PUT AGREEMENT
This PUT AGREEMENT (the "AGREEMENT") is made and entered into as of the
30th day of April, 1999, by and between Xxxxx Brothers, Inc., an Arizona
corporation ("KBI"), BMHC Framing, Inc., a Delaware corporation ("FRAMING"),
Building Materials Holding Corporation, a Delaware corporation ("BMHC") and
Xxxxx Brothers Industries, LLC, a Delaware limited liability company (the
"LLC").
RECITALS
WHEREAS, KBI and Xxxxx formed the LLC in December 1998;
WHEREAS, in connection with the transactions contemplated hereby, KBI and
Framing have entered into an Amended and Restated Limited Liability Company
Agreement for the LLC (the "Operating Agreement");
WHEREAS, KBI, Xxxxxxxx X. Xxxxx ("Xxxxx"), BMHC and Framing have entered
into a Securities Purchase Agreement, dated as of March 23, 1999 (the "Purchase
Agreement"), pursuant to which Framing has acquired a 49% interest in the LLC;
and
WHEREAS, it is a condition to the consummation of the transactions
contemplated by the Purchase Agreement that the parties enter into this
Agreement.
NOW THEREFORE, in consideration of the mutual covenants, promises and
representations set forth herein, and for other good and valuable consideration
the receipt of which is hereby acknowledged, the parties agree as follows.
AGREEMENT
1. CERTAIN DEFINITIONS. Capitalized terms used but not defined in this
Agreement shall have the meanings ascribed to such terms in the Operating
Agreement.
2. GRANT OF PUT. Upon the terms and subject to the conditions set forth
in this Agreement, BMHC hereby grants to the KBI Members the right to require
BMHC to purchase (the "Put") all of the Interests held by the KBI Members in the
LLC. The Put may be exercised during the period commencing on April 30, 2004 and
terminating at 5:00 p.m. California time on April 30, 2005 (the "Term") by KBI
Members providing written notice (the "Put Notice") to BMHC during the Term of
the election to exercise the Put. The Put shall terminate upon the earlier of
(i) the expiration of the Term; (ii) the closing of a Redemption in accordance
with the terms of Article VIII of the Operating Agreement; or (iii) the closing
of a Change of Control Transaction of the LLC. The Put may be exercised only in
whole and not in part. If during the stated Term set forth in this Section 2,
and prior to KBI Members providing the Put Notice to BMHC, Framing delivers a
Redemption Notice pursuant to Section 8.1 of the Operating Agreement or BMHC
Members exercise the BMHC Manager Designation, or the Members are
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undertaking a Change of Control Transaction, the stated Term shall be extended
by a period of time equal to the period of time that the Redemption or Change of
Control Transaction is pending in the event that the Redemption or Change of
Control Transaction does not close.
3. PURCHASE PRICE AND LOANS.
(a) The purchase price (the "Purchase Price") for the KBI Members'
Interests shall be equal to the Redemption Price, determined as of the date of
the Put Notice.
(b) The Purchase Price may be paid in cash or Common Stock of BMHC or
a combination of cash and BMHC Common Stock with any BMHC Common Stock valued at
its then fair market value based upon the average of the closing prices of the
Common Stock of BMHC for the five most recent trading days prior to the date of
the Put Notice; provided, however, that KBI Members shall not be required to
accept Common Stock of BMHC in payment of all or a portion of the Purchase Price
unless such stock may be sold immediately in the public market at the Closing
and BMHC agrees to arrangements, including a guaranty of the aggregate amount
KBI Members are entitled to receive if the Purchase Price were paid in cash at
the Closing, reasonably acceptable to KBI Members, to effectively eliminate the
risk of a reduction in the market price of the Common Stock of BMHC during a
reasonable sale period of not to exceed six months beginning on the Closing.
(c) If there shall be any outstanding loans, including, without
limitation, Special Loans, by KBI Members to the LLC, such loans, including
interest thereon accrued and unpaid, shall be purchased by BMHC for the
principal amount thereof and accrued and unpaid interest thereon at the Closing.
The purchase price for such loans shall be paid, at KBI Members' option, by
certified check drawn to the order of KBI Members, or by wire transfer of
immediately available funds to an account designated by KBI Members. At the
Closing, KBI Members shall deliver to BMHC each note evidencing such loans.
(d) The provisions of Section 8.4 of the Operating Agreement
pertaining to this Agreement are specifically incorporated herein and made
applicable to this Agreement.
4. CLOSING OF PUT.
(a) The closing of the transactions contemplated hereby shall take
place at the offices of BMHC, Xxx Xxxxxx Xxxxx, Xxxxxxx Xxxxxx Xxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000 , at 10:00 a.m. California time, not earlier than 60
days nor later than 180 days after receipt of the Put Notice or at such other
time and place as BMHC and KBI Members mutually agree upon (which time and place
are referred to in this Agreement as the "Closing"). At the Closing, the KBI
Members will deliver to BMHC instruments evidencing the transfer of its
Interests in the LLC and its withdrawal from the LLC, all against delivery by
BMHC to the KBI Members of the Purchase Price and the payment for the purchase
of loans and Special Loans, if any, in accordance with Section 3(c).
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(b) The parties acknowledge that exercise of the Put and purchase by
BMHC of the KBI Members' Interests may require filings under the HSR Act. Each
of the parties hereto agree to cooperate with each other and use reasonable
efforts to comply with any applicable requirements of the HSR Act; provided,
however, that no party shall be under any obligation to comply with any request
that it reasonably determines is unduly burdensome. Filing fees under the HSR
Act shall be paid by the LLC. Any time periods specified with respect to the
closing of the Put in this Section 4 shall be extended if required to comply
with filing and waiting period requirements under the HSR Act.
(c) Upon exercise of the Put, the Purchase Price shall be allocated
for income tax purposes among the assets of the LLC pursuant to Section 755 and
1060 of the Internal Revenue Code. Such allocation shall be on a tax basis,
except for real property, which shall be allocated based on fair market value.
Any excess above the tax basis and fair market value of real property shall be
allocated to goodwill. BMHC and KBI Members agree that they will file their tax
returns on a basis consistent wth such allocations.
5. BMHC OBLIGATION. BMHC may assign its rights under this Agreement to an
Affiliate, but such assignment shall not relieve BMHC of any of its obligations
under this Agreement.
6. MISCELLANEOUS.
(a) Successors and Assigns. The terms and conditions of this
Agreement will inure to the benefit of and be binding upon the respective
successors of the parties. The Put is not transferable by KBI or the KBI Members
without the written consent of BMHC, which consent may be withheld in BMHC's
absolute discretion.
(b) Governing Law. This Agreement will be governed by and construed
under the internal laws of the State of Delaware, without reference to
principles of conflict of laws or choice of laws.
(c) Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(d) Headings. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules will, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
(e) Notices. Any notice required or permitted under this Agreement
shall be given in accordance with the provisions of Section 20.6 of the Purchase
Agreement.
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(f) Amendments and Waivers. This Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of Framing and BMHC on the one hand and KBI Members and Xxxxx on
the other hand. Any amendment or waiver effected in accordance herewith will be
binding upon each of the parties hereto and their respective successors and
assigns.
(g) Severability. If any provision of this Agreement is held to be
unenforceable under applicable law, such provision will be excluded from this
Agreement and the balance of the Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.
(h) Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, agreements,
understandings, duties or obligations between the parties with respect to the
subject matter hereof.
(i) Further Assurances. From and after the date of this Agreement
upon the request of BMHC or KBI Members, the parties hereto will execute and
deliver such instruments, documents or other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
(j) Fees, Costs and Expenses. All fees, costs and expenses (including
attorney's' fees and expenses) incurred by any party hereto in connection with
the preparation, negotiation and execution of this Agreement the consummation of
the transactions contemplated hereby (including the costs associated with any
filings with, or compliance with any of the requirements of, any governmental
authorities), shall be the sole and exclusive responsibility of such party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first written above.
BUILDING MATERIALS HOLDING CORPORATION XXXXX BROTHERS, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxxx X. Xxxxx
Title: Senior VP Finance & Treasurer Title: President
BMHC FRAMING, INC. XXXXX BROTHERS INDUSTRIES, LLC
By: /s/ Xxxxx X. Xxxxxx By: Xxxxx Brothers, Inc.,
Title: Senior VP Finance & Treasurer Managing Member
By: /s/ Xxxxxxxx X. Xxxxx
Xxxxxxxx X. Xxxxx, President
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FA990360.022/4+
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