Document:

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                                                                  EXHIBIT 10.37

     THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
     1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY HAVE BEEN ACQUIRED
     SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
     THE SALE OR DISTRIBUTION THEREOF. THEY MAY NOT BE SOLD, OFFERED FOR
     SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF
     AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN EXEMPTION
     FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY
     APPLICABLE STATE SECURITIES LAWS.

KM-1                                 WARRANTS                  November 3, 1998
                  To Purchase 75,000 Shares of Common Stock of
                     Metal Management, Inc. (the "Company")

     1. Number of Shares: Exercise Price: Term. This certifies that Kenneth A.
Merlau ("Holder"), in consideration for, among other things, agreeing to serve
as the Executive Vice President, Finance and Operations, pursuant to that
certain letter agreement, dated October 27, 1998 (the "Letter Agreement")
between the Holder and the Company, is entitled, upon the terms and subject to
the vesting requirements and other conditions set forth herein, to acquire from
the Company, in whole or in part, from time to time, up to 75,000 fully paid and
non-assessable shares (the "Shares") of Common Stock, $.01 par value per share,
of the Company ("Common Stock") at a purchase price per share equal to $4.00 per
share. The right to purchase the shares of Common Stock shall vest in six equal
monthly installments beginning on November 3, 1998 and ending on April 3, 1999,
so long as as of each vesting date the Holder continues to be employed by the
Company. Notwithstanding the foregoing, if the Holder is involuntarily
terminated by the Company prior to April 3, 1999 for any reason other than (x)
substantial dereliction of duties of the Holder to the Company or (y) knowing
participation in any act of fraud, embezzlement or theft, or conviction of a
felony by the Holder, the warrant with respect to all shares of Common Stock
covered hereby shall become immediately vested and exerciseable by the Holder as
of the date of termination. The Holder shall have the right to purchase Common
Stock that has become vested hereunder until 11:59 p.m. Central Time on November
3, 2001.

     2. Exercise of Warrant. Subject to the vesting conditions set forth in
paragraph 1 above, the purchase rights represented by this Warrant are
exercisable by the Holder, in whole or in part, at any time prior to the
Expiration Time by the surrender of this Warrant and the Notice of Exercise
annexed hereto, all duly completed and executed on behalf of the Holder, at the
office of the Company in Chicago, Illinois (or such other office or agency of
the Company as it may designate by notice in writing to the Holder at the
address of the Holder appearing on the books of the Company). Payment of the
Exercise Price for the Shares thereby purchased shall be made by cash, certified
or cashier's check or wire transfer payable to the order of the Company, at
10:00 a.m., Central Standard Time, on the day following surrender of this
Warrant and the Notice of Exercise, in an amount equal to the purchase price of
the Shares thereby purchased. Thereupon, the Holder as the holder of this
Warrant, shall be entitled to receive from the Company a stock certificate in
proper form representing the number of Shares so purchased, and a new Warrant in
substantially identical form and dated as of such exercise for the purchase of
that number of Shares equal to the difference, if any, between the number of
Shares subject hereto and the number of Shares as to which this Warrant is so
exercised.

     3. Issuance of Shares. Certificates for Shares purchased hereunder shall be
delivered to the Holder promptly after the date on which this Warrant shall have
been exercised in accordance with the terms hereof. The Company hereby
represents and warrants that all Shares that may be issued upon the exercise of
this Warrant will, upon such exercise, be duly and validly authorized and
issued, fully paid and nonassessable and free from all taxes, liens and charges
in respect of the issuance thereof (other than liens or charges created by or
imposed upon the Holder as the holder of the Warrant or taxes in respect of any
transfer occurring contemporaneously or otherwise specified herein). The Company
agrees that the Shares so issued shall be and shall for all purposes be deemed
to have been issued to the Holder as the record owner of such Shares as of the
close of business on the date on which this Warrant shall have been exercised or
converted in accordance with the terms hereof.

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     4.  No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder as the holder would
otherwise be entitled, the Holder shall be entitled, at his option, to receive
either (i) a cash payment equal to the excess of fair market value for such
fractional share above the Exercise Price for such fractional share (as
determined in good faith by the Company) or (ii) a whole share if the Holder
tenders the Exercise Price for one whole share.

     5.  No Rights as Shareholders. This Warrant does not entitle the Holder as
a holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof.

     6.  Charges. Taxes and Expenses. Certificates for Shares issued upon
exercise of this Warrant shall be issued in the name of the Holder as the holder
of this Warrant. Issuance of certificates for Shares upon the exercise of this
Warrant shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such certificates, all
of which taxes and expenses shall be paid by the Company.

     7.  No Transfer. This Warrant and any rights hereunder are not
transferable by the Holder as the holder hereof, in whole or in part except to
the Holder's spouse or to a trust or other entity for estate planning purposes,
for the benefit of the Holder, the Holder's spouse and their descendants.

     8.  Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by the Holder as the registered holder at the
above-mentioned office or agency of the Company, for a new Warrant on
substantially identical form and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name and
address of the Holder as the registered holder of this Warrant. This Warrant may
be surrendered for exchange or exercise, in accordance with its terms, at the
office of the Company, and the Company shall be entitled to rely in all
respects, prior to written notice to the contrary, upon such registry.

     9.  Loss. Theft. Destruction or Mutilation of Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in the case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation
and reissuance, in lieu of this Warrant.

     10. Reservation of Common Stock. The Company will at all times reserve and
keep available, solely for issuance, sale and delivery upon the exercise of this
Warrant, such number of Shares, equal to the number of such Shares purchasable
upon the exercise of this Warrant. All such Shares shall be duly authorized and,
when issued upon exercise of this Warrant in accordance with the terms hereof,
will be validly issued and fully paid and nonassessable, with no liability on
the part of the Holder. Such Shares will not be subject to any preemptive
rights.

     11. Listing on Securities Exchanges, Etc. The Company will maintain the
listing of all Shares issuable or issued from time to time upon exercise of this
Warrant on each securities exchange or market or trading system on which any
shares of Common Stock are then or at any time thereafter listed or traded, but
only to the extent and for such period of time as such shares of Common Stock
are so listed.

     12. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or a Sunday or shall be a legal holiday, then

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such action may be taken or such right may be exercised on the next succeeding
day not a Saturday or a Sunday or a legal holiday.

     13. Adjustments and Termination of Rights. The purchase price per Share and
the number of Shares purchasable hereunder are subject to adjustment from time
to time as follows:

         (a) Merger or Consolidation. If at any time there shall be a merger
or a consolidation of the Company with or into another corporation when the
Company is not the surviving corporation, then, as part of such merger or
consolidation, lawful provision shall be made so that the Holder as the holder
of this Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the aggregate
Exercise Price then in effect, the number of shares of stock or other securities
or property (including cash) of the successor corporation resulting from such
merger or consolidation, to which the Holder as the holder of the stock
deliverable upon exercise of this Warrant would have been entitled in such
merger or consolidation if this Warrant had been exercised immediately before
such merger or consolidation. In any such case, appropriate adjustment shall be
made in the application of the provisions of this Warrant with respect to the
rights and interests of the Holder as the holder of this Warrant after the
merger or consolidation. This provision shall apply to successive mergers or
consolidations.

         (b) Reclassification, Recapitalization, etc. If the Company at any
time shall, by subdivision, combination or reclassification of securities,
recapitalization, automatic conversion, or other similar event affecting the
number or character of outstanding Shares, or otherwise, change any of the
securities as to which purchase rights under this Warrant exist into the same or
a different number of securities of any other class or classes, this Warrant
shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities that were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change.

         (c) Split, Subdivision or Combination of Shares. If the Company at
any time while this Warrant remains outstanding and unexpired shall split,
subdivide or combine the securities as to which purchase rights under this
Warrant exist, the Exercise Price shall be proportionately decreased in the case
of a split or subdivision or proportionately increased in the case of a
combination.

         (d) Common Stock Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect to Common
Stock payable in Common Stock, or make any other distribution with respect to
shares of Common Stock, then the Exercise Price shall be adjusted, from and
after the date of determination of the shareholders entitled to receive such
dividend or distribution, to that price determined by multiplying the Exercise
Price in effect immediately prior to such date of determination by a fraction
(i) the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution. This paragraph
shall apply only if and to the extent that, at the time of such event, this
Warrant is then exercisable for Common Stock.

         (e) Adjustment of Number of Shares. Upon each adjustment in the
Exercise Price pursuant to 13(c) or 13(d) hereof, the number of shares of Common
Stock purchasable hereunder shall be adjusted, to the nearest whole Share, to
the product obtained by multiplying the number of shares of Common Stock
purchasable immediately prior to such adjustment in the Exercise Price by a
fraction (i) the numerator of which shall be the Exercise Price immediately
prior to such adjustment, and (ii) the denominator of which shall be the
Exercise Price immediately after such adjustment.

     14. Notice of Adjustments: Notices. Whenever the Exercise Price or number
or type of securities issuable hereunder shall be adjusted pursuant to Section
13 hereof, the Company shall issue and provide to the Holder as the holder of
this Warrant a certificate signed by an officer of the Company setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment

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was calculated and the Exercise Price and number of shares of Common Stock
purchasable hereunder after giving effect to such adjustment.

     15. Governing Law. This Warrant shall be binding upon any successors or
assigns of the Company. This Warrant shall constitute a contract under the laws
of Delaware and for all purposes shall be construed in accordance with and
governed by the laws of said state without giving effect to the conflict of laws
principles.

     16. Attorneys' Fees. In any litigation, arbitration or court proceeding
between the Company and the Holder as the holder of this Warrant relating
hereto, the prevailing party shall be entitled to reasonable attorneys' fees and
expenses incurred in enforcing this Warrant.

     17. Amendments. This Warrant may be amended and the observance of any term
of this Warrant may be waived only with the written consent of the Company and
the Holder as the holder hereof.

     18. Notice. All notices hereunder shall be in writing and shall be
effective (a) on the day on which delivered if delivered personally or
transmitted by telex or telegram or telecopier with evidence of receipt, (b) one
business day after the date on which the same is delivered to a nationally
recognized overnight courier service with evidence of receipt, or (c) five
business days after the date on which the same is deposited, postage prepaid, in
the U.S. mail, sent by certified or registered mail, return receipt requested,
and addressed to the party to be notified at the address indicated below for the
Company, or at the address for the Holder as the holder set forth in the
registry maintained by the Company pursuant to Section 8, or at such other
address and/or telecopy or telex number and/or to the attention of such other
person as the Company or the Holder as the holder may designate by ten-day
advance written notice.

     19. Entire Agreement. This Warrant and the forms attached hereto contain
the entire agreement between the parties with respect to the subject matter
hereof and supersede all prior and contemporaneous arrangements or undertakings
with respect thereto.

     IN WITNESS WHEREOF, Metal Management, Inc. has caused this Warrant to be
executed by its duly authorized officer.

Dated: November 3, 1998

                           METAL MANAGEMENT, INC.

                           By: /s/ David A. Carpenter
                              ------------------------------------------------

                           Name:  David A. Carpenter

                           Title:  Vice President, General Counsel & Secretary

                           Address: 500 N. Dearborn Street
                                    Suite 405
                                    Chicago, IL  60610

4<PAGE>   1
                                                                   EXHIBIT 10.42

                       DIRECTOR INDEMNIFICATION AGREEMENT
                       ----------------------------------

     THIS DIRECTOR INDEMNIFICATION AGREEMENT (this "Agreement") is made and
entered into as of this _____ day of __________, 2000, by and between Metal
Management, Inc., a Delaware corporation (the "Company"), and ________________
(the "Indemnitee").

     WHEREAS, the Indemnitee has agreed to serve as a director of the Company,
in which capacity the Indemnitee will perform valuable services for the Company,
and, in order to induce the Indemnitee to continue to serve in such capacity,
the Company has determined to indemnify the Indemnitee against certain
liabilities incurred or to be incurred by the Indemnitee in connection with his
serving as a director of the Company.

     NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:

     Section 1. Indemnity of Indemnitee. The Company hereby agrees to hold
harmless and indemnify the Indemnitee to the full extent authorized or permitted
by Delaware law, as in effect from time to time.

     Section 2. Insurance and Self-Insurance. In addition to the indemnities
contained herein, the Company shall maintain in full force and effect, in
reasonable amounts from reputable insurers, directors and officers liability
insurance to cover certain liabilities which may be incurred by its directors in
the performance of their services for the Company ("D & O Insurance") unless
such insurance becomes not reasonably available or if, in the reasonable
business judgment of the Company's Board of Directors (as comprised at the time)
either (a) the premium cost of such insurance is substantially disproportionate
to the amount of coverage, or (b) the coverage provided by such insurance is so
limited by exclusions that there is insufficient benefit from such insurance. If
the Company does not maintain D & O Insurance, the Company agrees to self insure
the Indemnitee to the full extent of the coverage which would have otherwise
been provided for the benefit of the Indemnitee pursuant to the D & O Insurance
policy in effect as of the date hereof. This Section is in no way limited by,
and in no way limits, the indemnities otherwise provided herein.

     Section 3. Additional Indemnity. Subject only to the exclusions set forth
in Section 4, the Company shall indemnify the Indemnitee:

     (a) against any and all expenses (including without limitation legal fees),
judgments, fines, penalties, ERISA excise taxes and amounts paid in settlement,
actually and reasonably incurred by the Indemnitee in connection with any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative, and including, without limitation, an
action by or in the right of the

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Company) to which the Indemnitee is, was or at any time becomes a party, or
is threatened to be made a party, as a result, directly or indirectly, of
serving at any time as a director of the Company or at the request of the
Company as a director of another corporation, partnership, limited liability
company, trust or other enterprise; and

     (b) otherwise to the fullest extent to which the Indemnitee may be
indemnified by the Company under Delaware law and the Company's By-laws.

     Section 4. Limitations on Indemnity. No indemnity pursuant to Section 1 or
Section 3 shall be paid by the Company:

     (a) on account of any suit in which judgment is rendered against the
Indemnitee for an accounting of profits made from the purchase or sale of
securities of the Company pursuant to the provisions of ss.16(b) of the
Securities Exchange Act of 1934, as amended, or similar provisions of any
federal, state or local statutory law;

     (b) in relation to any matter if it shall have been adjudicated that the
action or omission of the Indemnitee was material to the matter giving rise to
the proceeding and was committed in bad faith or was the result of active or
deliberate dishonesty or the Indemnitee actually received an improper personal
benefit, or in the case of criminal proceedings, the Indemnitee had reasonable
cause to believe that the act or omission was unlawful; or

     (c) if a final decision by a court having jurisdiction on the matter
determines that such indemnification is not lawful.

     Notwithstanding anything in this Agreement, the termination of any
proceeding by judgment, order or settlement does not create any presumption that
the indemnity provided to the Indemnitee hereunder is precluded under Delaware
law or by this Section 4.

     Section 5. Continuation of Obligations. All obligations of the Company
under this Agreement shall continue during the period that the Indemnitee is a
director of the Company or is, at the request of the Company, a director of
another corporation, partnership, limited liability company, trust or other
enterprise and shall continue thereafter as long as the Indemnitee may be
subject to any possible claim or any threatened, pending or completed action,
suit or proceeding (whether civil, criminal or investigative) as a result,
directly or indirectly, of being such a director.

     Section 6. Notification and Defense of Claim. After receipt by the
Indemnitee of notice of the commencement of any action, suit or proceeding, if a
claim is to be made against the Company under this Agreement, the Indemnitee
shall promptly notify the Company of the commencement thereof. The failure of
the Indemnitee to so notify the Company shall not relieve the Company from any
liability which it may have

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to the Indemnitee other than under this Agreement. With respect to any such
action, suit or proceeding of which the Indemnitee notifies the Company of the
commencement:

     (a) The Company shall be entitled to participate therein at its own
expense.

     (b) The Company shall be entitled to assume the defense thereof, jointly
with any other indemnifying party similarly notified, with counsel selected by
the Company and approved by the Indemnitee, which approval shall not be
unreasonably withheld. After notice from the Company to the Indemnitee of the
Company's election to assume such defense, the Company shall not be liable to
the Indemnitee under this agreement for any legal or other expenses subsequently
incurred by the Indemnitee in connection with the defense thereof other than the
reasonable costs of investigation or as otherwise provided below. The Indemnitee
shall have the right to employ his own counsel in such action, suit or
proceeding, but the fees and expenses of such counsel incurred after notice from
the Company or its assumption of such defense shall be the expense of the
Indemnitee, except in the case of any one of the following, in any of which
cases the reasonable fees and expenses of such counsel (but only one such
counsel) shall be borne by the Company:

          (i) the employment of such counsel by the Indemnitee has been
     authorized by the Company;

          (ii) the Indemnitee shall have reasonably concluded that there may be
     a conflict of interest between the Company and the Indemnitee in the
     conduct of such defense; or

          (iii) the Company has not in fact employed counsel to assume such
     defense.

The Company shall not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Company or as to which the Indemnitee
shall have made the conclusion described in subsection 6(b)(ii) hereof.

          (c) The Company shall not be required to indemnify the Indemnitee
     under this Agreement for any amounts paid in settlement of any action or
     claim without its written consent.

     Section 7. Consent to Settlement. Neither the Company nor the Indemnitee
will unreasonably withhold its consent to any proposed settlement. The Company
shall not settle any action or claim in any manner which would impose any
penalty or limitation on the Indemnitee without the Indemnitee's written
consent.

     Section 8. Payment of Expenses. The Company shall pay or reimburse all
reasonable expenses incurred by the Indemnitee in connection with any
threatened, pending or completed action, suit or proceeding to which the
Indemnitee is, was or at any time becomes a party, or is threatened to be made a
party, as a result, directly or

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indirectly, of serving at any time as a director of the Company or at the
request of the Company as a director of another corporation, partnership,
limited liability company, trust or other enterprise in advance of the final
disposition of such action, suit or proceeding upon receipt by the Company of:

     (a) a written affirmation by the Indemnitee of the Indemnitee's good faith
belief that the standard of conduct necessary for indemnification by the Company
under Delaware law, the By-laws of the Company, this Agreement or otherwise have
been met; and

     (b) a written undertaking by or on behalf of the Indemnitee to repay the
amount if it shall ultimately be determined that such standard of conduct has
not been met, which written undertaking shall be an unlimited general obligation
of the Indemnitee, but need not be secured and shall be accepted without
reference to financial ability to make the repayment.

     Section 9. Repayment of Expenses. The Indemnitee shall reimburse the
Company for all reasonable expenses paid by the Company in defending any civil
or criminal action, suit or proceeding against the Indemnitee if and to the
extent that the Indemnitee shall ultimately be determined not to be entitled to
indemnification by the Company for such expenses under Delaware law, the By-laws
of the Company, this Agreement or otherwise.

     Section 10. Legal Fees and Expenses. The Company shall pay all reasonable
legal fees and expenses which the Indemnitee may incur to collect money due
under this Agreement or as a result of the Company's contesting the validity or
enforceability of this Agreement.

     Section 11. Notice. All notices and communications under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered in
person or mailed by United States certified or registered mail, postage prepaid,
if addressed as follows:

         If to the Company:         Metal Management, Inc.
                                    500 N. Dearborn Street
                                    Suite 400
                                    Chicago, IL  60610
                                    Attention:  General Counsel

         If to the Indemnitee:

or at such other address for either party as shall be specified by like notice
except that notice of change of address shall be effective only upon receipt.

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Section 12. Validity. The invalidity or unenforceability of any provisions of
this Agreement shall not effect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect. In any
court proceeding pursuant to this Agreement, the Company shall be precluded from
asserting that the procedures and presumptions of this Agreement are not valid,
binding and enforceable. The Company shall stipulate in any such court or in any
arbitration that the Company is bound by all the provisions of this Agreement
and is precluded from making any assertion to the contrary.

Section 13. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.

Section 14. Successors. This Agreement shall be binding upon, and inure to the
benefit of, and be enforceable by and against, the Indemnitee and the Company
and the respective heirs, successors and assigns.

Section 15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

                                      -5-
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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                                    METAL MANAGEMENT, INC.

                                    By:
                                       ----------------------------------------
                                             David A. Carpenter

                                    Title:   Executive Vice President

                                    -------------------------------------------
                                             [DIRECTOR]

                                      -6-

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