corporation is an odd number, one-half (1/2) of the next lowest even number of Directors; provided, that one of such nominees shall be an Independent Director (as defined below), who shall be reasonably acceptable to the Cozzi Stockholders; (ii) The Cozzi Stockholders shall have the right to nominate that number of persons (each, a "Cozzi Director") constituting: (A) at any time at which the total number of Directors of the Corporation is an even number, one-half (1/2) of such total; or (B) at any time at which the total number of Directors of the Corporation is an odd number, one-half (1/2) of the next lowest even number of Directors; provided, that one of such nominees shall be an Independent Director (as defined below), who shall be reasonably acceptable to the JJ Stockholders; and (iii) At any time when the Purchaser Condition is satisfied, Purchaser shall have the right to designate either Sam Zell or Rod F. Dammeyer as a nominee (the "Purchaser Director"). For purposes of this Agreement, an "Independent Director" shall mean a director who is not an employee, officer or director of the Corporation or any of its subsidiaries or a relative or an Associate of any of the Stockholders. "Associate" shall have the meaning ascribed to it in Rule 12b-2 of the General Rules and Regulations of the Securities Exchange Act of 1934, as amended. 2 (c) Removal. Each Stockholder agrees to vote such Stockholder's shares of Common Stock to remove a JJ Director upon request at any time by the unanimous consent of the JJ Stockholders, to remove a Cozzi Director upon request at any time by the holders of a majority of the shares of Common Stock held by the Cozzi Stockholders, and to remove the Purchaser Director upon request at any time by Purchaser; provided, that the Stockholders making such request shall simultaneously designate a replacement to fill any vacancy so created, which replacement, if such replacement is an Independent Director, shall be reasonably acceptable to the other group. (d) Vacancies. Each Stockholder agrees to vote such Stockholder's shares of Common Stock to fill any vacancy on the Board of Directors caused by the death, disability, resignation or removal of any JJ Director, Cozzi Director, or Purchaser Director, with a nominee selected by the JJ Stockholders, the Cozzi Stockholders, or the Purchaser, respectively; provided, that if such nominee is to fill the vacancy of an Independent Director, such nominee shall be reasonably acceptable to either the JJ Stockholders or the Cozzi Stockholders, as applicable; and provided further, that if such nominee is to fill the vacancy of the Purchaser Director, such nominee shall be either Sam Zell or Rod F. Dammeyer. Notwithstanding any provision of this Agreement to the contrary, if at any time the Purchaser Condition is not satisfied, Purchaser agrees to cause the Purchaser Director, if any, to resign effective immediately upon such failure to satisfy the Purchaser Condition, and the vacancy created by such resignation shall not be filled. (e) Selection of Nominees. Any person nominated by the holders of a majority of the shares of Common Stock held by the Cozzi Stockholders, as to the Cozzi Directors, and by the unanimous approval of the JJ Stockholders, as to the JJ Directors, shall be deemed to be the nominee of such group. Each group shall notify the Corporation of its nominees not less than forty-five (45) days prior to the Corporation's annual meeting, and not less than forty-five (45) days prior to any special meeting at which directors are to be elected. Purchaser shall notify the Corporation of the identity of the nominee for the Purchaser Director (whether Mr. Zell or Mr. Dammeyer) not less than forty-five (45) days prior to the Corporation's annual meeting, and not less than forty-five (45) days prior to any special meeting at which Directors are to be elected. 1.2 Management Provisions. Without limiting the actions that may be required, by applicable law or otherwise, to be approved by the Board of Directors, the parties expressly agree that, unless approved by a two-thirds vote of the Board of Directors, neither the Corporation nor any of its subsidiaries may take or agree to take, and no Stockholder shall cause the Corporation or any subsidiary to take or agree to take, any of the following actions: (i) amend the Certificate of Incorporation or By-laws of the Corporation; (ii) wind-up, liquidate, dissolve or reorganize the Corporation or adopt a plan or proposal contemplating any of the foregoing; 3 (iii) approve the annual budget of the Corporation for any fiscal year or approve any course of action which would cause the Corporation to materially deviate from its budget; (iv) elect or remove Officers; (v) change the level of compensation of or modify or terminate any written agreement with AAC, FJC, GPC, GMJ or TBJ; (vi) issue securities of the Corporation including debt or equity securities, options, rights or warrants, or any other securities which are convertible into or exchangeable for shares of Common Stock of the Corporation; (vii) register any securities of the Corporation; (viii) borrow funds in excess of $5,000,000 or provide a guarantee in respect of the obligations of another person or request any waiver from a lender to the Corporation; (ix) merge, consolidate or combine the Corporation with any person or sell substantially all of its assets; (x) purchase, sell, lease, acquire or dispose of assets valued at $5,000,000 or more, including acquiring another company, division or line of business (other than matters provided for in the Corporation's annual budget approved in accordance with this Agreement); (xi) declare or pay any dividends or any other distribution in respect of any securities of the Corporation or redeem, acquire or retire any securities of the Corporation; (xii) make or commit to make during any fiscal year capital expenditures (other than capital expenditures provided for in the Corporation's annual budget approved in accordance with this Agreement) which, in the aggregate, exceed $5,000,000; (xiii) create any committee of the Board of Directors or change a committee of the Board of Directors; and (xiv) make any decision involving a matter referred to in (i) through (xiii), inclusive, relating to any subsidiary of the Corporation. Notwithstanding the foregoing, no further action or approval of the Board of Directors shall be required for, and the provisions of this Section 1.2 shall not apply to, the matters set forth on Schedule 1.2, which matters have been approved by the Board of Directors prior to the date of this Agreement and which shall be acted upon by the Chairman and Chief Executive Officer of the Corporation in their sole discretion. 4 1.3 Committees. The Board of Directors shall establish and at all times maintain an Executive Committee consisting of at least the Chairman of the Board, the President, and the Chief Executive Officer; provided, that in the event of the death or disability of Albert A. Cozzi, Frank J. Cozzi shall assume Albert A. Cozzi's position on such Executive Committee. The Board of Directors shall delegate to the Executive Committee all the power and authority of the Board of Directors, including those matters set forth in Section 1.2, relating to the management of the business and affairs of the Corporation to the extent permitted under Section 141 (c) (i) of the General Corporation Law of the State of Delaware. Any action to be taken by the Executive Committee shall require the unanimous consent of Albert A. Cozzi, Gerard M. Jacobs and T. Benjamin Jennings. 1.4 Election of Officers. The Stockholders shall cause their designees on the Board of Directors to elect the following persons to the offices set forth opposite their names:
(a) Albert A. Cozzi President, Chief Operating Officer (b) Gerard M. Jacobs Chief Executive Officer (c) T. Benjamin Jennings Chairman of the Board and Chief Development Officer (d) Frank J. Cozzi Vice President and President of Cozzi Iron & Metal, Inc.
1.5 Agreement to Vote Shares. Each Stockholder shall vote all of his shares of Common Stock (or such other securities of the Corporation which entitle such Stockholder to vote on such matters), execute and deliver such further documents, take such further action and cause his designees on the Board of Directors to vote in such a manner as may be necessary or desirable to carry out the purposes and intent of this Agreement, including, without limitation, any amendments to the Certificate of Incorporation or By-Laws which are required by law or prudent business practices in order to make the terms of this Agreement effective and binding on the Corporation and all of its stockholders or otherwise to effectuate any of the terms, conditions, provisions or purposes hereof. ARTICLE II RESTRICTIONS UPON AND OBLIGATIONS WITH RESPECT TO DISPOSITION OF SHARES 2.1 Certain Definitions. The term "Corporation Securities" as used herein shall mean any shares of capital stock of the Corporation at any time owned or subscribed for by any party hereto, and any subscriptions, options, warrants, calls, commitments, or rights of any kind whatsoever to purchase or otherwise acquire any shares of capital stock of the Corporation. 2.2 General Restriction; Cozzi Stockholders and JJ Stockholders. During the term of this Agreement, each of the Cozzi Stockholders and JJ Stockholders covenants and agrees that such Stockholder will not, directly or indirectly, voluntarily or involuntarily, sell, assign, transfer, pledge, hypothecate, encumber or otherwise dispose (each, a "Transfer") of the Corporation Securities at any time owned by such Stockholder, or any interest therein, except for (i) Transfers of up to that amount of Corporation Securities that such Stockholder is permitted (or would be 5 permitted) to sell in reliance upon Rule 144 of the Securities Act of 1933, as amended (the "Securities Act"), as specified in paragraph (c) of such Rule 144, (ii) Transfers to Permitted Transferees (as hereinafter defined), (iii) Transfers in accordance with the terms and conditions of the provisions of Section 2.4 or 2.5, (iv) Transfers of Corporation Securities registered under the Securities Act, or (v) Transfers between the Escrow Agent (as such term is defined in that certain Escrow Agreement by and among the Corporation, the JJ Stockholders, the Cozzi Stockholders and Chicago Title & Trust Company) and the Cozzi Stockholders, JJ Stockholders or the Corporation pursuant to the terms of the Escrow Agreement. Any attempted Transfer not in accordance with the terms and conditions of this Agreement shall be void and of no force or effect. 2.3 General Restriction; Purchaser. For a period beginning on the date of this Agreement and continuing for one year, Purchaser covenants and agrees that it will not, directly or indirectly, voluntarily or involuntarily, sell, assign, transfer, pledge, hypothecate, encumber or otherwise dispose (each, a "Transfer") of the Corporation Securities at any time owned by Purchaser, or any interest therein, except for (i) Transfers to Permitted Transferees (as hereinafter defined), (ii) Transfers in accordance with the terms and conditions of the provisions of Section 2.5 or (iii) Transfers of Corporation Securities registered under the Securities Act. Any attempted Transfer not in accordance with the terms and conditions of this Agreement shall be void and of no force or effect. Notwithstanding anything to the contrary in this Agreement, Purchaser shall be entitled to pledge or hypothecate any number of Corporation Securities to any bank or other financial institution in connection with a bona fide financing transaction involving Purchaser or its affiliates, and neither such pledge or hypothecation, nor any exercise of rights or remedies pursuant thereto, shall be subject to any of the provisions of this Agreement, and upon any realization of such pledge or hypothecation, the pledgee shall take such Corporation Securities free and clear of this Agreement. 2.4 First Refusal Options. (a) Receipt of Offer. If at any time after the date hereof any of the Cozzi Stockholders and JJ Stockholders shall at any time desire to sell all or a portion of the Corporation Securities owned by such Stockholder (the "Offered Corporation Securities"), other than a Transfer of up to that number of Corporation Securities that such Stockholder is permitted (or would be permitted) to sell in reliance upon Rule 144 of the Securities Act pursuant to Section 2.2(i) of this Agreement, a Transfer to a Permitted Transferee pursuant to Section 2.2 (ii) of this Agreement, or a Transfer of Corporation Securities registered under the Securities Act, and shall have received a bona fide written offer for the purchase thereof, with a proposed closing required within a reasonable time (an "Offer"), which such Stockholder desires to accept, such Stockholder (the "Selling Stockholder") shall within five (5) days thereafter transmit executed or true and correct photostatic copies of the Offer to each of the other Stockholders (the "Remaining Stockholders") and to the Corporation. For purposes of this Section 2.4, if any portion of the purchase price for the Offered Corporation Securities is payable in property other than in cash or a promissory note (the "Non-Cash Portion") the Non-Cash Portion shall be valued at its fair market value on the date of the Offer, and shall be payable by the Remaining Stockholders in cash in accordance with the payment terms set forth in the Offer. The fair market value of the Non-Cash Portion shall be mutually 6 determined by the Selling Stockholder on the one hand, and the Remaining Stockholders, on the other. If the two sides cannot agree on the fair market value of the Non-Cash Portion within a fifteen (15) day period, the two sides shall mutually select an appraiser to value such property. The option periods set forth in Section 2.4(b) and (c), and 2.5 shall not begin to run until the parties have assigned a value to the Non-Cash Portion. (b) Order of First Refusal Options. All of the Offered Corporation Securities shall thereupon be subject to the following options to purchase from the Selling Stockholder at the price and terms set forth in the Offer, in the following order of priority: (i) In the event that the Selling Stockholder is a Cozzi Stockholder, each of the remaining Cozzi Stockholders shall have the first option to purchase any Offered Corporation Securities on a pro rata basis (determined by reference to the remaining Cozzi Stockholders only) or in such proportions as is otherwise agreed upon by the remaining Cozzi Stockholders. The remaining Cozzi Stockholders shall exercise this option by giving notice to the Corporation and the Selling Stockholder not later than fifteen (15) days after the giving of the notice of Offer. If the Cozzi Stockholders exercise the first options with respect to less than all of the Offered Corporation Securities or fail to exercise the options within such fifteen (15) day period, each of the JJ Stockholders shall have the second option to purchase any remaining Offered Corporation Securities on a pro rata basis (determined by reference to the JJ Stockholders only) or in such proportions as is otherwise agreed upon by the remaining JJ Stockholders. The JJ Stockholders shall exercise their option by giving notice to the Selling Stockholder and the Corporation not later than fifteen (15) days after notice from the Cozzi Stockholders, or if the Cozzi Stockholders fail to give notice, fifteen (15) days after the expiration of the first option period. If the remaining Cozzi Stockholders and the JJ Stockholders have in the aggregate exercised their respective options with respect to less than all of the Offered Corporation Securities, then the Corporation shall have a third option to purchase any remaining Offered Corporation Securities. The Corporation shall exercise its option by giving notice to the Selling Stockholder not later than five (5) days after notice from the JJ Stockholders, or if the JJ Stockholders fail to give notice, five (5) days after the expiration of the second option period. If after the exercise or expiration of the foregoing options there remain any Offered Corporation Securities for sale, then no Offered Corporation Securities may be purchased pursuant to such options and such options shall be deemed to have expired without exercise. (ii) In the event that the Selling Stockholder is a JJ Stockholder, each of the remaining JJ Stockholders shall have the first option to purchase any Offered Corporation Securities on a pro rata basis (determined by reference to the remaining JJ Stockholders only) or in such proportions as is otherwise agreed upon by the remaining JJ Stockholders. The remaining JJ Stockholders shall exercise this option by giving notice to the Corporation and the Selling Stockholder not later than fifteen (15) days after the giving of the notice of Offer. If the JJ Stockholders exercise the first options with respect to less than all of the Offered 7 Corporation Securities or fail to exercise the options within such fifteen (15) day period, each of the Cozzi Stockholders shall have the second option to purchase any remaining Offered Corporation Securities on a pro rata basis (determined by reference to the Cozzi Stockholders only) or in such proportions as is otherwise agreed upon by the remaining Cozzi Stockholders. The Cozzi Stockholders shall exercise their option by giving notice to the Selling Stockholder and the Corporation not later than fifteen (15) days after notice from the JJ Stockholders, or if the JJ Stockholders fail to give notice, fifteen (15) days after the expiration of the first option period. If the remaining JJ Stockholders and the Cozzi Stockholders have in the aggregate exercised their respective options with respect to less than all of the Offered Corporation Securities, then the Corporation shall have a third option to purchase any remaining Offered Corporation Securities. The Corporation shall exercise its option by giving notice to the Selling Stockholder not later than five (5) days after notice from the Cozzi Stockholders, or if the Cozzi Stockholders fail to give notice, five (5) days after the expiration of the second option period. If after the exercise or expiration of the foregoing options there remain any Offered Corporation Securities for sale, then no Offered Corporation Securities may be purchased pursuant to such options and such options shall be deemed to have expired without exercise. (c) Place of Closing. Unless otherwise agreed by the parties, all purchases pursuant to exercise of any options hereunder shall be consummated at the offices of the Corporation, and the date of Closing shall be as provided in Section 2.4 (d) below. (d) Date of Closing. The purchase of Offered Corporation Securities pursuant to the exercise of one or more of the options provided for in this Section 2.4 shall be consummated on the date specified in the Offer or sixty (60) days after the exercise or expiration of the last such option, whichever is later (an "Option Closing Date"). (e) Deliveries at Closing. The cash portion of the purchase price of any Corporation Securities purchased hereunder shall be paid on the Option Closing Date by certified or bank cashier's check or by wire transfer as designated by the Selling Stockholder. Simultaneously with such payment, the Selling Stockholder shall deliver to the purchaser a certificate or certificates representing all of the Corporation Securities so purchased, duly endorsed in blank, or with separate assignments attached duly executed in blank, in either case with signatures guaranteed and appropriate tax stamps, if any, affixed, in form satisfactory to transfer such Corporation Securities to the order of such purchaser, free and clear of any liens, claims or encumbrances thereon. Each Selling Stockholder shall furnish to each purchaser such additional evidence and executed documents as such purchaser may reasonably request to establish that the transfer of such shares is valid and free and clear of any liens, claims or encumbrances. (f) Right to Accept. In the event that the options provided for in Section 2.4 (b) hereof expire without exercise or the Offered Corporation Securities are not purchased pursuant to exercise thereof, then within sixty (60) days after all rights to make such pur chase shall have expired, the Selling Stockholder, subject to the provisions of Section 2.5, shall have the right to consummate the sale of all of the Offered Corporation Securities, 8 upon terms and conditions no less favorable than those contained in the Offer, to the offeror thereunder. If for any reason the sale is not consummated within the period provided for herein, the Selling Stockholder shall not thereafter dispose of the Offered Corporation Securities unless and until it has again complied with all of the provisions hereof. 2.5 Tag Along Rights. In addition to the options set forth in Section 2.4, if a Selling Stockholder has given notice of an Offer to sell more than that number of Corporation Securities that such Stockholder is permitted (or would be permitted) to sell in reliance upon Rule 144 of the Securities Act pursuant to Section 2.2(i) of this Agreement to any person other than the Corporation or a Permitted Transferee (the "Proposed Transferee") other than an offer of Corporation Securities registered under the Securities Act, the Remaining Stockholders (which, for purposes of this Section 2.5 only, shall include Purchaser, so long as the Purchaser and its Permitted Transferees have not sold or otherwise disposed of more than fifty percent (50%) of the Purchaser Shares) shall have the right to elect to participate in the contemplated transaction by delivering a notice to the Selling Stockholder within five (5) days of the expiration of all of the options set forth in Section 2.4. If any Remaining Stockholder elects to participate in the proposed sale, he shall have the right to sell, at the same price and on the same terms as set forth in the Offer, that number of shares of Corporation Securities equal to the product of (i) the number obtained by dividing (A) the number of shares of Corporation Securities owned by such Remaining Stockholder, by (B) the aggregate number of shares owned by the Selling Stockholder and all Remaining Stockholders electing to participate in the sale, and (ii) the number of shares of Corporation Securities to be sold to the Proposed Transferee pursuant to the Offer (the "Tag-Along Shares"). The Tag-Along Shares shall either (i) be purchased by the Proposed Transferee in addition to the Selling Stockholder's shares, or (ii) be purchased by the Proposed Transferee in lieu (and reduction) of the number of shares being sold by the Selling Stockholder. The Selling Stockholder will use his best efforts to obtain the agreement of the Proposed Transferee to the participation of the Remaining Stockholders in such sale. The Selling Stockholder will be prohibited from transferring any of his shares of Corporation Securities to the Proposed Transferee if the Proposed Transferee declines to allow the participation of the Remaining Stockholders electing to participate. 2.6 Effect of Giving of Notice. The giving of any notice of exercise of any option to purchase, or to require any other party to sell, any Corporation Securities shall, subject to revocation of such as herein expressly permitted, create a binding contract for the sale and purchase of such Corporation Securities on the Option Closing Date in accordance with the provisions hereof. 2.7 Restrictive Legend on Securities. Each stock certificate or instrument representing any Corporation Securities shall be endorsed with the following legend: "The shares represented by this Certificate have not been registered under the Securities Act of 1933 (the "Act") or any state securities law. This Certificate may not be transferred or otherwise disposed of unless an effective registration statement under the Act and all applicable state securities laws is then in effect or, in the opinion of counsel for the Corporation, such registration is not necessary. The transfer or other 9 disposition of the shares represented by this Certificate is also restricted under the terms of a Stockholders' Agreement dated December 19, 1997 by and among the Corporation, T. Benjamin Jennings, Gerard M. Jacobs, Albert A. Cozzi, Frank J. Cozzi and Gregory P. Cozzi, and Samstock, L.L.C., a copy of which is available in the office of the Corporation." 2.8 Permitted Transfers. (a) Notwithstanding anything contained in Section 2.2 or 2.3 to the contrary, a Stockholder may transfer any or all of his Corporation Securities to a Permitted Transferee, as defined below, subject to the terms and conditions contained in this Section 2.8. (b) A "Permitted Transferee" of a Stockholder is hereby defined as and construed to mean any one or more of the following: (i) With respect to a Cozzi Stockholder, to any other Cozzi Stockholder; (ii) With respect to a JJ Stockholder, to any other JJ Stockholder; (iii) An executor(s), administrator(s) or conservator(s) of the Stockholder; (iv) A beneficiary of a deceased Stockholder's will or trust; (v) A trustee or trustees of a trust or a beneficiary or beneficiaries of a trust created by a Stockholder, but only if (A) the beneficiary or beneficiaries of such trust are one or more of a group consisting of the Stockholder, the spouse of the Stockholder and the descendants and/or the adopted children of the Stockholder or the Stockholder's parents, and (B) the trustee or other person exercising dominion or control over such trust is a Stockholder or former Stockholder; (vi) With respect to Purchaser, any person or entity that directly or indirectly controls, is controlled by, or is under common control with, Purchaser; "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether through ownership of voting securities, by contract or otherwise; and (vii) A Transferee of a Permitted Transferee if the transfer would have been permissible under the provisions hereof if made by the Stockholder who originally transferred the Corporation Securities to the Permitted Transferee. (c) All Permitted Transferees shall execute an appropriate supplement to this Agreement pursuant to which the Permitted Transferee agrees to assume and become subject to all of the rights and obligations hereunder of the party whose Corporation 10 Securities it has acquired and upon such execution shall be deemed a Stockholder hereunder; provided, however, that with respect to a Permitted Transferee under Section 2.8(b)(iii) and (iv), the Permitted Transferee shall further execute a proxy granting to the Remaining Stockholders of the deceased Stockholder's group the right to vote the transferred Corporation Securities with respect to the designation, nomination and/or election of directors. The proxy shall be in a form acceptable to the Remaining Stockholders. The Permitted Transferee shall assume and become subject to all of the rights and obligations hereunder of the Stockholder whose Corporation Securities it has acquired. Until a Permitted Transferee shall execute such a supplement to this Agreement, and a proxy, if necessary, the transfer and conveyance of the Corporation Securities to such Permitted Transferee shall be void and of no effect and he or she shall not be deemed a Stockholder hereunder and shall have none of the rights and benefits of a Stockholder hereunder. 2.9 Requirements for Transfer. Other than Transfers permitted pursuant to Section 2.2(i), (iii) and (iv) of this Agreement, no Corporation Securities shall be transferred upon the books of the Corporation, nor shall any sale or transfer or any other disposition thereof be effective, unless and until (a) all of the terms and conditions of this Agreement and applicable law have been first complied with and, with respect to compliance with applicable law, the Corporation has been provided with an opinion of counsel in form and substance satisfactory to the Corporation's counsel, and (b) the transferees shall have executed an agreement in form and substance satisfactory to counsel for the Corporation to assume and become subject to all of the rights and obligations hereunder of the party whose Corporation Securities it has acquired, including, without limitation, the obligation to make payment for any unpaid stock subscriptions and the obligations and restrictions under Article II hereof with respect to disposition of the Corporation Securities with the same full force and effect as if originally a signatory hereto. 2.10 Rights and Obligations of Transferor. Following disposition of all of his Corporation Securities in compliance with this Agreement, a party hereto shall have no further rights or obligations hereunder. ARTICLE III GENERAL PROVISIONS 3.1 Term of This Agreement. This Agreement shall continue in full force and effect for a period of ten (10) years unless sooner terminated by the unanimous consent of the Stockholders. No termination of this Agreement, by lapse of time or otherwise shall affect any rights or obligations created by exercise of any option to purchase or sell the Corporation Securities in accordance with any of the provisions of Article II hereof. In addition, this Agreement shall continue in full force and effect with respect to Purchaser until (a) the Purchaser Condition no longer remains satisfied, and (b) Purchaser and its Permitted Transferees have sold or otherwise disposed of more than fifty percent (50%) of the Purchaser Shares, and Purchaser agrees to take all actions which may be reasonably requested by the other parties hereto to amend, restate, terminate, or modify this Agreement to effect the foregoing. 11 3.2 Remedies. Each of the parties to this Agreement acknowledges that (a) the rights of the Stockholders concerning the restrictions on the transfer of the Corporation Securities, and in the management and affairs of the Corporation are unique, and (b) any failure of any Stockholder to perform any of such party's obligations under this Agreement will cause irreparable harm for which any remedies at law would be inadequate. Accordingly, each of the parties agrees that, in the event of any actual or threatened or attempted failure of any party to perform any of his obligations hereunder, each of the other parties shall, in addition to all other remedies, be entitled to a decree for specific performance of the provisions of this Agreement and to temporary and permanent injunctions restraining such failure or commanding performance of such obligations, without being required to show actual damage or to furnish any bond or other security. 3.3 Notices. All notices required or permitted hereunder shall be in writing, signed by the party giving notice or an officer thereof, and shall be deemed to have been given when delivered by personal delivery, by Federal Express or similar courier service, by facsimile or three (3) days after deposit in the United States mail, registered or certified, with postage prepaid, addressed as follows: (A) If to AAC, FJC or GPC at: Cozzi Iron & Metal, Inc. 2232 South Blue Island Avenue Chicago, Illinois 60608 Tel.: (773) 254-1200 Fax: (773) 254-8201 (B) If to TBJ, at: 12 Country Lane Northfield, Illinois 60093 with a copy to: Thomas V. Skinner, Esq. Winston & Strawn 33 West Wacker Drive Chicago, Illinois 60601 Tel.: (312) 558-5578 Fax: (312) 558-5700 (C) If to GMJ, at: 7600 Augusta River Forest, Illinois 60305 12 with a copy to: Thomas V. Skinner, Esq. Winston & Strawn 33 West Wacker Drive Chicago, Illinois 60601 Tel.: (312) 558-5578 Fax: (312) 558-5700 (D) If to the Corporation, at: 500 North Dearborn Street Suite 405 Chicago, Illinois 60610 Attn: Chief Financial Officer Fax: (312) 645-0714 With a copy to: Shefsky & Froelich Ltd. 444 North Michigan Avenue Suite 2500 Chicago, Illinois 60611 Attn: Erhard R. Chorle Fax: 312) 527-5921 If to Purchaser: Samstock, L.L.C. Two North Riverside Plaza Suite 600 Chicago, Illinois 60606 Attn: Rod F. Dammeyer Fax: (312) 454-0610 With a copy to: Rosenberg & Liebentritt, P.C. Two North Riverside Plaza Suite 1600 Chicago, Illinois 60606 Attn: Joseph M. Paolucci Fax: (312) 454-0335 or such other address as any party may designate for himself or itself by notice given to the other parties from time to time in accordance with the provisions hereof. 13 3.4 Legal Fees. In the event that any action is filed to enforce any of the terms, covenants or provisions of this Agreement, the prevailing party in such action shall be entitled to payment from the other party of all costs and expenses, including reasonable attorney fees, court costs and ancillary expenses incurred by such prevailing party in connection with such action. 3.5 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, personal representatives, successors and assigns. 3.6 Governing Law. This Agreement shall be controlled, construed and enforced in accordance with the substantive laws of the United States and the State of Illinois, notwithstand ing any conflict of law principles. 3.7 Further Assurances. Each party agrees to cooperate with the others, and to execute and deliver, or cause to be executed and delivered, all such other instruments, and to take all such other actions as he may be reasonably required to take, from time to time, in order to effect the provisions and purposes hereof. 3.8 Counterparts. This Agreement may be executed in any one or more counterparts, each of which shall constitute an original, no other counterpart needing to be produced and all of which, when taken together, shall constitute but one and the same instrument. 3.9 Headings. The headings of Articles and subdivisions herein are merely for convenience of reference and shall not affect the interpretation of any of the provisions hereof. 3.10 Entire Agreement. This Agreement and the Merger Agreement contain the entire understanding among the parties with respect to the subject matter of this Agreement. Any modification hereof may be made only by an instrument in writing signed by all of the parties hereto, except that Purchaser expressly acknowledges that any modification to this Agreement made after the Purchaser Condition is no longer satisfied need not be signed by Purchaser. 3.11 Severability. Whenever possible, each provision of this Agreement shall be construed and interpreted in such a manner as to be effective and valid under applicable law. If any provision of this Agreement or the application thereof to any party or circumstance shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition without invalidating the remainder of such provision or any other provision of this Agreement or the application of such provision to other parties or circumstances. 3.12 Waivers. No delay on the part of any party in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by any party or any remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy. 3.13 Gender References. Whenever appropriate, the singular form of a word shall be interpreted in the plural and vice versa. All words and phrases shall be construed as masculine, feminine or neuter gender, according to the context. 14 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the day and year first above written. METAL MANAGEMENT, INC., a Delaware corporation By: ---------------------------------------- Name: -------------------------------------- Title: ------------------------------------- -------------------------------------------- T. Benjamin Jennings -------------------------------------------- Gerard M. Jacobs -------------------------------------------- Albert A. Cozzi -------------------------------------------- Frank J. Cozzi -------------------------------------------- Gregory P. Cozzi SAMSTOCK, L.L.C., a Delaware limited liability company By: SZ Investments, L.L.C., its managing member By: Zell General Partnership, Inc., its managing member By: /s/ Rod Dammeyer ----------------------------------- Name: Rod Dammeyer --------------------------------- Title: Vice-President -------------------------------- 322233-3 15 SCHEDULE 1.2 ------------ 1. The board of directors of MTLM has authorized the Chairman and the CEO of MTLM to negotiate an arrangement with Donald Moorehead whereby Donald Moorehead would become Vice-Chairman of MTLM and Donald Moorehead and/or his designees would receive a package of 150,000 warrants to purchase common stock of MTLM in connection therewith. 2. The board of directors of MTLM has authorized the Chairman and the CEO of MTLM to negotiate and grant 30,000 warrants to purchase shares of common stock of MTLM to Dan Burgess, 25,000 warrants and 15,000 options to purchase shares of common stock of MTLM to Xavier Hermosillo, and 25,000 options to purchase shares of common stock of MTLM to Robert Larry. Additionally, the board of directors authorized the Chairman and CEO to issue options to purchase 20,000 shares of common stock to employees of the Company that are not officers or directors. 3. The board of directors of MTLM has authorized the Chairman and the CEO of MTLM to negotiate and grant increases in the compensation of Xavier Hermosillo and Robert Larry. The adjustment to annual compensation for Mr. Larry and Mr. Hermosillo increased their annual base pay to $135,000 and $100,000 respectively. 4. The Compensation Committee approved increases in annual base salary for Mr. Jacobs and Mr. Jennings effective from and after June 1, 1997. Mr. Jennings' adjusted annual salary is equal to the amount of $275,000 and Mr. Jacobs' adjusted annual salary is equal to the amount of $287,000. In addition, Mr. Jennings receives a travel allowance equal to $12,000 per year. 5. The board of directors of MTLM has authorized the Chairman and CEO to grant bonuses for Mr. Jennings, Mr. Jacobs, and Mr. Larry. On July 31, 1997, Mr. Jacobs and Mr. Jennings each received a bonus in the amount of $50,000. On July 15, 1997, Mr. Larry received a bonus in the amount of $25,000. 6. The Company plans to pay aggregate bonuses to Mr. Hermosillo in an amount equal to $102,332. 7. MTLM plans to issue 50,000 warrants to purchase common stock of MTLM to a financial advisor of MTLM on terms and conditions being negotiated by the Chairman and the CEO of MTLM. 8. MTLM plans to issues 70,000 warrants to purchase common stock of MTLM to a governmental affairs advisor of MTLM on terms and conditions being negotiated by the Chairman and CEO of MTLM. 9. The board of directors of MTLM has authorized the Chairman and the CEO to negotiate certain agreements with George Moorehead as more fully described in MTLM's definitive Proxy Statement dated November 20, 1997. 16 -----END PRIVACY-ENHANCED MESSAGE-----