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EXHIBIT 10.6
PROCUREMENT AGREEMENT
This Procurement Agreement (this "Agreement") is entered into as of December
13, 1996 between MMI Products, Inc., a Delaware corporation ("Buyer"), and
Mannesmann Pipe & Steel Corporation, a New York corporation ("Mannesmann").
1. APPOINTMENT
Subject to the terms and conditions contained in this Agreement, Buyer
hereby appoints Mannesmann as its sole and exclusive procurement
organization for all its import purchases for hot rolled wire rod, and
for any other items that may be added at a later date by written
agreement of the parties hereto. Mannesmann hereby accepts this
appointment.
In case Buyer receives offers for Buyer to purchase imported products
from any source, Buyer will immediately turn those offers over to
Mannesmann for further handling. Buyer will continue to purchase
domestic wire rod through the competitive bidding process Buyer
currently uses.
2. PROCUREMENT
Mannesmann shall use its best efforts in sourcing Products for Buyer in
order to obtain the best possible prices for Buyer.
Recognizing that market conditions fluctuate, the parties nevertheless
anticipate that Mannesmann's procurement efforts and Buyer's
requirements will result in an annual transaction volume in excess of
175,000 tons.
All of Mannesmann's sourcing with international suppliers and subsequent
procurement shall be done from Mannesmann's Houston, Texas, offices
directly with the various international suppliers and without
involvement of any kind by any of Mannesmann's other offices or
personnel in other offices. Mannesmann will fully communicate to Buyer
all information and disclose all fees, terms, costs and other
information about the sourcing offers in order to provide Buyer the
opportunity to evaluate fully all aspects of every offer Mannesmann
solicits on Buyer's behalf.
Buyer reserves the exclusive right to approve or disapprove any and all
offers. Mannesmann shall not procure any Products sourced pursuant to
this Agreement until Mannesmann receives Buyer's written requisition for
such Products from the named source that states the description of the
Product or material and the quantities and delivery dates Buyer
requires.
Any offerings received by Mannesmann for Products from any source shall
be forwarded by Fax to Buyer without delay. Within 48 hours after
Buyer's actual receipt of such Fax (or on
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the first business day following such 48-hour period if the 48 hour
period does not end on a business day), Buyer shall inform Mannesmann by
Fax whether or not Buyer approves the proposed source and offer.
3. PROCUREMENT ALLOWANCE
Buyer will pay Mannesmann a procurement allowance of 2% of the Total
Price of all purchases. "Total Price" shall mean the sum of the sales
price of the purchase (F.O.B. mill price) and all other expenses
associated with the transaction, including but not limited to costs such
as transportation, insurance, interest charges ("interest #1") for no
longer than 30 days from delivery to Buyer at rates no greater than that
specified herein, L/C charges, surveys, and U.S. customs duty.
"Interest #1" must be charged for a period less than 30 days when credit
limits imposed by Mannesmann require the Buyer to pay Mannesmann
invoices in less than 30 days. Terminal handling, stevedoring, and
wharfage expenses shall also be charged to Buyer but are excluded from
Total Price for the purpose of computing the 2% procurement allowance.
After discharge of materials at the U.S. port of entry, Mannesmann will
prepare an analysis of all the above noted costs and compute the per
metric ton (MT) and per hundred weight (cwt) cost that will ultimately
be utilized for billing the Buyer when materials are delivered. These
costs will include interest ('interest #2') on all amounts that
Mannesmann pays a foreign supplier for Products that Buyer has
ordered, and the interest payments so owed shall be the product of (a)
the interest rate and (b) the amount paid for such Products and (c) a
fraction, the numerator of which is the number of days from the date
Mannesmann pays its supplier for the materials until the materials are
available for delivery and the denominator of which is 365. In
addition, the invoiced costs will also include an interest charge
('interest #3') for the estimated period from when the materials are
available for delivery to Buyer until actual delivery. Mannesmann will
account for variances from the actual period and issue debit or credit
memoranda for the adjustments. Buyer shall also pay Mannesmann a
separate interest charge ('interest #4') on all amounts billed to Buyer
that have not been paid within thirty (30 days) of delivery to Buyer,
with interest beginning to accrue on the thirty-first day. The 2%
procurement allowance will not be applied to "Interest #2', "Interest
#3' or "Interest #4'. Interest rates under this Agreement shall be the
prime rate published in the Wall Street Journal on the date on which
Mannesmann pays a supplier on Buyer's behalf.
4. MINIMUM GUARANTEED PROCUREMENT ALLOWANCE
For purposes of this Section 4, "Buyers Group" shall mean MMI Products,
Inc. and any and all subsidiaries of MMI.
If, on the third anniversary of the effective date of this Agreement and
subject to the test for quantity of tonnage received by the Buyers Group
from Mannesmann as noted in the next paragraph, Mannesmann has not
received from Buyers Group during the three years of this
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Agreement procurement allowances in the aggregate principal amount of at
least $3.0 Million, MMI shall pay Mannesmann an additional sum
(hereafter referred to as "Penalty" or "Penalties") equal to one-half of
the difference between $3.0 Million and the aggregate principal amount
Mannesmann has received from Buyers Group as procurement allowances;
provided however, that if one-half of the difference between $3.0
Million and the aggregate principal amount Mannesmann has received from
Buyers Group as procurement allowances exceeds $675,000 then MMI shall
pay Mannesmann as Penalty the sum of $675,000 and no more. If this
Agreement shall be extended beyond the initial three year term, then on
each succeeding anniversary date of this Agreement, if Mannesmann has
not received from Buyers Group, during the preceding 36 months,
procurement allowances and Penalties in the aggregate principal amount
of at least $3.0 Million, MMI shall pay Mannesmann a Penalty equal to
one-half of the difference between $3.0 Million and the aggregate
principal amount Mannesmann has received from Buyers Group as
procurement allowances and Penalties during such 36 month period;
provided however, that if one-half of the difference between $3.0
Million and the aggregate principal amount Mannesmann has received from
Buyers Group as procurement allowances and Penalties during such 36
month period exceeds $675,000, the maximum MMI shall pay Mannesmann as
Penalties for and during any three consecutive years is $675,000.
If the procurement allowances and Penalties in the aggregate principal
amount for any three year period is less than $3.0 million, but the
volume of hot rolled wire rod received from Mannesmann (whether from
foreign or domestic sources) during that three year period equals or
exceeds 525,000 tons (the "Minimum Tonnage"), then no Penalty will be
owed for that 36 month period. If at any time it is determined by MMI
that the Buyer's Group will incur a penalty for the 36 month period
ending on the next anniversary of the effective date of this agreement
and that such penalty will be caused by Mannesmann's inability to
provide the minimum tonnage at prices no greater than MMI's other
domestic sources of hot rolled wire rod, then MMI can advise Mannesmann
that this Agreement is in default and terminated. MMI will be obliged
to substantiate its claim and provide Mannesmann an opportunity to meet
the lower domestic price. Mannesmann shall have the right to negate the
default and termination by waiving the penalty that would have been
payable for the 36 month period ending on the next anniversary of the
effective date of this agreement. Termination of the contract under
this provision shall oblige MMI to pay in full to Mannesmann all
principal and interest owing on those certain Senior Subordinated
Secured Promissory Notes.
No later than 45 days after December 31, 1999 and if this Agreement is
extended, no later than 45 days after each subsequent December 31st,
Mannesmann shall prepare and deliver to Buyers an invoice setting forth
for the preceding 36 months (I) the procurement allowances paid by
Buyers Group (listed separately by company), (ii) the Penalties paid by
MMI and (iii) the Penalty currently owed to Mannesmann, if any. All
payments of the Penalty shall be due net 30 days after the invoice date.
Past due amounts shall bear interest as specified in Paragraph 3 herein.
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5. CONSIGNMENT
In certain instances it may be necessary for Mannesmann to purchase
large quantities at any given time to take advantage of lower prices
being offered by a particular mill and also to obtain better
transportation rates. Mannesmann is willing and prepared to enter into
closed-end consignment arrangements with Buyer related to those orders.
Such consignment arrangements require the consent of both parties prior
to establishment of the arrangement and shall be governed by the terms
and conditions contained in Annex 1 attached hereto.
6. TERMS OF PAYMENT
Buyer shall pay Mannesmann's invoices net 30 days after delivery unless
Buyer's representative and Mannesmann agree upon other terms. In
connection with consignment transactions, however, terms of payment
shall be governed by the provisions in Annex I hereto.
7. TERMS AND CONDITIONS OF SALE AND DELIVERY
Except as otherwise provided in this Agreement or as otherwise expressly
agreed between the parties, Mannesmann's "General Terms and Conditions
of Sale", attached hereto as an Exhibit to Annex 1, shall apply for all
sales from Mannesmann to Buyer.
8. EXCHANGE OF INFORMATION
Mannesmann will provide Buyer with timely, periodic market reports
detailing national and international price developments.
Buyer will provide Mannesmann with their best effort quarterly estimates
of Buyer's Product requirements at least 60 days prior to the
commencement of each quarter.
Buyer shall have the right to inspect any of Mannesmann's records
regarding transactions between Mannesmann and any member of Buyers Group
and between Mannesmann and any other entity on behalf of any member of
Buyers Group in order to confirm the accuracy of the matters set forth
in any invoice from Mannesmann.
9. TERM OF THE AGREEMENT
This Agreement shall be effective on January 1, 1997 and shall expire on
MMI's declaration of contract default as described in Paragraph 4
herein, or the later of (a) the close of business on December 31, 1999,
or (b) the date on which that certain loan made by Mannesmann to MMI
pursuant to those certain Senior Subordinated Secured Promissory Notes
has been repaid in full or released in full.
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10. RELATIONSHIP OF THE PARTIES
The relationship between the parties hereto shall be one of independent
contractors. No party hereto is authorized to bind the other
contractually or otherwise, or to make any representation not permitted
herein on behalf of the other party without such other party's consent.
11. DEFINITIONS
When used in this Agreement, the following terms shall have the meaning
stated herein:
"Domestic," when used in connection with any Product, wire rod, or other
item, means such product, wire rod, or other item as is produced in the
United States.
"Imported Products" shall mean Products produced outside of the United
States.
"International supplier" means any person, corporation, partnership, or
other entity that produces Products outside of the United States.
"$" shall mean dollars in legal tender of the United States of America.
"Fax" shall mean a written transmission by fax machine that transmits
written documents.
12. AMENDMENTS
Any amendments to this Agreement must be in writing and signed by all
parties to this Agreement.
13. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUCTED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS.
14. REQUIRED PERFORMANCE
The failure of either party to this Agreement to require the performance
of any term of this Agreement or the waiver by either party of any
breach under this Agreement shall not prevent the subsequent enforcement
of such term and shall not be deemed a waiver of any subsequent breach.
15. SEVERABILITY
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If any provision of this Agreement is held to be invalid or void by any
court of competent jurisdiction, such provision shall be deemed
severable from the remainder of this Agreement and shall not affect any
other provision hereof. If such provision shall be deemed invalid due
to its scope or breadth, such provision shall be deemed valid to the
extent of the scope or breadth permitted by law.
16. ASSIGNABILITY
Neither party to this Agreement shall assign any rights or delegate any
obligations of such party hereunder without the prior written consent of
the other party hereto, which shall not be unreasonably withheld.
17. NOTICES
Any notice required or permitted hereunder shall be in writing and shall
be deemed to have been duly given (a) when delivered to each party
personally or by private carrier, (b) 72 hours after the communication
is deposited in the United States mail, first-class, postage prepaid,
addressed to the respective parties at the addresses set forth below, or
(c) upon actual receipt when delivered by Fax. All notices shall be
addressed as set forth below:
MMI: MMI Products, Inc.
000 X. Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxx, President
Mannesmann: Mannesmann Pipe & Steel Corporation
0000 Xxxx Xxx Xxxx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Rudolf Georg, President
or to such other address as to any party hereto as such party shall
designate by like notice to the other parties hereto.
18. MERGER
This Agreement contains the entire understanding between the parties
with respect to the subject matter hereof and supercedes all prior
understanding between the parties including but not limited to the
Procurement Agreement entered into July 6, 1989. The parties agree that
all obligations under all prior understandings are settled upon
execution of this Agreement. In the event of any conflict between the
terms of this Agreement and any purchase order or any document submitted
by Mannesmann to Buyer, this Agreement shall govern.
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Executed and effective as of the date first written above.
MMI PRODUCTS, INC.
By: /s/ Xxxxxx X. Xxxxx
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Title: President
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MANNESMANN PIPE & STEEL CORPORATION
By: /s/ Rudolf Georg
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Title: Rudolf Georg, President
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Annex 1
CONSIGNMENT AGREEMENT
This Consignment Agreement is entered into as of the 13 day of December,
1996, between Mannesmann Pipe & Steel Corporation, hereinafter referred to as
Consignor, and MMI Products, Inc., hereinafter referred to as Consignee,
pursuant to that certain Procurement Agreement between the parties dated
December, 1996.
ARTICLE I - SCOPE
This Agreement covers metal products including, but not limited to,
wire, wire rod, tubular products, and aluminum products, to be delivered by
Consignor to Consignee, to be further defined by individual consignment sales
contracts making reference to this Consignment Agreement. Such metal products
shall be referred to herein as the "Products".
ARTICLE II - QUALITY
The Products furnished by Consignor shall conform to the specifications
as to sizes, grades and other technical details agreed upon by Consignee and
Consignor.
ARTICLE III - CONSIGNMENT INVENTORY
(a) All Products delivered to Consignee by Consignor under the terms
of this Agreement which have not yet been invoiced by Consignor shall
constitute the consignment inventory (the "Consignment Inventory"). Consignee
shall physically separate such Consignment Inventory from other inventory of
materials located on Consignee's premises, and post a prominent sign stating
that the material has been consigned by Consignor.
(b) When Consignee wishes to withdraw a Product from the Consignment
Inventory, such Product shall be physically removed by Consignee from the
Consignment Inventory at which time it shall be deemed to be withdrawn from the
Consignment Inventory for invoicing purposes. The contents of the Consignment
Inventory and all such withdrawals therefrom shall be reflected in the
Inventory Activity Report referred to in Article X below.
ARTICLE IV - TITLE
Title to each product furnished by Consignor to Consignee under this
Agreement shall remain with Consignor until the date such product is withdrawn
from the Consignment Inventory by Consignee in accordance with the procedures
of Article III (b) above. Consignor may reclaim any or all of the Products in
the Consignment inventory at any time.
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ARTICLE V - TERM
This Agreement covers Consignee's partial requirements for the Products
for the period beginning January 1, 1997, and ending on December 31, 1999, or
at such time as all consigned product has been withdrawn by Consignee in
accordance with the procedures of Articles III(b) and paid for pursuant to
Article VIII, whichever date is later.
ARTICLE VI - QUANTITIES
Consignor will use its best efforts to deliver or cause to be delivered
the quantity of Products required by Consignee.
Consignor may at its sole option deliver to Consignee the Products in
one or more bulk shipments.
ARTICLE VII - PRICING
Consignor will furnish Consignee with the Products, as defined above, at
agreed upon prices in effect at the time Products are ordered for placement in
Consignment Inventory.
ARTICLE VIII - PAYMENT TERMS
Consignor extends to Consignee payment terms of net thirty (30) days
from the date of Consignor's invoice, unless otherwise agreed in writing. All
invoices will be payable in U.S. Dollars only.
ARTICLE IX - LEASE OF WAREHOUSE SPACE
(a) During the term of the Consignment Agreement, Consignor agrees to
pay monthly rent in the amount of $.10 per net ton delivered to Consignee
pursuant to the terms of the Consignment Agreement and stored at any of the
Consignee's premises. Such rental amount shall be pro-rated for each partial
month Consignee hold each such ton of Consignment Inventory.
(b) Such rent shall be payable within thirty days of the end of each
month.
ARTICLE X - INVENTORY ACTIVITY REPORT
On the second workday of each week, Consignee will furnish Consignor
with a Consignment Inventory Activity Report for the preceding calendar week
for each location where Consignment Inventory has been or is located. This
report will reflect the total quantities of each of the following: opening
consignment Inventory by line item, weekly receipts, weekly withdrawals and
ending Consignment Inventory by line item. The reports will identify receipts
and withdrawals which are
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transfers among Consignee's storage sites. This report will be utilized by
Consignee and Consignor for inventory control and invoicing purposes.
ARTICLE XI - NOTIFICATION OF WITHDRAWALS
Consignee shall inform Consignor of the date of each withdrawal of a
Product from the Consignment Inventory and the quantity of Products withdrawn
from the Consignment Inventory on such date. Such information shall be
included in the Consignment Inventory Activity Report described in Article X
above.
ARTICLE XII - INSPECTION
Consignor shall be entitled to enter into and upon the Consignee's
premises during regular business hours on any business day, or at such other
times as the Consignor and Consignee shall agree, for the purpose of inspecting
the Consignment Inventory. If, upon inspection, Consignor discovers a shortage
in the Consignment Inventory from the amount reported in the most recent
Inventory Activity Report the Products missing shall be deemed to have been
sold to Consignee and Consignee shall include such missing Consignment
Inventory in the next Consignment Inventory Activity Report and identify such
Products as withdrawn from the Consignment Inventory.
ARTICLE XIII - INVOICING
Immediately after receipt of a weekly Inventory Activity Report,
Consignor will invoice Consignee for all Products withdrawn by Consignee from
the Consignment Inventory during the preceding week.
ARTICLE XIV - CLASSIFICATION OF TRANSACTION AND RIGHTS OF CREDITORS
Consignee and Consignor agree that the transactions between Consignee
and Consignor provided for hereunder and intended to be classified as a "sale
on approval" for the purposes of the Uniform Commercial Code Section 2-326,
that the Products are delivered by Consignor to Consignee primarily for
Consignee's use, and that the Consignment Inventory is not subject to any
claims by third parties, including, without limitation, Consignee's creditors.
Consignee and Consignor further agree that the Products shall be deemed to be
accepted by Consignee only upon Consignee's withdrawal of the Products from the
Consignment Inventory, and that acceptance shall be limited to the particular
Products withdrawn from the Consignment Inventory so that acceptance of some
Products from a given lot shall not be deemed an acceptance of the entire lot.
Notwithstanding anything herein to the contrary, if Consignee fails to notify
Consignor of its election to return the products within 120 days of delivery,
such products shall be deemed to have been accepted on the 121st day after
delivery.
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ARTICLE XV - PERFECTION OF CONSIGNOR'S SECURITY INTEREST
In the event that, notwithstanding the intentions of the Consignee and
Consignor to create a consignment "sale on approval", any court treats any of
the transactions between Consignee and Consignor as a sale of goods other than
as a consignment "sales on approval", Consignee hereby grants Consignor a
security interest in the Products covered by this Agreement and the proceeds
thereof to secure payment of the purchase price of the Products.
Consignee hereby agrees to take any and all actions requested by
Consignor to perfect Consignor's security interest in the Products maintained
in the Consignment Inventory, including, without limitation: execution and
filing by Consignee of UCC-1 financing statements covering the Products and all
schedules or amendments in connection therewith, with the offices of the
Secretaries of State in any state in which consignment inventory is stored at
the consignee's premises and furnishing Consignor with a list of all secured
parties holding UCC Financing Statements which have been or hereafter are filed
to perfect an alleged security interest in Consignee's property.
ARTICLE XVI - TERMINATION
This Agreement may be terminated by either party for a material breach
of this Agreement by the other party upon sixty (60) days prior written
notification to the other party.
In the event this Agreement is terminated for any reason whatsoever,
Consignor will be entitled to the immediate return of the Products remaining in
the Consignment Inventory.
Notwithstanding the foregoing, upon termination of this Agreement for
any reason whatsoever, the parties shall remain contractually liable to each
other, as seller and buyer, with respect to all Products withdrawn from the
Consignment Inventory prior to such termination and the parties shall retain
all remedies available to them, at law or in equity, to enforce such
contractual liabilities.
ARTICLE XVII - BANKRUPTCY OR INSOLVENCY OF CONSIGNEE
In the event Consignee institutes proceedings under the Bankruptcy Code
or any similar law, or Consignee consents to entry of an order for relief
against it in any bankruptcy or insolvency proceeding or similar proceeding, or
Consignee files a petition or consent for reorganization or other relief under
any bankruptcy act or similar law, or a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) is appointed for Consignee or
any substantial part of its property, or Consignee admits in writing its
inability to pay its debts as they become due, or Consignee makes an assignment
for the benefit of creditors, or Consignee takes any action in furtherance of
the foregoing, Consignor is hereby entitled, without prejudice to Consignor's
right to damages for breach of any contractual obligations of Consignee, to the
immediate return of all Products maintained in the Consignment Inventory, and
Consignee shall pay any and all costs associated with the return of such
Products to Consignor.
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ARTICLE XVIII - NON-ASSIGNMENT
Consignee may not assign, subcontract, delegate or otherwise transfer
any of its duties rights or obligations under this Agreement or any part hereof
to a third party without the prior written consent of Consignor. No assignee
for the benefit of creditors, receiver, trustee in bankruptcy, sheriff nor any
other officer of the court or official charged with taking custody of
Consignee's assets or business shall have any right to continue performance of
this Agreement, and this Agreement may not otherwise be assigned by operation
of law (except by operation of law to a successor-in-interest to the Consignee
pursuant to a merger of the Consignee).
ARTICLE XIX - RISK OF LOSS
Risk of loss from fire, vandalism, weather or acts of God shall remain
with Consignor until material is withdrawn from the Consignment Inventory,
provided however that the risk of loss for Products in the Consignment
Inventory which are missing or otherwise unaccounted for shall remain with
Consignee.
ARTICLE XX - CONSIGNOR'S TERMS AND CONDITIONS
Consignor's standard terms and conditions of sale, annexed hereto as an
Exhibit shall apply to Products withdrawn by Consignee from the Consignment
Inventory. In the event of an inconsistency between the Exhibit and this
Agreement, the provisions of the Agreement shall control.
ARTICLE XXI - NOTICES
All reports, communications, requests or notices required or permitted
under this Agreement shall be in writing and shall be deemed to be duly given on
the date same are hand delivered and acknowledged, or if mailed, when mailed by
registered or certified mail, return requested, to the party concerned at the
following address:
If to Consignor: Mannesmann Pipe & Steel Corporation
0000 Xxxx Xxx Xxxx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx Georg, President
If to Consignee: MMI Products, Inc.
000 X. Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx, President
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Either party may change the address to which such notices and
communications shall be sent by written notice to the other party provided that
any such notice of change of address shall be effective only upon request.
ARTICLE XXII - INTEGRATION; AMENDMENTS
This Agreement sets forth the entire Agreement and understanding between
the parties, merges all prior discussions between the parties, and supersedes
all prior consignment agreements entered into between them. Except as
otherwise specifically provided herein, neither party shall be bound by any
definition, condition, warranty or representation other than expressly stated
in this Agreement. This Agreement may not be amended or modified except by
written instrument signed by each of the parties hereto.
ARTICLE XXIII - APPLICABLE LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.
ARTICLE XXIV - INTERPRETATION
The headings given to the paragraphs of this Agreement are for the
convenience of the parties only and are not to be used in an interpretation of
this Agreement.
ARTICLE XXV - SEVERABILITY
In the event that any one or more provisions of this Agreement shall be
held invalid, illegal or enforceable in any respect, such provision or
provisions shall be severable from this Agreement, so that the validity,
legality or enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby. In the event that any one or
more provisions of this Agreement shall be held invalid, illegal or enforceable
with respect to certain products delivered to Consignee, the validity, legality
or enforceability of the Agreement with respect to other Products delivered
shall not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers all as of the date set forth above.
MMI PRODUCTS, INC. MANNESMANN PIPE & STEEL
CORPORATION
By: /s/ Xxxxxx X. Xxxxx By: /s/ Rudolf Georg
-------------------------------- -------------------------
Xxxxxx X. Xxxxx Xxxxxx Georg
President President
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AMENDMENT NO. 1 TO PROCUREMENT AGREEMENT
This Amendment No. 1 to Procurement Agreement (the "Amendment") is made
and entered into as of the 27th day of March, 1997, by and between MMI
Products, Inc., a Delaware corporation (the "Buyer"), and Mannesmann Pipe &
Steel Corporation, a New York corporation ("Mannesmann").
WHEREAS, Mannesmann and the Buyer entered into that certain Procurement
Agreement dated as of December 13, 1996 (the "Agreement"); and
WHEREAS, the Buyer and Mannesmann desire to amend the provisions of the
Agreement as provided herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Amendment of Provisions Regarding Minimum Guaranteed Procurement
Allowance. The text of Section 4 of the Agreement is hereby amended to read in
its entirety as follows:
Beginning with the two years ending December 31, 1998, and each December
31 thereafter, if the volume of hot rolled wire rod received from
Mannesmann (whether from foreign or domestic sources) during any
two-year period is less than 200,000 tons (the "Minimum Tonnage"), then
an allowance ("Allowance") will be owed for that 24-month period. Such
allowance will be equal to the difference between 200,000 tons and the
lesser tonnage received by Buyer during that 24-month period multiplied
by $.50. Notwithstanding the foregoing, if the tonnage received in the
year ending December 31, 2001 is less than 100,000, the Allowance will
be the greater of the amount calculated on the basis described in the
preceding sentence or the difference between 100,000 tons and the lesser
tons received multiplied by $1 per ton. Buyer hereby acknowledges and
agrees that this is a reasonable sum.
No later than 45 days after December 31, 1998, and no later than 45 days
after each subsequent December 31, Mannesmann shall prepare and deliver
to Buyer an invoice setting forth for the preceding 24 months the tons
purchased for Buyers Group and the Allowance currently owed to
Mannesmann, if any. All payments of the Allowance shall be due net 30
days after the invoice date. Past due amounts shall bear interest as
specified in Paragraph 3 herein.
2. Amendment of Provision Regarding Term. The text of Section 9 is
amended to read in its entirety as follows:
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This Agreement shall be effective on January 1, 1997 and shall expire on
the later of (a) the close of business on December 31, 2001, or (b) the
date on which that certain loan made by Mannesmann to MMI pursuant to
those certain Senior Subordinated Secured Promissory Notes has been
repaid in full or released in full.
3. Continued Effectiveness of Agreement. Except as expressly
amended by this Amendment, the Agreement shall remain in full force and effect
in the form in which it was in effect prior to the execution and delivery of
this Amendment.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Amendment as of the date first above written.
MMI PRODUCTS, INC.
By: /s/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
-------------------------
Title: President
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MANNESMANN PIPE & STEEL
CORPORATION
By: /s/ Rudolf Georg
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Name: Rudolf Georg
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Title: President
-----------------------
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