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EXHIBIT 4.2
SHELF REGISTRATION RIGHTS AGREEMENT
SHELF REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
December 19, 1997, by and among Metal Management, Inc., a Delaware corporation
(the "Company"), and Samstock, L.L.C., a Delaware limited liability company
("Purchaser").
RECITALS
A. The Company has agreed, on the terms and subject to the
conditions set forth in the Securities Purchase Agreement of even date herewith
(the "Securities Purchase Agreement"), to issue and sell to Purchaser in the
aggregate (i) 1,470,588 shares (the "Shares") of the Company's Common Stock,
$.01 par value per share (the "Common Stock"), and (ii) a warrant (the
"Warrant") to purchase an additional 600,000 shares of Common Stock (the
"Warrant Shares").
B. In order to induce the Purchaser to enter into the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended (the "Securities Act"), and
under applicable state securities laws. Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the
Securities Purchase Agreement.
In consideration of Purchaser entering into the Securities Purchase
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings specified:
(a) "Filing Deadline" means 120 days following the
Closing Date;
(b) "Registration Deadline" means 180 days following the
Closing Date;
(c) "Holder" means any person owning or having the right
to acquire, through exercise of the Warrant, Registrable Securities, including
initially Purchaser and thereafter any permitted assignee thereof;
(d) "Register", "registered" and "registration" refer to
a registration effected by preparing and filing a shelf registration statement
or statements in compliance with the Securities Act and pursuant to Rule 415
under the Securities Act ("Rule 415") or any successor rule providing for the
offering of securities on a continuous basis ("Registration Statement"), and
the declaration or ordering of effectiveness of the Registration Statement by
the Securities and Exchange Commission (the "Commission"); and
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(e) "Registrable Securities" means (i) Shares and the
Warrant Shares, and (ii) any shares of capital stock issued or issuable from
time to time (with any adjustments) in replacement of, in exchange for or
otherwise in respect of such shares.
2. MANDATORY REGISTRATION.
(a) On or before Filing Deadline, the Company shall
prepare and file a Registration Statement on Form S-3 (or, if Form S-3 is not
available, on such form of Registration Statement as is then available to
effect a registration of the Registrable Securities as a "shelf" registration
statement under Rule 415) covering the resale of the Shares and the Warrant
Shares and including in the "plan of distribution" and the definition of
"selling shareholder" pledgees, donees, transferees or other successors in
interest of the selling shareholders. The Registration Statement shall state,
to the extent permitted by Rule 416 under the Securities Act, that it also
covers such indeterminate number of shares of Common Stock as may be required
to prevent dilution resulting from stock splits, stock dividends or similar
events.
(b) The Company shall cause the Registration Statement to
become effective as soon as practicable following the filing thereof but in no
event later than the Registration Deadline, and shall submit to the Commission,
within five (5) business days after the Company learns that no review of the
Registration Statement will be made by the staff of the Commission or that the
staff of the Commission has no further comments on the Registration Statement,
as the case may be, a request for acceleration of the effectiveness of the
Registration Statement to a time and date not later than forty-eight (48) hours
after the submission of such request, and maintain the effectiveness of the
Registration Statement until the earlier to occur of (i) the date on which all
of the Registrable Securities have been sold and (ii) the date on which all of
the remaining Registrable Securities (in the reasonable opinion of counsel to
the Purchaser) may be immediately sold to the public without registration and
without regard to the amount of Registrable Securities which may be sold by a
Holder thereof at a given time (the "Registration Period").
(c) The Filing Deadline and the Registration Deadline
shall be extended by the number of days (not exceeding an aggregate for both
such dates, when taken together, of thirty (30) days) during (i) any period in
which the Company has been advised by its outside counsel that the Registration
Statement will not be accepted for filing by the Commission as a result of the
Company then having on file a registration statement which has not yet gone
effective or a proxy statement that is then being reviewed by the Commission (a
"Filing Delay Period"), and (ii) any period in which the Board of Directors of
the Company determines in good faith (A) that an amendment or supplement to the
Registration Statement or prospectus contained therein is necessary in order to
correct a material misstatement made therein or to include information the
absence of which would render the Registration Statement or such prospectus
materially misleading and (B) that the disclosure of such information at such
time would be detrimental to the business or prospects of the Company; provided
that no such period specified in this clause (ii) may exceed ten (10) days
unless, prior to the end of such ten day period, the Company obtains the
written advice of its outside legal counsel that an amendment or supplement to
the Registration Statement or prospectus contained
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therein is necessary in order to correct a material misstatement made therein
or to include information the absence of which would render the Registration
Statement or such prospectus materially misleading (a "Standstill Period").
(d) If (A) the Registration Statement (i) is not filed by
the Filing Deadline or (ii) is not declared effective by the Commission on or
before the Registration Deadline, (B) after the Registration Statement has been
declared effective by the Commission, sales of Registrable Securities cannot be
made by a Holder under the Registration Statement for any reason not within the
exclusive control of such Holder, or (C) the Common Stock is not included for
quotation on the Nasdaq National Market ("Nasdaq") or listed on the New York
Stock Exchange (the "NYSE") or other national securities exchange at any time
after the Registration Deadline, the Company shall pay to such Holder an amount
equal to the lesser of (x) two percent (2%) per month and (y) the highest rate
permitted by applicable law, times the aggregate purchase price of the Shares,
the Warrant and/or the Warrant Shares held by such Holder, accruing daily and
compounded monthly, (I) from the Filing Deadline until the date on which the
Registration Statement is filed with the Commission, (II) from the Registration
Deadline until the date on which the Registration Statement is declared
effective, (III) from the date on which the Registration Statement is
unavailable for sales of Registrable Securities by a Holder until the
Registration Statement becomes available for sales of Registrable Securities;
provided that the Registration Statement will not be considered unavailable for
the number of days occurring during a Standstill Period which takes place after
the effectiveness of the Registration Statement, or (IV) from the date on which
the Common Stock is no longer quoted or listed on Nasdaq, the NYSE or such
other exchange until the date on which the Common Stock becomes so listed or
quoted, as the case may be. The amounts paid or payable by the Company
hereunder shall be in addition to any other remedies available to Purchaser at
law or in equity or pursuant to the terms of any other Transaction Document.
Payments of cash pursuant hereto shall be made within five (5) days after the
end of each period that gives rise to such obligation, provided that, if any
such period extends for more than thirty (30) days, payments shall be made at
the end of each thirty-day period.
3. OBLIGATIONS OF THE COMPANY.
In addition to performing its obligations under paragraphs 2(a) and
(b) above, the Company shall:
(a) prepare and file with the Commission such amendments
and supplements to such Registration Statement and the prospectus used in
connection with such Registration Statement as may be necessary to comply with
the provisions of the Securities Act or to maintain the effectiveness of the
Registration Statement during the Registration Period, or as may be reasonably
requested by a Holder in order to incorporate information concerning such
Holder or such Holder's intended method of distribution;
(b) secure the designation and quotation of the
Registrable Securities on the Nasdaq National Market;
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(c) furnish to each Holder such number of copies of the
prospectus included in such Registration Statement, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as such Holder may reasonably request in order to facilitate
the disposition of such Holder's Registrable Securities;
(d) use its best efforts to register or qualify the
Registrable Securities under the securities or "blue sky" laws of such
jurisdictions within the United States as shall be reasonably requested from
time to time by a Holder, and do any and all other acts or things which may be
necessary or advisable to enable such Holder to consummate the public sale or
other disposition of the Registrable Securities in such jurisdictions; provided
that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such jurisdiction;
(e) in the event of an underwritten public offering of
the Registrable Securities, enter into and perform its obligations under an
underwriting agreement, in usual and customary form reasonably acceptable to
the Company, with the managing underwriter of such offering;
(f) notify each Holder immediately upon the occurrence of
any event as a result of which the prospectus included in such Registration
Statement, as then in effect, contains an untrue statement of material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, and as promptly as practicable, prepare, file and furnish to each
Holder a reasonable number of copies of a supplement or an amendment to such
prospectus as may be necessary so that such prospectus does not contain an
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(g) use its best efforts to prevent the issuance of any
stop order or other order suspending the effectiveness of such Registration
Statement and, if such an order is issued, to obtain the withdrawal thereof at
the earliest possible time and to notify each Holder of the issuance of such
order and the resolution thereof;
(h) furnish to each Holder, on the date that such
Registration Statement becomes effective, (x) an opinion, dated such date, of
outside counsel representing the Company addressed to such Holder and in form
and substance as is customarily given to underwriters in an underwritten public
offering, and (y) in the case of an underwriting, a letter, dated such date,
from the Company's independent certified public accountants, in form and
substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to each Holder; and
(i) permit counsel for each Holder to review such
Registration Statement and all amendments and supplements thereto, and provide
such counsel with the opportunity to conduct a reasonable inquiry of the
Company's financial and other records during normal business hours and
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make available its officers, directors and employees for questions regarding
information contained in such Registration Statement, amendments or
supplements, a reasonable period of time prior to the filing thereof with the
Commission.
4. OBLIGATIONS OF EACH HOLDER.
In connection with the registration of the Registrable Securities
pursuant to the Registration Statement, each Holder shall:
(a) furnish to the Company such information regarding itself
and the intended method of disposition of Registrable Securities as the Company
shall reasonably request in order to effect the registration thereof; and
(b) upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph 4(f) or 4(g) above,
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement until the Registration has been amended in accordance
with paragraph 4(f) or until withdrawal of the stop order referred to in
paragraph 4(g), as the case may be.
5. INDEMNIFICATION.
In the event that any Registrable Securities are included in a
Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company shall
indemnify and hold harmless each Holder, the officers, directors, employees,
agents and representatives of such Holder, and each person, if any, who
controls such Holder within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), against any losses, claims,
damages, liabilities or reasonable out-of-pocket expenses (whether joint or
several) (collectively, including legal or other expenses reasonably incurred
in connection with investigating or defending same, "Losses"), insofar as any
such Losses arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in such Registration Statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, or (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading (collectively, "Violations"). The Company will
reimburse such Holder, and each such officer, director, employee, agent,
representative or controlling person for any legal or other expenses as
reasonably incurred by any such entity or person in connection with
investigating or defending any Loss; provided, however, that the foregoing
indemnity shall not apply to amounts paid in settlement of any Loss if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be obligated to indemnify
any person for any Loss to the extent that such Loss arises out of or is based
upon and in conformity with written information furnished by such person
expressly for use in such
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Registration Statement; and provided, further, that the Company shall not be
required to indemnify any person to the extent that any Loss results from such
person selling Registrable Securities (i) to a person to whom there was not
sent or given, at or prior to the written confirmation of the sale of such
shares, a copy of the prospectus, as most recently amended or supplemented, if
the Company has previously furnished or made available copies thereof or (ii)
during any period following written notice by the Company to such Holder of an
event described in Section 4(f) or 4(g).
(b) To the extent permitted by law, each Holder, acting
severally and not jointly, shall indemnify and hold harmless the Company, the
officers, directors, employees, agents and representatives of the Company, and
each person, if any, who controls the Company within the meaning of the
Securities Act or the 1934 Act, against any Losses to the extent (and only to
the extent) that any such Losses arise out of or are based upon and in
conformity with written information furnished by such Holder expressly for use
in such Registration Statement; and such Holder will reimburse any legal or
other expenses as reasonably incurred by the Company and any such officer,
director, employee, agent, representative, or controlling person, in connection
with investigating or defending any such Loss; provided, however, that the
foregoing indemnity shall not apply to amounts paid in settlement of any such
Loss if such settlement is effected without the consent of such Holder, which
consent shall not be unreasonably withheld; provided, that, in no event shall
any indemnity under this subsection 6(b) exceed the net purchase price of
securities sold by such Holder under the Registration Statement.
(c) Promptly after receipt by an indemnified party under
this Section 6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in and to assume
the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain its
own counsel, with the reasonably incurred fees and expenses of one such counsel
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
under applicable standards of professional conduct due to actual or potential
conflicting interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of any such action, to the extent prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 6 with respect to such action, but the
omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section 6 or with respect to any other action.
(d) In the event that the indemnity provided in paragraph
(a) or (b) of this Section 6 is unavailable or insufficient to hold harmless an
indemnified party for any reason, the Company and each Holder agree, severally
and not jointly, to contribute to the aggregate Losses to which the Company or
such Holder may be subject in such proportion as is appropriate to reflect the
relative
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fault of the Company and such Holder in connection with the statements or
omissions which resulted in such Losses; provided, however, that in no case
shall such Holder be responsible for any amount in excess of the net purchase
price of securities sold by it under the Registration Statement. Relative
fault shall be determined by reference to whether any alleged untrue statement
or omission relates to information provided by the Company or by such Holder.
The Company and each Holder agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who is
not guilty of such fraudulent misrepresentation. For purposes of this Section
6, each person who controls a Holder within the meaning of either the
Securities Act or the 1934 Act and each officer, director, employee, agent or
representative of such Holder shall have the same rights to contribution as
such Holder, and each person who controls the Company within the meaning of
either the Securities Act or the Exchange Act and each officer, director,
employee, agent or representative of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
(e) The obligations of the Company and each Holder under
this Section 6 shall survive the conversion or redemption, if any, of the
Preferred Shares, the completion of any offering of Registrable Securities
pursuant to a Registration Statement under this Agreement, or otherwise.
6. REPORTS.
With a view to making available to each Holder the benefits of
Rule 144 under the Securities Act ("Rule 144") and any other rule or regulation
of the Commission that may at any time permit such Holder to sell securities of
the Company to the public without registration, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act
and the 1934 Act; and
(c) furnish to such Holder, so long as such Holder owns
any Registrable Securities, and until such Registrable Securities are eligible
for sale pursuant to Rule 144(k), forthwith upon request (i) a written
statement by the Company, if true, that it has complied with the reporting
requirements of Rule 144, the Securities Act and the 1934 Act, (ii) a copy of
the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested in availing such Holder of any rule or
regulation of the Commission which permits the selling of any such securities
without registration.
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7. MISCELLANEOUS.
(a) Expenses of Registration. All expenses, other than
underwriting discounts and commissions and fees and expenses of counsel to each
Holder, incurred in connection with the registrations, filings or
qualifications described herein, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, the
fees and disbursements of counsel for the Company, and the fees and
disbursements incurred in connection with the opinion and letter described in
paragraph 4(h) hereof, shall be borne by the Company.
(b) Amendment; Waiver. Any provision of this Agreement
may be amended only pursuant to a written instrument executed by the Company
and each Holder. Any waiver of the provisions of this Agreement may be made
only pursuant to a written instrument executed by the party against whom
enforcement is sought. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each Holder, each future Holder, and the
Company.
(c) Notices. Any notice, demand or request required or
permitted to be given by the Company or a Holder pursuant to the terms of this
Agreement shall be in writing and shall be deemed given (i) when delivered
personally or when sent by verifiable facsimile transmission (with a hard copy
to follow), (ii) on the next business day after timely delivery to an overnight
courier and (iii) on the third business day after deposit in the U.S. mail
(certified or registered mail, return receipt requested, postage prepaid),
addressed to the parties at the addresses set forth in the Securities Purchase
Agreement, or to such other address or fax number as any party shall notify the
others in accordance herewith.
(d) Termination. This Agreement shall terminate on the
earlier to occur of (a) the end of the Registration Period and (b) the date on
which all of the Registrable Securities have been publicly distributed; but any
such termination shall be without prejudice to (i) the parties' rights and
obligations arising from breaches of this Agreement occurring prior to such
termination and (ii) the indemnification obligations under this Agreement.
(e) Assignment. The rights of a Holder hereunder shall
be assigned automatically to any transferee of the Warrant Shares or
Registrable Securities from such Holder as long as: (i) the Company is, within
a reasonable period of time following such transfer, furnished with written
notice of the name and address of such transferee, (ii) the transferee agrees
in writing with the Company to be bound by all of the provisions hereof and
(iii) such transfer is made in accordance with the applicable requirements of
the Securities Purchase Agreement.
(f) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to the conflict of laws provisions thereof.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first-above written.
METAL MANAGEMENT, INC., a Delaware
corporation
By:/s/ XXXXXX X. XXXXXX
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Name: XXXXXX X. XXXXXX
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Title: CHIEF EXECUTIVE OFFICER
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SAMSTOCK, L.L.C., a Delaware limited
liability company
By: SZ Investments, L.L.C., its
managing member
By: Xxxx General Partnership,
Inc., its managing member
By:/s/ XXX XXXXXXXX
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Name: XXX XXXXXXXX
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Title: VICE PRESIDENT
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