Exhibit 3
SHELF REGISTRATION RIGHTS AGREEMENT
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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.
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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.
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(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
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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.
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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 make available its officers,
directors and employees for questions regarding
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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.
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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.
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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
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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
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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.
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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.
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(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:_____________________________________________
Name:___________________________________________
Title:__________________________________________
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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316230.5
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