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EXHIBIT 10.5
AMENDED AND RESTATED PUT AGREEMENT
THIS AMENDED AND RESTATED PUT AGREEMENT (this "Agreement") is
entered into as of June 12, 1997, by and between Xxxxxx X. Xxxxx, an individual
residing in Houston, Texas ("Xxxxx"), and Merchants Metals Holding Company, a
Delaware corporation (the "Company").
RECITALS
X. Xxxxx is the President and Chief Executive Officer of
the Company.
X. Xxxxx and the Company have entered into that certain
Amended and Restated Put Agreement dated as of December 13, 1996 (the "Prior
Agreement").
X. Xxxxx is and the Company are entering into this
Agreement in order to amend and restate (in its entirety) the Prior Agreement.
D. Concurrently with the execution and delivery of this
Agreement, the holders of the capital stock of the Company representing at
least a majority of the voting power of the Company (including Xxxxx) are
entering into the Limited Liability Company Agreement (the "LLC Agreement") of
MMI Products, L.L.C. (the "LLC") pursuant to which such holders will contribute
(the "Contribution") all of their shares of capital stock of the Company to the
LLC in consideration for the issuance by the LLC to such holders of equity
interests of the LLC.
E. As a result of the Contribution, Xxxxx will own
58,902 Class A Common Units (the "Class A Common Units") of the LLC. Pursuant
to the LLC Agreement, upon Xxxxx' death, the Class A Common Units held by Xxxxx
at such time, will automatically be exchanged for a like number of shares of
Common Stock (the "Common Shares"), par value $.01 per share, of the Company
(the "Common Stock").
F. Both Xxxxx and the Company desire, subject to the
conditions set forth herein, that for a 90- day period following Xxxxx' death,
Xxxxx' estate shall have the option to cause the Company to repurchase the
securities of the Company held by Xxxxx at the time of his death (once the
Exchange has occurred) (the "Subject Securities"), including, without
limitation, the Common Shares and stock options, having a fair market value of
up to $2,000,000.
ACCORDINGLY, the parties hereby agree as follows:
1. Certain Definitions. Whenever used herein, the
following terms shall have the meanings set forth adjacent thereto:
(a) "Acquiring Person" shall mean any person
other than (i) the Company, (ii) any subsidiary of the Company, (iii)
Citicorp Venture Capital Ltd., or any of its
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subsidiaries or affiliates (collectively or individually, "CVC"), (iv)
any employee benefit plan of the Company or of a subsidiary of the
Company or of a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company, (v) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of a subsidiary of the Company or of a corporation owned
directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company or (vi) any corporation a majority of the voting securities
(assuming conversion by CVC of any non-voting securities it holds to
voting securities) of which is, immediately following that
corporation's first acquisition of voting securities of the Company,
owned directly or indirectly by the stockholders of the Company at the
point in time immediately prior to such acquisition.
(b) "Board" shall mean the Board of Directors of
the Company.
(c) "Cause" shall mean conduct by Xxxxx
constituting gross mismanagement, wilful misconduct or fraud, as
determined by the Board in its sole judgment.
(d) "Change in Control" shall mean the event that
is deemed to have occurred if:
(i) any Acquiring Person is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of
securities of the Company representing more than 50% of the
combined voting power of the then outstanding voting
securities of the Company (assuming conversion by CVC of all
of its non-voting securities to voting securities); or
(ii) the Company merges or consolidates
with any other corporation or entity, or the stockholders of
the Company and such other corporation or entity (or the
Company and the holders of voting securities in such other
corporation or entity) participate in a securities exchange,
other than a merger, consolidation or securities exchange that
would result in holders of voting securities of the Company
outstanding immediately before the completion thereof
(assuming conversion by CVC of all of its non-voting
securities to voting securities) continuing to hold (either by
voting securities remaining outstanding or by being converted
into voting securities of the surviving entity or of a parent
of the surviving entity) a majority of the combined voting
power of the voting securities of the surviving entity (or its
parent) outstanding immediately after that merger,
consolidation or securities exchange (assuming conversion by
CVC of all of its non-voting securities to voting securities);
or
(iii) the Company liquidates or sells or
disposes of all or substantially all the Company's assets in
one transaction or a series of transactions
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other than a liquidation, sale or disposition of all or
substantially all the Company's assets in one transaction or a
series of related transactions to an entity owned directly or
indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of the stock of the
Company.
(e) "Class A Common Units" shall have the meaning
set forth in the Recitals.
(f) "Closing" shall have the meaning set forth in
Section 5.
(g) "Common Shares" shall have the meaning set
forth in the Recitals.
(h) "Common Stock" shall have the meaning set
forth in the Recitals.
(i) "Contribution" shall have the meaning set
forth in the Recitals.
(j) "Fair Market Value" of any Subject
Securities means the fair market value agreed upon by the
Representative and the Company. In the event that, within ten days
after the date of the Put Notice, the Company and the Representative
cannot agree upon the fair market value of the applicable Subject
Securities, then, within five days after such ten-day period has
expired, the Company and the Representative shall select an
independent appraiser, the fees and expenses of which shall be borne
one-half by the Representative and one-half by the Company, who will
determine the fair market value of such Subject Securities. Such
independent appraiser will determine the fair market value of such
Subject Securities within 30 days following its appointment. If,
within the five days provided for the Company and the Representative
to select an independent appraiser, the Representative and the Company
are unable to agree upon an independent appraiser, the Representative
and the Company will, within five days after the first five-day
selection period expires, each select an independent appraiser and
such independent appraisers together will determine the fair market
value of such Subject Securities. Each party will bear the fees and
expenses for the appraiser which it selects. In the event that,
within 30 days after they have been selected, such appraisers are
unable to agree upon the fair market value of such Subject Securities,
they will, within five days after such 30-day period expires, select
another appraiser whose determination of the fair market value of such
Subject Securities will be final and binding. Such third appraiser
will have 30 days following its selection to determine the fair market
value of such Subject Securities. The fees and expenses of such third
appraiser shall be borne as aforesaid for a single appraiser. The
Company agrees to make its books and records available on a reasonable
basis to the appraiser(s) selected in accordance with this procedure
to the extent they are necessary or desirable in determining Fair
Market Value. The appraiser(s) shall determine the Fair Market Value
as if the Company was being sold in its entirety as an ongoing concern
in a controlled private market auction after being shopped for a
reasonable period of time. Notwithstanding the foregoing, if any of
the Subject Securities are then listed on a national securities
exchange or are traded over the counter, the Fair
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Market Value of such Subject Securities shall be equal to the average
of the closing prices, the average of the last sales prices or the
average of the closing bid and asked prices, as the case may be, for
the 20 trading days immediately preceding the date of the Put Notice.
Notwithstanding anything herein to the contrary, (i) in no event will
the Fair Market Value of any preferred stock exceed the original
purchase price paid therefor plus accrued and unpaid dividends, (ii)
in no event will the Fair Market Value of any debt securities exceed
the unpaid principal amount plus accrued and unpaid interest, and
(iii) the Fair Market Value of unexercised stock options shall be the
remainder of the Fair Market Value of the underlying securities less
the applicable exercise price.
(k) "FMV Determination Date" shall mean the date
on which Fair Market Value has been determined in accordance with this
Agreement.
(l) "Good Reason" shall mean any action by the
Company that results in a diminution in Xxxxx' position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of notice thereof
given by Xxxxx.
(m) "LLC" shall have the meaning set forth in the
Recitals.
(n) "Purchase Price" shall have the meaning set
forth in Section 3.
(o) "Put Cancellation Notice" shall have the
meaning set forth in Section 4.
(p) "Put Notice" shall have the meaning set forth
in Section 2.
(q) "Put Period" shall have the meaning set forth
in Section 2.
(r) "Put Right" shall have the meaning set forth
in Section 2.
(s) "Prior Agreement" shall have the meaning set
forth in the Recitals.
(t) "Representative" shall have the meaning set
forth in Section 2.
(u) "Subject Securities" shall have the meaning
set forth in the Recitals.
2. Put Right. Subject to each of the conditions set
forth herein, at any time during the 90 days following the date of death of
Xxxxx (the "Put Period"), the Representative or executor of Xxxxx' estate (the
"Representative") shall have the right (but not the obligation) to cause the
Company to purchase Subject Securities having a Fair Market Value of up to
$2,000,000 (the "Put Right"). The notice of an election to exercise the Put
Right (the "Put Notice") shall specify the number and type of Subject
Securities which the Representative desires to sell. In order to provide
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for the possibility that the Subject Securities specified in the Put Notice
have a Fair Market Value in excess of $2,000,000, and, therefore, cannot all be
purchased by the Company, the Put Notice will further specify a ranking by the
Representative of Subject Securities, by class, of the order in which such
Subject Securities are to be sold. The Representative shall only be permitted
to exercise the Put Right if at the time of Xxxxx' death: (a) Xxxxx was an
employee of the Company, or (b) Xxxxx had either (i) retired at or after age 67,
(ii) voluntarily terminated his employment with the Company for Good Reason
within six months following a Change in Control, (iii) been terminated by the
Company without Cause or (iv) otherwise retired with the consent of the Board or
(c) Xxxxx was no longer employed by the Company due to a disability recognized
by the Board. The Company, in its sole discretion, may elect to terminate this
Agreement in the event, at any time after the date hereof and prior to Xxxxx'
death, Xxxxx is in material default of his obligations under that certain
Non-Competition Agreement dated as of December 31, 1994, between Xxxxx and MMI
Products, Inc.
3. Purchase Price. The purchase price (the "Purchase
Price") paid by the Company pursuant to the Put Right shall be the aggregate
Fair Market Value of the applicable Subject Securities. The Purchase Price is
payable through the application of Life Insurance Proceeds (as hereinafter
defined in Section 7) in an amount equal to the Purchase Price.
4. Put Deferral/Cancellation.
(a) By Representative. Following the FMV
Determination Date and prior to the Closing, the Representative may
elect to cancel an exercise of the Put Right by delivery of a notice
to such effect to the Company (the "Put Cancellation Notice").
(b) By the Company.
(i) Legal Prohibition. In the event and
to the extent that, following receipt of the Put Notice, the
Board reasonably determines in good faith that the Company is
legally prohibited from paying the Purchase Price, the Company
may defer the Closing indefinitely and will commence payment,
for so long as the applicable Subject Securities are held by
members of Xxxxx' family, of cash interest on the unpaid
Purchase Price related to such Subject Securities at the then
current prime rate of Texas Commerce Bank, N.A., payable
quarterly in arrears. All payments will be made at the end of
calendar quarters and will be pro-rated for partial periods.
If the Board determines in good faith that the Company is
legally unable to make the cash interest payments provided for
in this Section 4, the Company may in lieu of such payments
issue shares of Common Stock of comparable value, as
determined in good faith by the Board. Notwithstanding the
foregoing, in no event will the foregoing payments (whether in
cash or in Fair Market Value Common Stock) exceed the
applicable Purchase Price.
(ii) Pending Transactions. The Company
may defer the Closing for up to 180 days, if good faith
negotiations exist relating to the sale of substantially
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all the Company's assets or voting securities or in the good
faith determination of the Board such a sale is reasonably
certain (the "Pending Transaction").
(iii) Options. The Company will remain
obligated to pay the Purchase Price related to any stock
options which were exercisable during the Put Period but which
expired prior to the Closing due to the deferrals contemplated
in clauses (i) and (ii) above.
(iv) Notices. The Company will provide
the Representative with prompt notice of any of the conditions
described in clauses (i) and (ii) above.
5. Closing. If a Put Cancellation Notice has not been
delivered to the Company or the closing (the "Closing") of an exercise of the
Put Right has not otherwise been deferred pursuant to Section 4(b)(i) or (ii)
hereof, the Closing of an exercise of the Put Right shall, unless otherwise
agreed to by the Representative and the Company, take place at the offices of
the Company, at 10:00 a.m., on the date which is five business days after the
FMV Determination Date. At the Closing, the Representative shall (a) transfer
and assign to the Company the Subject Securities, free and clear of any liens,
encumbrances or rights of others, and (b) return (or assign the right to
recover) any Life Insurance Proceeds in excess of the Purchase Price; provided
that in the case of a delay of a Closing under Section 4(b)(ii), the return or
assignment of Life Insurance Proceeds will be made by the Representative on the
first to occur of such delayed Closing or the closing of the Pending
Transaction. Unless otherwise agreed to by the Company and the Representative,
a determination of Fair Market Value will need to be redetermined if a Closing
would occur more than 180 days after a FMV Determination Date.
6. Term. If not otherwise terminated pursuant to the
terms of this Agreement, this Agreement shall terminate on the earlier of: (a)
December 31, 2000, (b) the failure of the Representative to exercise the Put
Right prior to the expiration of the Put Period, (c) the Closing (or if there
is more than one Closing, the final Closing), (d) the termination of Xxxxx'
employment with the Company for reasons other than Xxxxx' (i) death, (ii)
retirement at age 67 or otherwise with the Board's consent, (iii) termination
by Xxxxx of his employment with the Company for Good Reason following a Change
in Control, (iv) termination by the Company of his employment with the Company
without Cause, (v) disability recognized by the Board, or (e) the time at which
Xxxxx or members of Xxxxx' family no longer hold any securities of the Company
or securities of the LLC which are exchangeable for securities of the Company.
7. Life Insurance. The Company has purchased life
insurance contracts to provide the Company with funds to pay the maximum
Purchase Price of $2,000,000 hereunder. Xxxxx is the sole beneficiary of such
life insurance contracts. The Company is not obligated, in any respect,
hereunder to cause the Purchase Price to be paid other than through the
application of the proceeds payable under such life insurance contracts (the
"Life Insurance Proceeds"). The Company will continue to pay premiums on such
life insurance contracts through December 31, 2000; provided that it is under
no obligation, and has made no commitment, to spend in excess of an
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aggregate of $100,000 on life insurance premiums over the term of this
Agreement. Xxxxx hereby agrees that to the extent that the Put Right is not
exercised or is exercised only in part, all of, or the portion of, the Life
Insurance Proceeds, to the extent not used to pay the Purchase Price, will be
immediately returned (or the right to recover such proceeds assigned) to the
Company as follows: (i) in the case of the nonexercise of the Put, on the
expiration of the Put Period or (ii) in the case of the partial exercise of the
Put Right, on the Closing (except as otherwise contemplated in Section 5
hereof). Failure by the Representative (or any heirs, successors or assigns)
to comply with this provision will result in the forfeiture and cancellation of
all of the Subject Securities.
8. Legends. Xxxxx hereby agrees that all of the Subject
Securities from and after the date hereof and through the termination of this
Agreement will bear a legend indicating that the Subject Securities are subject
to this Agreement.
9. Binding Effect; Assignment. This Agreement is
binding upon and inures to the benefit of the parties hereto and the
Representative and their respective heirs, assigns, executors, administrators,
personal representatives and successors (it being understood and agreed that
nothing contained in this Agreement is intended to confer upon any other person
any rights, benefits or remedies of any kind or character whatsoever). No
party may assign this Agreement to any person (other than by the Company to the
surviving corporation in any consolidation or merger with the Company) without
the prior written consent of the other party hereto.
10. Entire Agreement; Waiver. This Agreement contains
the entire agreement of the parties hereto with respect to the subject matter
hereof and no modification, amendment or change of any term or provision of
this Agreement shall be valid or binding unless the same is in writing and
signed by all the parties hereto. No waiver of any of the terms of this
Agreement will be valid unless signed by the party against whom such waiver is
asserted and a waiver at any time of any of the terms of this Agreement will
not be construed as a waiver at any subsequent time of the same terms. This
Agreement replaces the Prior Agreement in its entirety.
11. Notices. Any notice, demand, offer, or other written
instrument required or permitted to be given, made or sent hereunder shall be
in writing and may be sent by personal delivery, courier, facsimile, or
registered or certified United States mail, postage prepaid, return receipt
requested, to the parties at their respective addresses set forth herein. Any
notice required to be given to the Representative may be addressed to the
Representative at the address of Xxxxx.
If to Xxxxx: Xx. Xxxxxx X. Xxxxx
00000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
If to the Company: Merchants Metals Holding Company
c/o MMI Products, Inc.
000 X. Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
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Notices will be deemed to have been given when (a) personally delivered, (b)
the next business day when sent by overnight courier, (c) upon receipt of
facsimile transmission confirmation or (d) three days after deposit in the
United States mail.
12. Governing Laws. This Agreement has been executed in
the State of Delaware and shall be governed by and construed in accordance
with the laws of the State of Delaware.
13. Counterparts. This Agreement may be executed in one
or more counterparts, each of which will be deemed an original and all of which
together will constitute one agreement.
14. Severability. In the event any one or more of the
provisions contained in this Agreement is for any reason held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability will have no affect any other provision hereof and this
agreement will be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
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IN WITNESS WHEREOF, the parties have hereunto set their hands
as of the day and year first above written.
/s/ XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx
MERCHANTS METALS HOLDING COMPANY
By: /s/ XXXXXX X. XXXXXXX
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Name: Xxxxxx X. Xxxxxxx
Title: Vice President
