1
EXHIBIT 10.2
________________________________________________________________________________
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
FOR
METAL MANAGEMENT, INC.
Dated: December 19, 1997
________________________________________________________________________________
2
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; Xxxxx 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
3
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. Xxxxxxxx
Xxxxxxxx ("TBJ"), Xxxxxx X. Xxxxxx ("GMJ"), Xxxxxx X. Xxxxx ("AAC"), Xxxxx X.
Xxxxx ("FJC"), Xxxxxxx X. Xxxxx ("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., Xxxxx Iron & Metal, Inc., AAC, FJC and GPC (AAC, FJC and GPC being
sometimes hereinafter referred to collectively as the "XXXXX STOCKHOLDERS"),
the Xxxxx 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 Xxxxx 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
4
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 Xxxxx
Stockholders;
(ii) The Xxxxx Stockholders shall have the right to
nominate that number of persons (each, a "XXXXX 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 Xxx Xxxx or Xxx X.
Xxxxxxxx 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
5
(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 Xxxxx Director upon request at any time by
the holders of a majority of the shares of Common Stock held by the
Xxxxx 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, Xxxxx Director, or Purchaser Director, with
a nominee selected by the JJ Stockholders, the Xxxxx 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 Xxxxx
Stockholders, as applicable; and provided further, that if such nominee
is to fill the vacancy of the Purchaser Director, such nominee shall be
either Xxx Xxxx or Xxx X. Xxxxxxxx. 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
Xxxxx Stockholders, as to the Xxxxx 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 Xx. Xxxx or Xx. Xxxxxxxx)
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
6
(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
7
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 Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx shall
assume Xxxxxx X. Xxxxx'x 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 Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxxx and
T. Xxxxxxxx Xxxxxxxx.
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) Xxxxxx X. Xxxxx President, Chief Operating Officer
(b) Xxxxxx X. Xxxxxx Chief Executive Officer
(c) T. Xxxxxxxx Xxxxxxxx Chairman of the Board and Chief
Development Officer
(d) Xxxxx X. Xxxxx Vice President and President of
Xxxxx 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; XXXXX STOCKHOLDERS AND JJ STOCKHOLDERS.
During the term of this Agreement, each of the Xxxxx 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
8
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 Xxxxx Stockholders and Chicago Title & Trust Company) and the
Xxxxx 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 Xxxxx 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
9
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 Xxxxx Stockholder, each of the remaining Xxxxx Stockholders
shall have the first option to purchase any Offered
Corporation Securities on a pro rata basis (determined by
reference to the remaining Xxxxx Stockholders only) or in such
proportions as is otherwise agreed upon by the remaining Xxxxx
Stockholders. The remaining Xxxxx 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 Xxxxx 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 Xxxxx Stockholders, or if the Xxxxx Stockholders fail to
give notice, fifteen (15) days after the expiration of the
first option period. If the remaining Xxxxx 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
10
Corporation Securities or fail to exercise the options
within such fifteen (15) day period, each of the Xxxxx
Stockholders shall have the second option to purchase any
remaining Offered Corporation Securities on a pro rata basis
(determined by reference to the Xxxxx Stockholders only) or in
such proportions as is otherwise agreed upon by the remaining
Xxxxx Stockholders. The Xxxxx 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 Xxxxx
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 Xxxxx Stockholders, or if the
Xxxxx 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
purchase 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
11
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
12
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. Xxxxxxxx Xxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxx
X. Xxxxx, Xxxxx X. Xxxxx and Xxxxxxx X. Xxxxx, 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 Xxxxx Stockholder, to any
other Xxxxx 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
13
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
14
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:
Xxxxx Iron & Metal, Inc.
0000 Xxxxx Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
(A) If to TBJ, at:
00 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
(C) If to GMJ, at:
0000 Xxxxxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000
12
15
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
(D) If to the Corporation, at:
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: Chief Financial Officer
Fax: (000) 000-0000
With a copy to:
Xxxxxxx & Xxxxxxxx Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
If to Purchaser:
Samstock, L.L.C.
Two Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxx X. Xxxxxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxxxxxx & Xxxxxxxxxxx, P.C.
Two Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
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
16
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, notwithstanding any conflict of law
principles.
3.7 FURTHER ASSURANCES. Each party agrees to cooperate
with the others, and to execute and deliver, or cause to be executed and
delivered, all such other instruments, and to take all such other actions as he
may be reasonably required to take, from time to time, in order to effect the
provisions and purposes hereof.
3.8 COUNTERPARTS. This Agreement may be executed in
any one or more counterparts, each of which shall constitute an original, no
other counterpart needing to be produced and all of which, when taken together,
shall constitute but one and the same instrument.
3.9 HEADINGS. The headings of Articles and
subdivisions herein are merely for convenience of reference and shall not
affect the interpretation of any of the provisions hereof.
3.10 ENTIRE AGREEMENT. This Agreement and the Merger
Agreement contain the entire understanding among the parties with respect to
the subject matter of this Agreement. Any modification hereof may be made only
by an instrument in writing signed by all of the parties hereto, except that
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
17
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: T. Xxxxxxxx Xxxxxxxx
----------------------------
Name: T. Xxxxxxxx Xxxxxxxx
--------------------------
Title: Chairman
-------------------------
/s/ T. Xxxxxxxx Xxxxxxxx
----------------------------
T. Xxxxxxxx Xxxxxxxx
/s/ Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxx
----------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxx X. Xxxxx
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
-----------------------------
Name: Xxx Xxxxxxxx
----------------------------
Title: Vice President
---------------------------
322233-3
15
18
SCHEDULE 1.2
1. The board of directors of MTLM has authorized the Chairman and the CEO
of MTLM to negotiate an arrangement with Xxxxxx Xxxxxxxxx whereby
Xxxxxx Xxxxxxxxx would become Vice-Chairman of MTLM and Xxxxxx
Xxxxxxxxx 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 Xxx Xxxxxxx, 25,000 warrants and 15,000
options to purchase shares of common stock of MTLM to Xxxxxx
Xxxxxxxxxx, and 25,000 options to purchase shares of common stock of
MTLM to Xxxxxx Xxxxx. 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 Xxxxxx
Xxxxxxxxxx and Xxxxxx Xxxxx. The adjustment to annual compensation
for Mr. Xxxxx and Xx. Xxxxxxxxxx increased their annual base pay to
$135,000 and $100,000 respectively.
4. The Compensation Committee approved increases in annual base salary
for Xx. Xxxxxx and Xx. Xxxxxxxx effective from and after June 1, 1997.
Xx. Xxxxxxxx' adjusted annual salary is equal to the amount of
$275,000 and Xx. Xxxxxx' adjusted annual salary is equal to the amount
of $287,000. In addition, Xx. Xxxxxxxx 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 Xx. Xxxxxxxx, Xx. Xxxxxx, and Mr. Xxxxx. On July
31, 1997, Xx. Xxxxxx and Xx. Xxxxxxxx each received a bonus in the
amount of $50,000. On July 15, 1997, Mr. Xxxxx received a bonus in
the amount of $25,000.
6. The Company plans to pay aggregate bonuses to Xx. Xxxxxxxxxx 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 Xxxxxx Xxxxxxxxx as more fully
described in MTLM's definitive Proxy Statement dated November 20,
1997.
16
