FIRST AMENDMENT TO PURCHASE AGREEMENT
This First Amendment to Purchase Agreement (the "Amendment") is entered
into effective as of March 6, 1997, by and among Metal Management, Inc.,
a Delaware corporation ("MTLM"); X. Xxxxxx Iron & Metal, Inc., an Ohio
corporation (the "Company") and the sole general partner of Reserve Iron & Metal
Limited Partnership, a Delaware limited partnership ("Reserve"); and Xxxx X.
Xxxxxx, Xxxxxx X. Xxxxxx and Xxxxx X. Xxxxxx who constitute all of the
shareholders of the Company (together the "Shareholders"). Certain other
capitalized terms used herein are defined in that certain purchase agreement
dated as of January 17, 1997, by and among the parties hereto (the "Agreement")
or elsewhere throughout this Amendment.
RECITALS:
A. The parties have previously entered into the Agreement.
B. SECTION 11.1 of the Agreement gives MTLM the right to terminate the
Agreement in the event MTLM does not enter into a definitive agreement with
BancBoston Ventures Inc. for the purchase of its Class B Units of Reserve.
C. BancBoston Ventures Inc. has refused to enter into such definitive
agreement upon the terms and conditions initially proposed by MTLM and has
objected to certain of the terms and conditions set forth in the Agreement.
D. As a result, in order to complete the Transaction, the parties hereto
believe it is in their mutual best interests to enter into this Amendment and
thereby modify certain of the terms and conditions of the Agreement.
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TERMS OF AMENDMENT
In consideration of the premises and the mutual promises contained herein,
the parties hereto agree as follows:
1. SECTION 1.2 of the Agreement is hereby amended by deleting in line
three the reference to "7%" and substituting in its place "8-1/2%".
2. SECTION 1.2 of the Agreement is hereby amended by deleting the second
sentence and substituting in its place the following: "All principal and
accrued interest shall be due and payable one year subsequent to the Closing
Date."
3. SECTION 1.3 of the Agreement is hereby amended by deleting in line two
the reference to "five business days" and substituting in its place "three
business days".
4. Section 1.4(b) of the Agreement is hereby amended in its entirety,
such that after amendment it reads as follows:
"(b) If an audit examination of any federal or state tax
returns of either the Company or Reserve (a "Return") results in any
adjustment, the effect of which is to impose any additional income
taxes on the Shareholders (including interest and penalties) (the
"Additional Tax Payments"), and provided the Closing has occurred,
MTLM agrees to pay the Shareholders as an adjustment to the Purchase
Price, an amount equal to the net tax effect on the Shareholders after
decreasing the Additional Tax Payments by the amount of any decrease
in income taxes which will be due the Shareholders as a result of any
related adjustment to a Return (the "Net Additional Tax Payments")
within fifteen (15) days after the conclusion of the earlier of either
the final determination of such adjustments or the agreement to such
adjustment by the Company or Reserve, as the case may be. Anything
herein to the
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contrary notwithstanding, MTLM shall not be responsible
to pay any Net Additional Tax Payments in the event: (i) any
Shareholder had knowledge that any item set forth on a Return that was
adjusted in any audit examination for which an Additional Tax Payment
is claimed was inaccurate; (ii) any adjustment in an audit examination
of a Return is based on any facts or circumstances which, had they
been known by MTLM prior to the expiration of any survival period for
any representation or warranty made by the Shareholders in this
Agreement, would allow MTLM to make a claim for Indemnifiable Damages
(without regard to the limitation thereon as set forth in SECTION
8.1(e)); or (iii) the Shareholders fail to reasonably cooperate with
Reserve or the Company with regard to any audit, appeal or final
adjudication."
5. SECTION 3.2 of the Agreement is hereby amended by adding to the
beginning of the first and second sentences of that section the following:
"Subject to the rights of BancBoston Ventures Inc. under the Partnership
Agreement," and by changing the next word in each such sentence from "The" to
"the".
6. SECTION 3.3 of the Agreement is hereby amended by adding to the
beginning of that section the following: "Subject to the rights of BancBoston
Ventures Inc. under the Partnership Agreement," and by changing the next word in
such sentence from "This" to "this".
7. SECTION 5.13 of the Agreement is hereby amended by deleting from that
section the last sentence in its entirety and substituting in its place the
following: "Anything herein to the contrary notwithstanding, MTLM's obligation
to provide the Notice and the Shareholder's rights hereunder (including their
right to continue negotiations with respect to a Sale Transaction to which a
Notice has been sent) shall be terminated and of no further force and effect
from and after the last to occur of (x) the date that the closing price of the
Common Stock on the Nasdaq Stock Market (or
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such other public market upon which the Common Stock is then traded) has
reached Nine and No/100 Dollars ($9.00) per share (subject to appropriate
adjustments for stock splits, stock dividends and other corporate actions) or
higher on at least one trading day following the date hereof; and (y) payment
of all amounts due on the Purchase Price Note, whether to the holder thereof
and/or into the escrow account in the manner set forth in SECTION 8.4."
8. SECTION 6.11(f) of the Agreement is hereby amended by relettering it
as SECTION 6.11(h) and by adding to the end of that section the following:
"including but not limited to those items set forth on SCHEDULE 11.1".
9. SECTION 6.11 of the Agreement is hereby amended by adding the
following subjections:
"(f) a release of any claims the Company, Reserve and the Shareholders
have or may have against BancBoston Ventures Inc. arising from any act or
failure to act prior to the Closing, in a form reasonably satisfactory to
BancBoston Ventures Inc. legal counsel, duly executed by the Company,
Reserve and the Shareholders;"
"(g) the reports required to be delivered by the Company to its
limited partners pursuant to Section 9.4(a) of the Partnership Agreement
for the fiscal year ending December 31, 1996;"
10. SECTION 8.2(d) of the Agreement is hereby amended by adding to the end
of that section the following: "If MTLM does not pay the amount of the claim
for Shareholder Indemnifiable Damages within 10 days, then the Shareholders may
take any action or exercise any remedy available to them by appropriate legal
proceedings to collect the Shareholders Indemnifiable Damages.
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11. SECTION 8.2(e) of the Agreement is hereby amended by inserting in line
three of that section after the word "Shareholders", the following: "(other than
a claim arising under SECTION 1.2)".
12. SECTION 8.4 of the Agreement is hereby amended by deleting from that
section the second sentence in its entirety and substituting in its place the
following: "On the due date of the Purchase Price Note, MTLM shall pay an
amount equal to any such damages claimed by MTLM (not to exceed, in the
aggregate, the unpaid balance of the Purchase Price Note) into an escrow account
pursuant to the terms and conditions of an escrow agreement in the form of
Exhibit "F" attached hereto at Closing by MTLM and the Shareholders."
13. SECTION 11.1 is hereby amended by adding the following subsection and
by relettering SECTION 11.1(g) as SECTION 11.1(h):
"(g) at any time prior to the Closing Date, by MTLM if
it, in its sole discretion, is not satisfied with the
results of its due diligence investigation of XXXXXX XXXXXX
V. RESERVE IRON & METAL L.P. AND X. XXXXXX IRON & METAL,
INC."
14. SECTION 11.1(h) is hereby amended by deleting the reference to "March
31, 1997" and substituting in its place "April 30, 1997" and by deleting the
reference to "SECTION 11.1(g)" and substituting in its place "SECTION 11.1(h)".
15. The Agreement is hereby amended by deleting in its entirety the
Purchase Price Note in the form attached to the Agreement as "Exhibit A" and
substituting in its place the Purchase Price Note in the form attached hereto as
"Exhibit A".
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16. The Agreement is hereby amended by deleting in its entirety the Stock
Pledge and Security Agreement in the form attached to the Agreement as "Exhibit
B" and substituting in its place the Stock Pledge and Security Agreement in the
form attached hereto as "Exhibit B."
17. The Agreement is hereby amended by deleting in their entirety the
employment agreements of Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxx and Xxxxx X. Xxxxxx in
the form attached to the Agreement as Exhibits "C", "D" and "E", respectively,
and substituting in their place the employment agreements attached hereto as
Exhibits "C", "D" and "E".
18. All other terms, conditions and provisions set forth in the Agreement
shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the day and year first above written.
METAL MANAGEMENT, INC., A DELAWARE
CORPORATION
Date: March 6, 1997 By: /s/ T. Xxxxxxxx Xxxxxxxx
----------------------- ---------------------------------
Name: T. Xxxxxxxx Xxxxxxxx
---------------------------------
Title: Chairman of the Board
---------------------------------
X. XXXXXX IRON & METAL, INC.
AN OHIO CORPORATION
Date: March 6, 1997 By: /s/ Xxxx X. Xxxxxx
---------------------- ----------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: President/CEO
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[SIGNATURES CONTINUED ON NEXT PAGE]
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RESERVE IRON & METAL LIMITED PARTNERSHIP,
A DELAWARE LIMITED PARTNERSHIP
BY: X. XXXXXX IRON & METAL, INC.,
ITS SOLE GENERAL PARTNER,
Date: March 6, 1997 By: /s/ Xxxx X. Xxxxxx
----------------------- ----------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: CEO
---------------------------------
Date: March 6, 1997 /s/ Xxxx X. Xxxxxx
------------------------ ---------------------------------------
XXXX X. XXXXXX
Date: March 6, 1997 /s/ Xxxxxx X. Xxxxxx
------------------------ ---------------------------------------
XXXXXX X. XXXXXX
Date: March 6, 1997 /s/ Xxxxx X. Xxxxxx
-------------------------- ---------------------------------------
XXXXX X. XXXXXX
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