Exhibit 1
SECURITIES PURCHASE AGREEMENT
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SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of December 19,
1997, by and among Metal Management, Inc., a Delaware corporation (the
"Company"), and Samstock, L.L.C., a Delaware limited liability company
("Purchaser").
RECITALS
A. The Company wishes to issue and sell to Purchaser, and Purchaser
wishes to buy from the Company, on the terms and subject to the conditions set
forth in this Agreement in the aggregate (i) 1,470,588 shares (the "Shares") of
the Company's Common Stock, $.01 par value per share (the "Common Stock"),
representing approximately 5.2% of the Common Stock outstanding, or 3.6% of the
Fully Diluted Common Stock (as hereinafter defined), together with (ii) a
warrant (the "Warrant") in the form of Exhibit A hereto to purchase an
additional 600,000 shares of the Common Stock (the "Warrant Shares"),
representing approximately 1.5% of the Fully Diluted Common Stock. The Warrant
Shares shall have an exercise price (subject to adjustment as provided in the
Warrant) of $20.00 per share for 400,000 Warrant Shares and $23.00 per share for
200,000 Warrant Shares. The Shares, the Warrant and the Warrant Shares are
collectively referred to herein as the "Securities" and each as a "Security".
B. The Company has agreed to effect the registration of the Shares and
the Warrant Shares under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to a Shelf Registration Rights Agreement of even date herewith
among the Company and Purchaser (the "Shelf Registration Rights Agreement") and
an Amended and Restated Registration Rights Agreement dated as of the date
hereof among the Company, Purchaser, T. Xxxxxxxx Xxxxxxxx, Xxxxxx X. Xxxxxx,
Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxxxxx X. Xxxxx (the "Amended and Restated
Registration Rights Agreement").
C. The sale of the Shares and the Warrant by the Company to Purchaser
will be effected in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D"), as promulgated by
the Securities and Exchange Commission (the "Commission") under the Securities
Act.
The Company and the Purchasers hereby agree as follows:
1. PURCHASE AND SALE OF THE SHARES AND THE WARRANT.
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1.1 Agreement to Purchase and Sell. Upon the terms and subject to the
satisfaction of the conditions set forth herein, the Company agrees to sell at
the Closing (as defined below), and Purchaser agrees to purchase 1,470,588
Shares at a purchase price of $17.00 per Share, together with the Warrants in
each case free and clear of all Liens (as hereinafter defined).
1.2 Closing. Subject to the satisfaction of the conditions set forth
herein, the closing of the purchase and sale of the Shares and the Warrant will
be deemed to occur when this Agreement and the other Transaction Documents (as
defined below), have been executed and
delivered by the Company and Purchaser, and full payment of the Purchase Price
has been made by Purchaser by wire transfer of immediately available funds to an
account designated by the Company against delivery by the Company of duly
executed certificates to Purchaser representing the Shares purchased by
Purchaser hereunder, as well as the Warrant to be delivered in connection
therewith (the "Closing"). The date on which the Closing is deemed to take place
is referred to herein as the "Closing Date". The aggregate Purchase Price for
all of the Shares and the Warrant to be purchased by Purchaser at the Closing
(assuming the satisfaction of the conditions described in Section 5 below) shall
be Twenty-Four Million Nine Hundred Ninety-Nine Thousand Nine Hundred Ninety-Six
and 00/100 Dollars ($24,999,996.00).
1.3 Certain Definitions. When used herein:
(A) "business day" shall mean any day on which the New York Stock Exchange
and commercial banks in the city of New York are open for business;
(B) an "affiliate" of a party shall mean any person or entity controlling,
controlled by or under common control with that party;
(C) "control" shall mean, with respect to an entity, the ability to direct
the business, operations or management of such entity, whether through an equity
interest therein or otherwise;
(D) "subsidiary" shall mean any entity in which the Company has an equity
interest of 50% or greater;
(E) "Fully Diluted Common Stock" shall mean the total number of shares of
Common Stock outstanding after taking into account the following: (i) all
shares of Common Stock outstanding (exclusive of the Shares), (ii) all Shares
and Warrant Shares (assuming full exercise of the Warrant and issuance of all
Warrant Shares), (iii) all shares of Common Stock issuable upon conversion,
exchange or other exercise of the Company's Equity Securities outstanding, and
(iv) adjustments needed to account or adjust for stock splits, stock dividends,
recapitalizations, recombinations and similar events;
(F) "Equity Securities" shall mean, with respect to the Company or any
subsidiary, as the case may be: (i) any class or series of common stock,
preferred stock or other capital stock, whether voting or non-voting, including,
without limitation, with respect to the Company, Common Stock, Series A
Convertible Preferred Stock and Series B Convertible Preferred Stock, (ii) any
other equity securities issued by the Company or such subsidiary, as the case
may be, whether now or hereafter authorized for issuance by the Company's or
such subsidiary's, as the case may be, Certificate of Incorporation, (iii) any
debt, hybrid or other securities issued by the Company or such subsidiary, as
the case may be, which are convertible into, exercisable for or exchangeable for
any other Equity Securities, whether now or hereafter authorized for issuance by
the Company's or such subsidiary's, as the case may be, Certificate of
Incorporation, (iv) any equity equivalents (including, without limitation, stock
appreciation rights, phantom stock or similar rights), interests in the
ownership or earnings of the Company or such subsidiary, as the
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case may be, or other similar rights, (v) any written or oral rights, options,
warrants, subscriptions, calls, preemptive rights, rescission rights or other
rights to subscribe for, purchase or otherwise acquire any of the foregoing,
(vi) any written or oral obligation of the Company or such subsidiary, as the
case may be, to issue, deliver or sell, any of the foregoing, (vii) any written
or oral obligations of the Company or such subsidiary, as the case may be, to
repurchase, redeem or otherwise acquire any Equity Securities, and (viii) any
bonds, debentures, notes or other indebtedness of the Company or such
subsidiary, as the case may be, having the right to vote (or convertible into,
or exchangeable for securities having the right to vote) on any matters on which
the stockholders of the Company or such subsidiary, as the case may be, may
vote; and
(G) "Lien" shall mean any preemptive or similar rights of any third party,
purchase options, calls, proxies, voting trusts, voting agreements, judgments,
pledges, charges, taxes, assessments, levies, escrows, rights of first refusal
or first offer, transfer restrictions, mortgages, indentures, claims, liens,
equities, mortgages, deeds of trust, deeds to secure debt, security interests
and other encumbrances of every kind and nature whatsoever, whether arising by
agreement, operation of law or otherwise, other than any created by Purchaser.
2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
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Purchaser, solely with respect to it, hereby makes the following
representations and warranties to the Company (which shall be true as of the
date hereof and as of the Closing Date) and agrees with the Company that:
2.1 Authorization; Enforceability. Purchaser is duly and validly
organized, validly existing and in good standing as a limited liability company
under the laws of the State of Delaware with full power and authority to
purchase the Shares and the Warrant and to execute and deliver this Agreement.
This Agreement constitutes Purchaser's valid and legally binding obligation,
enforceable in accordance with its terms, except as such enforcement may be
limited by (i) applicable bankruptcy, insolvency, reorganization or other laws
of general application relating to or affecting the enforcement of creditors'
rights generally and (ii) general principles of equity.
2.2 Accredited Investor; Investment Intent. Purchaser is an accredited
investor as that term is defined in Rule 501 of Regulation D, and is acquiring
the Shares and the Warrant solely for its own account for investment purposes as
a principal and not with a present view to the public resale or distribution of
all or any part thereof, except pursuant to sales that are exempt from the
registration requirements of the Securities Act and/or sales registered under
the Securities Act; provided, however that in making such representation,
Purchaser does not agree to hold the Securities for any minimum or specific term
and reserves the right to sell, transfer or otherwise dispose of the Securities
at any time in accordance with the provisions of this Agreement and with Federal
and state securities laws applicable to such sale, transfer or disposition.
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2.3 Information. The Company has provided Purchaser with, and Purchaser
has reviewed, the written information regarding the Company set forth on
Schedule 2.3, and has granted to Purchaser the opportunity to ask questions of
and receive answers from representatives of the Company, its officers,
directors, employees and agents concerning the business, operations and
financial condition of the Company and materials relating to the terms and
conditions of the purchase and sale of the Shares and the Warrant hereunder.
Neither such information nor any other investigation conducted by Purchaser or
any of its representatives shall modify, amend or otherwise affect Purchaser's
right to rely on the Company's representations and warranties contained in this
Agreement.
2.4 Limitations on Disposition. Purchaser acknowledges that, except as
provided in the Shelf Registration Rights Agreement or the Amended and Restated
Registration Rights Agreement, the Securities have not been and are not being
registered under the Securities Act and may not be transferred or resold without
registration under the Securities Act or unless pursuant to an exemption
therefrom. Purchaser agrees not to sell, transfer or otherwise dispose of the
Securities unless and until:
(a) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or
(b) (i) Purchaser shall have notified the Company in advance of the
proposed disposition, and (ii) if reasonably requested by the Company,
Purchaser shall have furnished the Company with an opinion of counsel (the
cost of which shall be borne by the Purchaser), reasonably satisfactory to
the Company, that such disposition will not require registration under the
Securities Act. It is agreed that no opinion of counsel will be required
for the transfer of the Securities to an affiliate of Purchaser or with
respect to a sale thereof made pursuant to Rule 144 under the Securities
Act ("Rule 144").
2.5 Legend. Purchaser understands that the certificates representing the
Securities may bear at issuance, in addition to any restrictive legend required
pursuant to the Amended and Restated Stockholders Agreement, a restrictive
legend in substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws, and may not be sold,
transferred or assigned in the absence of an effective registration
statement under the Securities Act and any such state law or an
exemption from the registration requirements thereunder."
Notwithstanding the foregoing, it is agreed that, as long as the sale of
the Warrant Shares are registered pursuant to an effective registration
statement or such shares are eligible for resale under Rule 144(k), the Warrant
Shares shall be issued upon exercise of the Warrant pursuant to the terms of the
Warrant, without any legend or other restrictive language. The legend set forth
above shall be removed and the Company shall issue a new certificate without
such legend to the
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holder of any Security upon which it is stamped if (i) the sale of such Security
is registered under the Securities Act, (ii) such holder provides the Company
with an opinion of counsel, in form, substance and scope customary for opinions
of counsel in comparable transactions (the cost of which shall be borne by the
Purchaser) to the effect that such Security can be sold publicly without
registration under the Securities Act or (iii) such holder provides the Company
with reasonable assurances that such Security can be sold pursuant to Rule 144
without any restriction as to the number of shares of such Security that can
then be immediately resold.
2.6 No Reliance by Purchaser. Purchaser acknowledges that (i) it has
such knowledge in business and financial matters as to be fully capable of
evaluating this Agreement, the other Transaction Documents (as defined below)
and the transactions contemplated hereby and thereby, (ii) it is not relying on
any advice or representation of the Company in connection with entering into
this Agreement, the other Transaction Documents or such transactions (other than
the representations made by the Company in this Agreement and the other
Transaction Documents, and in the written information described in paragraph 2.3
above), (iii) it has not received from the Company any assurance or guarantee as
to the merits (whether legal, regulatory, tax, financial or otherwise) of
entering into this Agreement or the other Transaction Documents or the
performance of its obligations hereunder and thereunder, and (iv) it has
consulted with its own legal, regulatory, tax, business, investment, financial
and accounting advisors to the extent that it has deemed necessary, and has
entered into this Agreement and the other Transaction Documents based on its own
independent judgment and on the advice of its advisors as it has deemed
necessary, and not on any view (whether written or oral) expressed by the
Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby makes the following representations, warranties and
covenants to Purchaser (which shall be true as the date hereof and as of the
Closing Date, provided that the representations and warranties made by the
Company in paragraph 3.18 hereof shall be true as of the date specified therein)
and agrees with Purchaser that:
3.1 Organization, Good Standing and Qualification. Each of the Company
and its subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite power and authority, corporate and otherwise, to carry on
its business as now conducted. Each of the Company and its subsidiaries is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure so to qualify would have a material adverse effect on the
consolidated business or financial condition of the Company and its subsidiaries
taken as a whole.
3.2 Authorization; Consents. The Company has the requisite corporate
power and authority to enter into and perform this Agreement, the Registration
Rights Agreement and the Warrant, to issue and sell the Shares and the Warrant
to Purchaser in accordance with the terms hereof, and to issue the Warrant
Shares upon exercise of the Warrant in accordance with its terms. All corporate
action on the part of the Company by its officers, directors and stockholders
necessary for the authorization, execution and delivery of, and the performance
by the Company
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of its obligations under: (i) this Agreement; (ii) the Registration Rights
Agreement; (iii) the Warrant; (iv) the Amended and Restated Registration Rights
Agreement; (v) the Amended and Restated Stockholders' Agreement dated as of the
date hereof among the Company, Purchaser, T. Xxxxxxxx Xxxxxxxx, Xxxxxx X.
Xxxxxx, Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxxxxx X. Xxxxx (the "Amended and
Restated Stockholders' Agreement"); and (vi) all other agreements, documents,
certificates or other instruments delivered by the Company at the Closing (the
instruments described in (i), (ii), (iii), (iv), (v) and (vi) being collectively
referred to herein as the "Transaction Documents") has been obtained and no
further consent or authorization of the Company, its Board of Directors or its
stockholders is required.
3.3 Enforcement. The Transaction Documents constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except as such enforcement may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors' rights generally and (ii)
general principles of equity. Except as otherwise provided in the Transaction
Documents, the Company has obtained all governmental or regulatory consents and
approvals required for it to execute, deliver and perform its obligations under
the Transaction Documents.
3.4 Disclosure Documents; Material Agreements; Other Information. The
Company has filed with the Commission: (i) the Company's Annual Report on Form
10-K for the year ended March 31, 1997; (ii) Quarterly Reports on Form 10-Q and
10-Q/A for the quarters ended January 31, 1996, June 30, 1996, September 30,
1996, December 31, 1996, June 30, 1997 and September 30, 1997; (iii) Transition
Report on Form 10-Q for the period from November 1, 1995 through March 31, 1996;
(iv) all Current Reports on Form 8-K required to be filed with the Commission
since January 31, 1996; (v) the Company's definitive Proxy Statement for its
1995 Annual Meeting of Shareholders; (vi) the Company's definitive proxy
statement for its 1997 Annual Meeting of Shareholders, a copy of which has been
provided to Purchaser (the "Proxy Statement"); (vii) any amendments to the
foregoing; and (viii) all schedules and exhibits attached thereto (collectively,
the "Disclosure Documents"). Except as described in the 1997 Proxy Statement,
and except for the transactions contemplated hereby, the Company is not aware of
any event that would require the filing of a Form 8-K within fifteen (15) days
following the Closing Date. Each Disclosure Document, as of the date of the
filing thereof with the Commission, conformed in all material respects to the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations thereunder and, as of the date of such
filing or, if such Disclosure Document was subsequently amended, as of the date
of the filing of any amendment thereto with the Commission, such Disclosure
Document did not contain an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. All material agreements required to be filed as exhibits to the
Disclosure Documents have been filed as required. The written information
provided to such Purchaser as described in paragraph 2.3 above does not contain
an untrue statement of material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except as set
forth in the financial statements of the Company included in the Disclosure
Documents, the Company
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has no liabilities, contingent or otherwise, other than liabilities incurred in
the ordinary course of business which, under generally accepted accounting
principles, are not required to be reflected in such financial statements and
which, individually or in the aggregate, are not material to the business,
operations or financial condition of the Company and its subsidiaries taken as a
whole.
3.5 Capitalization. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares reserved for issuance pursuant to the
Company's stock option plans, the number of shares reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for
any shares of Common Stock and the number of shares initially to be reserved for
issuance upon exercise of the Warrant is set forth on Schedule 3.5 hereto. All
of such outstanding shares of capital stock have been, or upon issuance will be,
validly issued, fully paid and non-assessable. No shares of the capital stock of
the Company are subject to preemptive rights or any other similar rights of the
stockholders of the Company or any liens or encumbrances created by or through
the Company. Except as disclosed on Schedule 3.5, or as contemplated herein, as
of the date of this Agreement and as of the Closing Date, there are no
outstanding Equity Securities of the Company or any subsidiary. The Shares shall
represent approximately 3.6% of the Fully Diluted Common Stock and 5.2% of the
outstanding shares of Common Stock as of the Closing Date. The Warrant Shares
shall represent approximately 1.5% of the Fully Diluted Common Stock as of the
Closing Date.
3.6 Valid Issuance. The Shares are duly authorized and, when issued, sold
and delivered in accordance with the terms hereof: (i) will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens; and (ii)
based in part upon the representations of Purchaser in this Agreement, will be
issued, sold and delivered in compliance with all applicable Federal and state
securities laws. The Warrant Shares are duly authorized and reserved for
issuance and, upon exercise of the Warrant in accordance with its terms, will be
duly and validly issued, fully paid and nonassessable, free and clear of all
Liens. Upon payment of the Purchase Price at the Closing, Purchaser will
acquire good and marketable title to the Shares, free and clear of all Liens.
Upon payment of the Purchase Price at the Closing, Purchaser will acquire good
and marketable title to the Warrant, free and clear of all Liens. Upon exercise
of the Warrant in accordance with its terms, including payment of the
consideration in the form and amount specified therein, Purchaser will acquire
good and marketable title to the Warrant Shares, free and clear of all Liens.
3.7 No Conflict with Other Instruments. Neither the Company nor any of
its subsidiaries is in violation of any provisions of its Certificate of
Incorporation or Bylaws as amended and in effect on and as of the date hereof;
the Company is not in default (and no event has occurred which, with notice or
lapse of time or both, would constitute a default) under any material provision
of any material instrument or contract to which it is a party or by which it is
bound, or of any provision of any Federal or state judgment, writ, decree,
order, statute, rule or governmental regulation applicable to the Company, which
would have a material adverse effect on the business, operations or financial
condition of the Company and its subsidiaries taken as a whole. The execution,
delivery and performance of this Agreement and the other Transaction
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Documents, and the consummation of the transactions contemplated hereby and
thereby (including without limitation the issuance and reservation for issuance
of the Warrant Shares) will not result in any such violation or be in conflict
with or constitute, with or without the passage of time and giving of notice,
either a default under any such provision, instrument or contract or an event
which results in the creation of any lien, charge or encumbrance upon any assets
of the Company.
3.8 Financial Condition; Taxes; Litigation.
3.8.1 The Company's financial condition is, in all material respects,
as described in the Disclosure Documents, except for changes in the ordinary
course of business and normal year-end adjustments that are not, in the
aggregate, materially adverse to the Company. Except as otherwise described in
the Disclosure Documents, as of the date hereof and as of the Closing there has
been no material adverse change to the Company's business, operations,
properties, financial condition or results of operations since the date of the
Company's most recent audited financial statements contained in the Disclosure
Documents.
3.8.2 The Company has filed all tax returns required to be filed by
it and paid all taxes which are due, except for taxes which it reasonably
disputes or which could not reasonably be expected to have a material adverse
effect on the consolidated business or financial condition of the Company.
3.8.3 Except as set forth on Schedule 3.8.3, the Company is not the
subject of any pending or, to its knowledge, threatened investigation or
administrative or legal proceeding by the Internal Revenue Service, the taxing
authorities of any state or local jurisdiction, the Commission or any state
securities commission or other governmental entity which could reasonably be
expected to have a material adverse effect on the business, operations or
financial condition of the Company and its subsidiaries taken as a whole.
3.8.4 Except as set forth on Schedule 3.8.4, there is no material
claim, litigation or administrative proceeding pending, or, to the best of the
Company's knowledge, threatened, against the Company or against any officer,
director or employee of the Company in connection with such person's employment
therewith. The Company is not a party to or subject to the provisions of, any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality which could reasonably be expected to have a material adverse
effect on the business, operations or financial condition of the Company and its
subsidiaries taken as a whole.
3.9 Reporting Company; Form S-3. The Company is subject to the reporting
requirements of the Exchange Act, has a class of securities registered under
Section 12 of the Exchange Act, and has filed all reports required thereby. The
Company is eligible to register for resale shares of its Common Stock on a
registration statement on Form S-3 under the Securities Act.
3.10 No Reliance by Company. The Company acknowledges that (i) it has
such knowledge in business and financial matters as to be fully capable of
evaluating this Agreement,
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the other Transaction Documents and the transactions contemplated hereby and
thereby, (ii) it is not relying on any advice or representation of Purchaser in
connection with entering into this Agreement, the other Transaction Documents or
such transactions (other than the representations made by Purchaser in this
Agreement and the other Transaction Documents), (iii) it has not received from
Purchaser any assurance or guarantee as to the merits (whether legal,
regulatory, tax, financial or otherwise) of entering into this Agreement or the
other Transaction Documents or the performance of its obligations hereunder and
thereunder, and (iv) it has consulted with its own legal, regulatory, tax,
business, investment, financial and accounting advisors to the extent that it
has deemed necessary, and has entered into this Agreement and the other
Transaction Documents based on its own independent judgment and on the advice of
its advisors as it has deemed necessary, and not on any view (whether written or
oral) expressed by Purchaser.
3.11 Acknowledgment of Dilution. The Company acknowledges that the
issuance of the Warrant Shares upon exercise of the Warrant Shares in accordance
with its terms may result in dilution of the outstanding shares of Common Stock,
which dilution may be substantial under certain market conditions. The Company
further acknowledges that its obligation to issue Warrant Shares upon exercise
of the Warrant in accordance with its terms is unconditional and absolute
regardless of the effect of any such dilution.
3.12 Registration Rights; Rights of Participation. Except as described on
Schedule 3.12 hereto, (A) the Company has not granted or agreed to grant to any
person or entity any rights (including "piggy-back" registration rights) to have
any securities of the Company registered with the Commission or any other
governmental authority and (B) no person or entity, including, but not limited
to, current or former shareholders of the Company, underwriters, brokers, agents
or other third parties, has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the transactions
contemplated by this Agreement or any other Transaction Document which has not
been waived.
3.13 Trading on Nasdaq. The Common Stock is authorized for quotation on
the Nasdaq National Market, and trading in the Common Stock on Nasdaq has not
been suspended as of the date hereof and as of the Closing Date.
3.14 Solicitation. Neither the Company nor any of its subsidiaries or
affiliates, nor any person acting on its or their behalf, (i) has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Shares and the
Warrant; or (ii) has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under any circumstances
that would require registration of the Shares or the Warrant under the
Securities Act.
3.15 Fees. The Company is not obligated to pay any compensation or other
fee, cost or related expenditure to any underwriter, broker, agent or other
representative in connection with the transactions contemplated hereby.
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3.16 Foreign Corrupt Practices. Neither the Company, nor any of its
subsidiaries nor any director, officer, agent, employee or other person acting
on behalf of the Company or any subsidiary has (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity, (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee, (iii)
violated any provision of the Foreign Corrupt Practices Act of 1977, as amended,
or made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.
3.17 Pending Acquisitions. With respect to any acquisition of assets or
securities by the Company or any of its subsidiaries, the agreement for which
has been executed as of the date of this Agreement, the closing of such
acquisition, and the obligations of the parties thereunder, are not conditioned
in any respect on the maintenance at any given level of the closing bid, ask or
sale price of the Common Stock as quoted by Nasdaq.
3.18 Environmental Matters. Except as set forth in the Disclosure
Documents or on Schedule 3.18 hereof, the following representations and
warranties shall be true with respect to the Company and its subsidiaries (and
only those subsidiaries owned by the Company as of May 16, 1997) as of May 16,
1997:
3.18.1 To the best of the Company's knowledge, the Company and each
of its subsidiaries is in material compliance with all Environmental, Health and
Safety Laws (as defined below) governing its business, operations, properties
and assets. Neither the Company nor any of its subsidiaries is currently liable
for any penalties, fines or forfeitures for failure to comply with any
Environmental, Health and Safety Laws.
3.18.2 The Company and each of its subsidiaries has obtained, or
caused to be obtained, and to the best of the Company's knowledge, is in
material compliance with, all applicable and material licenses, certificates,
permits, approvals and registrations required by the Environmental, Health and
Safety Laws (collectively, "Licenses"). There are no administrative or judicial
investigations, notices, claims or other proceedings pending or threatened by
any governmental authority or third parties against the Company or any of its
subsidiaries, their respective businesses, operations, properties or assets,
which question the validity or entitlement of the Company or any of its
subsidiaries to any License wherein an unfavorable decision, ruling or finding
could have a material adverse effect on the Company or any of its subsidiaries.
3.18.3 Neither the Company nor any of its subsidiaries has received
or is aware of any non-compliance order, warning letter, investigation, notice
of violation, claim, suit, action, judgment or administrative or judicial
proceeding pending or threatened against or involving the Company or any of its
subsidiaries, issued by any governmental authority or third party with respect
to any Environmental, Health and Safety Laws, which has not been resolved to the
satisfaction of the issuing governmental authority or third party and which
could have a material adverse effect on the Company or any of its subsidiaries.
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3.18.4 To the best of the Company's knowledge, neither the Company
nor any of its subsidiaries has generated, manufactured, used, transported,
transferred, stored, handled, treated, Discharged, Released or disposed of, nor
has it allowed or arranged for any third parties to generate, manufacture, use,
transport, transfer, store, handle, treat, Discharge, Release or dispose of,
Hazardous Substances or other Waste (as defined below) to or at any location
other than a site lawfully permitted to receive such Hazardous Substances or
other waste for such purposes, nor has it performed, arranged for or allowed by
any method or procedure such generation, manufacture, use, transportation,
transfer, storage, treatment, spillage, leakage, dumping, Discharge, Release or
disposal in material contravention of any Environmental, Health and Safety Laws.
To the best of the Company's knowledge, neither the Company nor any of its
subsidiaries has generated, manufactured, used, stored, handled, treated,
Discharged, Released or disposed of, or allowed or arranged for any third
parties to generate, manufacture, use, store, handle, treat, spill, leak, dump,
discharge, release or dispose of, any material quantities of Hazardous
Substances or other waste upon property currently or previously owned or leased
by it, except as permitted by law. For purposes of this Agreement, the term
"Hazardous Substances" means any toxic or hazardous substance, material, or
waste, any other contaminant, pollutant or constituent thereof, whether liquid,
solid, semi-solid, sludge and/or gaseous, including without limitation,
chemicals, compounds, metals, by-products, pesticides, asbestos containing
materials, petroleum or petroleum products, and polychlorinated biphenyls, the
presence of which requires investigation or remediation under any Environmental,
Health and Safety Laws or which are or become regulated, listed or controlled
by, under or pursuant to any Environmental Health and Safety Laws. For purposes
of this Agreement, the term "Waste" means agricultural wastes, biomedical
wastes, biological wastes, bulky wastes, construction and demolition debris,
garbage, household wastes, industrial solid wastes, liquid wastes, recyclable
materials, sludge, solid wastes, special wastes, used oils, white goods, and
yard trash.
3.18.5 To the best of the Company's knowledge, neither the Company
nor any of its subsidiaries has caused, nor allowed to be caused or permitted,
either by action or inaction, a Release or Discharge, or threatened Release or
Discharge, of any material quantity of Hazardous Substances on, into or beneath
the surface of any parcel of the Owned Properties or the Leased Premises or to
any properties adjacent thereto which would have a material adverse effect on
the Company or its subsidiaries. To the best of the Company's knowledge, there
has not occurred, nor is there presently occurring, a Release or Discharge, or,
threatened Release or Discharge, of any material quantity of Hazardous
Substances on, into or beneath the surface of any parcel of the Owned Properties
or the Leased Premises or to any properties adjacent thereto which would have a
material adverse effect on the Company or its subsidiaries. For purposes of this
Agreement, the terms "Release" and "Discharge" shall have the meanings given
them in the Environmental, Health and Safety Laws.
3.18.6 To the best of the Company's knowledge, neither the Company
nor any of its subsidiaries has generated, handled, manufactured, treated,
stored, used, shipped, transported, transferred or disposed of, nor has it
allowed or arranged, by contract, agreement or otherwise, for any third parties
to generate, handle, manufacture, treat, store, use, ship, transport, transfer
or dispose of, any Hazardous Substances or other Waste to or at a site which,
pursuant to
-11-
CERCLA or any similar state law, has been placed or been proposed for placement
on the National Priorities List or its state equivalent. Neither the Company nor
any of its subsidiaries has received notice, and neither the Company nor any of
its subsidiaries has knowledge of any facts which could give rise to any notice,
that the Company or any of its subsidiaries is a potentially responsible party
for a federal or state environmental cleanup site or for corrective action under
Environmental Health and Safety Laws. Neither the Company nor any of its
subsidiaries has submitted or was required to submit any notice pursuant to
Section 103(c) of CERCLA with respect to the Leased Premises or the Owned
Properties. Neither the Company nor any of its subsidiaries has received any
written request for information in connection with any federal or state
environmental cleanup site, or in connection with any of the real property or
premises where the Company or any of its subsidiaries has transported,
transferred or disposed of other Wastes. Neither the Company nor any of its
subsidiaries has been required to or has undertaken any response or remedial
actions or clean-up actions of any kind at the request of any governmental
authorities or at the request of any other third party. To the best of the
Company's knowledge, neither the Company nor any of its subsidiaries has any
material liability under any Environmental, Health and Safety Laws for personal
injury, property damage, natural resource damage, or clean up obligations.
3.18.7 To the best of the Company's knowledge, there are no
Aboveground Storage Tanks or Underground Storage Tanks on the Owned Properties
or the Leased Premises. For purposes of this Agreement, the terms "Aboveground
Storage Tanks" and "Underground Storage Tanks" shall have the meanings given
them in Section 6901 et seq., as amended, of RCRA, or any applicable state or
local statute, law, ordinance, code, rule, regulation, order, ruling or decree
governing Aboveground Storage Tanks or Underground Storage Tanks.
3.18.8 Schedule 3.18 identifies (i) all material environmental
audits, assessments or occupational health studies, of which the Company is
aware, undertaken by the Company, its subsidiaries or their agents, or by any
governmental authority, or by any third party, relating to or affecting the
Company, its subsidiaries or any of the Leased Premises or the Owned Properties;
and (ii) all material citations issued under OSHA, or similar state or local
statutes, laws, ordinances, codes, rules, regulations, orders, rulings or
decrees, relating to or affecting the Company or any of its subsidiaries or any
of the Leased Premises or the Owned Properties.
3.18.9 Schedule 3.18 contains a list of the assets of the Company and
its subsidiaries which have been confirmed to contain "Asbestos" or "Asbestos-
Containing Material" (as such terms are identified under the Environmental,
Health and Safety Laws). The Company and each of its subsidiaries has operated
and continues to operate in material compliance with all Environmental, Health
and Safety Laws governing the handling, use and exposure to and disposal of
asbestos or asbestos-containing materials. There are no claims, actions, suits,
governmental investigations or proceedings before any governmental authority or
third party pending, or threatened against or directly affecting the Company,
any of its subsidiaries, or any of their respective assets or operations
relating to the use, handling or exposure to and disposal of asbestos or
asbestos-containing materials in connection with their assets and operations.
-12-
3.18.10 As used in this Agreement, "Environmental Health and Safety
Laws" means all federal, state, regional or local statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees, rulings, and changes or
ordinances or judicial or administrative interpretations thereof, any of which
govern (or purport to govern) or relate to pollution, protection of the
environment, public health and safety, air emissions, water discharges,
hazardous or toxic substances, solid or hazardous waste or occupational health
and safety, as any of these terms are or may be defined in such statutes, laws,
rules, regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations thereof,
including, without limitation, the United States Department of Transportation
Table (49 CFR 172, 101) or by the Environmental Protection Agency as hazardous
substances (40 CFR Part 302) and any amendments thereto; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C. Section 9601,
et seq. (collectively, "CERCLA"); the Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act of 1976 and subsequent Hazardous and
Solid Waste Amendments of 1984, 42 U.S.C. section 6901 et seq. (collectively
"RCRA"); the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
Section 1801, et seq.; the Clean Water Act, as amended, 33 U.S.C. Section 1311,
et seq.; the Clean Air Act, as amended (42 U.S.C. Section 7401-7642); Toxic
Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act as amended, 7 U.S.C. Section 136-
136y ("FIFRA"); the Emergency Planning and Community Right-to-Know Act of 1986
as amended, 42 U.S.C. Section 11001, et seq. (Title III of XXXX) ("EPCRA"); the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Section 651,
et seq. ("OSHA"); any similar state statute, or regulations implementing such
statutes, laws, ordinances, codes, rules, regulations, orders, rulings, or
decrees, or which has been or shall be determined or interpreted at any time by
any governmental authority to be a hazardous or toxic substance regulated under
any other statute, law, regulation, order, code, rule, order, or decree.
3.18.11 Schedule 3.18 identifies the operations and activities, and
locations thereof, which have been conducted and are being conducted by the
Company or any of its subsidiaries on any of the Owned Properties or the Leased
Premises which have involved the generation, accumulation, storage, treatment,
transportation, labeling, handling, manufacturing, use, spilling, leaking,
dumping, discharging, release or disposal of any material quantities of
Hazardous Substances.
3.18.12 To the best of the Company's knowledge, none of the Owned
Properties or Leased Premises presently includes, or has been constructed upon,
any "Wetlands" as defined under applicable Environmental, Health and Safety
Laws.
3.18.13 Unless otherwise specified herein, as used in Section 3.18,
the terms "Owned Properties" and "Leased Premises" are deemed to refer only to
the properties currently owned or leased by the Company.
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4. COVENANTS.
4.1 Covenants of the Company. The Company hereby agrees and covenants
with Purchaser as follows:
4.1.1 Corporate Existence. The Company shall, so long as Purchaser
beneficially owns any Securities, maintain its corporate existence in good
standing and shall pay all its taxes when due except for taxes which the Company
reasonably disputes or which could not reasonably be expected to have a material
adverse effect on the business, operations or financial condition of the Company
and its subsidiaries taken as a whole.
4.1.2 Form D; Blue-Sky Qualification. The Company agrees to file a
Form D with respect to the Securities as required under Regulation D and to
provide a copy thereof to Purchaser promptly after such filing. The Company
shall, on or before the Closing, take such action as is necessary to qualify the
Shares and the Warrant Shares for sale under applicable state or "blue-sky" laws
or obtain an exemption therefrom, and shall provide evidence of any such action
to Purchaser at or prior to the Closing.
4.1.3 Reporting Status. As long as Purchaser or any affiliate of
Purchaser beneficially owns any Securities and until the date on which any of
the foregoing may be sold to the public pursuant to Rule 144(k) (or any
successor rule or regulation), (i) the Company shall timely file with the
Commission all reports required to be so filed pursuant to the Exchange Act and
(ii) the Company shall not terminate its status as an issuer required by the
Exchange Act to file reports thereunder even if the Exchange Act or the rules or
regulations thereunder would permit such termination. The Company will issue a
press release (the form and content of which shall be subject to Purchaser's
prior written comment) describing the transactions contemplated by this
Agreement no later than the business day following the Closing Date.
4.1.4 Use of Proceeds. The Company shall use the proceeds from the
sale of the Shares and Warrant for general corporate purposes and shall not use
such proceeds to make a loan to or an investment in any other corporation,
partnership or other entity, provided that the Company may use such proceeds as
full or partial consideration for the purchase of more than 50% of the voting
equity or substantially all of the assets of any corporation, partnership or
other entity.
4.1.5 Quotation on Nasdaq. The Company shall promptly secure the
designation and quotation of the Warrant Shares on the Nasdaq National Market
and shall use its best efforts to maintain the designation and quotation, or
listing, of the shares of Common Stock on the Nasdaq National Market or, if not
quoted on such market, the New York Stock Exchange or other national securities
exchange.
4.1.6 Use of Purchaser Name. The Company shall not use, directly
or indirectly, Purchaser's name in any advertisement, announcement, press
release or other similar
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communication unless it has received the prior written consent of Purchaser for
the specific use contemplated, or except as it may be required to do so, in the
reasonable opinion of counsel to the Company, pursuant to applicable law or
regulation, provided, whenever practicable, the Company first consults with
Purchaser concerning the timing, form and content of such use before such use is
made.
4.1.7 Company's Instructions to Transfer Agent. On or prior to the
Closing, the Company shall execute and deliver a letter to its transfer agent
(the "Transfer Agent"), thereby appointing the Transfer Agent as the Company's
exercise agent and irrevocably instructing the Transfer Agent: (i) to issue
certificates representing the Warrant Shares upon exercise of the Warrant in
accordance with its terms upon receipt of a valid exercise from Purchaser; (ii)
to issue certificates representing the number of Warrant Shares specified in
such exercise notice, free of any restrictive legend, in the name of Purchaser
or its nominee as long as the sale of the Warrant Shares is registered pursuant
to an effective registration statement or such shares are eligible for resale
under Rule 144(k); and (iii) to deliver certificates to such Purchaser no later
than the close of business on the later to occur of (i) the third (3rd) business
day following the date of exercise and (ii) the business day following the day
on which the Warrant is received by the Company. As long as purchases and sales
of shares of Common Stock are eligible for settlement at the Depository Trust
Company ("DTC"), the Company may instruct the Transfer Agent that, in lieu of
delivering physical certificates to Purchaser upon exercise of the Warrant, the
Transfer Agent may effect delivery of Warrant Shares by crediting the account of
Purchaser or its nominee at DTC for the number of shares for which delivery is
required hereunder within the time frame specified above for delivery of
certificates. The Company represents to and agrees with Purchaser that it will
not give any instruction to the Transfer Agent that will conflict with the
foregoing instruction or otherwise restrict Purchaser's right to exercise the
Warrant or receive Warrant Shares in accordance with the terms of the Warrant,
the Registration Rights Agreement and this Agreement, respectively. In the
event the Company's relationship with the Transfer Agent should be terminated
for any reason, the Transfer Agent shall continue acting as transfer agent
pursuant to the terms hereof until such time that a successor transfer agent is
appointed by the Company and agrees to be bound by the terms hereof.
4.1.8 Reservation of Shares. As long as the Warrant has not expired
and all of the Warrant Shares issuable thereunder have not been issued, the
Company at all times shall have authorized and reserved for issuance the number
of shares of Common Stock remaining issuable thereunder.
4.1.9 Board Representation. Until the third anniversary of the
Closing Date, so long as Purchaser and its affiliates do not sell or otherwise
dispose of more than one-third of the Shares and the Warrant Shares (on an as
exercised basis), other than to affiliates of Purchaser: (a) Purchaser shall be
entitled to designate one director to the Company's board of directors; and (b)
the Company shall take all necessary or appropriate action to assist in the
nomination and election of Purchaser's designee as a director of the Company,
with such designee's initial term of office to begin no later than six months
after the Closing Date, provided, that the director so designated by Purchaser
shall be either Mr. Xxx Xxxx or Xx. Xxx X. Xxxxxxxx.
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4.2 Covenant of Purchaser.
No Tender Offers. For a period of one year from the Closing Date,
unless such shall have been specifically invited by the Company, neither
Purchaser nor any of its affiliates (as defined under the Securities Exchange
Act of 1934, as amended) (other than any public affiliates) will: (i) propose
to the Company or any other person any transaction between Purchaser and the
Company and/or its security holders or involving any of its securities or
security holders, whether by merger, tender offer or otherwise; (ii) acquire, or
assist, advise or encourage any other persons in acquiring, directly or
indirectly, control of the Company, whether by solicitation of proxies or
otherwise, or any of the Company's securities, businesses or assets; or (iii)
request or demand the call, or participate with or in any way assist any other
person in requesting or demanding the call of a special or annual meeting of
shareholders. Purchaser also agrees that the Company shall be entitled to
equitable relief, including injunction, in the event of any breach of the
provisions of this paragraph; provided, however, that, notwithstanding anything
to the contrary in this Section 4.2, Purchaser shall be entitled to sell or
pledge the Shares, the Warrant and the Warrant Shares to any party whatsoever.
5. CONDITIONS TO CLOSING.
5.1 Conditions to Purchaser's Obligations at Closing. Purchaser's
obligations at the Closing, including without limitation its obligation to
purchase the Shares and the Warrant, are conditioned upon the fulfillment of
each of the following events:
5.1.1 the representations and warranties of the Company set forth in
this Agreement shall be true and correct in all material
respects as of the date of the Closing as if made on such date;
provided that the representations and warranties made by the
Company in paragraph 3.18 shall be true and correct in all
material respects as of the date specified therein;
5.1.2 the Company shall have complied with or performed all of the
agreements, obligations and conditions set forth in this
Agreement that are required to be complied with or performed by
the Company on or before the Closing;
5.1.3 the Company shall have delivered to Purchaser a certificate,
signed by an officer of the Company, certifying that the
conditions specified in paragraphs 5.1.1 and 5.1.2 above have
been fulfilled;
5.1.4 the Company shall have delivered to Purchaser an opinion of
counsel for the Company, dated as of the date of the Closing,
in the form attached as Exhibit 5.1.4 hereto;
5.1.5 the Company and the other parties thereto shall have executed
and delivered the Shelf Registration Rights Agreement, the
Amended and
-16-
Restated Registration Rights Agreement and the Amended and
Restated Stockholders' Agreement;
5.1.6 the Common Stock shall be designated for quotation and actively
traded on the Nasdaq National Market;
5.1.7 there shall have been no material adverse changes in the
consolidated business or financial condition of the Company and
its subsidiaries taken as a whole since the date of the
Company's most recent audited financial statements contained in
the Disclosure Documents; and
5.1.8 the Company shall have authorized and reserved for issuance
upon exercise of the Warrant in full the number of shares of
Common Stock issuable thereunder.
5.2 Conditions to Company's Obligations at Closing. The Company's
obligations at the Closing are conditioned upon the fulfillment of each of the
following events:
5.2.1 the representations and warranties of Purchaser shall be true
and correct in all material respects as of the date of the
Closing as if made on such date;
5.2.2 Purchaser shall have complied with or performed all of the
agreements, obligations and conditions set forth in this
Agreement that are required to be complied with or performed by
Purchaser on or before the Closing; and
5.2.3 Purchaser shall have delivered to the Company a certificate,
signed by an officer of Purchaser, certifying that the
conditions specified in paragraphs 5.2.1 and 5.2.2 above have
been fulfilled.
6. INDEMNIFICATION.
The Company agrees to indemnify and hold harmless Purchaser and its
officers, directors, employees and agents, and each person who controls
Purchaser within the meaning of the Securities Act or the Exchange Act (each, a
"Purchaser Indemnified Party") against any losses, claims, damages, liabilities
or reasonable out-of-pocket expenses (including the reasonable fees and
disbursements of counsel) as incurred, joint or several, to which it, they or
any of them, may become subject and not otherwise reimbursed, arising out of or
in connection with the breach by the Company of any of its representations,
warranties or covenants made herein. In addition, in the event of a breach or
inaccuracy (a) by Xxxxx Iron & Metal, Inc. ("Xxxxx"), Xxxxxx X. Xxxxx, Xxxxx X.
Xxxxx or Xxxxxxx X. Xxxxx (the "Xxxxx Shareholders") of the representation and
warranty contained in Section 4.13 of that certain Agreement and Plan of Merger
dated May 16, 1997 by and among Xxxxx, the Xxxxx Shareholders, the Company and
CIM Acquisition Co. (the "Xxxxx Agreement"), and/or (b) by the Xxxxx
Corporation, Ferrex Trading Corporation, Paulding Recycling, Inc., Briquetting
Corporation of America (the "Xxxxx Companies"), or any of the
-17-
former shareholders of the Xxxxx Companies (the "Xxxxx Shareholders") of the
representation and warranty contained in Section 4.13 of that certain Purchase
Agreement and Plan of Merger dated June 23, 1997 by and among the Xxxxx
Companies, the Xxxxx Shareholders, the Company and Xxxxx Acquisition Corporation
(the "Xxxxx Agreement"), for which the Company is entitled to indemnification
pursuant to the Xxxxx Agreement or the Xxxxx Agreement, as the case may be, the
Company shall indemnify and hold harmless Purchaser against any losses, claims,
damages, liabilities or reasonable out-of-pocket expenses (including the
reasonable costs and disbursements of counsel) incurred by Purchaser as a result
of such breach or inaccuracy.
Purchaser agrees to indemnify and hold harmless the Company and its
officers, directors, employees and agents, and each person who controls the
Company within the meaning of the Securities Act or the Exchange Act (each, a
"Company Indemnified Party") (a Purchaser Indemnified Party and a Company
Indemnified Party are each hereinafter referred to as an "Indemnified Party")
against any losses, claims, damages, liabilities or expenses (including the fees
and disbursements of counsel) as incurred, joint or several, to which it, they
or any of them, may become subject and not otherwise reimbursed, arising out of
or in connection with the breach by Purchaser of any of its representations,
warranties or covenants made herein.
Promptly after receipt by an Indemnified Party of notice of the
commencement of any action pursuant to which indemnification may be sought
hereunder, such Indemnified Party will, if a claim in respect thereof is to be
made against the other party (the "Indemnifying Party"), deliver to the
Indemnifying Party a written notice of the commencement thereof and, upon
delivery to the Indemnified Party of the Indemnifying Party's undertaking and
agreement that such claim is within the scope of the Indemnifying Party's
indemnity to the Indemnified Party under this Agreement, the Indemnifying Party
shall have the right to participate in and to assume the defense thereof with
counsel reasonably selected by the Indemnifying Party, provided, however, that
an Indemnified Party shall have the right to retain its own counsel, with the
reasonably incurred fees and expenses of such counsel to be paid by the Company,
if representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential conflicts
of interest under applicable standards of professional conduct between such
Indemnified Party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the Indemnifying Party
within a reasonable time of the commencement of any such action will not relieve
the Indemnifying Party of any of its obligations hereunder with respect to such
action except to the extent such failure is prejudicial to the Indemnifying
Party's ability to defend any such action.
No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of pending or threatened action in
respect of which an Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on any claims that are the subject matter of such action. An
Indemnifying Party will not be liable for any settlement of any action or claim
effected without its written consent.
-18-
7. MISCELLANEOUS.
7.1 Survival; Severability. The representations and warranties made by
the parties herein shall survive the Closing until the sooner to occur of the
date which is (i) eighteen (18) months from the date hereof or (ii) the first
date on which the Purchaser no longer owns any Shares or Warrant Shares (on an
as exercised basis), notwithstanding any due diligence investigation made by or
on behalf of the Purchaser. No claim may be asserted by Purchaser for any
breach or misrepresentation of any representation or warranty of the Company
after such representations and warranties have expired; provided, however, that
any claims first asserted within the survival period shall not thereafter be
barred. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to either party.
7.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. The Purchaser may assign its rights hereunder (other than
those under Section 4.1.9 hereof), in connection with any private sale or
transfer of the Shares, so long as, as a condition precedent to such transfer,
the transferee executes an acknowledgment agreeing to be bound by the applicable
provisions of this Agreement, in which case the term "Purchaser" shall be deemed
to refer to such transferee as though such transferee were an original signatory
hereto.
7.3 Injunctive Relief. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to Purchaser and that the
remedy or remedies at law for any such breach will be inadequate and agrees, in
the event of any such breach, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate and specific
performance of such obligations without the necessity of showing economic loss.
7.4 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed under the laws of the State of Delaware without regard to the conflict
of laws provisions thereof. Each party hereby irrevocably submits to the
jurisdiction of the state and federal courts sitting in the City of Wilmington,
Delaware for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address in effect for notices to it under this Agreement and
agrees that such service
-19-
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
7.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
7.6 Headings. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
7.7 Notices. Any notice, demand or request required or permitted to be
given by any party to any other party pursuant to the terms of this Agreement
shall be in writing and shall be deemed given: (i) when delivered personally or
by verifiable facsimile transmission (with a hard copy to follow) on or before
5:00 p.m., eastern time, on a business day or, if such day is not a business
day, on the next succeeding business day; (ii) on the next business day after
timely delivery to an overnight courier; and (iii) on the third business day
after deposit in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed to the parties as follows:
If to the Company:
Metal Management, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxxxx & Xxxxxxxx Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx. Esq.
Fax: (000) 000-0000
If to Purchaser:
Samstock, L.L.C.
Two Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
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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 to such other address or fax number as any party shall specify in writing to
the other parties.
7.8 Expenses. Except as otherwise specified herein, each of the Company
and each Purchaser shall pay all costs and expenses that it incurs in connection
with the negotiation, execution, delivery and performance of this Agreement.
7.9 Entire Agreement; Amendments. This Agreement and the other
Transaction Documents constitute the entire agreement between the parties with
regard to the subject matter hereof and thereof, superseding all prior
agreements or understandings, whether written or oral, between or among the
parties. Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended except pursuant to a written instrument executed by
the Company and Purchaser, and no provision hereof may be waived other than by a
written instrument signed by the party against whom enforcement of any such
waiver is sought.
-21-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first-above written.
METAL MANAGEMENT, INC., a Delaware
corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
SAMSTOCK, L.L.C., a Delaware limited liability
company
By: SZ Investments, L.L.C., its managing member
By: Xxxx General Partnership, Inc., its
managing member
By: /s/ Xxx Xxxxxxxx
-----------------------------------
Name: Xxx Xxxxxxxx
---------------------------------
Title: Vice President
--------------------------------
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