<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 27, 1998
REGISTRATION NO. 333-41837
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
CLYDE COMPANIES, INC.
(Exact name of registrant as specified in its charter)
UTAH 3272 87-0260879
(State or other (Primary standard (I.R.S. Employer
jurisdiction of industrial Identification No.)
incorporation or Classification
organization) code number)
---------------------
1423 DEVONSHIRE DRIVE
SALT LAKE CITY, UTAH 84108
(801) 582-2783
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
---------------------
CAROL C. SALISBURY
1423 DEVONSHIRE DRIVE
SALT LAKE CITY, UTAH 84108
(801) 582-2783
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
---------------------
WITH COPY TO:
ARTHUR B. RALPH, ESQ.
VAN COTT, BAGLEY, CORNWALL & MCCARTHY
50 SOUTH MAIN STREET, SUITE 1600
SALT LAKE CITY, UTAH 84144
(801) 532-3333
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: At the effective time of the proposed merger of wholly-owned
subsidiaries of Clyde Companies, Inc. ("CCI") with and into W.W. Clyde & Co.
("Clyde"), Geneva Rock Products, Inc. ("Geneva Rock"), Utah Service, Inc. ("Utah
Service") and Beehive Insurance Agency, Inc. ("Beehive Insurance"), in
accordance with the Amended and Restated Agreement and Plan of Merger, dated as
of November 13, 1997, attached as Annex A to the Proxy Statement/Prospectus
forming a part of this Registration Statement, which shall occur as promptly as
practicable after this Registration Statement becomes effective and the
shareholders of each of CCI, Clyde, Geneva Rock, Utah Service and Beehive
Insurance have approved the merger.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
---------------------
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================
Proposed
Title of each class of maximum Proposed maximum Amount of
securities to be Amount to be offering price aggregate offering registration
registered registered(1) per share(2) price(2) fee (2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 4,634,789 shares $14.52 $67,297,137 $19,853
================================================================================================
</TABLE>
(1) Represents the estimated maximum number of shares of common stock, no par
value, of CCI issuable in connection with the merger, based upon an assumed
exchange ratio of (a) 33.93 shares for each outstanding share of common
stock, par value $10 per share, of Clyde, (b) 239.27 shares for each
outstanding share of common stock, par value $10 per share, of Geneva Rock,
(c) 43.43 shares for each outstanding share of common stock, par value $10
per share, of Utah Service, and (e) 4.33 shares for each outstanding share
of common stock, par value $1 per share, of Beehive Insurance.
(2) Estimated pursuant to Rule 457(f) under the Securities Act of 1933, as
amended, based on the book value of the merging companies.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME FURTHER EFFECTIVE IN ACCORDANCE WITH SECTION
8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
<PAGE> 3
CLYDE COMPANIES, INC.
W.W. CLYDE & CO.
GENEVA ROCK PRODUCTS, INC.
UTAH SERVICE, INC.
BEEHIVE INSURANCE AGENCY, INC.
February 12, 1998
Dear Shareholder:
Enclosed you will find proxy materials (Notice of Special Meeting of
Shareholders, letter to shareholders, Proxy Statement/Prospectus, and proxy
card) relating to the Special Meetings of Shareholders of Clyde Companies, Inc.
("CCI"), W.W. Clyde & Co. ("Clyde"), Geneva Rock Products, Inc. ("Geneva Rock"),
Utah Service, Inc. ("Utah Service"), and Beehive Insurance Agency, Inc.
("Beehive Insurance"). For your convenience, we have color coded the proxy cards
as follows:
CCI [white]
Clyde [green]
Geneva Rock [blue]
Utah Service [red]
Beehive Insurance [yellow]
If you own shares of more than one of these companies, you will receive more
than one proxy card. It is very important that you complete and return a
separate proxy card for each company in which you own shares.
Sincerely,
Carol C. Salisbury, President Richard C. Clyde, President and General
Clyde Companies, Inc. Manager
W.W. Clyde & Co.
Wilford W. Clyde, President David O. Cook, President
Geneva Rock Products, Inc. Utah Service Inc.
W. Douglas Snow, President
Beehive Insurance Agency, Inc.
Enclosures
<PAGE> 4
CLYDE COMPANIES, INC.
W.W. CLYDE & CO.
GENEVA ROCK PRODUCTS, INC.
UTAH SERVICE, INC.
BEEHIVE INSURANCE AGENCY, INC.
February 12, 1998
Dear Shareholder:
Special Meetings of Shareholders (each a "Special Meeting") of each of Clyde
Companies, Inc. ("CCI"), W.W. Clyde & Co. ("Clyde"), Geneva Rock Products, Inc.
("Geneva Rock"), Utah Service, Inc. ("Utah Service") and Beehive Insurance
Agency, Inc. ("Beehive Insurance") will be held at the places and times set
forth in the accompanying Notices of Special Meeting of Shareholders for your
respective company.
At your respective Special Meeting, you will be asked to consider and vote upon
a proposal to approve an Amended and Restated Agreement and Plan of Merger dated
as of November 13, 1997 (the "Merger Agreement") providing for the merger
("Merger") of wholly owned subsidiaries of CCI with Clyde, Geneva Rock, Utah
Service and Beehive Insurance, each of which will become wholly owned
subsidiaries of CCI. Upon the effective date of the Merger, each issued and
outstanding share of common stock of Clyde, Geneva Rock, Utah Service and
Beehive Insurance will be converted into, respectively, 33.93, 239.27, 43.43 and
4.33 shares of common stock, no par value, of CCI.
The Board of Directors of CCI, Clyde, Geneva Rock, Utah Service and Beehive
Insurance each has unanimously approved the Merger Agreement and the
transactions contemplated thereby, and has determined that it is in the best
interests of their respective shareholders. Your Board of Directors unanimously
recommends that shareholders vote to approve the Merger Agreement.
In the materials accompanying this letter, you will find a Notice of Special
Meeting of Shareholders, a Proxy Statement/Prospectus relating to the actions to
be taken by you at the Special Meeting and a proxy card. The Proxy
Statement/Prospectus more fully describes the proposed Merger.
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE SPECIAL MEETING IN PERSON. HOWEVER,
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE SPECIAL
MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN THOUGH YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED
AT THE SPECIAL MEETING.
Sincerely,
- ------------------------------ -----------------------------------------------
Carol C. Salisbury, President Richard C. Clyde, President and General Manager
Clyde Companies, Inc. W.W. Clyde & Co.
- ------------------------------ -----------------------------------------------
Wilford W. Clyde, President David O. Cook, President
Geneva Rock Products, Inc. Utah Service, Inc.
- ------------------------------
W. Douglas Snow, President
Beehive Insurance Agency, Inc.
<PAGE> 5
CLYDE COMPANIES, INC.
1423 DEVONSHIRE DRIVE
SALT LAKE CITY, UTAH 84108
(801) 582-2783
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 17, 1998
Notice is hereby given that a Special Meeting of Shareholders of Clyde
Companies, Inc. ("CCI") will be held on Tuesday, March 17, 1998, at 11:30
a.m., local time, at 1565 West 400 North, Orem, Utah for the following purposes:
(1) To consider and vote upon a proposal to approve an Amended and
Restated Agreement and Plan of Merger dated as of November 13, 1997 (the
"Merger Agreement") providing for the merger ("Merger") of wholly owned
subsidiaries of CCI with W.W. Clyde & Co. ("Clyde"), Geneva Rock
Products, Inc. ("Geneva Rock"), Utah Service, Inc. ("Utah Service") and
Beehive Insurance Agency, Inc. ("Beehive Insurance"), each of which will
become wholly owned subsidiaries of CCI. Upon the effective date of the
Merger, each issued and outstanding share of common stock of Clyde,
Geneva Rock, Utah Service and Beehive Insurance will be converted into,
respectively, 33.93, 239.27, 43.43 and 4.33 shares of common stock, no
par value, of CCI.
(2) To transact such other business that may properly come before the
Special Meeting or any postponements or adjournments thereof.
Only shareholders of record at the close of business on January 30, 1998 are
entitled to notice of and to vote at the Special Meeting, or at any
postponements or adjournments thereof.
A complete list of shareholders entitled to vote at the Special Meeting will be
available for examination at CCI's principal executive offices, for any purposes
germane to the Special Meeting, during ordinary business hours, for a period of
at least 10 days prior to the Special Meeting.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES OF COMMON STOCK OF CCI
THAT YOU OWN. WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON,
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT WITHOUT DELAY IN
THE ENCLOSED ENVELOPE, WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY THEN WITHDRAW YOUR
PROXY AND VOTE IN PERSON. YOUR PROXY CAN BE WITHDRAWN BY YOU AT ANY TIME BEFORE
IT IS VOTED.
February 12, 1998
BY ORDER OF THE BOARD OF DIRECTORS,
Carol C. Salisbury, Director and President
PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME.
<PAGE> 6
W.W. CLYDE & CO.
1375 NORTH MAIN STREET
SPRINGVILLE, UTAH 84663
(801) 489-5616
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 17, 1998
Notice is hereby given that a Special Meeting of Shareholders of W.W. Clyde &
Co. ("Clyde") will be held on Tuesday, March 17, 1998, at 8:00 a.m., local
time, at 1565 West 400 North, Orem, Utah for the following purposes:
(1) To consider and vote upon a proposal to approve an Amended and
Restated Agreement and Plan of Merger dated as of November 13, 1997 (the
"Merger Agreement") providing for the merger ("Merger") of wholly owned
subsidiaries of Clyde Companies, Inc. ("CCI") with Clyde, Geneva Rock
Products, Inc. ("Geneva Rock"), Utah Service, Inc. ("Utah Service") and
Beehive Insurance Agency, Inc. ("Beehive Insurance"), each of which will
become wholly owned subsidiaries of CCI. Upon the effective date of the
Merger, each issued and outstanding share of common stock of Clyde,
Geneva Rock, Utah Service and Beehive Insurance will be converted into,
respectively, 33.93, 239.27, 43.43 and 4.33 shares of common stock, no
par value, of CCI.
(2) To transact such other business that may properly come before the
Special Meeting or any postponements or adjournments thereof.
Only shareholders of record at the close of business on January 30, 1998 are
entitled to notice of and to vote at the Special Meeting, or at any
postponements or adjournments thereof. The affirmative vote of the holders of a
majority of the outstanding shares of common stock of Clyde is required for the
approval of the Merger.
Under the Utah Revised Business Corporation Act, shareholders of Clyde will have
the right to assert dissenters' rights in connection with the proposed Merger.
See "Dissenters' Rights" in the Proxy Statement/Prospectus accompanying this
notice.
A complete list of shareholders entitled to vote at the Special Meeting will be
available for examination at Clyde's principal executive offices, for any
purposes germane to the Special Meeting, during ordinary business hours, for a
period of at least 10 days prior to the Special Meeting.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES OF COMMON STOCK OF
CLYDE THAT YOU OWN. WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN
PERSON, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT WITHOUT
DELAY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED
IN THE UNITED STATES. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY THEN WITHDRAW
YOUR PROXY AND VOTE IN PERSON. YOUR PROXY CAN BE WITHDRAWN BY YOU AT ANY TIME
BEFORE IT IS VOTED.
February 12, 1998
BY ORDER OF THE BOARD OF DIRECTORS,
Richard C. Clyde, Director, President and
General Manager
PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME.
<PAGE> 7
GENEVA ROCK PRODUCTS, INC.
1565 WEST 400 NORTH
OREM, UTAH 84057
(801) 328-2700
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 17, 1998
Notice is hereby given that a Special Meeting of Shareholders of Geneva Rock
Products, Inc. ("Geneva Rock") will be held on Tuesday, March 17, 1998, at 9:30
a.m., local time, at 1565 West 400 North, Orem, Utah for the following purposes:
(1) To consider and vote upon a proposal to approve an Amended and
Restated Agreement and Plan of Merger dated as of November 13, 1997 (the
"Merger Agreement") providing for the merger ("Merger") of wholly owned
subsidiaries of Clyde Companies, Inc. ("CCI") with W.W. Clyde & Co.
("Clyde"), Geneva Rock, Utah Service, Inc. ("Utah Service") and Beehive
Insurance Agency, Inc. ("Beehive Insurance"), each of which will become
wholly owned subsidiaries of CCI. Upon the effective date of the Merger,
each issued and outstanding share of common stock of Clyde, Geneva Rock,
Utah Service and Beehive Insurance will be converted into, respectively,
33.93, 239.27, 43.43 and 4.33 shares of common stock, no par value, of
CCI.
(2) To transact such other business that may properly come before the
Special Meeting or any postponements or adjournments thereof.
Only shareholders of record at the close of business on January 30, 1998 are
entitled to notice of and to vote at the Special Meeting, or at any
postponements or adjournments thereof. The affirmative vote of the holders of a
majority of the outstanding shares of common stock of Geneva Rock is required
for the approval of the Merger.
Under the Utah Revised Business Corporation Act, shareholders of Geneva Rock
will have the right to assert dissenters' rights in connection with the proposed
Merger. See "Dissenters' Rights" in the Proxy Statement/Prospectus accompanying
this notice.
A complete list of shareholders entitled to vote at the Special Meeting will be
available for examination at Geneva Rock's principal executive offices, for any
purposes germane to the Special Meeting, during ordinary business hours, for a
period of at least 10 days prior to the Special Meeting.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES OF COMMON STOCK OF
GENEVA ROCK THAT YOU OWN. WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL
MEETING IN PERSON, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT WITHOUT DELAY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO ADDITIONAL POSTAGE
IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY THEN
WITHDRAW YOUR PROXY AND VOTE IN PERSON. YOUR PROXY CAN BE WITHDRAWN BY YOU AT
ANY TIME BEFORE IT IS VOTED.
February 12, 1998
BY ORDER OF THE BOARD OF DIRECTORS,
Wilford W. Clyde, Director and President
PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME.
<PAGE> 8
UTAH SERVICE, INC.
35 EAST 400 SOUTH
SPRINGVILLE, UTAH 84663
(801) 322-2772
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 17, 1998
Notice is hereby given that a Special Meeting of Shareholders of Utah Service,
Inc. ("Utah Service") will be held on Tuesday, March 17, 1998, at 10:30 a.m.,
local time, at 1565 West 400 North, Orem, Utah for the following purposes:
(1) To consider and vote upon a proposal to approve an Amended and
Restated Agreement and Plan of Merger dated as of November 13, 1997 (the
"Merger Agreement") providing for the merger ("Merger") of wholly owned
subsidiaries of Clyde Companies, Inc. ("CCI") with W.W. Clyde & Co.
("Clyde"), Geneva Rock Products, Inc. ("Geneva Rock"), Utah Service and
Beehive Insurance Agency, Inc. ("Beehive Insurance"), each of which will
become wholly owned subsidiaries of CCI. Upon the effective date of the
Merger, each issued and outstanding share of common stock of Clyde,
Geneva Rock, Utah Service and Beehive Insurance will be converted into,
respectively, 33.93, 239.27, 43.43 and 4.33 shares of common stock, no
par value, of CCI.
(2) To transact such other business that may properly come before the
Special Meeting or any postponements or adjournments thereof.
Only shareholders of record at the close of business on January 30, 1998 are
entitled to notice of and to vote at the Special Meeting, or at any
postponements or adjournments thereof. The affirmative vote of the holders of a
majority of the outstanding shares of common stock of Utah Service is required
for the approval of the Merger.
Under the Utah Revised Business Corporation Act, shareholders of Utah Service
will have the right to assert dissenters' rights in connection with the proposed
Merger. See "Dissenters' Rights" in the Proxy Statement/Prospectus accompanying
this notice.
A complete list of shareholders entitled to vote at the Special Meeting will be
available for examination at Utah Service's principal executive offices, for any
purposes germane to the Special Meeting, during ordinary business hours, for a
period of at least 10 days prior to the Special Meeting.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES OF COMMON STOCK OF
UTAH SERVICE THAT YOU OWN. WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL
MEETING IN PERSON, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT WITHOUT DELAY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO ADDITIONAL POSTAGE
IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY THEN
WITHDRAW YOUR PROXY AND VOTE IN PERSON. YOUR PROXY CAN BE WITHDRAWN BY YOU AT
ANY TIME BEFORE IT IS VOTED.
February 12, 1998
BY ORDER OF THE BOARD OF DIRECTORS,
Vernon O. Cook, Chairman of the Board
PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME.
<PAGE> 9
BEEHIVE INSURANCE AGENCY, INC.
302 WEST 5400 SOUTH, SUITE 109
MURRAY, UTAH 84107
(801) 685-2779
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 17, 1998
Notice is hereby given that a Special Meeting of Shareholders of Beehive
Insurance Agency, Inc. ("Beehive Insurance") will be held on Tuesday, March 17,
1998, at 11:00 a.m., local time, at 1565 West 400 North, Orem, Utah for the
following purposes:
(1) To consider and vote upon a proposal to approve an Amended and
Restated Agreement and Plan of Merger dated as of November 13, 1997 (the
"Merger Agreement") providing for the merger ("Merger") of wholly owned
subsidiaries of Clyde Companies, Inc. ("CCI") with W.W. Clyde & Co.
("Clyde"), Geneva Rock Products, Inc. ("Geneva Rock"), Utah Service, Inc.
("Utah Service") and Beehive Insurance, each of which will become wholly
owned subsidiaries of CCI. Upon the effective date of the Merger, each
issued and outstanding share of common stock of Clyde, Geneva Rock, Utah
Service and Beehive Insurance will be converted into, respectively,
33.93, 239.27, 43.43 and 4.33 shares of common stock, no par value, of
CCI.
(2) To transact such other business that may properly come before the
Special Meeting or any postponements or adjournments thereof.
Only shareholders of record at the close of business on January 30, 1998 are
entitled to notice of and to vote at the Special Meeting, or at any
postponements or adjournments thereof. The affirmative vote of the holders of a
majority of the outstanding shares of common stock of Beehive Insurance is
required for the approval of the Merger.
Under the Utah Revised Business Corporation Act, shareholders of Beehive
Insurance will have the right to assert dissenters' rights in connection with
the proposed Merger. See "Dissenters' Rights" in the Proxy Statement/Prospectus
accompanying this notice.
A complete list of shareholders entitled to vote at the Special Meeting will be
available for examination at Beehive Insurance's principal executive offices,
for any purposes germane to the Special Meeting, during ordinary business hours,
for a period of at least 10 days prior to the Special Meeting.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES OF COMMON STOCK OF
BEEHIVE INSURANCE THAT YOU OWN. WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL
MEETING IN PERSON, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT WITHOUT DELAY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO ADDITIONAL POSTAGE
IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY THEN
WITHDRAW YOUR PROXY AND VOTE IN PERSON. YOUR PROXY CAN BE WITHDRAWN BY YOU AT
ANY TIME BEFORE IT IS VOTED.
February 12, 1998
BY ORDER OF THE BOARD OF DIRECTORS,
W. Douglas Snow, Director, President and
General Manager
PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME.
<PAGE> 10
PROXY STATEMENT
CLYDE COMPANIES, INC.
W.W. CLYDE & CO.
GENEVA ROCK PRODUCTS, INC.
UTAH SERVICE, INC.
BEEHIVE INSURANCE AGENCY, INC.
Special Meetings to be Held on
March 17, 1998
---------------------------------
PROSPECTUS
CLYDE COMPANIES, INC.
4,634,789 SHARES OF COMMON STOCK
(no par value per share)
---------------------------------
This Proxy Statement/Prospectus is being furnished to holders of common
stock, no par value ("CCI Common Stock"), of Clyde Companies, Inc., a Utah
corporation ("CCI"), holders of common stock, par value $10 per share ("Clyde
Common Stock"), of W.W. Clyde & Co., a Utah corporation ("Clyde"), holders of
common stock, par value $10 per share ("Geneva Rock Common stock"), of Geneva
Rock Products, Inc., a Utah corporation ("Geneva Rock"), holders of common
stock, par value $10 per share ("Utah Service Common Stock"), of Utah Service,
Inc., a Utah corporation ("Utah Service"), and holders of common stock, par
value $1 per share ("Beehive Insurance Common Stock"), of Beehive Insurance
Agency, Inc., a Utah corporation ("Beehive Insurance"), in connection with the
solicitation of proxies by the Boards of Directors of CCI, Clyde, Geneva Rock,
Utah Service, and Beehive Insurance for use at special meetings of each of those
companies to be held at 11:30, 8:00, 9:30, 10:30 and 11:00 a.m., respectively,
on Tuesday, March 17, 1998, at the offices of Geneva Rock located at 1565 West
400 North, Orem, Utah.
This Proxy Statement/Prospectus constitutes a prospectus of CCI with
respect to up to 4,634,789 shares of CCI Common Stock to be issued in connection
with the merger (the "Merger") of Clyde, Geneva Rock, Utah Service, and Beehive
Insurance with wholly owned subsidiaries of CCI. Upon the effective date of the
Merger, each issued and outstanding share of Clyde Common Stock, Geneva Rock
Common Stock, Utah Service Common Stock, and Beehive Insurance Common Stock will
be converted into respectively, 33.93, 239.27, 43.43 and 4.33 shares of CCI
Common Stock.
THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THIS PROXY STATEMENT/PROSPECTUS.
HOLDERS OF CCI, CLYDE, GENEVA ROCK, UTAH SERVICE AND BEEHIVE INSURANCE COMMON
STOCK ARE STRONGLY URGED TO READ AND CAREFULLY CONSIDER THIS PROXY
STATEMENT/PROSPECTUS IN ITS ENTIRETY, PARTICULARLY THE MATTERS REFERRED TO UNDER
"RISK FACTORS" BEGINNING ON PAGE 19.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This Proxy Statement/Prospectus and the accompanying form of proxy are first
being mailed to shareholders of CCI, Clyde, Geneva Rock, Utah Service and
Beehive Insurance on or about February 12, 1998.
The date of this Proxy Statement/Prospectus is February 12, 1998.
<PAGE> 11
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 12
ADDITIONAL INFORMATION
CCI has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 (together with any amendments
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities to be issued
pursuant to the Amended and Restated Agreement and Plan of Merger dated as of
November 13, 1997 (the "Merger Agreement"), attached as Annex A to this Proxy
Statement/Prospectus. This Proxy Statement/Prospectus does not contain all the
information set forth in the Registration Statement and the exhibits and
schedules thereto, certain parts of which have been omitted in accordance with
the rules and regulations of the Commission. Statements contained in this Proxy
Statement/Prospectus or in any document incorporated by reference in this Proxy
Statement/Prospectus as to the contents of any contract or other document
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such reference. Copies of the
Registration Statement and the exhibits and schedules thereto may be obtained,
upon payment of the fee prescribed by the Commission, at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at Seven World
Trade Center, Suite 1300, New York, New York 10048, and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may also be examined without charge at the Commission's principal
office in Washington, D.C. The Commission maintains a World Wide Web site on the
Internet at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission.
All disclosures contained in this Proxy Statement/Prospectus regarding
CCI, Clyde, Geneva Rock, Utah Service and Beehive Insurance, including the
information derived from any publicly available document described in the
preceding paragraph, have been provided by such corporations.
NO AUTHORIZATION
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS IN
CONNECTION WITH THE SOLICITATION OF PROXIES OR THE OFFERING OF SECURITIES MADE
HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY CCI, CLYDE, GENEVA ROCK, UTAH SERVICE,
BEEHIVE INSURANCE OR ANY OTHER PERSON. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM ANY
PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION.
FORWARD-LOOKING STATEMENTS
Certain statements included or incorporated by reference in this Proxy
Statement/Prospectus, including without limitation statements containing the
words "believes," "anticipates," "intends," "expects" and words of similar
import, constitute forward-looking statements. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of CCI to be materially
different from any future results, performance or achievements expressed or
implied by such forward looking statements. Such factors include, among other
things, the following: (1) expected cost savings from the Merger may not be
realized; (2) costs or difficulties related to the integration of the businesses
of Clyde, Geneva Rock, Utah Service and Beehive Insurance may be greater than
expected; (3) an increase of competitive
<PAGE> 13
pressure in the industries of Clyde, Geneva Rock, Utah Service and Beehive
Insurance may adversely affect the businesses of those companies; and (4)
general economic conditions, either nationally or in the states in which Clyde,
Geneva Rock, Utah Service and Beehive do business, may be less favorable than
expected. CCI disclaims any obligation to update such factors or to publicly
announce the result of any revisions to any forward-looking statements included
or incorporated by reference herein to reflect future events or developments.
<PAGE> 14
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SUMMARY..................................................................................... 1
THE COMPANIES........................................................................1
CCI .......................................................................1
CLYDE .......................................................................1
GENEVA ROCK...................................................................1
UTAH SERVICE..................................................................2
BEEHIVE INSURANCE.............................................................2
THE SPECIAL MEETINGS.................................................................2
TIME, DATE AND PLACE..........................................................2
PURPOSES......................................................................2
VOTE REQUIRED; RECORD DATE....................................................2
THE MERGER...........................................................................3
EFFECT OF MERGER..............................................................3
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARDS OF DIRECTORS............3
TASK FORCE....................................................................4
VALUATION REPORTS FOR OPERATING COMPANIES BY FINANCIAL ADVISOR................5
EXCHANGE RATIOS...............................................................6
INTEREST OF CERTAIN PERSONS IN THE MERGER.....................................6
ACCOUNTING TREATMENT..........................................................6
REGULATORY APPROVAL...........................................................6
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS.....................................6
REPORTS TO SHAREHOLDERS.......................................................7
STOCK REDEMPTION PLAN................................................................7
VOTING AGREEMENT.....................................................................7
MANAGEMENT OF CCI AFTER THE MERGER...................................................8
COMPARISON OF SHAREHOLDER RIGHTS.....................................................8
THE MERGER AGREEMENT.................................................................9
GENERAL.......................................................................9
CONVERSION OF SHARES..........................................................9
CONDITIONS TO THE MERGER......................................................9
WAIVER AND AMENDMENT.........................................................10
TERMINATION..................................................................10
FEES AND EXPENSES............................................................10
SURRENDER OF CERTIFICATES....................................................10
DISSENTERS' RIGHTS..................................................................10
SELECTED FINANCIAL INFORMATION......................................................11
SUMMARY HISTORICAL FINANCIAL INFORMATION.....................................11
COMPARATIVE PER SHARE DATA...................................................13
PRO FORMA FINANCIAL INFORMATION..............................................18
MARKETS AND MARKET PRICES FOR SHARES................................................18
RISK FACTORS................................................................................19
FAILURE TO REALIZE OPERATING EFFICIENCIES...........................................19
NO PUBLIC TRADING MARKET FOR CCI COMMON STOCK; UNCERTAINTY OF STOCK
REDEMPTION PLAN..............................................................19
UNCERTAINTY OF FUTURE DIVIDENDS.....................................................19
TAX RISKS...........................................................................20
DEPENDENCE ON KEY PERSONNEL.........................................................20
UNCERTAINTY OF BUSINESS OF OPERATING COMPANIES......................................20
CONTROL OF CCI BY W.W. CLYDE FAMILY.................................................20
</TABLE>
i
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<TABLE>
<S> <C>
DETERMINATION OF EXCHANGE RATIOS....................................................20
LACK OF SEPARATE LEGAL REPRESENTATION...............................................21
CLYDE COMPANIES, INC........................................................................22
OVERVIEW............................................................................22
MARKET PRICE OF AND DIVIDENDS ON CCI COMMON STOCK...................................22
CCI MANAGEMENT PRIOR TO CONSUMMATION OF THE MERGER..................................22
DIRECTORS....................................................................22
EXECUTIVE OFFICERS...........................................................24
CCI MANAGEMENT UPON CONSUMMATION OF THE MERGER......................................24
DIRECTORS....................................................................24
EXECUTIVE OFFICERS...........................................................25
COMMITTEES OF CCI BOARD.............................................................25
ATTENDANCE AT CCI BOARD MEETINGS....................................................25
CCI EXECUTIVE COMPENSATION..........................................................25
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION...............................25
COMPENSATION OF DIRECTORS OF CCI.............................................25
DEFINED BENEFIT RETIREMENT PLAN..............................................26
STOCK REDEMPTION PLAN...............................................................26
VOTING AGREEMENT....................................................................27
EMPLOYMENT AGREEMENT................................................................27
PRINCIPAL SHAREHOLDERS OF CCI PRIOR TO CONSUMMATION OF THE MERGER...................28
PRINCIPAL SHAREHOLDERS OF CCI UPON CONSUMMATION OF THE MERGER.......................29
SELECTED FINANCIAL INFORMATION FOR CCI..............................................30
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF CCI............................................................31
CCI PRO FORMA COMBINED FINANCIAL INFORMATION (UNAUDITED)............................33
CLYDE ....................................................................................40
BACKGROUND..........................................................................40
SERVICES AND MARKET.................................................................40
RAW MATERIALS, EQUIPMENT AND SUPPLIERS..............................................41
INDUSTRY AND COMPETITION............................................................41
SEASONALITY OF CLYDE BUSINESS.......................................................41
REGULATION AND INSURANCE............................................................41
EMPLOYEES...........................................................................42
CUSTOMERS...........................................................................42
BACKLOG.............................................................................42
PROPERTIES..........................................................................42
EQUIPMENT...........................................................................42
LEGAL PROCEEDINGS...................................................................43
MARKET PRICE OF AND DIVIDENDS ON CLYDE COMMON STOCK.................................43
CLYDE MANAGEMENT....................................................................43
DIRECTORS....................................................................43
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES.................................44
COMMITTEES OF CLYDE BOARD....................................................44
ATTENDANCE AT CLYDE BOARD MEETINGS...........................................44
COMPENSATION OF DIRECTORS OF CLYDE...........................................44
PRINCIPAL SHAREHOLDERS OF CLYDE.....................................................44
SELECTED FINANCIAL INFORMATION FOR CLYDE............................................46
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF CLYDE..........................................................47
FORWARD-LOOKING STATEMENTS...................................................47
GENERAL.............................................................................48
RESULTS OF OPERATIONS........................................................48
GENEVA ROCK..................................................................48
LIQUIDITY AND CAPITAL RESOURCES..............................................49
</TABLE>
ii
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<TABLE>
<S> <C>
INFLATION....................................................................49
SEASONALITY..................................................................50
THE YEAR 2000 ISSUE..........................................................50
CERTAIN TRANSACTIONS................................................................50
GENEVA ROCK.................................................................................51
BACKGROUND..........................................................................51
PRODUCTS AND SERVICES...............................................................51
NORTHERN DIVISION............................................................51
SOUTHERN DIVISION............................................................52
RAW MATERIALS AND SUPPLIERS.........................................................52
NORTHERN DIVISION............................................................52
SOUTHERN DIVISION............................................................53
COMPETITION.........................................................................53
NORTHERN DIVISION............................................................53
SOUTHERN DIVISION............................................................53
SEASONALITY OF BUSINESS.............................................................53
NORTHERN DIVISION............................................................53
SOUTHERN DIVISION............................................................53
REGULATION..........................................................................54
EMPLOYEES...........................................................................54
NORTHERN DIVISION............................................................54
SOUTHERN DIVISION............................................................54
CUSTOMERS...........................................................................54
PROPERTIES..........................................................................54
NORTHERN DIVISION............................................................54
SOUTHERN DIVISION............................................................56
FUTURE LAND DEVELOPMENT.............................................................56
TRADE NAMES.........................................................................57
BACKLOG.............................................................................57
LEGAL PROCEEDINGS...................................................................57
MARKET PRICE OF AND DIVIDENDS ON GENEVA ROCK COMMON STOCK...........................57
GENEVA ROCK MANAGEMENT..............................................................57
DIRECTORS....................................................................57
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES.................................58
COMMITTEES OF GENEVA ROCK BOARD..............................................59
ATTENDANCE AT GENEVA ROCK BOARD MEETINGS.....................................59
COMPENSATION OF DIRECTORS OF GENEVA ROCK.....................................59
PRINCIPAL SHAREHOLDERS OF GENEVA ROCK...............................................59
SELECTED FINANCIAL INFORMATION FOR GENEVA ROCK......................................61
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF GENEVA ROCK....................................................62
FORWARD-LOOKING STATEMENTS...................................................62
RESULTS OF OPERATIONS........................................................62
OTHER INCOME.................................................................63
LIQUIDITY AND CAPITAL RESOURCES..............................................63
INFLATION....................................................................64
SEASONALITY..................................................................64
THE YEAR 2000 ISSUE..........................................................64
CERTAIN TRANSACTIONS................................................................64
UTAH SERVICE................................................................................65
BACKGROUND..........................................................................65
PRODUCTS AND SERVICES...............................................................65
BUILDING MATERIALS AND LUMBER................................................65
HARDWARE.....................................................................65
CHEVRON GAS STATION/CONVENIENCE STORE........................................65
</TABLE>
iii
<PAGE> 17
<TABLE>
<S> <C>
AUTOMOTIVE AND INDUSTRIAL SUPPLIES...........................................66
SUPPLIERS...........................................................................66
COMPETITION.........................................................................66
SEASONALITY OF BUSINESS.............................................................66
EMPLOYEES...........................................................................67
INFORMATION SYSTEMS.................................................................67
REGULATION..........................................................................67
PROPERTIES..........................................................................67
TRADE NAMES.........................................................................67
LEGAL PROCEEDINGS...................................................................68
MARKET PRICE OF AND DIVIDENDS ON UTAH SERVICE COMMON STOCK..........................68
UTAH SERVICE MANAGEMENT.............................................................68
DIRECTORS....................................................................68
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES.................................69
COMMITTEES OF UTAH SERVICE BOARD.............................................69
ATTENDANCE AT UTAH SERVICE BOARD MEETINGS....................................69
COMPENSATION OF DIRECTORS OF UTAH SERVICE....................................69
PRINCIPAL SHAREHOLDERS OF UTAH SERVICE..............................................70
SELECTED FINANCIAL INFORMATION FOR UTAH SERVICE.....................................71
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF UTAH SERVICE...................................................72
FORWARD-LOOKING STATEMENTS...................................................72
RESULTS OF OPERATIONS........................................................72
LIQUIDITY AND CAPITAL RESOURCES..............................................73
INFLATION....................................................................74
SEASONALITY..................................................................74
THE YEAR 2000 ISSUE..........................................................74
CERTAIN TRANSACTIONS................................................................74
BEEHIVE INSURANCE...........................................................................75
BACKGROUND..........................................................................75
THE INDUSTRY AND MARKET.............................................................75
INSURANCE CARRIERS..................................................................75
COMPETITION.........................................................................75
SEASONALITY OF BUSINESS.............................................................76
REGULATION..........................................................................76
EMPLOYEES...........................................................................76
PROPERTIES..........................................................................76
TRADE NAMES.........................................................................77
LEGAL PROCEEDINGS...................................................................77
MARKET PRICE OF AND DIVIDENDS ON BEEHIVE INSURANCE COMMON STOCK.....................77
BEEHIVE INSURANCE MANAGEMENT........................................................77
DIRECTORS....................................................................77
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES.................................78
COMMITTEES OF BEEHIVE INSURANCE BOARD........................................78
ATTENDANCE AT BEEHIVE INSURANCE BOARD MEETINGS...............................78
COMPENSATION OF DIRECTORS OF BEEHIVE INSURANCE...............................78
PRINCIPAL SHAREHOLDERS OF BEEHIVE INSURANCE.........................................78
SELECTED FINANCIAL INFORMATION FOR BEEHIVE INSURANCE................................80
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF BEEHIVE INSURANCE..............................................81
FORWARD-LOOKING STATEMENTS...................................................81
RESULTS OF OPERATIONS........................................................81
LIQUIDITY AND CAPITAL RESOURCES..............................................82
INFLATION....................................................................83
</TABLE>
iv
<PAGE> 18
<TABLE>
<S> <C>
SEASONALITY..................................................................83
THE YEAR 2000 ISSUE..........................................................83
CERTAIN TRANSACTIONS................................................................83
THE SPECIAL MEETINGS........................................................................85
TIME, DATE AND PLACE OF THE SPECIAL MEETINGS........................................85
PURPOSES OF THE SPECIAL MEETINGS....................................................85
VOTE REQUIRED; RECORD DATE..........................................................85
CCI ......................................................................85
CLYDE ......................................................................85
GENEVA ROCK..................................................................86
UTAH SERVICE.................................................................86
BEEHIVE INSURANCE............................................................86
PROXIES; REVOCATION OF PROXIES......................................................87
THE MERGER..................................................................................88
GENERAL.............................................................................88
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARD OF DIRECTORS OF CCI,
CLYDE, GENEVA ROCK, UTAH SERVICE AND BEEHIVE INSURANCE.......................88
INCREASED FINANCIAL AND COMPETITIVE STRENGTH.................................88
PROFESSIONAL MANAGEMENT TEAM.................................................88
SPIN-OFFS OR SALES OF OPERATIONS.............................................88
INCREASED PURCHASING POWER...................................................88
CONSOLIDATION OF OPERATIONS..................................................89
CONSOLIDATION OF ADMINISTRATIVE FUNCTIONS....................................89
POTENTIAL TAX SAVINGS........................................................89
TASK FORCE..........................................................................89
VALUATION REPORTS FOR OPERATING COMPANIES BY FINANCIAL ADVISOR, HOULIHAN
VALUATION ADVISORS...........................................................90
BACKGROUND...................................................................90
VALUATIONS OF OPERATING COMPANIES............................................90
VALUATION OF CCI BY TASK FORCE...............................................91
RECOMMENDATION OF TASK FORCE.................................................91
LIMITATIONS ON HVA VALUATIONS................................................92
EXCHANGE RATIOS.....................................................................93
INTERESTS OF CERTAIN PERSONS IN THE MERGER..........................................93
CLYDE FAMILY TREE............................................................93
FAMILY RELATIONSHIPS; INTERRELATED MANAGEMENT AND STOCK OWNERSHIP............94
TASK FORCE...................................................................96
TAX SAVINGS FOR CCI AND CLYDE................................................96
EMPLOYMENT AGREEMENT.........................................................96
VOTING AGREEMENT.............................................................96
BYLAWS OF CCI................................................................96
LACK OF SEPARATE LEGAL REPRESENTATION........................................97
ACCOUNTING TREATMENT................................................................97
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS...........................................97
REGULATORY APPROVALS................................................................99
FEDERAL SECURITIES LAW CONSEQUENCES.................................................99
THE MERGER AGREEMENT.......................................................................100
GENERAL............................................................................100
CONVERSION OF SHARES...............................................................100
CONDITIONS TO THE MERGER...........................................................100
WAIVER AND AMENDMENT...............................................................101
TERMINATION........................................................................101
FEES AND EXPENSES..................................................................101
SURRENDER OF CERTIFICATES..........................................................101
CORPORATE STRUCTURE AND RELATED MATTERS AFTER THE MERGER...........................102
BUSINESS OF THE OPERATING COMPANIES PENDING THE MERGER.............................102
</TABLE>
v
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<TABLE>
<S> <C>
DISSENTERS' RIGHTS........................................................................103
DESCRIPTION OF CCI CAPITAL STOCK...........................................................105
COMMON STOCK.......................................................................105
UTAH CONTROL SHARES ACQUISITION ACT................................................105
CERTAIN PROVISIONS OF CCI'S ARTICLES OF INCORPORATION AND BY-LAWS..................106
COMPARISON OF THE RIGHTS OF HOLDERS OF CCI COMMON STOCK AND CLYDE, GENEVA ROCK, UTAH
SERVICE AND BEEHIVE INSURANCE COMMON STOCK.........................................107
AMENDMENTS TO ARTICLES AND BY-LAWS.................................................107
SPECIAL MEETINGS OF SHAREHOLDERS...................................................107
CORPORATE ACTION BY WRITTEN CONSENT OF SHAREHOLDERS................................108
DIVIDENDS..........................................................................108
CAPITAL STOCK......................................................................108
DISSENTERS' RIGHTS.................................................................108
PROVISIONS RELATING TO DIRECTORS...................................................108
VALIDITY OF CCI COMMON STOCK...............................................................110
EXPERTS....................................................................................110
OTHER MATTERS..............................................................................110
SHAREHOLDER PROPOSALS......................................................................110
INDEX TO FINANCIAL STATEMENTS..............................................................F-1
</TABLE>
LIST OF ANNEXES
ANNEX A AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
ANNEX B STOCK REDEMPTION PLAN
ANNEX C BYLAWS OF CCI
ANNEX D UTAH REVISED BUSINESS CORPORATION ACT SECTIONS 16-10A-1301
THROUGH 16-10A-1331
vi
<PAGE> 20
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROXY STATEMENT/PROSPECTUS. REFERENCE IS MADE TO, AND THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION CONTAINED IN THIS
PROXY STATEMENT/PROSPECTUS AND THE ANNEXES HERETO. UNLESS OTHERWISE DEFINED
HEREIN, CAPITALIZED TERMS USED IN THIS SUMMARY HAVE THE RESPECTIVE MEANINGS
ASCRIBED TO THEM ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS. CCI, CLYDE,
GENEVA ROCK, UTAH SERVICE AND BEEHIVE INSURANCE SHAREHOLDERS ARE URGED TO READ
THIS PROXY STATEMENT/PROSPECTUS AND THE ANNEXES HERETO IN THEIR ENTIRETY. SEE
"RISK FACTORS" FOR CERTAIN INFORMATION THAT SHOULD BE CONSIDERED BY THE
SHAREHOLDERS OF CCI, CLYDE, GENEVA ROCK, UTAH SERVICE AND BEEHIVE INSURANCE.
THE COMPANIES
CCI
CCI was incorporated in the state of Utah in 1961 as a holding company
for shares of stock of Clyde, Geneva Rock, Utah Service and Beehive Insurance.
In November 1997, the name of CCI was changed from W.W. Clyde Investment Co. to
Clyde Companies, Inc. CCI has no operations of its own and, prior to the
consummation of the Merger, its assets consisted solely of shares of common
stock of Clyde (31,935 shares or 33.78% of the outstanding shares), Geneva Rock
(4,725 shares or 21.67% of the outstanding shares), Utah Service (1,698 shares
or 31.37% of the outstanding shares) and Beehive Insurance (3,700 shares or
17.22% of the outstanding shares). All cash held by CCI, other than an amount of
cash sufficient to satisfy CCI's tax obligations upon the consummation of the
Merger, will be distributed as a dividend to its shareholders prior to the
consummation of the Merger. It is anticipated that upon the consummation of the
Merger, CCI will continue to be a holding company with no operations of its own,
and that operations will be conducted by its wholly owned subsidiaries, Clyde,
Geneva Rock, Utah Service and Beehive Insurance (the "Operating Companies"). The
merging companies (CCI, Clyde, Geneva Rock, Utah Service and Beehive Insurance)
are sometimes collectively referred to herein as the "Constituent Corporations".
The principal executive offices of CCI are located at 1423 Devonshire Drive,
Salt Lake City, Utah 84108, and its telephone number is (801) 582-2783. See
"Clyde Companies, Inc."
CLYDE
Clyde was founded in approximately 1926 by W. W. Clyde and was
incorporated as a Utah corporation in 1933. Since that time, Clyde has been
involved in the construction of interstate highways, bridges, dams, airports,
mines, golf courses, environmental reclamation projects, large site work/site
preparation, and other types of large construction projects in the Intermountain
region requiring massive earth moving and professional management. Clyde has
completed more than $400 million of construction projects throughout the
Intermountain West. Clyde owns 7,581 shares, or 34.77% of the outstanding shares
of Geneva Rock Common Stock. The principal executive offices of Clyde are
located at 1375 North Main Street, Springville, Utah 84663, and its telephone
number is (801) 489-5616. See "Clyde".
GENEVA ROCK
Geneva Rock, which was incorporated in August 1954 as a Utah
corporation, was founded as a ready-mix concrete business by W.W. Clyde and his
associates. Geneva Rock is engaged in the construction business through its
Northern Utah and Southern Utah divisions. Geneva Rock's products consist
primarily of ready-mix concrete, asphalt, sand, gravel and other building
materials, and its services consist primarily of road and site construction.
Geneva Rock's market is primarily the Northern Utah area, including Utah, Salt
Lake, Davis, Weber, Summit and Wasatch Counties, and the Southern Utah area
surrounding St. George, Utah. Geneva Rock's client base is diversified, with no
one client generating more than 10% of Geneva Rock's total sales. Geneva Rock
has furnished much of the concrete for many of the large commercial office
buildings in downtown Salt Lake City. The principal executive offices of Geneva
Rock are located at 1565 West 400 North, Orem, Utah 84057, and its telephone
number is (801) 765-7800. See "Geneva Rock".
1
<PAGE> 21
UTAH SERVICE
Utah Service was founded in 1938 by W.W. Clyde to service Clyde. Utah
Service owns and operates a hardware store and lumber yard and an adjacent
gasoline station/convenience store, all located at 400 South Main Street in
Springville, Utah. The hardware store sells hardware items, electrical supplies,
plumbing fittings and other plumbing items, vanity goods, building materials,
locksets, hand tools, lawn and garden chemicals and supplies, housewares,
appliances, fasteners, paint, industrial supplies, automotive supplies, auto
care products, auto tools and conveyor belting. Sales are made directly to
retail customers, as well as to building contractors and retail auto shops. The
lumber yard sells a wide variety of lumber products, primarily to building
contractors. The gasoline station/convenience store, located directly to the
west of the hardware store, sells gasoline and diesel fuel, as well as a variety
of convenience items. The principal executive offices of Utah Service are
located at 35 East 400 South, Springville, Utah 84663, and its telephone number
is (801) 489-5686. See "Utah Service".
BEEHIVE INSURANCE
Beehive Insurance was incorporated in Utah in 1961 by W.W. Clyde to
operate as an independent insurance agency for the sale of insurance coverage to
Clyde and the general public. Beehive Insurance's operations have gradually
evolved into the sale of primarily commercial property insurance policies,
casualty insurance policies and surety bonds. Affiliated companies (particularly
Clyde and Geneva Rock) comprise a significant portion of Beehive Insurance's
client base. The principal executive offices of Beehive Insurance are located at
302 West 5400 South, Murray, Utah 84107, and its telephone number is (801)
685-2779. See "Beehive Insurance".
THE SPECIAL MEETINGS
TIME, DATE AND PLACE
The Special Meetings of CCI, Clyde, Geneva Rock, Utah Service and
Beehive Insurance will be held at 11:30, 8:00, 9:30, 10:30 and 11:00 a.m.,
respectively, on Tuesday, March 17, 1998, at the offices of Geneva Rock located
at 1565 West 400 North, Orem, Utah.
PURPOSES
At the Special Meetings, the shareholders of each of CCI, Clyde, Geneva
Rock, Utah Service and Beehive Insurance will consider and vote upon a proposal
to approve the Amended and Restated Agreement and Plan of Merger dated as of
November 13, 1997 (the "Merger Agreement") and the transactions contemplated
thereby. A copy of the Merger Agreement is attached to this Proxy
Statement/Prospectus as Annex A.
VOTE REQUIRED; RECORD DATE
Shareholders of record at the close of business on January 30, 1998 (the
"Record Date") will be entitled to notice of and to vote at the CCI, Clyde,
Geneva Rock, Utah Service and Beehive Insurance Special Meetings and at any
adjournment or postponement thereof. On the Record Date, there were issued and
outstanding: (i) 2,303,920 shares of CCI Common Stock held by approximately 56
shareholders of record; (ii) 94,544 shares of Clyde Common Stock held by
approximately 100 shareholders of record; (iii) 21,802 shares of Geneva Rock
Common Stock held by approximately 81 shareholders of record; (iv) 5,413 shares
of Utah Service Common Stock held by approximately 52 shareholders of record;
and (v) 21,487 shares of Beehive Insurance Common Stock held by approximately 52
shareholders of record.
Under the Utah Revised Business Corporation Act ("URBCA"), the adoption
and approval of the Merger Agreement by the shareholders of Clyde, Geneva Rock,
Utah Service and Beehive Insurance requires the affirmative vote of the holders
of at least a majority of the outstanding shares of Clyde Common Stock, Geneva
Rock Common Stock, Utah Service Common Stock and Beehive Insurance Common Stock.
The URBCA does not require that the Merger Agreement be adopted and approved by
the shareholders of CCI since only CCI, as the sole
2
<PAGE> 22
shareholder of its subsidiaries, will vote on the merger of its subsidiaries
with Clyde, Geneva Rock, Utah Service and Beehive Insurance. However, the Board
of Directors of CCI has determined that it is in the best interest of CCI and
its shareholders for CCI to submit the Merger Agreement to its shareholders for
approval. Under the terms of the Merger Agreement, the affirmative vote of
holders of at least a majority of the outstanding shares of CCI is required to
approve the Merger. In determining whether the approval of the Merger Agreement
has received the requisite number of affirmative votes, abstentions and shares
not represented at the CCI, Clyde, Geneva Rock, Utah Service and Beehive
Insurance Special Meetings will have the same effect as a vote against any such
proposal. If the Merger Agreement is not approved by the requisite number of
votes at the Special Meetings, the Merger Agreement will be terminated and each
Constituent Corporation will bear its pro-rata share of the expenses that have
been incurred in connection with the Merger Agreement. See "The Merger Agreement
- -- Fees and Expenses." In the event the Merger Agreement is terminated, it is
anticipated that CCI will continue to act as a holding company for the shares of
the Operating Companies which it owns and that the Operating Companies will
continue to operate their respective businesses.
As of the Record Date, the directors and officers of CCI and their
affiliates owned 759,160 shares representing approximately 32.95% of the
outstanding shares of CCI Common Stock. All of such persons have indicated that
they intend to vote their shares FOR approval of the Merger.
As of the Record Date, the directors and officers of Clyde and their
affiliates owned 12,680 shares, representing approximately 13.41% of the
outstanding shares of Clyde Common Stock, and CCI owned 31,935 shares,
representing approximately 33.78% of the outstanding shares of Clyde Common
Stock. All of such persons have indicated that they intend to vote their shares
FOR approval of the Merger.
As of the Record Date, the directors and officers of Geneva Rock and
their affiliates owned 1,812 shares, representing approximately 8.31% of the
outstanding shares of Geneva Common Stock, Clyde owned 7,581 shares,
representing approximately 34.77% of the outstanding shares of Geneva Rock
Common Stock, and CCI owned 4,725 shares, representing approximately 21.67% of
the outstanding shares of Geneva Rock Common Stock. All of such persons have
indicated that they intend to vote their shares FOR approval of the Merger,
thereby assuring approval of the Merger by the Geneva Rock shareholders.
As of the Record Date, the directors and officers of Utah Service and
their affiliates owned 1,423 shares, representing approximately 26.89% of the
outstanding shares of Utah Services Common Stock, and CCI owned 1,698 shares,
representing approximately 31.37% of the outstanding shares of Utah Service
Common Stock. All of such persons have indicated that they intend to vote their
shares FOR approval of the Merger, thereby assuring approval of the Merger by
the Utah Service shareholders.
As of the Record Date, the directors and officers of Beehive Insurance
and their affiliates owned 6,734 shares, representing approximately 31.34% of
the outstanding shares of Beehive Insurance Common Stock, and CCI owned 3,700
shares of Beehive Insurance Common Stock, representing approximately 17.2% of
the outstanding shares of Beehive Insurance Common Stock. All of such persons
except J. Richard Walton have indicated that they intend to vote their shares
FOR approval of the Merger. Although J. Richard Walton, a director of Beehive
Insurance, believes that the Merger is in the best interest of Beehive Insurance
and its shareholders and, therefore, voted in favor of the Merger as a director
of Beehive Insurance, he has advised CCI that, because of personal financial
considerations, he intends to vote his shares AGAINST approval of the Merger at
the Beehive Insurance Special Meeting and exercise his dissenter's rights. See
"Dissenters' Rights."
THE MERGER
EFFECT OF MERGER
Upon the effective date of the Merger, Clyde, Geneva Rock, Utah Service
and Beehive Insurance each will become wholly owned subsidiaries of CCI, and
each share of common stock of Clyde, Geneva Rock, Utah Service and Beehive
Insurance (except for (i) shares of the Operating Companies owned by CCI and
(ii) shares of Geneva Rock owned by Clyde, which will be distributed as a
dividend to CCI) will be converted into 33.93, 239.27, 43.43 and 4.33 shares,
respectively, of CCI Common Stock. In anticipation of the Merger, in November
1997 each outstanding share of CCI Common Stock was converted into 40 shares of
CCI Common Stock.
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
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In accepting the recommendation of the majority of the Task Force (as
defined below) to approve the Merger, the Boards of Directors of CCI, Clyde,
Geneva Rock, Utah Service and Beehive Insurance considered a number of factors,
most of which were positive, but some of which were negative. After carefully
weighing all of these factors, the Boards of Directors concurred with the Task
Force that, on balance, the Merger is fair and in the best interest of each
Constituent Corporation and its respective shareholders. Accordingly, the Boards
of Directors of each Constituent Corporation unanimously approved the Merger
Agreement and recommends that their respective shareholders vote FOR approval of
the Merger Agreement and the transactions contemplated thereby. In considering
whether to vote for approval of the Merger Agreement, shareholders should be
aware (i) that certain members of the Task Force and certain Directors of the
Constituent Corporations may be subject to conflicts of interest in recommending
that shareholders vote for approval of the Merger Agreement, and (ii) that the
Constituent Corporations did not have separate legal representation in
connection with negotiating the terms and provisions of the Merger Agreement and
the transactions contemplated thereby. See "The Merger -- Task Force" and "The
Merger -- Interests of Certain Persons in the Merger."
Among the negative factors considered by the Task Force and the Boards
of Directors of the Constituent Corporations are the following. As a result of
the Merger, some shareholders will have a smaller equity interest in CCI than
they had in the Constituent Corporation(s) in which they owned shares and,
therefore, they will have less voice in the business and affairs of CCI than
they had with respect to the business and affairs of such Constituent
Corporation(s). Also, it is anticipated that the dividends to be paid by CCI on
its Common Stock will be less than the dividends previously paid on the Common
Stock of Utah Service -- see "Summary -- Selected Financial Information --
Comparative Per Share Data," and that Beehive Insurance may lose some of the
premiums it receives from insurance placed with CCI and Clyde -- see "Beehive
Insurance - Regulation." Further, the Merger will result in a consolidation of
management, which may result in a loss of autonomy for the Constituent
Corporations.
Among the positive factors considered by the Task Force and the Board of
Directors of the Constituent Corporations are the following. The merger will
combine the financial strength of Clyde and Geneva Rock and increase their
respective competitive positions. The combination of entities resulting from the
merger will create a company with greater financial strength to bid on large
construction projects. after the merger, the benefits of a management team
comprised of the top management from the Constituent Corporations will be made
available to each of CCI, Clyde, Geneva Rock, Utah Service and Beehive Insurance
to help them address problems in their respective businesses. While there are no
present plans to sell part or all of any of the Operating Companies, the Boards
of Directors of the Constituent Corporations believe that the Merger will
increase shareholder value by creating a unified ownership structure that would
make it easier to sell one or more of the Operating Companies should CCI ever
elect to do so. The Merger will also create an entity with greater purchasing
power, eliminate duplicative purchasing and potentially reduce the cost of
obtaining such items as fuel, construction materials and equipment. After the
Merger, the management of CCI will be in a better position to combine divisions
of Clyde, Geneva Rock, Utah Service and Beehive Insurance that now have similar
operations and to consolidate the separate financial and accounting systems now
used by the Constituent Corporations, resulting in potential cost savings. In
addition, as a consequence of the Merger, taxable dividends to CCI and Clyde
from the other Constituent Corporations will be eliminated, resulting in tax
savings to CCI and Clyde. Also, it is anticipated that the Merger will result in
tax savings for the Constituent Corporations as a whole due to the elimination
of sales tax on certain intercompany transactions and the filing of consolidated
tax returns that will replace the current practice of each of the Constituent
Corporations filing separate tax returns.
Although J. Richard Walton, a director of Beehive Insurance, believes
that the Merger is in the best interest of Beehive Insurance and its
shareholders and, therefore, voted in favor of the Merger as a director of
Beehive Insurance, he has advised CCI that, because of personal financial
considerations, he intends to vote his shares AGAINST approval of the Merger at
the Beehive Insurance Special Meeting and exercise his dissenter's rights. See
"Dissenters' Rights."
For a more detailed discussion of the factors considered by the Task
Force and the Boards of Directors of the Constituent Corporations in reaching
their decisions to approve the Merger Agreement and the transactions
contemplated thereby and in recommending that the Constituent Corporations'
respective shareholders vote FOR the proposal to adopt and approve the Merger
Agreement and the transactions contemplated thereby, see "The Merger -- Reasons
for the Merger; Recommendations of the Boards of Directors of CCI, Clyde, Geneva
Rock, Utah Service and Beehive Insurance."
TASK FORCE
In order to facilitate the Merger, an informal working group of
shareholders of the Constituent Corporations (the "Task Force") was formed for
the purpose of considering and making recommendations to the Board of Directors
of each Constituent Corporation with respect to the economic and other terms of
the Merger. The Task Force is comprised of (i) David E. Salisbury, who is a
director of Clyde and the husband of Carol C. Salisbury, who is the President
and a director of CCI and the Secretary, Treasurer and a director of Beehive
Insurance, (ii) Hal M. Clyde, who is a director of Utah Service and Beehive
Insurance, (iii) Wilford W. Clyde, who is the President and General Manager of
Geneva Rock and a director of Clyde, Geneva Rock and Beehive Insurance, (iv)
Richard C. Clyde, who is the President and General Manager of Clyde and a
director of CCI, Clyde, Geneva Rock and Beehive Insurance, (v) Paul B. Clyde,
who is a Vice President of Clyde and a director of CCI, Clyde, Geneva Rock and
Utah Service, (vi) David O. Cook, who is the President and a director of Utah
Service, (vii) James C. Gramoll, who is a grandson of Harry S. Clyde, (viii)
Steven L. Clyde, who is the Project Superintendent and a director of Clyde, (ix)
A. Ray Gammell, who is the Vice President and a director of Utah
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Service and a director of Geneva Rock and (x) Norman D. Clyde, who is a director
of Clyde, Geneva Rock, Utah Service and Beehive Insurance. The Board of
Directors of each of the Constituent Corporations has considered and approved
the recommendations of the majority of the Task Force with respect to the
Merger. See "The Merger -- Task Force."
VALUATION REPORTS FOR OPERATING COMPANIES BY FINANCIAL ADVISOR
The Task Force requested Houlihan Valuation Advisors ("HVA") to prepare
valuation reports with respect to Clyde, Geneva Rock, Utah Service and Beehive
Insurance as of June 30, 1997. HVA provides professional services relative to
business valuations, fairness and solvency opinions, economic loss analyses and
other valuation and economic issues. HVA prepared two separate valuation reports
for these companies as of June 30, 1997, the first dated September 12, 1997 (the
"First HVA Report") and the second dated October 23, 1997 (the "Second HVA
Report"). Both the First HVA Report and the Second HVA Report resulted in the
same valuations for each of Geneva Rock, Utah Service and Beehive Insurance. The
Second HVA Report resulted in a different valuation for Clyde.
The First HVA Report was prepared valuing each of Clyde, Geneva Rock,
Utah Service and Beehive Insurance as a stand alone entity. This approach took
into account certain tax liabilities that would be incurred by Clyde with
respect to Geneva Rock Common Stock owned by Clyde in the event Clyde and its
assets were to be liquidated. Pursuant to this valuation approach, HVA estimated
the fair market enterprise value of Clyde Common Stock to be $520 per share for
a total value of $49,200,000. The Second HVA Report was prepared valuing each of
Clyde, Geneva Rock, Utah Service and Beehive Insurance based on the assumption
that they would be combining in a tax free transaction where Clyde would not be
liquidated and would incur no tax liabilities with respect to its Geneva Rock
Common Stock. Based on this second approach, the fair market enterprise value of
Clyde as of June 30, 1997 was estimated to be $657 per share for a total value
of $62,100,000. A majority of the Task Force recommended to the Board of
Directors of each of CCI, Clyde, Geneva Rock, Utah Service and Beehive Insurance
that the Second HVA Report be accepted for the purpose of determining the
exchange ratios in the Merger. It is the position of Task Force member James C.
Gramoll that the First HVA Report with respect to Clyde (reflecting the tax
liability which would be incurred by Clyde with respect to its Geneva Rock
Common Stock in the event Clyde were to be liquidated) should be the basis for
calculating the exchange ratios in the Merger. The Boards of Directors of each
of CCI, Clyde, Geneva Rock, Utah Service and Beehive Insurance considered and
approved the majority Task Force recommendation to use the Second HVA Report for
the purpose of determining the exchange ratios in the Merger. The Task Force and
Boards of Directors decided to use the Second HVA Report because the Merger
Agreement contemplates a tax free transaction in which Clyde would not be
liquidated and would incur no tax liabilities with respect to the Geneva Rock
Common Stock which it owns; therefore, the Task Force and the Boards of
Directors concluded that it would not be appropriate to use the First HVA
Report, which takes into account the tax liabilities that Clyde would incur with
respect to the Geneva Rock Common Stock it owned if Clyde were liquidated.
Shareholders of the Constituent Corporations should be aware that certain
members of the Task Force and certain Directors of the Constituent Corporations
may be subject to conflicts of interest in this regard. See "The Merger - Task
Force" and "The Merger - Interests of Certain Persons in the Merger."
As indicated above, the Second HVA Report estimated the fair market
enterprise value of Clyde to be $657 per share for a total value of $62,100,000.
The fair market enterprise value of the Geneva Rock Common Stock was estimated
by HVA to be $4,633 per share for a total value of $101,206,000 and rounded to
$101,000,000. The fair market enterprise value of the Utah Service Common Stock
was estimated by HVA to be $841 per share for a total value of $4,552,800 and
rounded to $4,550,000. The fair market enterprise value of Beehive Insurance
Common Stock was estimated by HVA to be $83.77 per share for a total value of
$1,795,700 and rounded to $1,800,000.
Since CCI's only assets are cash and the shares of common stock it owns
in the Operating Companies, the Task Force did not request HVA to prepare a
valuation report for CCI. The Task Force determined the value of CCI Common
Stock to be equal to the total value of the shares of the Operating Companies
owned by CCI. Based on the HVA valuations described above, the Task Force
determined that the total value of the shares of the Operating Companies owned
by CCI is approximately $44,610,187, which results in a valuation of
approximately $19.36 per share of CCI Common Stock. As indicated below, for the
purpose of establishing the exchange ratios in the Merger, the Task Force
discounted the above per share valuation for CCI by 25% to $14.52 per share to
reflect the value of minority shareholder interest. Based on this valuation and
in anticipation of the Merger, in November 1997 each outstanding share of CCI
Common Stock was converted into 40 shares, and presently there are 2,303,920
outstanding shares of CCI Common Stock.
Each of the valuation reports was prepared by HVA on the assumption
the HVA was valuing a controlling interest in each corporation; that is, each
corporation was valued on a stand-alone basis as if the entire enterprise were
being sold. In determining the exchange ratios, the Task Force applied a
discount to HVA's valuation for each corporation. It should be noted that the
application of the same discount to each corporation does not have any effect on
the exchange ratios. The
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Task Force and the Boards of Directors determined to apply a 25% discount,
because this is the discount that the Boards of Directors intend to use in
setting the price for shares to be redeemed under the Stock Redemption Plan. See
"Clyde Companies, Inc. -- Stock Redemption Plan." Based on this 25% discount,
the per share valuation of CCI, Clyde, Geneva Rock, Utah Service and Beehive
Insurance Common Stock is $14.52, $492.63, $3,474.45, $630.43 and $62.83,
respectively. The full text of the Second HVA Report with respect to any
Operating Company can be obtained by sending a written request to the Secretary
of such Operating Company. See "The Merger -- Valuation Reports for Operating
Companies by Financial Advisor, Houlihan Valuation Advisors."
EXCHANGE RATIOS
The exchange ratios at which shares of common stock of Clyde, Geneva
Rock, Utah Service and Beehive Insurance will be exchanged for shares of CCI
Common Stock were determined by the Task Force and approved by the Board of
Directors of each Constituent Corporation. Shareholders of the Constituent
Corporations should be aware that certain members of the Task Force and certain
Directors of the Constituent Corporations may be subject to conflicts of
interest in determining the exchange ratios. See "The Merger-Task Force,
Interest of Certain Persons in the Merger." The exchange ratios were determined
by dividing the discounted value determined by HVA for each share of common
stock of Clyde, Geneva Rock, Utah Service and Beehive Insurance, respectively,
by $14.52, the amount which the Task Force determined to be the discounted per
share value of CCI Common Stock. This resulted in an exchange ratio of (i) 33.93
shares of CCI Common Stock for each outstanding share of Clyde Common Stock,
(ii) 239.27 shares of CCI Common Stock for each outstanding share of Geneva Rock
Common Stock, (iii) 43.43 shares of CCI Common Stock for each outstanding share
of Utah Service Common Stock and (iv) 4.33 shares of CCI Common Stock for each
outstanding share of Beehive Insurance Common Stock, respectively.
Interests of Certain Persons in the Merger
Shareholders of CCI, Clyde, Geneva Rock, Utah Service and Beehive
Insurance should be aware that certain members of the Task Force and certain
directors and executive officers of each of CCI, Clyde, Geneva Rock, Utah
Service and Beehive Insurance have interests in the Merger that are in addition
to the interests as shareholders generally and which may create potential
conflicts of interest. These interests include, among other things, the
following: (i) certain Task Force members and Directors and executive officers
of CCI, Clyde, Geneva Rock, Utah Service and Beehive Insurance are related
family members; (ii) certain Task Force members and Directors and executive
officers of each of CCI, Clyde, Geneva Rock, Utah Service and Beehive Insurance
will be Directors and/or executive officers of CCI; (iii) certain directors and
executive officers of CCI may be deemed to be principal shareholders of CCI,
Clyde, Geneva Rock, Utah Service and Beehive Insurance Common Stock; (iv) as a
consequence of the Merger, taxable dividends to CCI and Clyde from the other
Constituent Corporations will be eliminated, resulting in significant tax
savings to CCI and Clyde; (v) Richard C. Clyde will enter into an employment
agreement with CCI; (vi) the shareholders of CCI as constituted prior to the
Merger will enter into a ten year voting agreement with respect to the election
of CCI directors and certain other matters; (vii) as a result of certain
provisions in the CCI Bylaws, the W.W. Clyde family will have effective control
of the Board of Directors of CCI following the Merger; and (viii) David E.
Salisbury, a director of Clyde, is a shareholder of the law firm of Van Cott,
Bagley, Cornwall & McCarthy, which has represented each of CCI, Clyde, Geneva
Rock, Utah Service and Beehive Insurance in connection with the Merger. For a
more detailed description of the interests described above, see "The
Merger--Interests of Certain Persons in the Merger."
ACCOUNTING TREATMENT
For accounting and financial reporting purposes, it is intended that the
Merger will be accounted for in a manner similar to a "pooling of interests."
See "The Merger-Accounting Treatment."
REGULATORY APPROVAL
CCI and Geneva Rock filed a notification with the Federal Trade
Commission ("FTC"), pursuant to the Hart Scott Rodino Antitrust Improvement Act
of 1976, requesting early termination of the waiting period required under that
Act. On November 21, 1997, the FTC granted CCI's and Geneva Rock's request for
early termination of the waiting period. See "The Merger -- Regulatory
Approval."
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
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The Merger is intended to qualify as (i) a transfer to a controlled corporation
under Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"),
and/or (ii) a reorganization within the meaning of Section 368(a)(1)(B) of the
Code so that no gain or loss will be recognized by a holder of CCI, Clyde,
Geneva Rock, Utah Service or Beehive Insurance Common Stock with respect to the
receipt of CCI Common Stock in exchange for Clyde, Geneva Rock, Utah Service or
Beehive Insurance Common Stock pursuant to the Merger (except with respect to
any cash received in lieu of fractional shares of CCI Common Stock). Grant
Thornton LLP, independent accountants ("Grant Thornton"), has rendered an
opinion to that effect. Payment received by holders of Clyde, Geneva Rock, Utah
Service or Beehive Insurance Common Stock in lieu of fractional shares of CCI
Common Stock will be treated as payment in redemption of such fractional shares
and, provided that the redeemed interest is held as a capital asset at the
effective time of the Merger, will generally result in the recognition of
capital gain or loss by such holders measured by the difference between the
amount received and the tax basis allocable to such fractional shares. For a
discussion of certain federal income tax consequences applicable to shareholders
who exercise their dissenters' rights and a further discussion of certain of the
federal income tax consequences of the Merger, see "The Merger-Certain Federal
Income Tax Considerations."
Because of the complexity of the tax laws and the individual nature of
the tax consequences of the Merger to each holder of CCI, Clyde, Geneva Rock,
Utah Service or Beehive Insurance Common Stock, each such shareholder should
consult a tax advisor concerning certain other federal and all state, local and
foreign tax consequences of the Merger that may be applicable.
REPORTS TO SHAREHOLDERS
It is anticipated that following the consummation of the Merger, CCI
will furnish to its shareholders audited annual financial statements and
unaudited quarterly financial statements.
STOCK REDEMPTION PLAN
The Board of Directors of CCI has adopted a Stock Redemption Plan, a
copy of which is attached as Annex B hereto, pursuant to which it is anticipated
that CCI will make funds available for the redemption of a limited number of
shares of CCI Common Stock each year beginning in 1999, on a date to be
established each year by the Board of Directors (the "Redemption Date"). Each
year commencing in 1999, as soon as practicable following the issuance by CCI's
independent auditors of their report regarding the consolidated financial
statements of CCI and its subsidiaries for the prior year, the Board of
Directors will (i) cause an appraisal (or an update of a prior appraisal) of CCI
to be completed by an independent individual or firm selected by the Board of
Directors which will set forth a determination of the total fair market value of
CCI as of the last day of the prior year (the "Appraisal Value"), and (ii)
determine the amount which shall be made available by CCI on the Redemption Date
to fund the redemption of shares of CCI Common Stock (the "Redemption Fund").
The price to be paid to shareholders for each share of redeemed CCI Common Stock
(the "Redemption Price") will be an amount equal to the Appraisal Value divided
by the number of shares of CCI Common Stock outstanding on the last day of the
prior year, discounted by 25% (reflecting a lack of marketability and minority
interest). The Redemption Fund established each year will be an amount which is
greater than or equal to 5% and less than or equal to 10% of the net earnings of
CCI (after taxes) for the prior year. All shares of CCI Common Stock will be
eligible for redemption subject to and in accordance with the terms of the Stock
Redemption Plan. In the event that the number of shares offered for redemption
by shareholders is greater than the number of shares that can be redeemed from
the Redemption Fund, such shares will be redeemed on a pro rata basis. Unused
portions of the Redemption Fund will not be carried forward to increase the
Redemption Fund in future years. The Stock Redemption Plan will be administered
and interpreted by the Board of Directors of CCI in its sole and absolute
discretion, and the Stock Redemption Plan may be amended or terminated, and/or
the Redemption for any particular year may be canceled, upon a vote of 75% of
the directors of CCI.
VOTING AGREEMENT
In anticipation of the Merger, the current shareholders of CCI (the
"Original CCI Shareholders") entered into a Voting Agreement dated as of
November 14, 1997 (the "Voting Agreement") for the purpose of controlling
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the voting of the 2,303,920 shares of CCI Common Stock owned by the Original CCI
Shareholders on the Record Date, representing approximately 33.20% of the shares
of CCI Common Stock to be outstanding upon consummation of the Merger (the
"Voting Agreement Shares"). Pursuant to the Voting Agreement, William R. Clyde,
Ila C. Cook, Louise C. Gammell, Carol C. Salisbury, Richard C. Clyde and Paul B.
Clyde (the "Voting Committee Members") have been appointed to act as a committee
(the "Voting Committee") to determine how the Voting Agreement Shares will be
voted on each matter to be voted upon by the shareholders of CCI. Each Voting
Committee Member represents the other members of his or her family who are
Original CCI Shareholders.
Pursuant to the Voting Agreement, each Original CCI Shareholder has
granted to the Voting Committee an irrevocable proxy, for a period of 10 years
from November 13, 1997 (or until such time as the Voting Agreement is
terminated), to allow the Committee to vote such Shareholder's Voting Agreement
Shares in accordance with the Voting Agreement. However, under the Voting
Agreement, the Original CCI Shareholders retain their right to vote any shares
of CCI Common Stock which they own, other than the Voting Agreement Shares, as
they wish. The Voting Agreement will remain in effect for 10 years, unless
earlier terminated because (i) the Voting Committee Members unanimously agree in
writing to terminate the Voting Agreement, (ii) CCI is in bankruptcy or
receivership or is dissolved, (iii) CCI ceases it business, (iv) CCI enters into
an underwriting agreement with respect to a public offering of CCI Common Stock
in excess of $30,000,000, (v) CCI sells all or substantially all of its assets
or is the non-surviving corporation in a merger, or (vi) there is only one CCI
Shareholder bound by the terms of the Voting Agreement.
The Voting Agreement provides that an Original CCI Shareholder will not
be permitted to sell, transfer or otherwise dispose of any Voting Agreement
Shares, except to (i) a spouse of such Original CCI Shareholder, (ii) a child of
such Original CCI Shareholder or such spouse, (iii) a trustee in trust for the
benefit of such Original CCI Shareholder, such spouse or such child, (iv) CCI in
the event such Original CCI Shareholder owns no CCI Common Stock other than such
Voting Agreement Shares or (v) a third party upon obtaining the prior written
consent of the Committee Members. All transferees of the Voting Agreement Shares
will be required to enter into the Voting Agreement and to receive and hold the
Voting Agreement Shares subject to the terms and provisions of the Voting
Agreement.
MANAGEMENT OF CCI AFTER THE MERGER
Certain provisions in the Bylaws of CCI will control the composition of
the Board of Directors of CCI upon the consummation of the Merger and for five
years thereafter. Pursuant to such Bylaw provisions, the Board of Directors of
CCI will consist of between eight and eleven directors. Each of six directors
must be the direct descendants (or the spouse of a direct descendant) of W.W.
Clyde and each of two directors must be the direct descendants (or the spouse of
a direct descendant) of Edward Clyde. The Board of Directors of CCI will have
the right to add up to three additional directors. In no event will there be
more than eleven directors of CCI. For a more detailed description of the
applicable Bylaw provisions, see "Comparison of the Rights of Holders of CCI
Common Stock and Clyde, Geneva Rock, Utah Service and Beehive Insurance Common
Stock-Provisions Relating to Directors." The Bylaws of CCI are attached hereto
as Annex C. It is also contemplated that as soon as reasonably practicable after
the consummation of the Merger, Richard C. Clyde will serve as President and
Chief Executive Officer and Wilford W. Clyde will serve as Vice President and
Chief Operating Officer of CCI. See "Clyde Companies, Inc.-CCI Management Upon
Consummation of the Merger".
COMPARISON OF SHAREHOLDER RIGHTS
As a consequence of the Merger, the shareholders of Clyde, Geneva Rock,
Utah Service and Beehive Insurance will become shareholders of CCI. There will
be significant differences between the rights of shareholders of Clyde, Geneva
Rock, Utah Service and Beehive Insurance prior to the Merger and the rights of
CCI shareholders after the Merger. See "Comparison of the Rights of Holders of
CCI Common Stock and Clyde, Geneva Rock, Utah Service and Beehive Insurance
Common Stock" for a summary of the material differences between the rights of
holders of CCI Common Stock and Clyde, Geneva Rock, Utah Service and Beehive
Insurance Common Stock.
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THE MERGER AGREEMENT
GENERAL
The description of the material terms and conditions of the Merger
Agreement and any related documents in this Proxy Statement/Prospectus is
qualified in its entirety by reference to the copy of the Merger Agreement
attached hereto as Annex A. Shareholders of CCI, Clyde, Geneva Rock, Utah
Service and Beehive Insurance are urged to read the Merger Agreement in its
entirety for a more complete description of the terms of such agreement.
CONVERSION OF SHARES
At the effective time of the Merger Agreement (the "Effective Time"),
each outstanding share of common stock of the Operating Companies (except (i)
those shares of the Operating Companies owned by CCI, (ii) those shares of
Geneva Rock owned by Clyde, which will be distributed as a dividend to CCI and
(iii) to the extent that the holders of shares of Clyde, Geneva Rock, Utah
Service or Beehive Insurance Common Stock duly elect to exercise their
dissenters' rights under Part 13 of the URBCA) will be converted into (i) in the
case of Clyde Common Stock, 33.93 shares of CCI Common Stock, (ii) in the case
of Geneva Rock Common Stock, 239.27 shares of CCI Common Stock, (iii) in the
case of Utah Service Common Stock, 43.43 shares of CCI Common Stock, and (iv) in
the case of Beehive Insurance Common Stock, 4.33 shares of CCI Common Stock (the
ratios set forth in clauses (i) through (iv) above are sometimes referred to
herein as the "Exchange Ratios"). Fractional shares of CCI Common Stock will not
be issued. In lieu of fractional shares, shareholders of Clyde, Geneva Rock,
Utah Service and Beehive Insurance will receive cash equal to the product of (i)
such fraction multiplied by (ii) $14.52.
Clyde Reorganization Corporation ("CRC"), Geneva Rock Reorganization
Corporation ("GRRC"), Utah Service Reorganization Corporation ("USRC") and
Beehive Insurance Reorganization Corporation ("BIRC") (collectively, the "Merger
Subs") were recently organized by CCI for the purpose of effecting the
acquisition of the Operating Companies. CRC will merge with Clyde, GRRC will
merge with Geneva Rock, USRC will merge with Utah Service and BIRC will merge
with Beehive Insurance, with the Operating Companies being the surviving
corporations of such mergers. Each share of CRC, GRRC, USRC and BIRC Common
Stock issued and outstanding immediately prior to the Effective Time will be
converted into one share of common stock of the respective Operating Company.
CONDITIONS TO THE MERGER
Consummation of the Merger is subject to the satisfaction of various
conditions, including but not limited to (i) the approval and adoption of the
Merger Agreement by the requisite vote of the shareholders of each of the
Constituent Corporations; (ii) the aggregate number of dissenting shares shall
not be more than 5% of the total number of shares of CCI Common Stock that would
be outstanding upon consummation of the Merger if no dissenters' rights were
exercised (there would be 6,938,709 outstanding CCI shares and 5% of that number
is 346,935); (iii) no governmental authority shall have issued any order, and
there shall not be any statute, rule, decree or regulation restraining,
prohibiting or making illegal the consummation of the Merger; (iv) any waiting
period applicable to the consummation of the Merger under the Hart Scott Rodino
Act shall have expired or been terminated (such waiting period has been
terminated); (v) the representations and warranties of CCI contained in the
Merger Agreement shall be true and correct in all material respects when made
and as of the closing date of the Merger (the "Closing Date") (except for such
matters which specifically address a particular date which need only be true and
correct as of such date); (vi) CCI shall have performed in all material respects
all of the obligations to be performed by it under the Merger Agreement prior to
the Closing Date; (vii) a responsible officer of CCI shall have provided each of
the Operating Companies with a certificate with respect to the matters referred
to in the Merger Agreement; (viii) the representations and warranties of each of
the Operating Companies contained in the Merger Agreement shall be true and
correct in all material respects when made and as of the Closing Date (except
for matters which specifically address a particular date which need only be true
and correct as of such date); (ix) each of the Operating Companies shall have
performed in all material respects all of the obligations to be performed by it
under the Merger Agreement prior to the Closing Date; (x) a responsible officer
of each of the Operating Companies shall have provided CCI with a certificate
with respect to the matters referred to in the Merger Agreement;
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and (xi) the receipt of an opinion from Grant
Thornton to the effect that the Merger will qualify as a tax free
reorganization.
WAIVER AND AMENDMENT
Any provision of the Merger Agreement subject to waiver may be waived in
writing by the Board of Directors of the respective company that is entitled to
the benefits of such provision. The Boards of Directors of the Constituent
Corporations are not required to obtain shareholder approval prior to consenting
to any such waiver. The only provision of the Merger Agreement that is not
subject to waiver is the condition that the Merger Agreement be approved by a
majority of the outstanding Common Stock of each Constituent Corporation. The
Merger Agreement may be amended, modified or supplemented at any time prior to
the Closing Date by the written agreement of each of the Constituent
Corporations.
TERMINATION
The Merger Agreement may be terminated and the Merger may be abandoned
at any time prior to the Effective Time, whether before or after approval of the
shareholders of the Constituent Corporations, under the circumstances specified
therein, including (i) automatically, without any further actions by any of the
parties (except as may be otherwise required by the URBCA), (A) if the Merger of
each of the Constituent Corporations has not been consummated on or prior to
June 30, 1998 or (B) if any governmental authority shall have issued a statute,
order, decree or regulation or taken any other action permanently restraining or
enjoining or otherwise materially restricting the consummation of the
transactions contemplated by the Merger Agreement and such statute, order,
decree, regulation or other action shall have become final and non-appealable,
(ii) by the Boards of Directors of the Operating Companies, acting jointly, if
CCI breaches or fails in any material respect to perform or comply with any of
its covenants and agreements contained in the Merger Agreement or breaches its
representations and warranties therein in any material respect and fails to cure
such breach as provided for therein, or (iii) by the Board of Directors of CCI,
if any of the Operating Companies breaches or fails in any material respect to
perform or comply with any of its respective covenants and agreements contained
in the Merger Agreement or breaches its representations and warranties in any
material respect and fails to cure such breach as provided for therein.
FEES AND EXPENSES
If the Merger is consummated, CCI will pay all fees and expenses
incurred in connection with the Merger from the dividends CCI receives from the
Operating Companies. If the Merger is not consummated, each of the Constituent
Corporations will bear their pro-rata share of all such fees and expenses.
SURRENDER OF CERTIFICATES
Certificates nominally representing shares of the common stock of the
Operating Companies, other than any certificate representing dissenting shares,
if any ("Operating Company Certificates"), as of the Effective Time, for all
purposes, shall be deemed to evidence the number of shares of CCI Common Stock
determined in accordance with the applicable Exchange Ratio. As soon as
practicable after the Effective Time, CCI shall mail to each record holder of an
outstanding Operating Company Certificate, as of the Effective Time, a form of
letter of transmittal (the "Transmittal Letter") that contains instructions for
use in effecting the surrender of each Operating Company Certificate in exchange
for a CCI Common Stock certificate ("CCI Certificate"). Upon surrender to CCI of
an Operating Company Certificate, together with a duly executed Transmittal
Letter (and any other documents which may be reasonably required by CCI, if
any), the holder of such Operating Company Certificate shall receive promptly in
exchange therefor a CCI Certificate for the number of shares of CCI Common Stock
evidenced thereby in accordance with the applicable Exchange Ratio. At that
time, the Operating Company Certificate shall be canceled. If a CCI Certificate
is to be issued to a person other than the person in whose name the surrendered
Operating Company Certificate is registered, it shall be a condition of issuance
of the CCI Certificate (x) that the Operating Company Certificate so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and (y)
that the person requesting such issuance shall pay any transfer or other taxes
required by reason of the issuance to a person other than the registered holder
of the Operating Company Certificate surrendered or establish to the
satisfaction of CCI that such tax has been paid or is not applicable. CCI shall
pay all charges and expenses, including those of the Operating Companies, in
connection with the distribution of CCI Certificates.
10
<PAGE> 30
DISSENTERS' RIGHTS
If the Merger is consummated, holders of shares of Clyde Common Stock,
Geneva Rock Common Stock, Utah Service Common Stock and Beehive Insurance Common
Stock will be entitled to dissenters' rights under the URBCA, provided that they
comply with the conditions of Sections 16-10a-1301 through 16-10a-1331 of the
URBCA. Original CCI Shareholders are not entitled to dissenters' rights. Those
shareholders of Clyde, Geneva Rock, Utah Service and Beehive Insurance who elect
to exercise their dissenters' rights and who properly and timely perfect such
rights will be entitled to receive the "fair value" in cash for their shares of
Clyde Common Stock, Geneva Rock Common Stock, Utah Service Common Stock and
Beehive Insurance Common Stock. Pursuant to Section 16-10a-1301(4) of the URBCA,
such "fair value" means the value of the shares immediately before the
effectuation of the applicable Merger, excluding any appreciation or
depreciation in anticipation of such Merger. In order to exercise their
dissenters' rights, the holders of Clyde Common Stock, Geneva Rock Common Stock,
Utah Service Common Stock and Beehive Insurance Common Stock must comply with
the procedural requirements of Sections 16-10a-1301 through 16-10a-1331 of the
URBCA, a description of which is provided in "Dissenters' Rights" and the full
text of which is attached to this Proxy Statement/Prospectus as Annex D and
which is incorporated by reference herein. Failure to comply with any of the
steps required under Sections 16-10a-1301 through 16-10a-1331 of the URBCA on a
timely basis may result in the loss of dissenters' rights. See "Dissenters'
Rights." One of the conditions to the consummation of the Merger Agreement is
that the aggregate number of dissenting shares shall not be more than 5% of the
total number of shares of CCI that would be outstanding upon consummation of the
Merger if no dissenters' rights were exercised (there would be 6,938,709
outstanding CCI shares and 5% of that number is 346,935).
SELECTED FINANCIAL INFORMATION
SUMMARY HISTORICAL FINANCIAL INFORMATION
The following summary historical financial information should be read in
conjunction with the financial statements of CCI, Clyde, Geneva Rock, Beehive
Insurance and Utah Service and notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of each of the
respective companies included elsewhere in this Proxy Statement/Prospectus. The
summary historical financial information presented below has been derived from
the financial statements of CCI, Clyde, Geneva Rock, Beehive Insurance and Utah
Service. The financial statements for CCI as of and for the year ended December
31, 1996 have been audited by Grant Thornton whose report is included elsewhere
herein. The financial statements for Clyde as of and for the year ended December
31, 1996 have been audited by Grant Thornton, whose report is included elsewhere
herein. The financial statements for Geneva Rock as of and for the year ended
December 31, 1996 have been audited by Squire & Company, PC ("Squire") whose
report is included elsewhere herein. The financial statements for Beehive
Insurance as of and for the year ended December 31, 1996 have been audited by
Daines Associates LLC ("Daines") whose report is included elsewhere herein. The
financial statements of Utah Service as of and for the year ended December 31,
1996 have not been audited. The summary historical financial information for the
nine month period ended September 30, 1997 is included herein and has not been
audited for any of the respective Constituent Corporations except for Utah
Service. Management believes, however, that the unaudited financial statements
reflect all adjustments (consisting of normal recurring adjustments) necessary
for a fair presentation of the information included therein. The summary
historical financial information for Utah Service is derived from financial
statements as of September 30, 1997 and for the nine months then ended, which
were audited by Grant Thornton whose report is included elsewhere herein.
11
<PAGE> 31
<TABLE>
<CAPTION>
Geneva Utah Beehive
CCI Clyde Rock Service Insurance
---------- ---------- ---------- ---------- ----------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Nine months ended September 30, 1997
- ------------------------------------
Statement of earnings data:
Net revenues $ 93 $ 9,696 $ 94,736 $ 9,258 $ 523
Operating income (loss) 88 (864) 11,033 500 306
Net earnings 1,408 1,437 7,145 358 204
Earnings per common share $ 0.61(1) $ 15.19 $ 327.72 $ 66.20 $ 9.49
Weighted average shares outstanding 2,303,920(1) 94,544 21,802 5,413 21,487
</TABLE>
Balance sheet data (at period end):
<TABLE>
<CAPTION>
Geneva Utah Beehive
CCI Clyde Rock Service Insurance
---------- ---------- ---------- ---------- ----------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Current assets $ 124 $ 16,287 $ 42,113 $ 3,539 $ 840
Current liabilities - 1,126 9,913 826 470
Total assets 27,270 47,231 84,598 4,815 945
Total liabilities 9,932 11,014 20,274 958 470
Stockholders' equity 17,338 36,217 64,324 3,857 475
</TABLE>
12
<PAGE> 32
<TABLE>
<CAPTION>
Geneva Utah Beehive
CCI Clyde Rock Service Insurance
---------- ---------- ---------- ---------- ----------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1996
Statement of earnings data:
Net revenues $ 404 $ 19,056 $ 116,349 $ 13,108 $ 578
Operating income 398 497 12,462 565 334
Net earnings 1,935 2,687 8,434 421 234
Earnings per common share $ 0.84(1) $ 28.42 $ 386.85 $ 77.78 $ 10.88
Weighted average shares outstanding 2,303,920(1) 94,544 21,802 5,413 21,487
Balance sheet data (at period end):
Current assets $ 31 $ 16,357 $ 35,240 $ 3,057 $ 679
Current liabilities 5 1,092 8,036 626 377
Total assets 25,088 44,916 74,848 4,387 756
Total liabilities 9,158 9,969 17,669 853 377
Stockholders' equity 15,930 34,947 57,179 3,534 379
</TABLE>
(1) Earnings per common share are based upon the weighted average number of
common shares outstanding during the period presented after giving retroactive
effect to all periods presented for the subsequent 40:1 stock split effected
November 13, 1997.
COMPARATIVE PER SHARE DATA
Set forth below are unaudited pro forma combined earnings from
continuing operations and book value per common share of CCI after giving effect
to the Merger. The information set forth below should be read in conjunction
with the financial statements and the "CCI Pro Forma Combined Financial
Information (Unaudited)" included elsewhere in this Proxy Statement/Prospectus,
in each case including the notes thereto. The pro forma information presented
herein is for illustrative purposes only.
Comparative Per Share Data as of and for the nine
months ended September 30, 1997
<TABLE>
<S> <C>
CCI
Historical
Net earnings $ 0.61
Book value (at period end) 7.53
Cash dividends declared by CCI --
*Cash dividends declared by
Subsidiaries 0.14
Pro forma combined
Net earnings $ 1.10
Book value (at period end) 13.12
Cash dividends declared by CCI --
*Cash dividends declared by
Subsidiaries 0.05
</TABLE>
<TABLE>
<CAPTION>
Beehive
Clyde Geneva Rock Utah Service Insurance
---------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
Historical
Net earnings $ 15.20 $ 327.72 $ 66.20 $ 9.48
Book value (at period end) 383.07 2,950.36 712.64 22.11
Cash dividends declared 2.00 -- 6.00 5.00
Exchange ratio 33.93 239.27 43.43 4.33
========== ============ ========== =========
Equivalent pro forma combined
Net earnings $ 37.45 $ 264.11 $ 47.94 $ 4.78
Book value (at period end) 445.08 3,138.64 569.70 56.80
Cash dividends declared by CCI -- -- -- --
*Cash dividends declared by
Subsidiaries 1.61 11.34 2.06 0.21
</TABLE>
13
<PAGE> 33
Comparative Per Share Data as of and for the year
ended December 31, 1996
<TABLE>
<S> <C>
CCI
Historical
Net earnings $ 0.84
Book value (at period end) 6.91
Cash dividends declared by CCI 0.16
*Cash dividends declared by
Subsidiaries 0.67
Pro forma combined
Net earnings $ 1.42
Book value (at period end) 12.01
Cash dividends declared by CCI 0.05
*Cash dividends declared by
Subsidiaries 0.22
</TABLE>
<TABLE>
<CAPTION>
Beehive
Clyde Geneva Rock Utah Service Insurance
---------- ----------- ------------ ---------
<S> <C> <C> <C> <C>
Historical
Net earnings $ 28.42 $ 386.85 $ 77.78 $ 10.87
Book value (at period end) 369.64 2,622.64 652.96 17.61
Cash dividends declared 6.00 30.00 20.00 10.00
Equivalent pro forma combined
Net earnings $ 48.30 $ 340.63 $ 61.83 $ 6.16
Book value (at period end) 407.53 2,873.88 521.64 52.01
Cash dividends declared by CCI 1.75 12.37 2.25 0.22
*Cash dividends declared by
Subsidiaries 7.55 53.26 9.67 0.96
</TABLE>
14
<PAGE> 34
Comparative Per Share Data as of and for the year
ended December 31, 1995
<TABLE>
<S> <C>
CCI
Historical
Net earnings $ 1.14
Cash dividends declared by CCI 0.21
*Cash dividends declared by
Subsidiaries 0.83
Pro forma combined
Net earnings $ 1.91
Cash dividends declared by CCI 0.07
*Cash dividends declared by
Subsidiaries 0.28
</TABLE>
<TABLE>
<CAPTION>
Beehive
Clyde Geneva Rock Utah Service Insurance
---------- ----------- ------------ ---------
<S> <C> <C> <C> <C>
Historical
Net earnings $ 44.81 $ 503.54 $ 64.77 $ 6.09
Cash dividends declared 10.00 30.00 20.00 9.49
Equivalent pro forma combined
Net earnings $ 64.75 $ 456.59 $ 82.88 $ 8.26
Cash dividends declared by CCI 2.33 16.46 2.99 0.30
*Cash dividends declared by
Subsidiaries 9.35 65.93 11.97 1.19
</TABLE>
15
<PAGE> 35
Comparative Per Share Data as of and for the year
ended December 31, 1994
<TABLE>
CCI
<S> <C>
Historical
Net earnings $ 0.87
Cash dividends declared by CCI 0.21
*Cash dividends declared by
Subsidiaries 0.79
Pro forma combined
Net earnings $ 1.47
Cash dividends declared by CCI 0.07
*Cash dividends declared by
Subsidiaries 0.26
</TABLE>
<TABLE>
<CAPTION>
Beehive
Clyde Geneva Rock Utah Service Insurance
---------- ----------- ------------ ---------
<S> <C> <C> <C> <C>
Historical
Net earnings $ 27.34 $ 403.85 $ 89.18 $ 11.26
Cash dividends declared 10.00 27.00 15.59 10.00
Equivalent pro forma combined
Net earnings $ 50.01 $ 352.66 $ 64.01 $ 6.38
Cash dividends declared by CCI 2.31 16.30 2.96 0.29
*Cash dividends declared by
Subsidiaries 8.93 63.00 11.43 1.14
</TABLE>
*Cash dividends declared by Subsidiaries is not a required disclosure but is
included herein for additional information.
17
<PAGE> 36
PRO FORMA FINANCIAL INFORMATION
The CCI Summary Unaudited Pro Forma Financial Information as of December
31, 1996 and September 30, 1997 included below gives effect to the Merger as
described in this Proxy Statement/Prospectus and the estimated adjustments
caused by the Merger as described in "Clyde Companies, Inc. -- CCI Pro Forma
Combined Financial Information (Unaudited)" and the notes thereto. Shareholders
are urged to carefully read this document, "Clyde Companies, Inc. -- CCI Pro
Forma Combined Financial Information (Unaudited)" and the notes thereto.
CCI Summary Unaudited Pro Forma Financial Information
(In thousands, except per share data)
<TABLE>
<CAPTION>
Nine months ended Year ended
September 30, December 31,
1997 1996
----------------- ----------
<S> <C> <C>
Statement of earnings data:(1)
Operating Revenues $ 112,853 $ 147,303
Gross margin 17,610 22,152
Net Earnings 7,659 9,878
Earnings per share $ 0.61 $ 1.42
Weighted average shares outstanding (2) 6,938,709 6,938,709
Balance Sheet Data (at period end):(3)
Working capital $ 50,575
Total assets 114,571
Total liabilities 23,552
Retained earnings 89,215
Stockholders' equity 91,019
</TABLE>
- ----------
(1) The pro forma statements of earnings data are presented assuming the
combination occurred at the beginning of the periods presented.
(2) Reflects the conversion of the Constituent Corporations' shares into CCI
shares.
(3) The September 30, 1997 pro forma balance sheet data are presented assuming
the combination occurred on September 30, 1997.
MARKETS AND MARKET PRICES FOR SHARES
There is no public trading market for CCI Common Stock, Clyde Common
Stock, Geneva Rock Common Stock, Utah Service Common Stock or Beehive Insurance
Common Stock, and it is not anticipated that a public market for CCI Common
Stock will develop following the Merger. See "Clyde Companies, Inc. -- Stock
Redemption Plan."
18
<PAGE> 37
RISK FACTORS
The following risk factors should be considered carefully by the
shareholders of CCI, Clyde, Geneva Rock, Utah Service and Beehive Insurance in
evaluating whether to approve and adopt the Merger Agreement and the
transactions contemplated thereby. These factors should be considered in
conjunction with the other information included in this Proxy
Statement/Prospectus.
FAILURE TO REALIZE OPERATING EFFICIENCIES
There can be no assurance that the Merger will result in operating
efficiencies for the Operating Companies. The ability of CCI to achieve
operating efficiencies will depend on a number of factors, including the ability
of CCI to: (i) realize economies, particularly in the areas of accounting and
financial reporting, advertising and public relations, human resources,
purchasing, project bidding and employee safety, (ii) implement effective
internal information systems and management, operational and financial controls,
and (iii) retain existing personnel and attract new personnel. Although CCI will
attempt to integrate and streamline overlapping functions of Clyde, Geneva Rock,
Utah Service and Beehive Insurance, there can be no assurance that it will be
successful in doing so or that the process of integrating businesses and
operations will not cause an interruption of, or loss in momentum in, the
businesses of the Operating Companies.
NO PUBLIC TRADING MARKET FOR CCI COMMON STOCK; UNCERTAINTY OF STOCK REDEMPTION
PLAN
There is no public trading market for CCI Common Stock, and no public
trading market is expected to develop in the future. Holders of CCI Common Stock
may be able to redeem a limited number of their shares pursuant to the terms of
CCI's Stock Redemption Plan, which provides that beginning in 1999 between 5%
and 10% of CCI's net after tax earnings, as determined by CCI's Board of
Directors, will be put into a redemption fund to provide for the redemption of
CCI Common Stock. There can be no assurance that CCI will have available
adequate funds to effect all shareholders' requests for redemption, or that the
plan will not be subsequently amended or repealed upon a vote of 75% of the
directors of CCI. Also, there can be no assurance that the redemption prices to
be offered by CCI pursuant to the Stock Redemption Plan will be equal to the
prices which might be received by shareholders upon the sale or liquidation of
CCI. See "Clyde Companies, Inc. -- Stock Redemption Plan".
UNCERTAINTY OF FUTURE DIVIDENDS
The amount, type and frequency of dividends paid by CCI on CCI Common
Stock will be determined by the Board of Directors of CCI based on the results
of operations, financial condition and liquidity needs of CCI. The amount, type
and frequency of dividends paid by CCI to its shareholders will not be
equivalent to the amount, type and frequency of dividends paid by the Operating
Companies prior to the Merger. See "Summary--Selected Financial
Information--Comparative Per Share Data".
19
<PAGE> 38
TAX RISKS
Although the Merger has been structured to qualify as tax-free transfers
within the meaning of Section 351 of the Internal Revenue Code of 1986, as
amended (the "Code"), and/or as tax-free reorganizations under Section
368(a)(1)(B) of the Code, so that no gain or loss will be recognized by the
Operating Companies or by their shareholders on the exchange of stock of the
Operating Companies for shares of CCI Common Stock, and although the independent
accounting firm of Grant Thornton has rendered an opinion to that effect, no
ruling from the Internal Revenue Service ("IRS") has been obtained, and there
can be no assurance that the IRS will agree with Grant Thornton as to the tax
consequences of the Merger. Shareholders of the Constituent Corporations should
consult their own tax advisors concerning the federal, state and local tax
consequences to them of the Merger. See "The Merger--Certain Federal Income Tax
Considerations."
DEPENDENCE ON KEY PERSONNEL
Management of the business of CCI will be substantially dependent on
Richard C. Clyde, President and Chief Executive Officer, and Wilford W. Clyde,
Vice President and Chief Operating Officer. The loss of either of these
officers could have a material adverse effect on CCI's business, financial
condition and results of operations.
UNCERTAINTY OF BUSINESS OF OPERATING COMPANIES
The construction business is by nature a cyclical business, and there
can be no assurance that Geneva Rock will be able to maintain current levels of
revenues and earnings, or that the significant decline in revenues experienced
by Clyde over the last five years will not continue. The business of Utah
Service may be affected by cyclical declines in the construction industry and
the economy in general. The business of Beehive Insurance may be subject to more
restrictive regulations as a result of the Merger because the Utah Insurance
Code restricts the amount of compensation an insurance agency may receive for
placing insurance upon "controlled business" and such restriction may limit the
amount of insurance business that Beehive Insurance may place upon the property
of Clyde and Geneva Rock after the Merger. At the present time, Clyde and Geneva
Rock together account for more than 50% of the insurance business placed by
Beehive Insurance. See "Beehive Insurance -- Regulation".
CONTROL OF CCI BY W.W. CLYDE FAMILY
CCI will be controlled by the W.W. Clyde family as a result of
(i) certain provisions in the CCI Bylaws and (ii) the Voting Agreement entered
into by the Original CCI Shareholders, which are described below.
Section 3.2(c) of the CCI Bylaws, which are attached as Annex C hereto,
restricts the configuration of the CCI Board of Directors during the five year
period beginning on November 12, 1997 and ending on November 12, 2002. During
this period, six of the directors on the CCI Board of Directors must be direct
descendants (or the spouse of a direct descendant) of W.W. Clyde and two of the
directors must be direct descendants (or the spouse of a direct descendant) of
Edward Clyde. The CCI Bylaws require that there be between eight and eleven
directors on the CCI Board of Directors. The effect of the foregoing
restrictions on CCI Board membership is that, during the five year period
described above, the W.W. Clyde family will have effective control of the CCI
Board. Such control will give the W.W. Clyde family the ability to determine all
matters that come before the CCI Board, such as the amount which will be made
available by CCI to fund the redemption of shares of CCI Common Stock and the
amount of dividends to be paid on CCI Common Stock. See "Comparison of the
Rights of Holders of CCI Common Stock and Clyde, Geneva Rock, Utah Service and
Beehive Insurance Common Stock--Provisions Relating to Directors".
The Original CCI Shareholders have entered into a 10-year Voting
Agreement for the purpose of controlling the voting of the 2,303,920 shares of
CCI Common Stock owned by the Original CCI Shareholders on the Record Date,
representing approximately 33.20% of the shares of CCI Common Stock to be
outstanding upon consummation of the Merger. So long as the Voting Agreement is
in place, such Original CCI Shareholders will have the ability (subject to the
restrictions in CCI's Bylaws relating to the configuration of its Board of
Directors) to substantially influence the composition of the Board of Directors
of CCI and the outcome of all matters involving a shareholder vote. Such
influence by the Original CCI Shareholders could make it more difficult for a
third party to acquire, or could discourage a third party from attempting to
acquire, control of CCI. See "Clyde Companies, Inc.--Voting Agreement."
DETERMINATION OF EXCHANGE RATIOS
In connection with the Merger, each outstanding share of Clyde, Geneva
Rock, Utah Service and Beehive Insurance Common Stock will be exchanged for
33.93, 239.27, 43.43 and 4.33 shares, respectively, of CCI Common Stock. In
anticipation of the Merger, in November 1997 each then outstanding share of CCI
Common Stock was converted into 40 shares of CCI Common Stock. The exchange
ratios were determined by the Task Force and approved by the Boards of Directors
of the Constituent Corporations in reliance upon valuation reports for each of
the Constituent Corporations, except CCI, prepared by Houlihan Valuation
Advisors. Since the only assets of CCI are cash and the shares of the other
Constituent Corporations which it owns, an independent valuation
20
<PAGE> 39
report was not obtained for CCI. For purposes of determining CCI's value in the
Merger, CCI was assigned a value equal to the value of the shares it owns in
each of the Constituent Corporations. Although in approving the recommendations
of the Task Force, the Boards of Directors of the Constituent Corporations have
used their best efforts to arrive at exchange ratios that are equitable to the
shareholders of each of the Constituent Corporations, there can be no assurance
that such exchange ratios are indicative of the consideration which the
shareholders of the Constituent Corporations would receive upon the sale or
liquidation of the Constituent Corporations in which they own shares. See
"Summary -- Selected Financial Information--Comparative Per Share Data" and "The
Merger -- Valuation Reports for Operating Companies by Financial Advisor,
Houlihan Valuation Advisors." Shareholders of the Constituent Corporations
should be aware that certain members of the Task Force and certain Directors of
the Constituent Corporations may be subject to conflicts of interest in
determining the exchange ratios. See "The Merger -- Task Force, Interest of
Certain Persons in the Merger."
LACK OF SEPARATE LEGAL REPRESENTATION
The law firm of Van Cott, Bagley, Cornwall & McCarthy ("Van Cott")
previously has represented each of the Constituent Corporations, as well as
certain individual Task Force members, directors, officers and shareholders of
the Constituent Corporations. Because each Constituent Corporation is affiliated
through family relationships, interconnected Boards of Directors and cross stock
ownership, and in an effort to reduce the costs of the Merger, the Boards of
Directors of each Constituent Corporation determined to use Van Cott to
represent all of the Constituent Corporations in connection with the Merger and
the transactions contemplated thereby, including the preparation of this
Proxy Statement/Prospectus. Van Cott did not represent any Constituent
Corporation or individual shareholder separately in negotiating the exchange
ratios or any of the other terms or provisions of the Merger Agreement, nor did
Van Cott undertake any due diligence investigation with respect to any
Constituent Corporation, such as an investigation of the validity of the
outstanding shares of the Constituent Corporations, or the status of legal
agreements, pending legal proceedings or other legal matters with respect to the
Constituent Corporations. Such representation by Van Cott involves a conflict of
interest to the extent that the interest of one Constituent Corporation in the
Merger may be separate from or opposed to the interest of the other Constituent
Corporations or individuals (mentioned above) who may also be clients of Van
Cott. Because of such conflicts of interest, Van Cott obtained a written waiver
of such conflicts from the Board of Directors of each Constituent Corporation
and certain individual shareholders, pursuant to which each corporation and
individual shareholder acknowledged the existence of the conflicts of interest,
waived any objection thereto and agreed to Van Cott's representation of all of
the Constituent Corporations. David E. Salisbury, who is a shareholder of Van
Cott, was a member of the Task Force that negotiated the pertinent terms and
provisions of the Merger Agreement, including the exchange ratios. Mr. Salisbury
participated on the Task Force in his capacity as a director of Clyde, and as a
direct or indirect owner of shares of common stock of the Constituent
Corporations. See "The Merger--Interests of Certain Persons in the Merger".
21
<PAGE> 40
CLYDE COMPANIES, INC.
OVERVIEW
CCI was incorporated in the state of Utah in 1961 under the name "W.W.
Clyde Investment Co." as a holding company for shares of stock of Clyde, Geneva
Rock, Utah Service and Beehive Insurance. In November 1997 the name of the
corporation was changed to "Clyde Companies, Inc." CCI has no operations of its
own and, prior to the consummation of the Merger, its assets consisted solely of
cash and shares of common stock of Clyde (31,935 shares or 33.78% of the
outstanding shares), Geneva Rock (4,725 shares or 21.67% of the outstanding
shares), Utah Service (1,698 shares or 31.37% of the outstanding shares) and
Beehive Insurance (3,700 shares or 17.22% of the outstanding shares). Upon the
consummation of the Merger, CCI will be a holding company with wholly owned
subsidiaries consisting of Clyde, Geneva Rock, Utah Service and Beehive
Insurance. At this time, it is anticipated that CCI will have no operations of
its own after the consummation of the Merger. As of the date hereof, CCI has no
employees. The principal executive offices of CCI are located at 1423 Devonshire
Drive, Salt Lake City, Utah 84108, and its telephone number is (801) 582-2783.
MARKET PRICE OF AND DIVIDENDS ON CCI COMMON STOCK
There is no public trading market for CCI's Common Stock and none is
expected to develop. The approximate number of shareholders of record as of
the Record Date was 56. Upon the consummation of the Merger, the approximate
number of shareholders of record (assuming that no shareholders of the Operating
Companies exercise their dissenters' rights) will be 174.
In 1995, CCI declared and paid cash dividends of $.21 per share of CCI
Common Stock to shareholders. In 1996, CCI declared and paid cash dividends of
$.16 per share of CCI Common Stock to shareholders. In 1997, CCI paid cash
dividends of $7.66 per share of CCI Common Stock to its shareholders. Management
anticipates that all cash held by CCI, other than an amount of cash sufficient
to satisfy CCI's tax obligations upon the consummation of the Merger, will be
distributed as a dividend to its shareholders prior to the consummation of the
Merger, but the amount of the dividend has yet to be determined. Because CCI is
a holding company, any dividends declared and paid to its shareholders is
dependent upon the dividends CCI receives from its subsidiaries. The amount,
type and frequency of dividends paid by CCI on CCI Common Stock after
consummation of the Merger will be determined by the Board of Directors of CCI
based on the results of operations, financial condition and liquidity needs of
CCI. The amount, type and frequency of dividends paid by CCI to its shareholders
will not be equivalent to the amount, type and frequency of dividends paid by
the Operating Companies prior to the Merger. See "Summary--Selected Financial
Information--Comparative Per Share Data".
CCI MANAGEMENT PRIOR TO CONSUMMATION OF THE MERGER
DIRECTORS
The names and ages of CCI's Directors prior to and upon the consummation
of the Merger are as follows:
22
<PAGE> 41
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION(S) WITH CCI (PRIOR TO THE MERGER) SINCE
- ---- --- ------------------------------------------ --------
<S> <C> <C> <C>
Carol C. Salisbury......... 70 Director, President 1961
Ila C. Cook................ 76 Director, Vice President 1972
William R. Clyde........... 79 Director, Vice President 1961
Louise C. Gammell.......... 73 Director, Secretary and Treasurer 1961
Paul B Clyde............... 56 Director 1988
Richard C. Clyde........... 62 Director 1997
H. Michael Clyde........... 47 (1)
Tawna Clyde Smith.......... 41 (1)
</TABLE>
- ------------------------
(1) H. Michael Clyde and Tawna Clyde Smith have agreed to serve as directors
upon consummation of the Merger.
Carol C. Salisbury has served as the Secretary and Treasurer of Beehive
Insurance since 1988. Ms. Salisbury has served on the Board of Directors of
Beehive Insurance since 1971 and on the Executive Committee of the Board of
Beehive Insurance since 1988. She holds a Bachelors degree in economics from the
University of Utah. Prior to becoming President of CCI, Ms. Salisbury was
Secretary and Treasurer of CCI for twenty-two years. Carol C. Salisbury is the
wife of David E. Salisbury, who is currently a director of Clyde; a sister of
William R. Clyde, Ila C. Cook and Louise C. Gammell; and an aunt of Richard C.
Clyde, Paul B. Clyde, Wilford W. Clyde, Steven L. Clyde, David O. Cook, A. Ray
Gammell and B. Clyde Gammell.
Ila C. Cook has served as Vice President of CCI since 1988. She holds a
Bachelors degree from the University of Utah and a Masters degree from New York
University. Ila C. Cook is the wife of Vernon O. Cook, who is currently the
Chairman of the Board of Utah Service, the mother of David O. Cook, who is
currently the President, Chief Executive Officer and a director of Utah Service;
the sister of William R. Clyde, Louise C. Gammell and Carol C. Salisbury; and an
aunt of Richard C. Clyde, Paul B. Clyde, Wilford W. Clyde, Steven L. Clyde, A.
Ray Gammell and B. Clyde Gammell.
William R. Clyde has served as Vice President of CCI since 1997. Mr.
Clyde retired from employment with Clyde in 1983 after working for over 45 years
as a superintendent, project manager and equipment manager for Clyde. Mr. Clyde
has served as the Secretary of Geneva Rock since 1969 and on the Boards of
Directors of Utah Service and Geneva Rock since 1954. William R. Clyde is the
father of Steven L. Clyde, who is currently the Project Superintendent and a
director of Clyde, and the brother of Ila C. Cook, Louise C. Gammell and Carol
C. Salisbury; and an uncle of Richard C. Clyde, Paul B. Clyde, Wilford W. Clyde,
David O. Cook, A. Ray Gammell and B. Clyde Gammell.
Louise C. Gammell holds a Bachelors degree from the University of Utah.
Ms. Gammell has served on the Board of Directors of Utah Service since 1968.
Louise C. Gammell is the mother of A. Ray Gammell, who is currently a director
of Geneva Rock, and of B. Clyde Gammell, who is currently the Vice President and
a director of Beehive Insurance; the sister of William R. Clyde, Ila C. Cook and
Carol C. Salisbury; and an aunt of Richard C. Clyde, Paul B. Clyde, Wilford W.
Clyde, Steven L. Clyde and David O. Cook.
Paul B. Clyde has served as Vice President of Construction of Clyde
since 1992. Prior to that, he was Vice President of Marketing, Estimating and
Safety of Clyde from 1986 to 1992; Vice President of Marketing and Estimating
from 1983 to 1992; Chief Estimator from 1982 to 1983; and Project
Manager/Superintendent from 1969 to 1982. Mr. Clyde holds a B.S. degree in
construction engineering and management from Arizona State University. He is
responsible for field construction, estimating and bidding of all projects
performed by Clyde. Mr. Clyde has served on the Boards of Directors of Clyde and
Geneva Rock since 1971 and on the Board of Directors of Utah Service since 1987.
Paul B. Clyde is the brother of Wilford W. Clyde, who will become the Vice
President and Chief Operating Officer of CCI after the Merger, the President and
a director of Geneva Rock, and a director of Clyde and Beehive Insurance; and a
nephew of William R. Clyde, Ila C. Cook, Louise C. Gammell and Carol C.
Salisbury.
Richard C. Clyde is the third generation of the Clyde family to be
President and General Manager of Clyde, being named to that position in 1986.
Prior to that time, he was Vice President and Treasurer of Clyde from 1982 to
1986, and Project Manager/Superintendent from 1976 to 1982. Mr. Clyde holds a
B.S. degree from
23
<PAGE> 42
Brigham Young University. He serves on the National Board of Directors of the
American Road and Transportation Builders Association and is Director of the
Utah Highway Users Federation. Mr. Clyde has served on the Board of Directors of
Clyde, since 1970, on the Board of Directors of Geneva Rock since 1971 and on
the Board of Directors of Beehive Insurance since 1987. Richard C. Clyde is the
father of Jeffrey R. Clyde, who is currently the Contracts Manager and a
director of Clyde; and a nephew of William R. Clyde, Ila C. Cook, Louise C.
Gammell and Carol C. Salisbury.
H. Michael Clyde has agreed to become a director of CCI upon consummation
of the Merger. Since 1984, Mr. Clyde has been a lawyer with the law firm of
Brown & Bain, P.A. ("Brown & Bain") in Phoenix, Arizona where he is a general
litigator practicing primarily in the areas of securities, antitrust and
professional liability. Neither Mr. Clyde nor Brown & Bain has provided legal
services to CCI or to any other Constituent Corporation, nor has Mr. Clyde or
Brown & Bain provided any advice or services in connection with any of the
transactions discussed in, or contemplated by, this Proxy Statement/Prospectus.
Mr. Clyde received a J.D. degree from the University of Utah. H. Michael Clyde
is son of Hal M. Clyde, who is currently a director of Utah Service and Beehive
Insurance; and a nephew of Norman D. Clyde, who is currently a director of Utah
Service, Clyde, Geneva Rock, and Beehive Insurance.
Tawna Clyde Smith has agreed to become a director of CCI upon
consummation of the Merger. Ms. Smith has not been involved in business during
the last five years. Ms. Smith earned an R.N. degree from Brigham Young
University. She worked as a secretary and bookkeeper for Geneva Rock from 1974
to 1976 and as an office manager at a medical clinic from 1982 to 1985. Tawna
Clyde Smith is the daughter of Norman D Clyde, who is currently a director of
Utah Service, Clyde, Geneva Rock, and Beehive Insurance; and a niece of Hal M.
Clyde, who is currently a director of Utah Service and Beehive Insurance.
EXECUTIVE OFFICERS
The names, ages and positions of CCI's executive officers prior to the
consummation of the Merger are as follows:
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION(S) WITH CCI SINCE
- ---- --- ---------------------------- -----
<S> <C> <C> <C>
Carol C. Salisbury.................... 70 President 1997
Ila C. Cook........................... 76 Vice President 1988
William R. Clyde...................... 79 Vice President 1997
Louise C. Gammell..................... 73 Secretary and Treasurer 1997
</TABLE>
For a description of the business backgrounds of Carol C. Salisbury, Ila
C. Cook, William R. Clyde and Louise C. Gammell, see "CCI Management Prior to
Consummation of the Merger--Directors" above.
CCI MANAGEMENT UPON CONSUMMATION OF THE MERGER
DIRECTORS
CCI's Directors upon the consummation of the Merger will be the same as
CCI's Directors prior to the consummation of the Merger. See "CCI Management
Prior to Consummation of the Merger--Directors" above.
24
<PAGE> 43
EXECUTIVE OFFICERS
The names, ages and positions of CCI's executive officers upon the
consummation of the Merger will be as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH CCI
- ---- --- --------------------
<S> <C> <C>
Richard C. Clyde...................... 62 President and Chief Executive Officer
Wilford W. Clyde...................... 44 Vice President and Chief Operating Officer
Carol C. Salisbury.................... 70 Secretary and Treasurer
</TABLE>
For a description of the business backgrounds of Richard C. Clyde and
Carol C. Salisbury, see "CCI Management Prior to Consummation of the
Merger -- Directors" above.
Wilford W. Clyde has been the President and General Manager of Geneva
Rock since 1988. He has also been the Chairman of the Board (since 1996) and
President (since 1997) of Geneva Rock's wholly owned subsidiary, J & J Building
Supply, Inc. Mr. Clyde graduated form Brigham Young University. Mr. Clyde also
has served on the Board of Directors of Clyde since 1994, on the Board of
Directors of Geneva Rock since 1978 and on the Board of Directors of Beehive
Insurance since 1988. Wilford W. Clyde is the brother of Paul B. Clyde, who is
currently Vice President of Construction of Clyde and a director of Clyde, CCI,
Geneva Rock and Utah Service; and a nephew of William R. Clyde, Ila C. Cook,
Louise C. Gammell and Carol C. Salisbury.
COMMITTEES OF CCI BOARD
The Board of Directors of CCI currently has no committee and no plans to
establish any committee.
ATTENDANCE AT CCI BOARD MEETINGS
As of the date hereof, the Board of Directors held one meeting in 1997,
and all of the directors attended this meeting.
CCI EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
Previously, none of the executive officers of CCI have received any
compensation for their services as such. It is anticipated that after the
consummation of the Merger, none of the executive officers of CCI will receive
compensation that exceeds $100,000 per year except for Richard C. Clyde, who
will be the President and Chief Executive Officer of CCI, and Wilford W. Clyde,
who will be the Vice President and Chief Operating Officer of CCI. Richard C.
Clyde will receive an aggregate of $110,000 salary per year, plus such bonus as
may be determined by the Board of Directors of CCI, in accordance with the
provisions of an employment agreement to be entered into between CCI and Richard
C. Clyde. See "Clyde Companies, Inc. -- Employment Agreement" and "Interests of
Certain Persons in the Merger Employment Agreement". Wilford W. Clyde will
receive aggregate compensation of $110,000 (including amounts paid to him by
subsidiaries of CCI) plus such bonus as may be determined by the Board of
Directors of CCI.
COMPENSATION OF DIRECTORS OF CCI
Prior to the consummation of the Merger, CCI directors have received
annual cash compensation of $1,000 for serving on the Board of Directors of CCI.
It is anticipated that after the consummation of the Merger, directors will
continue to receive annual cash compensation of $1,000 for serving on the Board
of Directors of CCI.
25
<PAGE> 44
DEFINED BENEFIT RETIREMENT PLAN
Clyde, Geneva and Beehive Insurance have a defined benefit pension plan,
the Retirement Plan for Employees of W.W. Clyde & Co., Geneva Rock Products,
Inc. and Beehive Insurance Agency (the "Plan"), which is qualified under Section
401 of the Internal Revenue Code (the "Code") and that will continue in force
after the Merger. The Plan became effective on April 1, 1965. The annual pension
benefit under the plan is determined by the number of years of employment
multiplied by a percentage of the participant's average monthly compensation for
the five highest consecutive years of participation. Each of the executive
officers listed under the heading "Summary of Cash and Certain Other
Compensation" above is a participant in the Plan. The annual benefits payable at
retirement under the Plan are calculated as 1.800% of the participant's average
monthly compensation multiplied by the participant's total years of employment
with the applicable company.
The table below may be used to calculate the approximate annual benefits
payable at retirement at age 65 under the Plan to individuals in the specified
average annual compensation and years of service classifications:
PENSION TABLE
Years of Service
<TABLE>
<CAPTION>
Average
Compensation 10 15 20 25 30 35
<S> <C> <C> <C> <C> <C> <C>
$60,000 $10,800 $16,200 $21,600 $27,000 $32,400 $37,800
70,000 12,600 18,900 25,200 31,500 37,800 44,100
80,000 14,400 21,600 28,800 36,000 43,200 50,400
90,000 16,200 24,300 32,400 40,500 48,600 56,700
100,000 18,000 27,000 36,000 45,000 54,000 63,000
110,000 19,800 29,700 39,600 49,500 59,400 69,300
120,000 21,600 32,400 43,200 54,000 64,800 75,600
130,000 23,400 35,100 46,800 58,500 70,200 81,900
140,000 25,200 37,800 50,400 63,000 75,600 88,200
</TABLE>
The salary amounts listed under the heading "Summary of Cash and Certain
Other Compensation" above qualify under the Plan. The present credited years of
service for the officers listed under the heading "Summary of Cash and Certain
Other Compensation" above are as follows: Richard C. Clyde, 32 years; and
Wilford W. Clyde, 21 years.
STOCK REDEMPTION PLAN
The Board of Directors of CCI has adopted a Stock Redemption Plan, a
copy of which is attached as Annex B hereto, pursuant to which it is anticipated
that CCI will make funds available for the redemption of a limited number of
shares of CCI Common Stock each year beginning in 1999, on a date to be
established each year by the Board of Directors (the "Redemption Date"). Each
year commencing in 1999, as soon as practicable following the issuance by CCI's
independent auditors of their report regarding the consolidated financial
statements of CCI and its subsidiaries for the prior year, the Board of
Directors will (i) cause an appraisal (or an update of a prior appraisal) of CCI
to be completed by an independent individual or firm selected by the Board of
Directors which will set forth a determination of the total fair market value of
CCI as of the last day of the prior year (the "Appraisal Value"), and (ii)
determine the amount which shall be made available, if any, by CCI on the
Redemption Date to fund the redemption of shares of CCI Common Stock (the
"Redemption Fund"). The price to be paid to shareholders for each share of
redeemed CCI Common Stock (the "Redemption Price") will be an amount equal to
the Appraisal Value divided by the number of shares of CCI Common Stock
outstanding on the last day of the prior year, discounted by 25% (reflecting a
lack of marketability and minority interest). The Redemption Fund established
each year will be an amount which is greater than or equal to 5% and less than
or equal to 10% of the net earnings of CCI (after taxes) for the prior year. All
shares of CCI Common Stock will be eligible for redemption subject to and in
accordance
26
<PAGE> 45
with the terms of the Stock Redemption Plan. In the event that the number of
shares offered for redemption by shareholders is greater than the number of
shares that can be redeemed from the Redemption Fund, such shares will be
redeemed on a pro rata basis. Unused portions of the Redemption Fund will not be
carried forward to increase the Redemption Fund in future years. The Stock
Redemption Plan will be administered and interpreted by the Board of Directors
of CCI in its sole and absolute discretion, and the Stock Redemption Plan may be
amended or terminated, and/or the Redemption for any particular year may be
canceled, upon a vote of 75% of the directors of CCI.
VOTING AGREEMENT
In anticipation of the Merger, the current shareholders of CCI (the
"Original CCI Shareholders") entered into a Voting Agreement dated as of
November 14, 1997 (the "Voting Agreement") for the purpose of controlling the
voting of the 2,303,920 shares of CCI Common Stock owned by the Original CCI
Shareholders on the Record Date, representing approximately 33.20% of the shares
of CCI Common Stock to be outstanding upon consummation of the Merger (the
"Voting Agreement Shares"). Pursuant to the Voting Agreement, William R. Clyde,
Ila C. Cook, Louise C. Gammell, Carol C. Salisbury, Richard C. Clyde and Paul B.
Clyde (the "Voting Committee Members") have been appointed to act as a committee
(the "Voting Committee") to determine how the Voting Agreement Shares will be
voted on each matter to be voted upon by the shareholders of CCI. Each Voting
Committee Member represents the other members of his or her family who are
Original CCI Shareholders.
Pursuant to the Voting Agreement, each Original CCI Shareholder has
granted to the Voting Committee an irrevocable proxy, for a period of 10 years
from November 13, 1997 (or until such time as the Voting Agreement is
terminated), authorizing the Voting Committee to vote such Shareholder's Voting
Agreement Shares in accordance with the Voting Agreement. However, under the
Voting Agreement, the Original CCI Shareholders retain their right to vote any
shares of CCI Common Stock which they own, other than the Voting Agreement
Shares, as they wish. The Voting Agreement will remain in effect for 10 years,
unless earlier terminated because (i) the Voting Committee Members unanimously
agree in writing to terminate the Voting Agreement, (ii) CCI is in bankruptcy or
receivership or is dissolved, (iii) CCI ceases it business, (iv) CCI enters into
an underwriting agreement with respect to a public offering of CCI Common Stock
in excess of $30,000,000, (v) CCI sells all or substantially all of its assets
or is the non-surviving corporation in a merger, or (vi) there is only one CCI
Shareholder bound by the terms of the Voting Agreement.
The Voting Agreement provides that an Original CCI Shareholder may not
sell, transfer or otherwise dispose of any Voting Agreement Shares, except to
(i) a spouse of such Original CCI Shareholder, (ii) a child of such Original CCI
Shareholder or such spouse, (iii) a trustee in trust for the benefit of such
Original CCI Shareholder, such spouse or such child, (iv) CCI in the event such
Original CCI Shareholder owns no CCI Common Stock other than such Voting
Agreement Shares and (v) a third party upon obtaining the prior written consent
of the Committee Members. All transferees of the Voting Agreement Shares will be
required to enter into the Voting Agreement and to receive and hold the Voting
Agreement Shares subject to the terms and provisions of the Voting Agreement.
EMPLOYMENT AGREEMENT
It is contemplated that upon consummation of the Merger, CCI will enter
into an employment agreement with Richard C. Clyde pursuant to which Richard C.
Clyde will be employed as President and Chief Executive Officer for a term of
three years from and after the 1998 annual shareholders meeting of CCI. The
employment agreement will provide for a minimum annual base salary of $110,000
for Richard C. Clyde and a discretionary annual incentive bonus in an amount as
the Board of Directors of CCI may determine. The employment agreement will also
provide that if Richard C. Clyde is terminated by CCI prior to the end of the
term of employment, other than for cause, death or disability, CCI will pay
Richard C. Clyde an amount equal to his annual salary multiplied by the number
of years remaining under the term of the employment agreement. See also
"The Merger -- Interests of Certain Persons in the Merger -- Employment
Agreement".
27
<PAGE> 46
PRINCIPAL SHAREHOLDERS OF CCI PRIOR TO CONSUMMATION OF THE MERGER
The following table sets forth certain information regarding the
beneficial ownership of CCI Common Stock as of the Record Date, after giving
effect to the 40:1 split shares of CCI Common Stock which occurred in November
1997, as to (i) each person who is known by CCI to own beneficially 5% or more
of the outstanding shares of Common Stock, (ii) each Director of CCI, (iii) each
executive officer and (iv) all Directors and executive officers as a group.
Except as otherwise noted, CCI believes the persons listed below have sole
investment and voting power with respect to the CCI Common Stock that they are
deemed to beneficially own.
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------
SHARES APPROXIMATE
BENEFICIALLY PERCENTAGE
NAME AND ADDRESS OWNED(1) OWNED(1)
------------ -----------
<S> <C> <C>
Louise C. Gammell (2)............................................. 269,120 11.68%
1100 E. 400 S.
Springville, UT 84663
Kenneth L. and Carma C. Russell (3)............................... 215,600 9.36%
1869 East Michigan Avenue
Salt Lake City, UT 84108
William R. Clyde(4)............................................... 180,160 7.82%
2000 Canyon Road
Springville, UT 84663
INVO, L.C.(5)..................................................... 135,480 5.88%
2711 Sherwood Dr.
Salt Lake City, UT 84108
Carol C. Salisbury................................................ 122,360 5.31%
1423 Devonshire Drive
Salt Lake City, UT 84108
Richard C. and Patricia Clyde(6).................................. 115,200 5.00%
776 South 600 West
Orem, UT 84057
Paul B. Clyde(7).................................................. 72,320 3.14%
3308 N. 350 E.
Provo, UT 84601
Ila C. Cook....................................................... 0 *
2711 Sherwood Dr.
Salt Lake City, UT 84108
All Directors and executive officers as a group (6 people)........ 759,160 32.95%
</TABLE>
- ----------
* Less than 1%
(1) Applicable percentage of ownership is based on 2,303,920 shares of Common
Stock outstanding as of the Record Date, after giving effect to the 40:1
stock split in November 1997. Beneficial ownership is determined
28
<PAGE> 47
in accordance with the rules of the Securities and Exchange Commission (the
"Commission"), and includes voting and investment power with respect to
such shares.
(2) Includes 222,720 shares owned directly by Louise C. Gammell and 46,400
shares owned indirectly by Ms. Gammell as custodian for her son, John Scott
Gammell.
(3) Includes 54,400 shares owned directly by Carma C. Russell and 161,200
shares jointly owned by Kenneth L. and Carma C. Russell (husband and wife).
(4) Includes 1,080 shares owned indirectly by William R. Clyde through the
William R. Clyde Family Trust and 179,080 shares owned indirectly by Mr.
Clyde through the Reklaw & Co. Trust. Mr. Clyde does not own any shares of
CCI Common Stock directly.
(5) The following individuals are shareholders, directors and/or officers of
INVO, L.C. and, therefore, may each be deemed to beneficially own the
135,480 shares of CCI that are owned by INVO, L.C.: Bruce V. Cook, Glen C.
Cook, David O. Cook (Director, President and Chief Executive Officer of
Utah Service), Nan A. Oblad, J. Phillip Cook, Catherine C. Rasband and E.
Christine Christensen.
(6) Includes 8,000 shares owned directly by Richard C. Clyde, 81,600 shares
jointly owned by Richard C. and Patricia Clyde (husband and wife), 12,800
shares owned indirectly by Richard C. Clyde through the Richard C. Clyde
Trust and 12,800 shares owned indirectly by Patricia Clyde through the
Patricia Clyde Trust.
(7) Includes 40,000 shares owned directly by Paul B. Clyde and 35,200 shares
jointly owned by Paul B. and Jeanette P. Clyde (husband and wife).
PRINCIPAL SHAREHOLDERS OF CCI UPON CONSUMMATION OF THE MERGER
The following table sets forth certain information regarding the
beneficial ownership of CCI Common Stock after giving effect to the Merger for
(i) each person who will own beneficially 5% or more of the outstanding shares
of CCI Common Stock, (ii) each person to become a Director of CCI, (iii) each
person to become an executive officer of CCI and (iv) all persons described in
clauses (ii) and (iii) above as a group. Except as otherwise noted, CCI believes
the persons listed below have sole investment and voting power with respect to
the CCI Common Stock that they are deemed to beneficially own.
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------
SHARES APPROXIMATE
BENEFICIALLY PERCENTAGE
NAME AND ADDRESS OWNED(1) OWNED(1)
------------ -----------
<S> <C> <C>
Louise C. Gammell (2)............................................. 2,673,412 38.53%
1100 E. 400 S.
Springville, UT 84663
Richard C. Clyde(3)............................................... 2,524,814 36.39%
776 South 600 West
Orem, UT 84057
Carol C. Salisbury(4)............................................. 2,519,909 36.32%
1423 Devonshire Drive
Salt Lake City, UT 84108
William R. Clyde(5)............................................... 2,496,505 35.98%
2000 Canyon Road
Springville, UT 84663
Paul B. Clyde(6).................................................. 2,481,924 35.77%
3308 N. 350 E.
Provo, UT 84601
Ila C. Cook(7).................................................... 2,321,319 33.45%
2711 Sherwood Dr.
Salt Lake City, UT 84108
Wilford W. Clyde(8)............................................... 183,673 2.65%
1324 East 950 South
Springville, UT 84663
</TABLE>
29
<PAGE> 48
<TABLE>
<S> <C> <C>
H. Michael Clyde.................................................. 22,946 *
4338 North 56th Street
Phoenix, Arizona 85018
Tawna Clyde Smith................................................. 17,398 *
3223 Apache Lane
Provo, Utah 84604
Voting Committee(9)............................................... 2,303,920 33.20%
All Directors and executive officers of CCI as a
group (9 people)(10)............................................ 3,722,300 53.65%
</TABLE>
- -----------
* Less than 1%
(1) Applicable percentage of ownership is based on 6,938,709 shares of CCI
Common Stock outstanding after giving effect to the Merger. Beneficial
ownership is determined in accordance with the rules of the Commission, and
includes voting and investment power with respect to such shares. The
conversion of shares of common stock of the Operating Companies into CCI
Common Stock will, in some instances, result in fractional shares of CCI
Common Stock. Fractional shares of CCI Common Stock will not be issued. In
lieu of fractional shares, shareholders of Clyde, Geneva Rock, Utah Service
and Beehive Insurance will receive cash equal to the product of such
fraction multiplied by $14.52. See "The Merger Agreement -- Conversion of
Shares".
(2) Includes 2,303,920 shares controlled by the Voting Committee, which
shares Ms. Gammell may be deemed to beneficially own as a result of her
membership on the Voting Committee, 317,603 shares owned directly by Louise
C. Gammell, 46,400 shares owned indirectly by Ms. Gammell as custodian for
her son, John Scott Gammell, 3,757 shares owned directly by Ms. Gammell's
husband, Blake Gammell, and 1,732 shares owned jointly by Blake and Louise
C. Gammell.
(3) Includes 2,303,920 shares controlled by the Voting Committee, which
shares Mr. Clyde may be deemed to beneficially own as a result of his
membership on the Voting Committee, 69,965 shares owned directly by Richard
C. Clyde, 112,985 shares jointly owned by Richard C. and Patricia Clyde
(husband and wife), 17,933 shares owned indirectly by Richard C. Clyde
through Richard C. Clyde Trust and 20,011 shares owned indirectly by
Patricia Clyde through the Patricia Clyde Trust.
(4) Includes 2,303,920 shares controlled by the Voting Committee, which
shares Ms. Salisbury may be deemed to beneficially own as a result of her
membership on the Voting Committee, 207,506 shares owned directly by Carol
C. Salisbury and 8,483 shares owned directly by her husband, David E.
Salisbury.
(5) Includes 2,303,920 shares controlled by the Voting Committee, which shares
Mr. Clyde may be deemed to beneficially own as a result of his membership
on the Voting Committee, 608 shares owned directly by William R. Clyde,
9,915 shares owned indirectly by Mr. Clyde through the William R. Clyde
Family Trust and 182,062 shares owned indirectly by Mr. Clyde through the
Reklaw & Co. Trust.
(6) Includes 2,303,920 shares controlled by the Voting Committee, which shares
Mr. Clyde may be deemed to beneficially own as a result of his membership
on the Voting Committee, 112,091 shares owned directly by Paul B. Clyde and
65,913 shares jointly owned by Paul B. and Jeanette P. Clyde (husband and
wife).
(7) Includes 2,303,920 shares controlled by the Voting Committee, which shares
Ms. Cook may be deemed to beneficially own as a result of her membership
on the Voting Committee, 479 shares owned directly by Ila C. Cook, 11,318
shares owned indirectly by Ila C. Cook through the Ila C. Cook Family
Trust and 5,602 shares owned indirectly by Ms. Cook's husband, Vernon O.
Cook, through the Vernon O. Cook Family Trust.
(8) Includes 120,640 shares owned directly by Wilford W. Clyde and 63,033
shares owned jointly by Wilford W. and Natalie Clyde (husband and wife).
(9) Pursuant to the Voting Agreement among the Original CCI Shareholders, each
Original CCI Shareholder has granted to the Voting Committee, comprised of
William R. Clyde, Ila C. Cook, Louise C. Gammell, Carol C. Salisbury,
Richard C. Clyde and Paul B. Clyde, the right to vote such shares on each
matter to be voted upon by the shareholders of CCI. See "Clyde Companies,
Inc. -- Voting Agreement."
(10) In computing the aggregate number of shares owned by officers and
directors as a group, the shares controlled by the Voting Committee, which
shares certain of the officers and directors may be deemed to beneficially
own, are counted only once.
SELECTED FINANCIAL INFORMATION FOR CCI
The following selected statement of earnings and balance sheet data as
of and for each of the years in the three year period ended December 31, 1996
are derived from the audited financial statements of CCI which have been audited
by Grant Thornton. The selected statement of
30
<PAGE> 49
earnings data as of and for the years ended December 31, 1993 and 1992 and the
nine month periods ended September 30, 1997 and 1996 are unaudited, but, in the
opinion of management, the unaudited financial statements reflect all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation of the information included therein. The financial data for CCI
should be read in conjunction with the Financial Statements and Notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations of CCI" included elsewhere herein. The results for the nine month
period ended September 30, 1997 are not necessarily indicative of results that
may be expected for the full year.
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
---------------------- ----------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of earnings data:
Revenue $ 93 $ 47 $ 404 $ 530 $ 508 $ 492 $ 461
General and administrative 5 5 6 7 8 7 7
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income 88 42 398 523 500 485 454
Other income (expense), net 2,109 2,669 2,504 3,414 2,472 2,153 1,878
Income taxes 789 998 967 1,321 963 998 755
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net earnings $ 1,408 $ 1,713 $ 1,935 $ 2,616 $ 2,009 $ 1,640 $ 1,577
========== ========= ========== ========== ========== ========== ==========
Earnings per common share(1) $ 0.61 $ 0.74 $ 0.84 $ 1.14 $ 0.87 $ 0.71 $ 0.68
Weighted average shares outstanding(1) 2,303,920 2,303,920 2,303,920 2,303,920 2,303,920 2,303,920 2,303,920
Balance sheet data (at period end):
Current assets $ 124 $ 31 $ 40 $ 39 $ 39 $ 39
Current liabilities - 5 20 19 16 16
Total assets 27,270 25,088 22,593 19,180 16,725 14,574
Total liabilities 9,932 9,158 8,240 6,949 6,047 5,092
Stockholders' equity 17,338 15,930 14,353 12,213 10,678 9,482
</TABLE>
- ----------
(1) Earnings per common share are based upon the weighted average number of
common shares outstanding during the period presented after giving
retroactive effect to all periods presented for the subsequent 40:1 stock
split effected November 13, 1997.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF CCI
CCI is a holding company for shares of stock of Clyde, Geneva Rock, Utah
Service and Beehive Insurance and it has no operations of its own. Its assets
consist solely of cash and shares of common stock of Clyde (31,935 shares or
33.78% of the outstanding shares), Geneva Rock (4,725 shares or 21.67% of the
outstanding shares), Utah Service (1,698 shares or 31.37% of the outstanding
shares), and Beehive Insurance (3,700 shares or 17.22% of the outstanding
shares). CCI's income consists of the dividends it receives from such companies,
and the interest it receives on its cash deposits. All cash held by CCI, other
than an amount of cash sufficient to pay for the expenses of the Merger and to
allow CCI to satisfy its tax obligations upon the consummation of the Merger,
will be distributed as a dividend to its shareholders prior to the consummation
of the Merger. It is anticipated that upon the
31
<PAGE> 50
consummation of the Merger, CCI will continue to be a holding company with no
operations of its own, and that business operations will be conducted by its
wholly owned subsidiaries, Clyde, Geneva Rock, Utah Service and Beehive
Insurance. Based on the September 30, 1997 pro-forma financial statements,
management believes the consolidated company will have adequate cash and cash
equivalents to meet CCI's capital needs in the foreseeable future.
32
<PAGE> 51
Commencing in 1999, CCI will make funds available for the redemption of
a limited number of shares of CCI Common Stock pursuant to the Stock Redemption
Plan described below under "Clyde Companies, Inc.--Stock Redemption Plan". The
Redemption Fund (as defined under "Stock Redemption Plan") will be an amount
which is greater than or equal to 5% and less than or equal to 10% of the net
earnings of CCI (after taxes) for the prior year. Management believes the
limitation of the Redemption Fund to an amount not greater than 10% of the net
earnings of CCI (after taxes) for the prior year is a limitation sufficient to
protect the liquidity requirements of CCI. For example, pro forma net earnings
for the year ended December 31, 1996 (after income taxes), as set forth on the
CCI Unaudited Proforma Combined Statement of Earnings, are $9,878,000. If the
Merger had been consummated prior to 1996, the Redemption Fund to be
established in the year 1997, based upon such pro forma 1996 net earnings
(after income taxes), would have been a minimum of $493,900 and a maximum of
$987,800. Management believes a Stock Redemption Fund that is so limited would
not adversely impact CCI's liquidity.
CCI PRO FORMA COMBINED FINANCIAL INFORMATION (UNAUDITED)
The following unaudited pro forma combined financial information gives
pro forma effect to the Merger, giving effect to the pro forma adjustments
described in "Notes to Unaudited Pro Forma Combined Financial Statements" below.
The Pro Forma Combined Financial Information and related notes are provided for
informational purposes only. The CCI Unaudited Pro Forma Combined Balance Sheet
and the CCI Unaudited Pro Forma Combined Statements of Earnings included below
are not necessarily indicative of the financial position or results that would
have occurred had the events referred to above been consummated on the dates for
which the consummation of such events is being given effect, nor is it
necessarily indicative of the future financial position or results of the
proposed entity. The Pro Forma Financial Information should be read in
conjunction with the historical financial statements of CCI, Clyde, Geneva Rock,
Utah Service and Beehive Insurance, and the related notes thereto, which are
included elsewhere in this Proxy Statement/Prospectus. See "Index to Financial
Statements."
33
<PAGE> 52
CCI Unaudited Pro Forma Combined Balance Sheet
September 30, 1997
(In thousands)
<TABLE>
<CAPTION>
Geneva Utah Beehive Eliminating Final
CCI Clyde Rock Service Insurance Combined Entries Combined
--------- --------- --------- --------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 108 $ 2,251 $ 5,245 $ 666 $ 539 $ 8,809 $ -- $ 8,809
Interest bearing deposits in banks -- 8,430 -- -- -- 8,430 -- 8,430
Receivables -- 3,598 28,875 1,385 299 34,157 (776)(2) 33,381
Costs and estimated earnings in
excess of billings, contracts in
progress -- 1,608 -- -- -- 1,608 -- 1,608
Inventories -- 199 7,759 1,478 -- 9,436 -- 9,436
Other current assets 16 201 234 10 2 463 -- 463
--------- --------- --------- --------- --------- --------- --------- ---------
Current assets 124 16,287 42,113 3,539 840 62,903 -- 62,127
Property, plant, and equipment, net -- 8,578 39,742 1,211 59 49,590 -- 49,590
Investments - affiliates 27,146 22,366 -- -- -- 49,512 (49,512)(1) -
Intangible assets -- -- 2,229 -- -- 2,229 -- 2,229
Other assets -- -- 514 65 46 625 -- 625
--------- --------- --------- --------- --------- --------- --------- ---------
$ 27,270 $ 47,231 $ 84,598 $ 4,815 $ 945 $ 164,859 $ (50,288) $ 114,571
========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
34
<PAGE> 53
CCI Unaudited Pro Forma Combined Balance Sheet - Continued
September 30, 1997
(In thousands)
<TABLE>
<CAPTION>
Geneva Utah Beehive Eliminating Final
CCI Clyde Rock Service Insurance Combined Entries Combined
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES
Current maturities of long-term
obligations $ -- $ -- $ 721 $ 82 $ -- $ 803 $ -- $ 803
Accounts payable -- 663 6,214 620 2 7,499 (776)(2) 6,723
Billings in excess of costs and
estimated earnings on
contracts in progress -- 96 -- -- -- 96 -- 96
Income taxes payable -- -- 860 -- 4 864 (7)(1) 857
Accrued liabilities -- 367 2,118 124 464 3,073 -- 3,073
--------- --------- --------- --------- --------- --------- --------- ---------
Current liabilities -- 1,126 9,913 826 470 12,335 (783) 11,552
Long-term obligations -- -- 7,745 -- -- 7,745 -- 7,745
Accrued pension expense -- 224 168 132 -- 524 -- 524
Deferred income taxes 9,932 9,664 2,448 -- -- 22,044 (18,313)(1) 3,731
--------- --------- --------- --------- --------- --------- --------- ---------
9,932 9,888 10,361 132 -- 30,313 (18,313) 12,000
EQUITY
Common stock, at par 707 1,000 218 54 21 2,000 27 (1)(4) 2,027
Less: treasury stock -- (538) -- -- -- (538) 538 (1)(4) -
Additional paid-in capital -- -- 29 533 3 565 (565)(1)(4) -
Retained earnings 16,631 35,895 64,077 3,353 451 120,407 (31,192)(1)(4) 89,215
Additional pension cost -- (140) -- (83) -- (223) -- (223)
--------- --------- --------- --------- --------- --------- --------- ---------
17,338 36,217 64,324 3,857 475 122,211 (31,192) 91,019
--------- --------- --------- --------- --------- --------- --------- ---------
$ 27,270 $ 47,231 $ 84,598 $ 4,815 $ 945 $ 164,859 $ (50,288) $ 114,571
========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
35
<PAGE> 54
CCI Unaudited Pro Forma Combined Statement of Earnings
Nine Months Ended September 30, 1997
(In thousands, except per share data)
<TABLE>
<CAPTION>
Geneva Utah Beehive Eliminating Final
CCI Clyde Rock Service Insurance Combined Entries Combined
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues $ 93 $ 9,696 $ 94,736 $ 9,258 $ 523 $ 114,306 $ (1,453)(3) $ 112,853
Cost of goods sold -- 9,453 79,560 7,590 -- 96,603 (1,360)(3) 92,543
---------- --------- ---------- --------- ---------- ---------- ---------- ----------
Gross margin 93 243 15,176 1,668 523 17,703 (93) 17,610
General and administrative expenses 5 1,107 4,143 1,168 217 6,640 -- 6,640
---------- --------- ---------- --------- ---------- ---------- ---------- ----------
Earnings from operations 88 (864) 11,033 500 306 11,063 (93) 10,970
Other income (expense)
Income from long-term
investment -- -- -- -- -- -- -- --
Interest income, net 1 386 -- (8) 19 398 -- 398
Equity in net earnings of
affiliate 2,089 2,484 -- -- -- 4,573 (4,753)(1) --
Other, net 19 289 255 79 -- 642 -- 642
---------- --------- ---------- --------- ---------- ---------- ---------- ----------
2,109 3,159 255 71 19 5,613 (4,753) 1,040
---------- --------- ---------- --------- ---------- ---------- ---------- ----------
Earnings before income taxes 2,197 2,295 11,288 571 325 16,676 (4,666) 12,010
Income taxes 789 858 4,143 213 121 6,124 (1,773)(1) 4,351
---------- --------- ---------- --------- ---------- ---------- ---------- ----------
Net earnings $ 1,408 $ 1,437 $ 7,145 $ 358 $ 204 $ 10,552 $ (2,893) $ 7,659
========== ========= ========== ========= ========== ========== ========== ==========
Earnings per share $ 0.61 $ 15.20 $ 327.72 $ 66.20 $ 9.49
========== ========= ========== ========= ==========
Weighted average shares
outstanding 2,303,920 94,544 21,802 5,413 21,487
========== ========= ========== ========= ==========
</TABLE>
36
<PAGE> 55
CCI Unaudited Pro Forma Combined Statement of Earnings
Year Ended December 31, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
Geneva Utah Beehive
CCI Clyde Rock Service Insurance
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating revenues $ 404 $ 19,056 $ 116,349 $ 13,108 $ 578
Cost of goods sold -- 17,116 98,908 10,915 --
---------- ---------- ---------- ---------- ----------
Gross margin 404 1,940 17,441 2,193 578
General and administrative expenses 6 1,443 4,979 1,628 244
---------- ---------- ---------- ---------- ----------
Earnings from operations 398 497 12,462 565 334
Other income (expense)
Income from long-term
investment -- -- 29 -- --
Interest income, net 1 641 -- (28) 24
Equity in net earnings of
affiliate 2,503 2,932 -- -- --
Other, net -- 127 752 142 5
---------- ---------- ---------- ---------- ----------
2,504 3,700 781 114 29
---------- ---------- ---------- ---------- ----------
Earnings before income taxes 2,902 4,197 13,243 679 363
---------- ---------- ---------- ---------- ----------
Income taxes 967 1,510 4,809 258 129
---------- ---------- ---------- ---------- ----------
Net earnings $ 1,935 $ 2,687 $ 8,434 $ 421 $ 234
========== ========== ========== ========== ==========
Earnings per share $ 0.84 $ 28.42 $ 386.85 $ 77.78 $ 10.88
========== ========== ========== ========== ==========
Weighted average shares outstanding 2,303,920 94,544 21,802 5,413 21,487
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Eliminating Final
Combined Entries Combined
---------- ----------- ----------
<S> <C> <C> <C>
Operating revenues $ 149,495 $ (2,192)(3) $ 147,303
Cost of goods sold 126,939 (1,788)(3) 125,151
---------- ---------- ----------
Gross margin 22,556 (404) 22,152
General and administrative expenses 8,300 -- 8,300
---------- ---------- ----------
Earnings from operations 14,256 (404) 13,852
Other income (expense)
Income from long-term
investment 29 -- 29
Interest income, net 638 -- 638
Equity in net earnings of
affiliate 5,435 (5,435)(1) --
Other, net 1,026 -- 1,026
---------- ---------- ----------
7,128 (5,435) 1,693
---------- ---------- ----------
Earnings before income taxes 21,384 (5,839) 15,545
---------- ---------- ----------
Income taxes 7,673 (2,006)(1) 5,667
---------- ---------- ----------
Net earnings $ 13,711 $ (3,833) $ 9,878
========== ========== ==========
Earnings per share
Weighted average shares outstanding
</TABLE>
37
<PAGE> 56
CCI Unaudited Pro Forma Combined Statement of Earnings
Year Ended December 31, 1995
(In thousands, except per share data)
<TABLE>
<CAPTION>
Geneva Utah Beehive
CCI Clyde Rock Service Insurance
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating revenues $ 530 $ 21,325 $ 100,422 $ 13,580 $ 538
Cost of goods sold -- 18,199 80,811 11,633 --
---------- ---------- ---------- ---------- ----------
Gross margin 530 3,126 19,611 1,947 538
General and administrative expenses 7 1,255 3,173 1,498 357
---------- ---------- ---------- ---------- ----------
Earnings from operations 523 1,871 16,438 449 181
Other income (expense)
Income from long-term investment -- -- 52 -- --
Interest income, net 1 697 -- (22) 33
Equity in net earnings of
affiliate 3,413 3,817 -- -- --
Other, net -- 282 866 123 5
---------- ---------- ---------- ---------- ----------
3,414 4,796 918 101 38
---------- ---------- ---------- ---------- ----------
Earnings before income
taxes 3,937 6,667 17,356 550 219
Income taxes 1,321 2,431 6,378 199 88
---------- ---------- ---------- ---------- ----------
Net earnings $ 2,616 $ 4,236 $ 10,978 $ 351 $ 131
========== ========== ========== ========== ==========
Earnings per share $ 1.14 $ 44.81 $ 503.54 $ 64.77 $ 6.10
========== ========== ========== ========== ==========
Weighted average shares outstanding 2,303,920 94,544 21,802 5,413 21,487
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Eliminating Final
Combined Entries Combined
---------- ----------- ----------
<S> <C> <C> <C>
Operating revenues $ 136,395 $ (3,442)(3) $ 132,953
Cost of goods sold 110,643 (2,912)(3) 107,731
---------- ---------- ----------
Gross margin 25,752 (530) 25,222
General and administrative expenses 6,290 -- 6,290
---------- ---------- ----------
Earnings from operations 19,462 (530) 18,932
Other income (expense)
Income from long-term investment 52 -- 52
Interest income, net 709 -- 709
Equity in net earnings of
affiliate 7,230 (7,230)(1) --
Other, net 1,276 -- 1,276
---------- ---------- ----------
9,267 (7,230) 2,037
---------- ---------- ----------
Earnings before income
taxes 28,729 (7,760) 20,969
Income taxes 10,417 (2,689)(1) 7,728
---------- ---------- ----------
Net earnings $ 18,312 $ (5,071) $ 13,241
========== ========== ==========
Earnings per share
Weighted average shares outstanding
</TABLE>
38
<PAGE> 57
CCI Unaudited Pro Forma Combined Statement of Earnings
Year Ended December 31, 1994
(In thousands, except per share data)
<TABLE>
<CAPTION>
Geneva Utah Beehive
CCI Clyde Rock Service Insurance
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating revenues $ 508 $ 20,222 $ 80,526 $ 10,690 $ 598
Cost of goods sold -- 18,590 65,205 9,159 --
---------- ---------- ---------- ---------- ----------
Gross margin 508 1,632 15,321 1,531 598
General and administrative expenses 8 1,321 2,655 915 254
---------- ---------- ---------- ---------- ----------
Earnings from
operations 500 311 12,666 616 344
Other income (expense)
Income from long-term
investment -- -- 47 -- --
Interest income, net 2 546 -- -- 23
Equity in net earnings of
affiliate 2,455 3,061 -- -- --
Other, net 15 116 1,154 95 4
---------- ---------- ---------- ---------- ----------
2,472 3,723 1,201 95 27
---------- ---------- ---------- ---------- ----------
Earnings before income
taxes 2,972 4,034 13,867 711 371
Income taxes 963 1,449 5,062 265 129
---------- ---------- ---------- ---------- ----------
Net earnings $ 2,009 $ 2,585 $ 8,805 $ 446 $ 242
========== ========== ========== ========== ==========
Earnings per share $ 0.87 $ 27.34 $ 403.85 $ 89.18 $ 11.26
========== ========== ========== ========== ==========
Weighted average shares outstanding 2,303,920 94,544 21,802 5,000 21,487
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Eliminating Final
Combined Entries Combined
---------- ----------- ----------
<S> <C> <C> <C>
Operating revenues $ 112,544 $ (2,246)(3) $ 110,298
Cost of goods sold 92,954 (1,738)(3) 91,216
---------- ---------- ----------
Gross margin 19,590 (508) 19,082
General and administrative expenses 5,153 -- 5,153
---------- ---------- ----------
Earnings from
operations 14,437 (508) 13,929
Other income (expense)
Income from long-term
investment 47 47
Interest income, net 571 -- 571
Equity in net earnings of
affiliate 5,516 (5,516)(1) --
Other, net 1,384 -- 1,384
---------- ---------- ----------
7,518 (5,516) 2,002
---------- ---------- ----------
Earnings before income
taxes 21,955 (6,024) 15,931
Income taxes 7,868 (2,164)(1) 5,704
---------- ---------- ----------
Net earnings $ 14,087 $ (3,860) $ 10,227
========== ========== ==========
Earnings per share
Weighted average shares outstanding
</TABLE>
Notes to Unaudited Pro Forma Combined Financial Statements
1. Represents the elimination of Clyde's investment in Geneva Rock and the
elimination of CCI's investment in Clyde (33.78%), Geneva Rock (21.67%),
Utah Service (31.37%) and Beehive Insurance (17.22%), including related
deferred income taxes.
2. Represents the elimination of affiliate receivables/payables.
3. Represents the elimination of affiliate revenue/expenses.
4. Represents the recapitalization of CCI incorporating the change from $10
par value common stock to no par common stock.
39
<PAGE> 58
CLYDE
BACKGROUND
Clyde was founded in approximately 1926 by W. W. Clyde and was
incorporated in Utah in 1933. Since that time, Clyde has been involved in the
construction of interstate highways, bridges, dams, airports, mines, golf
courses, environmental reclamation projects, large site work/site preparation,
and other types of large construction projects in the Intermountain region
requiring massive earth moving and professional management. Clyde has completed
more than $400 million of construction projects throughout the Intermountain
West.
SERVICES AND MARKET
Examples of recent projects completed by Clyde include a $6.7 million
contract for the Wolf Creek Forest Road in Wasatch County; a $2.4 million
contract for the reconstruction of the Brown's Park Road in Daggett County,
including grading, drainage and paving; a $8.5 million contract for the South
Mountain Planned Community in Draper, Utah, including the construction of the
four lane Highland Drive highway extension, 18 hole golf course, all site storm
drainage, 1,000,000 gallon water storage tank, residential roads, ball fields,
and amphitheater; a $5 million contract for grading a pipeline corridor at
Kennecott Copper; and the construction of a $2.8 million hazardous waste cell at
the Laidlaw Environmental Grassy Mountain Facility.
Other projects in which Clyde is currently involved include a $10.3
million contract for environmental reclamation and site service work at Bingham
Canyon Mine for Kennecott Copper; a $3.2 million contract for the Eagle Mountain
Planned Community in Cedar Valley, Utah, including construction of Eagle
Mountain Boulevard, a concrete water tank and related water system, and the
Waste Water Lagoons; a $2 million contract for construction of the access road,
and phases 1 and 2 residential areas of the Sun River Ranch Planned Community
Project at Bloomington, Utah; a $1 million contract for the reconstruction of
the Holmes Irrigation Dam in Layton, Utah; a $1.2 million contract for closure
of cells 1, 2 and Y at Laidlaw Environmental Grassy Mountain Facility; and a
$1.6 million contract for a grading, drainage and paving project for UDOT in
Grand County, Utah. Except for the $10.3 million Kennecott Copper contract,
which may be terminated without cause by either party upon thirty days' notice,
none of the Clyde contracts above can be terminated prior to completion without
cause.
Clyde has clients in both the public and private sector, including the
Federal Highway Administration, UDOT, the U.S. Bureau of Reclamation, Laidlaw
Environmental Co., Utah Power & Light (Pacificorp), Kennecott Corporation, the
Wyoming Department of Transportation, Brush Wellman, Burns McDonnell, and many
others. In 1995, the revenue mix between the public and private sectors was
approximately 30% public and 70% private; however, this mix can change
significantly from year to year. For example, public projects for UDOT generated
between 70% and 80% of Clyde's total revenue during the mid-1980s. Clyde
performs construction work throughout the Intermountain Area, primarily in Utah,
Wyoming, Arizona, and Nevada. Most of the projects that Clyde bids on are
competitive bid projects.
Clyde has historically been most successful in bidding and working on
projects in the $15 million to $30 million range, which require the moving of
large amounts of dirt, such as the Jordanelle Highway Relocation Project
completed in 1992. With the completion of construction of the federal Interstate
Highway System in 1992, which provided a large volume of this type of work,
Clyde and the industry in general has seen a significant decline in large earth
work contracts. The market in Utah and surrounding states for highway work has
changed from building new roads to refurbishing existing roads. The most recent
trend in Utah is to enter into design/build contracts, as exhibited by Utah's
massive Interstate 15 ("I-15") re-construction project currently underway in
Salt Lake County. This single contract worth $1.5 billion has drastically
changed the road construction market in Utah. In the past, UDOT would have
divided a project of this magnitude into ten to fifteen smaller projects. Clyde
participated in the bidding process earlier this year for the I-15
re-construction project as a team member on one of the three teams competing for
this project. The Clyde team was not successful in obtaining this work, but
Clyde intends to bid on future UDOT projects.
In addition to bidding on design/build projects, Clyde has moved into
private sector projects, which generally provide better margins than public
projects. In the mid-1980s Clyde's work on projects for the transportation
departments of Utah, Wyoming and Idaho accounted for approximately 70% to 80% of
Clyde's
40
<PAGE> 59
revenues. In 1996, however, these projects accounted for approximately 10% of
Clyde's revenues. The private sector requires more marketing activities,
including early and constant contact and involvement with prospective customers.
Clyde has focused on securing work in the private sector by working with
private-sector customers during the design stage and providing constant input.
Clyde is currently working with owners whose projects are still one to two years
away from commencement. Most of these projects involve residential sub-division
and planned community development. Clyde has also focused on securing repeat
private-sector customers by developing relationships with customers throughout
the construction project. Quality, safety and performance all play an important
part in getting repeat work from the customer.
RAW MATERIALS, EQUIPMENT AND SUPPLIERS
Raw materials and components necessary for the rendering of Clyde's
construction projects are generally available from a variety of sources. Clyde
purchases most of its concrete and other materials used for construction
projects from Geneva Rock, in which Clyde owns a 34.77% equity interest before
giving effect to the Merger. Clyde also produces a limited supply of its own
aggregates through thirteen portable crushers, two asphalt plants and three
concrete batch plants, that can be moved throughout the region to supply Clyde's
needs when local commercial sources are unavailable.
INDUSTRY AND COMPETITION
Clyde's primary competitors are Gibbons & Reed, Gilbert Western,
LeGrande Johnson, Harpers Excavating and Ames Construction, some of which are
larger and have greater capital resources than Clyde. Since these firms are
similar in terms of performing high quality work, bid awards are usually granted
to the low cost bidder. Other factors influencing competitiveness include
reputation for quality, the availability of materials, machinery and equipment,
financial strength, knowledge of the local markets and conditions and estimating
abilities. Clyde believes that its competitive strengths include its excellent
reputation as a heavy contractor which has been in business for over 60 years;
its financial strength; its large, modern equipment fleet; its experienced and
dedicated employee base (field and office supervisors average over 20 years of
experience); its excellent safety record; and its commitment to quality work and
environmental sensitivity. Based on these factors, Clyde believes that it is
well positioned to compete effectively. There can be no assurance, however, that
Clyde will compete effectively.
SEASONALITY OF CLYDE BUSINESS
Clyde's business is seasonal, slowing down significantly during the
winter months due to adverse weather conditions. Historically, Clyde has
experienced a major curtailment in the amount and types of construction work
that can be accomplished in the months of December, January and February due to
the extreme temperatures and the frost in the ground.
REGULATION AND INSURANCE
Clyde's operations are subject to compliance with the regulatory
requirements of federal, state and county agencies and authorities, including
regulations covering safety, labor relations, affirmative action, and the
protection of the environment.
Clyde maintains a full time safety director, to assure its compliance
with all safety regulations and performs monthly safety audits on each of its
projects to assure that it is meeting the safety requirements of the project. As
of September 30, 1997, approximately 80 Clyde employees have received at least
40 hours of hazardous materials training as required by OSHA. All of Clyde's
employees are covered by workers compensation insurance. Because of Clyde's
focus on safety, it enjoys competitive insurance rates. Clyde also carries
general, auto and pollution liability insurance for all operations. Management
believes that each of these insurance policies have limits which are equal to or
greater than the industry norm.
Clyde maintains an affirmative action program and policy for assuring
equal opportunity in the workplace, which program has passed the periodic
reviews of state and federal regulatory agencies. Clyde also holds air quality
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<PAGE> 60
permits for its general operations and its asphalt plants and periodically
undergoes independent, pollution control testing and certification of its
facilities in accordance with applicable environmental regulations.
Clyde management believes that Clyde currently has all material
licenses, permits and approvals necessary for its current operations and is in
material compliance with all applicable government regulations.
EMPLOYEES
At August 31, 1997, Clyde had a total of 173 employees. This number
varies substantially depending on workload and seasonality, increasing to over
200 at times during the summer, but averaging between 50 and 60 during the
winter months. Clyde has contracts with several unions, including the Operating
Engineers Union, the Teamsters Union, the Laborers Union, the Cement Masons
Union and the Carpenters Union. These labor agreements were re-negotiated during
the summer of 1997 and run through June 30, 2000. All of these contracts contain
"no strike" provisions and enable Clyde to obtain trained workers to meet any
schedule that may be required. Clyde considers its relationship with its
employees to be generally good.
CUSTOMERS
Because of the large size of Clyde's infrastructure projects, a
relatively small number of projects may provide a significant percentage of the
Clyde's revenue in a given year. Kennecott Copper accounted for approximately
38% of Clyde's total 1996 revenues, approximately 33% of total 1995 revenues and
approximately 32% of total revenues over the last seven years. The loss of
Kennecott Copper's business could have a material adverse effect on Clyde.
BACKLOG
Backlog of work as of December 31, 1996 was an estimated $827,998
compared to $3,055,458 as of December 31, 1995. The decline in the 1996 backlog
was attributable to a curtailment in work under Clyde's service contract with
Kennecott Copper and the softening in the Utah housing market, which delayed
projects that were intended to be started during the fourth quarter of 1996, but
that did not materialize until the second quarter of 1997. These delays resulted
in the lower backlog, as well as a decline in construction revenues during 1996.
Kennecott Copper's cut back on Clyde's service contract work in 1996 was due to
problems with Kennecott Copper's new smelter. Work on this project did not begin
to pick up until late summer of 1997. Backlog of work began showing improvement
by August 1997. Clyde's estimate of backlog construction contracts as of
September 30, 1997 is $8,356,000.
PROPERTIES
Clyde owns approximately 10.8 acres of land located at 1375 North Main
Street, Springville, Utah, which includes one office building, an equipment
shed, repair shop and warehouse. Clyde also owns an approximately 20 acre parcel
of land located at 1455 North Main Street, Springville, Utah, which is used to
store Clyde equipment, and an approximately 18 acre parcel of land located at
2600 North 300 West, Lehi, Utah, which is currently being developed into
residential building lots.
EQUIPMENT
Clyde purchases and maintains a large fleet of construction equipment,
including bulldozers, scrapers, graders, loaders, trucks, pavers, rollers and
construction materials processing equipment. As of September 30, 1997, Clyde's
fleet included 21 crawler tractors, 15 rubber tired scrapers, 16 rubber tired
front end loaders, 10 off highway end dump trucks, 11 motor graders, 12
hydraulic track hoes, 30 belly dump semi trucks, 12 - 4,000 gallon water trucks,
3 - 10,000 gallon water trucks, 10 vibrating rollers and 4 asphalt pavers.
Clyde generally replaces and replenishes its equipment from revenues
generated from operations. As of September 30, 1997, Clyde did not have any
long-term debt. Purchases of equipment amounted to $2,220,046 in 1996 and
$4,551,214 in 1995. Clyde believes that owning most of its own equipment assures
it of the availability of
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<PAGE> 61
equipment when needed, thereby making Clyde more competitive. Clyde does rent or
lease equipment to meet high demand periods or to acquire the use of specialty
equipment. Clyde maintains a 27,000 square foot maintenance shop, with the
ability to completely rebuild or overhaul any of its equipment to assure
availability on the job-site.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which Clyde is a
party. From time to time, Clyde becomes involved in ordinary, routine legal
proceedings which are incidental to its business, but which do not have a
material adverse impact on its business or operations.
MARKET PRICE OF AND DIVIDENDS ON CLYDE COMMON STOCK
There is no public trading market for Clyde Common Stock. The
approximate number of shareholders of record on the Record Date was 98.
In 1995, Clyde paid cash dividends of $10.00 per share of Clyde Common
Stock to shareholders. In 1996, Clyde paid cash dividends of $6.00 per share of
Clyde Common Stock to shareholders. In 1997, Clyde paid cash dividends of $8.00
per share of Clyde Common Stock to shareholders. After the Merger, dividends
will be paid by CCI in such amounts and at such times as the CCI Board of
Directors deems to be appropriate based on the results of operations, financial
condition and liquidity needs of CCI. The amount, type and frequency of
dividends paid by CCI to its shareholders will not be equivalent to the amount,
type and frequency of dividends paid by Clyde prior to the Merger. See
"Summary--Selected Financial Information--Comparative Per Share Data".
CLYDE MANAGEMENT
DIRECTORS
The names and ages of Clyde's Directors are currently as follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION(S) WITH CLYDE SINCE
- ---- --- ---------------------- --------
<S> <C> <C> <C>
Richard C. Clyde .......... 62 Director, President and General Manager 1970
Paul B. Clyde ............. 56 Director, Vice President of Construction 1971
Norman D. Clyde............ 67 Director 1961
Wilford W. Clyde .......... 44 Director 1994
William R. Clyde .......... 79 Director 1955
Steven L. Clyde ........... 42 Director, Project Superintendent 1986
Jeffrey R. Clyde .......... 37 Director, Contracts Manager 1994
David E. Salisbury......... 70 Director 1961
</TABLE>
For a description of the business backgrounds of Richard C. Clyde, Paul
B. Clyde, and William R. Clyde, see "Clyde Companies, Inc. -- CCI Management
Prior to Consummation of the Merger," and of Wilford W. Clyde, see "Clyde
Companies, Inc. -- CCI Management Upon Consummation of the Merger."
Norman D. Clyde has been a director since 1961. Mr. Clyde served as Vice
President of Clyde from 1982 to 1996. He retired from management of Clyde in
1996, after working over forty years for Clyde. Mr. Clyde graduated from the
University of Utah. Mr. Clyde has also served on the Board of Directors of
Beehive Insurance since 1970, on the Board of Directors of Geneva Rock since
1959 and on the Board of Directors of Utah Service since 1964. Norman D. Clyde
is the brother of Hal M. Clyde, who is currently a director of Utah Service and
Beehive Insurance; the father of Tawna Clyde Smith, who will be a director of
CCI upon consummation of the Merger; and an uncle of H. Michael Clyde, who will
be a director of CCI upon consummation of the Merger.
Steven L. Clyde has been a director since 1986. Mr. Clyde graduated from
Brigham Young University. He began working for Clyde in 1981 and is currently
employed as a Project Superintendent of Clyde, a position he has held since
1986. Steven L. Clyde is the son of William R. Clyde; and a nephew of Ila C.
Cook, Louise C. Gammell and Carol C. Salisbury.
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<PAGE> 62
Jeffrey R. Clyde has been a director since 1994. Mr. Clyde is a graduate
of Arizona State University. He began working for Clyde in 1986 and is currently
employed as Contracts Manager of Clyde, a position he has held since 1997.
Jeffrey R. Clyde is the son of Richard C. Clyde.
David E. Salisbury has been a director since 1961. Mr. Salisbury is a
senior member and past President of the law firm of Van Cott, Bagley, Cornwall &
McCarthy where he has been an attorney for over 45 years. Mr. Salisbury received
a B.S. degree from the University of Utah and a J.D. degree from Stanford
University. David E. Salisbury is the husband of Carol C. Salisbury, who is
currently the President and a director of CCI, and the Secretary, Treasurer and
a director of Beehive Insurance.
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The names, ages and positions of Clyde's executive officers and
significant employees are currently as follows:
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION(S) WITH CLYDE SINCE
- ---- --- ------------------------------ -----
<S> <C> <C> <C>
Richard C. Clyde....................... 62 President and General Manager 1986
Paul B. Clyde.......................... 56 Vice President of Construction 1992
Keith M. Nelson........................ 37 Secretary and Treasurer 1991
Jeffrey R. Clyde....................... 38 Contracts Manager 1996
Steven L. Clyde........................ 42 Project Superintendent 1990
</TABLE>
For a description of the business backgrounds of Richard C. Clyde and
Paul B. Clyde, see "Clyde Companies, Inc. -- CCI Management Prior to
Consummation of the Merger," and of Jeffrey R. Clyde and Steven L. Clyde, see
"Clyde--Clyde Management--Directors".
Keith M. Nelson has worked for Clyde since 1985 and has been the Office
Manager since 1991. He has served as Secretary and Treasurer of Clyde since
1991. He graduated from Brigham Young University and is a Certified Management
Accountant.
COMMITTEES OF CLYDE BOARD
The Board of Directors of Clyde currently has no committee and no plans
to establish any committee.
ATTENDANCE AT CLYDE BOARD MEETINGS
As of the date hereof, the Board of Directors met two times in 1997, and
no director attended fewer than 75% of these meetings, except Norman Clyde who
is currently on a leave of absence for church service for a period of
approximately three years.
COMPENSATION OF DIRECTORS OF CLYDE
Non-employee directors of Clyde receive an annual cash compensation of
$1,500 for serving on the Board of Directors of Clyde.
PRINCIPAL SHAREHOLDERS OF CLYDE
The following table sets forth certain information regarding the
beneficial ownership of Clyde Common Stock as of the Record Date as to (i) each
person who is known by Clyde to own beneficially 5% or more of the outstanding
shares of Common Stock, (ii) each Director of Clyde, (iii) each executive
officer and (iv) all Directors and executive officers as a group. Except as
otherwise noted, Clyde believes the persons listed below have sole investment
and voting power with respect to the Clyde Common Stock that they are deemed to
beneficially own.
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<PAGE> 63
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------
SHARES APPROXIMATE
BENEFICIALLY PERCENTAGE
OWNED(1) OWNED(1)
------------ -----------
<S> <C> <C>
Richard C. Clyde(2)..................................................... 34,535 36.53%
776 South 600 West
Orem, UT 84057
David E. and Carol C. Salisbury(3)...................................... 34,275 36.25%
1423 Devonshire Drive
Salt Lake City, UT 84108
Louise C. Gammell (4)................................................... 34,255 36.23%
1100 E. 400 S.
Springville, UT 84663
Paul B. Clyde(5)........................................................ 33,660 35.60%
3308 N. 350 E.
Provo, UT 84601
William R. Clyde(6)..................................................... 32,040 33.89%
2000 Canyon Road
Springville, UT 84663
Clyde Companies, Inc.................................................... 31,935 33.78%
1423 Devonshire Drive
Salt Lake City, UT 84108
Ila C. Cook(7).......................................................... 31,935 33.78%
2711 Sherwood Dr.
Salt Lake City, UT 84108
Norman D. Clyde(8)...................................................... 3,150 3.33%
3223 Apache Lane
Provo, UT 84604
Wilford W. Clyde(9)..................................................... 1,675 1.77%
1324 East 950 South
Springville, UT 84663
Steven L. Clyde(10)..................................................... 1,035 1.09%
8604 South Woodland Hills Drive
Spanish Fork, UT 84660
Jeffrey R. Clyde........................................................ 100 *
4753 West Wasatch
Highland, Utah 84003
All Directors and executive officers as a group (8 people)(11).......... 44,615 47.19%
</TABLE>
- ----------
* Less than 1%
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(1) Applicable percentage of ownership is based on 94,544 shares of Common
Stock outstanding as of the Record Date. Beneficial ownership is determined
in accordance with the rules of the Commission, and includes voting and
investment power with respect to such shares.
(2) Includes 1,375 shares owned directly by Richard C. Clyde, 925 shares owned
jointly by Richard C. and Patricia Clyde (husband and wife), 150 shares
owned indirectly by Richard C. Clyde through the Richard Cornell Clyde
Trust, 150 shares owned indirectly by Patricia Clyde through the Patricia
Clyde Trust and 31,935 shares owned by CCI, which shares Mr. Clyde may be
deemed to beneficially own as a result of his position as a director of
CCI.
(3) Includes 250 shares owned directly by David E. Salisbury, 2,090 shares
owned directly by Carol C. Salisbury and 31,935 shares owned by CCI, which
shares the Salisburys may be deemed to beneficially own as a result of
Carol C. Salisbury's position as President and a director of CCI.
(4) Includes 2,320 shares owned directly by Louise C. Gammell and 31,935 shares
owned by CCI, which shares Ms. Gammell may be deemed to beneficially own as
a result of her position as Secretary, Treasurer and a director of CCI.
(5) Includes 1,115 shares owned directly by Paul B. Clyde, 610 shares owned
jointly by Paul B. and Jeanette P. Clyde (husband and wife) and 31,935
shares owned by CCI, which shares Mr. Clyde may be deemed to beneficially
own as a result of his position as a director of CCI.
(6) Includes 75 shares owned indirectly by William R. Clyde through the William
R. Clyde Family Trust, 30 shares owned indirectly by Mr. Clyde through the
Reklaw & Co. Trust and 31,935 shares owned by CCI, which shares Mr. Clyde
may be deemed to beneficially own as a result of his position as Vice
President and a director of CCI.
(7) Ila C. Cook may be deemed to be the beneficial owner of all of the 31,935
shares owned by CCI as a result of her position as Vice President and a
director of CCI. Ms. Cook does not own any shares of Clyde Common Stock
directly.
(8) Includes 50 shares owned directly by Norman D. Clyde and 3,100 shares owned
indirectly by Norman D. Clyde through the Norman D. Clyde Family Inter
Vivos Revocable Trust.
(9) Includes 1,065 shares owned directly by Wilford W. Clyde and 610 shares
jointly owned by Wilford W. and Natalie Clyde (husband and wife).
(10) Includes 885 shares owned directly by Steven L. Clyde and 150 shares owned
jointly by Steven L. and Pamela Clyde (husband and wife).
(11) In computing the aggregate number of shares owned by officers and directors
as a group, the shares owned by CCI, which shares certain of the officers
and directors may be deemed to beneficially own, are counted only once.
SELECTED FINANCIAL INFORMATION FOR CLYDE
The following selected statement of earnings and balance sheet data as
of and for each of the years in the five year period ended December 31, 1996 are
derived from the financial statements of Clyde which have been audited by Grant
Thornton. The selected statement of earnings data for the nine month periods
ended September 30, 1997 and 1996 are unaudited, but, in the opinion of
management, the unaudited financial statements reflect all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of the information included therein. The financial data for Clyde should be read
in conjunction with the Financial Statements and Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
Clyde" included elsewhere herein. The results for the nine month period ended
September 30, 1997 are not necessarily indicative of results that may be
expected for the full year.
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<PAGE> 65
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
--------------------- --------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of earnings data:
Construction revenue $ 9,696 $ 14,674 $ 19,056 $ 21,325 $ 20,222 $ 26,911 $ 25,879
Cost of construction 9,417 12,756 17,116 18,199 18,590 23,139 21,658
General and administrative 1,107 995 1,443 1,255 1,321 1,267 1,283
-------- -------- -------- -------- -------- -------- --------
Operating income (loss) (864) 923 497 1,871 311 2,505 2,938
Other income (expense), net 3,159 3,207 3,700 4,796 3,723 3,009 2,072
Income taxes 858 1,584 1,510 2,431 1,449 2,377 1,829
-------- -------- -------- -------- -------- -------- --------
Net earnings $ 1,437 $ 2,546 $ 2,687 $ 4,236 $ 2,585 $ 3,137 $ 3,181
======== ======== ======== ======== ======== ======== ========
Earnings per common share $ 15.19 $ 26.93 $ 28.42 $ 44.81 $ 27.34 $ 33.18 $ 33.64
Weighted average shares outstanding 94,544 94,544 94,544 94,544 94,544 94,544 94,544
Balance sheet data (at period end):
Current assets $ 16,287 $ 16,357 $ 16,320 $ 18,008 $ 18,175 $ 17,516
Current liabilities 1,126 1,092 1,297 1,225 1,599 1,801
Total assets 47,231 44,916 41,825 37,114 34,888 31,638
Total liabilities 11,014 9,969 8,836 7,415 6,829 5,770
Stockholders' equity 36,217 34,947 32,990 29,699 28,059 25,868
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF CLYDE
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Management's Discussion and
Analysis of Financial Condition and Results of Operations of Clyde and other
sections of this Proxy Statement/Prospectus, including without limitation
statements containing the words "believes," "anticipates," "intends," "expects"
and words of similar import, constitute forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Constituent Corporations to be materially different from any future results,
performance or achievements expressed or implied by such forward looking
statements. Such factors include, among other things, the following: (1)
expected cost savings from the Merger may not be realized; (2) costs or
difficulties related to the integration of the businesses of Clyde, Geneva Rock,
Utah Service and Beehive Insurance may be greater than expected; (3) an increase
of competitive pressure in the industries of Clyde, Geneva Rock, Utah Service
and Beehive Insurance may adversely affect the businesses of those companies;
and (4) general economic conditions, either nationally or in the states in which
Clyde, Geneva Rock, Utah Service and Beehive Insurance do business, may be less
favorable than expected. CCI disclaims any obligation to update such factors or
to publicly announce the result of any revisions to any forward-looking
statements included or incorporated by reference herein to reflect future events
or developments.
GENERAL
With the completion of the construction of the federal Interstate
Highway System in 1992, Clyde and the industry in general have seen a
significant decline in large earth work contracts. As discussed below, this
decline has had an adverse impact on Clyde's results of operations, but it has
not had a material adverse impact on Clyde's liquidity and capital resources. As
a consequence of the decline in large earth work contracts, the market in Utah
and surrounding states for highway work has changed from building new roads to
refurbishing existing roads. The most recent trend in Utah is to enter into
design/build contracts, such as Utah's massive Interstate 15 ("I-15")
reconstruction project currently underway in Salt Lake County. While Clyde was
not successful in its bid to participate in the I-15 project, it intends to bid
on future Utah Department of Transportation projects. In addition to bidding on
design/build projects, Clyde has increased its participation in private sector
projects, which generally provide better profit margins than public projects.
The following discussion address these changes in Clyde's business.
RESULTS OF OPERATIONS
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<PAGE> 66
The following discussions should be read in conjunction with the
financial statements and related notes of Clyde included elsewhere in this Proxy
Statement/Prospectus.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1996
Construction revenue for the nine-month period ended September 30, 1997
declined by $4,978,000 or 35% as compared to the nine-month period ended
September 30, 1996. The decrease in construction revenue resulted in a net
operating loss of $864,244 for the interim 1997 period, as compared to a net
profit of $923,000 for the 1996 interim period. The decrease in construction
revenue for the nine month period ended September 30, 1997 was largely
attributable to a decrease in Clyde's work under its service contract with
Kennecott Copper. In the last quarter of 1996 and the first half of 1997,
Kennecott Copper experienced difficulties with bringing a new smelter online,
resulting in a material reduction in revenue to Kennecott Copper on its copper
operations. Kennecott Copper addressed this reduction in revenue by making
cutbacks on environmental work which was the subject of Clyde's work under its
service contract with Kennecott Copper. During the third quarter of 1997,
Kennecott Copper was successful in commencing operations at its new smelter, and
Kennecott Copper appears to be returning to work under its service contract with
Clyde gradually (rather than immediately returning to the significantly higher
1995 and early 1996 work levels). While Clyde anticipates that Kennecott Copper
will continue to expand its work under the service contract with Clyde, recent
declines in the price of copper and gold may further delay or impede the ability
of Kennecott Copper to return to the 1995 and early 1996 levels of work under
the service contract. There can be no assurance that there will be a return to
the 1995 and early 1996 levels of work under the Kennecott service contract.
The decline in construction revenue during the first nine months of
1997, caused the gross profit margin on construction revenue for 1997 to decline
from 13.1% to 2.9%. This decrease in the gross profit margin was caused in
substantial part by Clyde's fixed costs. The cost of equipment and machinery
owned and maintained by Clyde is a fixed cost which is a major component of
Clyde's cost of construction, and this fixed cost continues to be an expense
which diminishes gross profits, regardless of whether Clyde is fully utilizing
such equipment and machinery during the reported period. Similarly, an increase
in general and accounting expenses, as a percentage of sales, from 7% to 11%,
resulted from certain of such expenses being fixed, as well as from annual
salary increases for the year ended 1997. Clyde anticipates that when and if
Clyde is able to increase construction revenues under the Kennecott service
contract, and under other projects, it will be able to recover a greater
percentage of its fixed costs and thereby increase its gross profits as a
percentage of sales, but there can be no assurance that this will be the case.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Construction revenue for the year ended December 31, 1996 totaled
$19,055,543, which represented a 10.6% decrease from $21,325,495 in construction
revenue for the year ended December 31, 1995. The decrease in 1996 construction
revenue was attributable to a decrease in Clyde's work under its service
contract at Kennecott Copper and the softening in the housing market. Work that
the management of Clyde anticipated doing in the fall of 1996 failed to
materialize during 1996. In addition, the management of Clyde was significantly
involved during 1996 in submitting a bid for the work on the I-15 project. The
bid process consumed considerable management resources and had a material effect
on construction revenue for 1996.
Earnings before income taxes for 1996 were $4,197,191, compared with
earnings before income taxes of $6,667,604 for 1995, resulting in a 37%
decrease. A 10.6% reduction in construction revenue in 1996 contributed
materially to the reduction in earnings before income taxes. Additionally, the
gross profit margin on construction revenue for 1996 declined to 10.2%, from
14.7% in 1995. The lower gross profit margin for 1996 stemmed from increased
competition for construction work in the Utah market and lower construction work
volume. For the reasons explained above with respect to the nine-month interim
periods, a 10.6% reduction in construction revenue for the year 1996 is the
primary reason for a decline in the gross profit margin from 14.7% in 1995 to
10.2% in 1996. Again, Clyde's significant investment in equipment and machinery
represents a fixed cost which reduces gross profits as percentage of sales
during periods of lower construction revenue. Also, general and administrative
expenses for 1996 increased to $1,443,165 from $1,254,961 in 1995. This increase
was largely a result of a non-cash accrual to pension expense of $111,715 in
1996 compared to no accrual for pension expense in 1995. Earnings before income
taxes for 1996 were also materially affected by a 23.2% decrease in the net
income of Geneva Rock in which Clyde has a 34.77% ownership interest (discussed
below).
Other income of Clyde in 1996 included gain on the sale of property and
equipment in the amount of $63,541, compared to a gain on the sale of property
and equipment in 1995 in the amount of $196,165. The gain on sale of property in
1995 was from Clyde's sale of 15 acres of land in Lehi, Utah, to the Alpine
School District. Interest income to Clyde for 1996 was $640,667, a decrease from
interest income in 1995 in the amount of $697,056.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Construction revenue for 1995 increased to $21,325,495, a 5.5% gain over
the 1994 construction revenue of $20,222,246. Gross profit on construction
revenue for 1995 in the amount of $3,126,551 represented a gross profit margin
of 14.7%, an increase over the 1994 gross profit margin of 8.1%. Increased
construction revenue in 1995 was attributable to an increased work load at
Kennecott Copper and the South Mountain Golf Course project In addition,
improvements in the gross profit margin from 1994 to 1995 were attributable to
better margins on negotiated work at Kennecott and South Mountain. Net income
before taxes increased to $6,667,604 for 1995 compared to $4,033,789 for 1994.
Clyde's strong net income for 1995 resulted from the strong construction
industry in Utah, the profitable year experienced in 1995 by Geneva Rock and the
volume of negotiated work completed during the year.
GENEVA ROCK
Clyde owns 34.77% of Geneva Rock Common Stock. Clyde's investment in
Geneva Rock is shown on an equity basis on Clyde's 1996 balance sheet as an
investment in an affiliate having a value of $19,881,754. Clyde's investment in
Geneva Rock as of December 31, 1994 and December 31, 1995 were shown as
$17,176,684 and $13,587,014,
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<PAGE> 67
respectively. Net income of Geneva Rock for 1996 was $8,433,997, resulting in an
additional $2,932,500 of income to Clyde. Geneva Rock has declared and paid
dividends of $30, $30, and $27 per share for the years 1996, 1995, 1994,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
Clyde's primary sources of liquidity have been funds generated by
operations and dividends received from Geneva Rock, in which Clyde has a 34.77%
interest. Net cash provided by (used in) operating activities was approximately
$5,668,299, $3,321,364, $1,163,408 and $(133,499) during 1994, 1995, 1996 and
the nine months ended September 30, 1997, respectively. Net cash provided by
operating activities is primarily attributable to Clyde's income before
depreciation and amortization expense. Net cash provided by dividends received
from Geneva Rock was approximately $204,687, $227,430, $227,430 and $0 during
1994, 1995, 1996 and the nine months ended September 30, 1997, respectively.
The cash position of Clyde from December 31, 1994 to December 31, 1995
increased from $5,144,323 on December 31, 1994 to $5,563,295 on December 31,
1995. Net cash provided by Clyde's operations totaled $3,321,364 for the year
ended December 31, 1995. During 1995 Clyde used cash of $4,551,214 for the
purchase of property and equipment and $2,857,022 for the purchase of interest
bearing deposits. In addition, $4,976,979 of investments which matured during
1995 was used to fund the purchase of property and equipment. Clyde paid
dividends of $945,440 during 1995. Equipment sold by Clyde during 1995 generated
$246,875 in cash and Clyde received a dividend from its subsidiary, Geneva Rock,
during 1995 in the amount of $227,430.
The cash position of Clyde dropped from a December 31,1995 balance of
$13,113,317 to a December 31, 1996 balance of $11,835,454. This reduction of
cash assets of Clyde, notwithstanding the 1996 after tax net income of
$2,686,858, resulted from a $112,395 increase in contracts receivable from a
December 31, 1995 balance of $2,084,533 to a December 31, 1996 balance of
$2,191,928. Additionally, costs and estimated earnings in excess of billings on
contracts in progress increased by the amount of $634,352 from a December 31,
1995 balance of $269,753 to a December 31, 1996 balance of $904,105, and costs
and estimated earnings in excess of billings on completed contracts increased to
a December 31, 1996 balance of $268,945 from a zero balance on December 31,
1995.
Clyde has historically had little or no long term debt. This has
continued to be the case through the years 1994, 1995, and 1996. Paid-in capital
remained unchanged from December 31, 1994 through December 31, 1996 at the
amount of $1,000,000. Retained earnings increased from $29,237,220 on December
31, 1994 to $32,527,923 on December 31, 1995 to $34,647,517 on December 31,
1996.
In addition to substantial cash investments on December 31, 1996, Clyde
had other substantial current assets in contracts receivable in the sum of
$2,191,928 (current) and $545,982 (in retention), and income taxes receivable in
the amount or $405,669.
The cash position of Clyde did not change significantly as of September
30, 1997 as compared to September 30, 1996.
INFLATION
Inflation in the U.S. economy has been relatively moderate during the
last few years. Price increases for labor and materials kept pace with inflation
for 1995 and 1996. The low unemployment rate in Utah and the rapid increase in
the number of workers required in the construction industry in the state has put
increased pressure on the cost of labor. Labor contracts negotiated in 1997
provide for increases in the 5% to 6% range per year through the year 2000.
Clyde expects that inflation will increase over the next few years,
making it more difficult to pass the increases on in the form of higher prices.
This could lead to lower margins in the work or a decrease in the work for which
Clyde successfully competes.
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SEASONALITY
Because Clyde conducts its business in the Intermountain West, Clyde
experiences lower sales during the winter months due to adverse weather
conditions. Historically, the months of December, January and February see a
major curtailment in the amount and types of construction work that can be
accomplished due to the extreme temperatures and frost in the ground. Clyde
anticipates that seasonal variations will continue. Clyde has, however,
established adequate reserves and, therefore, seasonal variations do not pose a
threat to Clyde.
THE YEAR 2000 ISSUE
Clyde utilizes computer hardware and software in its operations. Certain
computer applications could fail or create erroneous results due to the upcoming
change in the century (the "Year 2000 Issue"). Clyde regularly upgrades its
computer hardware and believes that it will not incur any additional expenses to
modify computer hardware due to the Year 2000 Issue. Clyde does not expect that
its expenditures related to the Year 2000 Issue will have a material adverse
effect on the results of operations or financial condition of Clyde
CERTAIN TRANSACTIONS
The following is a summary of related party transactions that occurred
during the years ended December 31, 1996 and 1995. Clyde provided construction
services and materials to Geneva Rock totaling approximately $519,000 and
$1,700,000 for the years ended December 31, 1996 and 1995, respectively. Clyde
paid $353,197 and $57,707 for the years ended December 31, 1996 and 1995,
respectively, for construction services and materials provided by Geneva Rock,
and $303,633 and $313,946 for the years ended December 31, 1996 and 1995,
respectively, for construction materials provided by Utah Service. Beehive
Insurance received $51,291 and $42,254 in commission revenue for insurance
purchased by Clyde in 1996 and 1995, respectively. Transactions with related
parties were not effected at below market prices.
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GENEVA ROCK
BACKGROUND
Geneva Rock, which was incorporated in Utah in 1954, was founded as a
ready-mix concrete business by W.W. Clyde and his associates. Geneva Rock is
engaged in the construction business through its Northern and Southern Utah
divisions. Geneva Rock's construction products consist primarily of ready-mix
concrete, asphalt, sand, gravel and other building materials, and its
construction services consist primarily of road and site construction. Geneva
Rock does business primarily in the Northern Utah area including Utah, Salt
Lake, Davis, Weber, Summit and Wasatch Counties, and the Southern Utah area
surrounding St. George, Utah. Geneva Rock's client base is diversified, with no
one client generating more than 10% of Geneva Rock's total sales. Geneva Rock
has furnished much of the concrete for many of the large commercial office
buildings in downtown Salt Lake City. Geneva Rock's Northern and Southern Utah
divisions are more fully described below.
PRODUCTS AND SERVICES
NORTHERN DIVISION
Utah has experienced a strong economy during the past four years. The
construction industry in the metropolitan areas of Utah, Salt Lake, Davis,
Weber, Summit and Wasatch Counties has benefited from Utah's strong economy. The
award of the 2002 Olympics to Salt Lake City has sparked plans of improvements
of highways, airports, lodging and ski areas. Construction of a light rail
system and a massive Interstate 15 ("I-15") freeway expansion project are
currently under way in the Salt Lake Valley. Geneva Rock was a team member of
one of the three consortiums that bid on the large I-15 freeway expansion
project. Although that consortium was not awarded the bid, Geneva Rock
anticipates receiving at least a portion of the materials work on the project
because of the convenient location of its plants along the I-15 freeway.
Geneva Rock produces many types of gravel for use in making asphalt,
drain rock, chips, screened sand, bank run sand, and gravel to make ready-mix
concrete, including washed sand and washed rock. Geneva Rock makes various
grades of asphalt to be used by its own construction crews or sold to other
contractors. The types of asphalt produced include 1/2" and 3/4" asphalt and
many special UDOT mixes, such as rubberized and friction course asphalts.
Because it does not wish to compete with its customers, Geneva Rock supplies,
but does not place, concrete. Geneva Rock's construction services consist of
excavation, utility and pipe work, site preparation, curb, gutter, and sidewalk
(placed by subcontractors), asphalt paving and other road building and site work
activities.
Geneva Rock has spent approximately $14,200,000 since January 1, 1993
updating its trucking fleets. Ninety percent of Geneva Rock's mixer trucks for
the ready-mix concrete business are front discharge trucks with capacities of
nine cubic yards per load. Geneva Rock's belly dump fleet of trucks has not been
significantly updated or expanded since many outside trucking firms are
available to perform these services. Savage Industries and Larsen Trucking, Inc.
are the two main haulers that Geneva Rock uses to transport aggregates to Geneva
Rock's plants. Geneva Rock's Construction Division is currently updating its 14
ton capacity dump trucks to 24 ton capacity trucks. With the constriction on
roads along the Salt Lake Valley region caused by the recent reconstruction of
the I-15 freeway, transporting Geneva Rock's products has become a more
complicated process. Upgrading to larger trucks has decreased the number of
trucks needed to transport product to a job site. In addition, Geneva Rock has
nearly completed the installation of new metal bins at its downtown Salt Lake
City plant that will enable Geneva Rock to produce 1200 to 1400 cubic yards of
concrete without hauling any aggregates into the downtown area during the busy
daylight hours. Aggregates can be hauled to the downtown bins during the night
while traffic is light so that Geneva Rock's trucks will not have to negotiate
I-15 traffic during the day. Since 1990 all cement powder used by Geneva Rock
has been hauled by Savage Industries.
Several Utah construction and material supply companies have recently
been acquired by national and international companies. Within the last two
years, Gibbons & Reed was acquired by Granite Construction, located in
Watsonville, California; Staker Paving and Jack B. Parsons Co. were acquired by
Old Castle, a U.S. subsidiary of CRH, an Ireland company; and Valley Asphalt,
Cox Rock Products, and Western Rock were acquired by U.S. Aggregates. There has
also been an influx of new large construction companies into Utah, such as Ames,
Industrial,
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Morrison Knudsen, and Peter Kewitt. Geneva Rock and Clyde are two of only a few
large, locally owned and operated highway contractors and gravel, asphalt, and
ready-mix concrete suppliers along the Wasatch front. The increase in
competitors and equipment have resulted in generally lower prices in the
industry along the Wasatch Front and operating and profit margins have
decreased. Despite increasing competition and decreased margins, the management
of Geneva Rock believes that it can continue to compete effectively in the Utah
market.
Geneva Rock has made several acquisitions in Northern Utah during the
1990's, including Ajax, a Tooele company acquired in 1990 and later divested;
Ideal Concrete, also acquired in 1990; the Price ready-mix concrete operation,
acquired in 1993; and Pioneer Sand and Gravel, a West Valley company acquired in
1995. Although Geneva Rock does not currently have any plans to acquire other
companies, it intends to continue to seek out other acquisitions to round out
its product lines in its existing market areas.
SOUTHERN DIVISION
In 1996, Geneva Rock formed J & J Building Supply, Inc. ("J & J") which
acquired the assets of J & J Mill & Lumber Supply Co. of St. George, Utah.
Geneva Rock's acquisition of J & J also included the operations of Quality
Concrete, a ready-mix cement producer located in Cedar City, Utah. As of
September 30, 1997, Geneva Rock's total investment in J & J was $18.47 million.
J & J is headquartered in St. George, Utah and also has operations in Cedar
City, Utah and Mesquite, Nevada. J & J's primary construction products consist
of rock products, including sand, gravel and ready mix concrete; concrete block
products, which it produces through its concrete block plant in St. George; and
other building materials, such as lumber, paint, sheet rock, roofing, plumbing,
electrical supplies and hardware products, which it sells through its stores in
St. George and Cedar City. J & J sells its product primarily in St. George and
Cedar City, Utah areas and in Mesquite, Nevada. Construction in Southwestern
Utah and Southeastern Nevada has in the past few years been strong, although
growth has experienced some recent slowdown, making it more difficult for J & J
to maintain past volumes. This region, however, continues to hold significant
potential growth as a preferred retirement community, especially as more people
move out of the increasingly congested Southern California, Las Vegas, Nevada
and Phoenix, Arizona regions.
RAW MATERIALS AND SUPPLIERS
NORTHERN DIVISION
Sand and gravel are the most basic raw materials required by Geneva
Rock. Presently Geneva Rock owns or leases gravel pits in Mapleton, Provo
Canyon, Draper and Bluffdale (Point of the Mountain), West Valley, South Weber,
and Morgan (all located in Utah). For a description of these properties, see
"Geneva Rock--Properties--Northern Division" below. Current sources in Davis and
Weber counties are sufficient, based on Geneva Rock's present requirements, to
supply Geneva Rock with sand and gravel for approximately ten years. Geneva Rock
is presently negotiating with certain property owners in the Davis, Weber and
Box Elder County region for the purchase or lease of new sites. New sources are
becoming harder to come by along the Wasatch Front due to increased property
development and more difficult permitting requirements.
Geneva Rock obtains other major raw materials from outside vendors.
Cement powder is purchased from three main suppliers in the area: Ashgrove
Cement, which owns a plant in Lemmington, Utah (approximately 90 miles south of
Salt Lake City) and a plant in southern Idaho near Inkom; Holnam Cement, which
is modernizing its plant in Weber Canyon at Devils Slide and will soon be able
to double production capacity; and Mountain Cement, which transports its cement
by train from a plant in Wyoming. These suppliers also import cement from other
plants and cement producers to meet customer demand. Geneva Rock is the largest
customer in Utah for Ashgrove and Holnam. Geneva Rock purchases most of its
concrete additives from Grace Construction Products. Geneva Rock also purchases
asphalt oil for the production of asphalt. Geneva Rock's major suppliers of
asphalt oil are Sinclair Oil, Crysen Refining, and Koch Asphalt Materials.
Geneva Rock prices diesel fuel daily and is currently purchasing most of its
diesel fuel requirements from Kellerstraus and Flying J. Management anticipates
that with a new cement plant coming on line, Geneva Rock will not experience any
significant shortages in cement products. Although the Wasatch Front region has
a limited number of suppliers of asphalt oil, management believes that the
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supply is sufficient to meet the needs of Geneva Rock. Management also believes
that the supply of diesel fuel in the region is sufficient to meet the needs of
Geneva Rock.
SOUTHERN DIVISION
J & J has various leases for sand and gravel in St. George and Cedar
City, Utah. For a description of these and other J & J properties, see "Geneva
Rock--Properties--Southern Division" below. J & J also has many suppliers of its
building and hardware products. J & J belongs to a buying cooperative named
TrueServe. Much of J & J's lumber products are purchased direct. Georgia Pacific
is one of J & J's largest suppliers of lumber. Cement products are purchased
from Ashgrove, Holnam, and Southdown. Management believes that because of the
availability of a large number of suppliers, J & J will not experience any
significant shortages in raw materials or goods.
COMPETITION
NORTHERN DIVISION
Geneva Rock has a number of competitors in Northern Utah, some of which
are larger and have greater financial resources. Management believes that with
an increasing number of new competitors entering the construction business and
the increase in the capabilities of existing competitors that have been sold to
larger firms, the opportunities for business and expansion will be more limited
than they have been in the last five years. Geneva Rock's primary ready-mix
concrete competitors currently include Westroc, Metro, Parsons, Monroc, CPC,
Valley Materials, Valley Ready Mix, Alta View/All American, and Fife Rock
Products. Construction, sand and gravel competitors include Valley Asphalt,
Staker Paving, Savage Asphalt, Miller Paving, Gibbons & Reed, Parsons, Harper
Excavating, Western Quality Concrete, H.E. Davis & Sons, and a number of smaller
competitors.
Competition is based on price, product quality and service, and
availability. Geneva Rock management believes that Geneva Rock is well
positioned to compete with its competitors because it has high-quality products
and services and key strategic locations of its operations.
SOUTHERN DIVISION
J & J's primary competitors for building materials include Anderson
Lumber, Burton Lumber, which concentrates on catering to the needs of
contractors, and a number of smaller competitors in the St. George area. J & J
has the only concrete block plant in the St. George area, and its primary
competitors for concrete block products are producers in Las Vegas, Nevada and
Southern California that ship into Southern Utah. J & J's primary competitors in
the sand, gravel, and ready-mix concrete business are Western Rock and, to a
lesser extent, Interstate Rock. Prices in this business are very competitive.
Competition is based on prices, product quality, service and availability.
SEASONALITY OF BUSINESS
NORTHERN DIVISION
The business of Geneva Rock in Northern Utah is seasonal, slowing during
December through February due to the winter weather. Geneva Rock typically lays
off a number of employees during this slow period (depending on the severity of
the weather), and/or as workload varies. During this period, the ready-mix
concrete and aggregate businesses continue to operate, but on a scaled back
basis. Geneva Rock's road construction business almost totally shuts down during
December, January, and February because its work consists largely of asphalt
paving which cannot be performed in the cold winter months.
SOUTHERN DIVISION
Southern Utah experiences two different seasonal weather conditions. In
St. George, Utah and Mesquite, Nevada, work can be performed year round because
the winters generally are mild. The summer months, however,
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are extremely hot which results in a slight slowdown in business since concrete
is harder to finish in extreme heat and many residents go on vacations during
this time. Cedar City, Utah has a climate similar to Northern Utah and must deal
with similar cold winter weather as the Northern Utah division.
REGULATION
Geneva Rock and J & J's operations are subject to a variety of federal,
state, and local laws and regulations, including environmental regulations.
Geneva Rock is continually upgrading its facilities in an effort to ensure
compliance with these regulations. Management believes that Geneva Rock and J &
J are in substantial compliance with all applicable government regulations and
have all material licenses, permits, and approvals from local, state and federal
governing bodies which are required to mine sand and gravel and to conduct
business at Geneva Rock's various locations.
EMPLOYEES
NORTHERN DIVISION
As of January 30, 1998, Geneva Rock's Northern Utah division had
approximately 700 employees, 53 of which were salaried employees and the
remainder of which were hourly employees. Geneva Rock has bargaining agreements
with the Operating Engineers Union and the Teamsters Union. Approximately 250
employees belong to the Operating Engineers Union, 275 belong to the Teamsters
Union and 175 are non-bargaining employees. The two union groups have benefit
programs that are funded by Geneva Rock. Benefit programs for the non-bargaining
unit employees are sponsored by Geneva Rock and, in the case of the health
insurance and retirement plans, are part of a combined plan with other Clyde
affiliated companies. Because of the seasonal nature of Geneva Rock's Northern
Utah business, an average of approximately 50% of its employees are laid off
during the winter months. Geneva Rock also experiences a turnover of about
10-15% of its employees each year. Geneva Rock believes that its employee
relations are satisfactory.
SOUTHERN DIVISION
As of January 30, 1998, J & J had approximately 200 employees, 36 of
which were salaried employees and the remainder of which were hourly employees.
J & J has no affiliation with any labor unions. J & J experiences a turnover of
about 5-10% of it's employees each year. J & J experiences less turnover than
Geneva Rock in Northern Utah because of the limited amount of good paying jobs
in J & J's market area in Southern Utah. Geneva Rock believes that its employee
relations are satisfactory.
CUSTOMERS
Geneva Rock and J & J have a customer base of approximately 5,000
customers. There are a few key customers that do a large volume of business with
Geneva Rock each year, but none that account for more than 10% of the business
of Geneva Rock. UDOT has consistently been Geneva Rock's largest customer.
UDOT's projects are typically awarded to the low bid. Most other customers are
either cities or private construction companies.
PROPERTIES
NORTHERN DIVISION
Geneva Rock has a number of operating facilities and sand and gravel
pits throughout Northern Utah, including sand and gravel pits in Mapleton, Provo
Canyon, Cedar Hills, Draper, Bluffdale, West Valley, Morgan and South Weber.
Geneva Rock has concrete plants in Ogden, Layton, Salt Lake City, South Salt
Lake, West Valley, Sandy, Draper, Orem, Park City and Helper. Geneva Rock also
has two asphalt plants, one at Geneva Rock's gravel pit in Draper at the Point
of the Mountain and the other in Orem, Utah. Geneva Rock's corporate offices and
Construction Division headquarters are located in Orem, Utah. The Ready Mix
Concrete headquarters is located in Murray, Utah and the Gravel and Asphalt
Materials Division is in Draper, Utah. Geneva Rock also has
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offices in Layton, West Valley, Park City and Helper, Utah. The following is a
description of Geneva Rock's primary properties in Northern Utah.
OREM. Geneva Rock's Orem property is the original and present location
of Geneva Rock's corporate office where all accounting functions take place. It
is also the headquarters for Geneva Rock's Construction Division. The property
is situated on 38 acres of industrial property which is owned by Geneva Rock.
The site also has a 300 ton- per-hour asphalt plant, 200 yard-per-hour pre-mix
concrete plant, nine bay shop with paint room and three bay weld shop. The site
is located in the heart of the Utah County, which currently has a population of
over 300,000. This area has experienced significant growth recently, especially
in the high tech industry. Major employers in the area include Brigham Young
University, Utah Valley State College, Geneva Steel, Novell and Nuskin
International.
DRAPER AND BLUFFDALE (POINT OF THE MOUNTAIN). These locations service
both Utah and Salt Lake Counties, Utah's two most populous counties, and are
Geneva Rock's two most important gravel pits. The pit in Bluffdale is leased by
Geneva Rock and contains a gravel washing operation and other miscellaneous
screening plants. The pit is a major source for sand throughout the area. See
"Geneva Rock--Future Land Development" for more information regarding the
Bluffdate pit. The Draper pit is owned by Geneva Rock and contains a washing
operation, road base and asphalt plant material crushing plant, dry mix concrete
batch plant, and 500 ton-per-hour state-of-the-art asphalt plant. Geneva Rock
has also just completed a new combination shop/office at the Draper site. This
will be the new headquarters for Geneva Rock's Gravel and Asphalt Materials
Division. This shop/office facility, with 10 bays, will be Geneva Rock's largest
and will be used to service crushing equipment, large front end loaders and
trucks.
SANDY. This location is owned by Geneva Rock and contains a pre-mix
concrete batch plant and small shop located at the south end of the Salt Lake
Valley, which is currently undergoing a major commercial expansion. The city of
Sandy, however, has restricted this site's operating hours. Geneva Rock is
currently engaging in negotiations to sell this property to an interested buyer
for $2,670,000.
MURRAY. In 1997, Geneva Rock purchased a 25,000 square foot office
building in Murray, Utah. One-fourth of the building is currently being used as
Geneva Rock's Salt Lake Sales and Dispatch Office and the remaining space is
being leased to other tenants, including Beehive Insurance. The office, which is
situated at the center of the Salt Lake Valley, is in an excellent location to
conduct business and is the headquarters for Geneva Rock's Ready-Mix Concrete
Division.
WEST VALLEY CITY. Geneva Rock has three gravel pits with gravel crushers
in West Valley City. The Pioneer property is leased from West Valley City with
two years remaining on the lease. Geneva Rock owns the 150 acre West Valley Pit
and leases the Bacchus property adjacent to the West Valley Pit from the
Property Reserve, Inc. These sites are critical sources of material to service
the west side of the Salt Lake Valley including Kennecott. Geneva Rock also has
a dry mix concrete batch plant at the West Valley Pit.
SOUTH SALT LAKE. This property is owned by Geneva Rock, is Geneva Rock's
first location in the Salt Lake Valley and is located in the middle of the
valley. The site contains a premix concrete batch plant and 8 bay truck shop.
This plant is strategically located to service any location throughout the Salt
Lake Valley.
DOWNTOWN SALT LAKE CITY. This location is owned by Geneva Rock and
contains a premix concrete batch plant and a small truck shop. This plant is
being upgraded to be able to batch 1200 to 1400 cubic yards of concrete without
any aggregate being hauled during daylight hours. It is located in the downtown
area and is key to supplying some of the largest projects in the area.
LAYTON. This location is owned by Geneva Rock and includes a sales
office, premix concrete batch plant and small truck shop. The office services
the Davis and Weber County areas.
PARK CITY. This location is owned by Geneva Rock and includes a sales
office, small batch plant and small shop to service the Park City area, a high
growth resort area located approximately 30 miles from Salt Lake City.
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PRICE. This location is owned by Geneva Rock and includes a sales office
and small dry-mix concrete batch plant to service the Carbon and Emery County
area. This site is situated approximately 90 miles from the corporate office in
Orem and services the low production levels required by surrounding rural
communities.
SOUTHERN DIVISION
ST. GEORGE STORE. This store is leased from the prior owners of J & J
under a 5 year lease with four 5 year options to renew. The store contains J &
J's corporate offices, a hardware store built in 1995 and a lumber yard. It is
located one block away from one of St. George's primary streets, St. George
Boulevard. This has been the original location of J & J for nearly fifty years.
ST. GEORGE CONCRETE PLANT. This plant, located on Bluff Street in the
center of town, is a leased property comprising a small shop and a dry-mix
concrete batch plant. Aggregates from J & J's gravel pit must be hauled through
town to this location. J & J is considering a move of the concrete plant to the
gravel pit. This will save J & J transportation costs and the $180,000 annual
lease currently paid for the St. George plant.
ST. GEORGE CONCRETE BLOCK PLANT. The block plant is owned by J & J and
is located in the Bloomington Hills area of St George. This location has two
block plants: a plant built in 1987 and a new state of the art plant built in
1996. The older plant employs a 3 block machine, while the new plant employs a 5
block machine. The location also includes a masonry store and a sales office.
FORT PIERCE GRAVEL PITS. The Fort Pierce gravel pits are located near
the St. George block plant. J & J is leasing one of the two pits for a term of
25 years and the other gravel pit from the State of Utah for a 5 year term which
began in September 1996. These pits are the two main sources of gravel in the
area. Management believes that these pits hold an adequate supply of gravel to
meet J & J's needs for the next twenty years.
MESQUITE, NEVADA. This location is owned by J & J and includes a small
concrete dry batch plant with a small gravel reserve. The property is surrounded
by a large tract of BLM property that could be a good source for future gravel
reserves, provided that the necessary permits could be obtained. There can be no
assurance, however, that such permits can be obtained.
CEDAR CITY, UTAH. There are two sites in Cedar City. One site includes a
small 6,000 square foot store, which is leased by J & J and stocks building and
masonry products, and the second site, which is owned by J & J, includes a
ready-mix concrete plant and a gravel pit. The second site has approximately 60
acres held in reserve for future gravel production. Although Cedar City is
currently a small community of approximately 20,000 people, it has recently
experienced strong growth.
FUTURE LAND DEVELOPMENT
One of Geneva Rock's most important land development needs is the
acquisition of future gravel reserves. The Davis and Weber County areas have
relatively few gravel reserves compared to other areas. Geneva Rock's current
reserves in the Davis and Weber County areas are expected to last approximately
ten years based on current requirements. Geneva Rock intends to seek the
purchase or lease of additional gravel reserves in this area. Geneva Rock
believes its reserves in Salt Lake and Utah Counties and the St. George, Utah
area will last at least twenty years based on current requirements.
Geneva Rock has entered into a Real Property Purchase Agreement, dated
September 2, 1997, pursuant to which Geneva Rock has agreed to purchase 57 acres
of real property situated in the Box Elder and Weber Counties of Utah. The
purchase price for the property is $40,000 per acre. Geneva Rock is in the
process of conducting due diligence on the property and has applied for
governmental approval and permits necessary for Geneva Rock to conduct sand,
gravel, and rock excavation upon the property and to operate crushing equipment
and a ready mix batch plant. The obligations of Geneva Rock to proceed with its
purchase of the property are contingent upon satisfactory completion of Geneva
Rock's due diligence and the issuance to Geneva Rock of all necessary
governmental approvals and permits.
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Geneva Rock leases the pit in Bluffdale from Mt. Jordan Limited
Partnership, a Utah limited partnership. Geneva Rock is a general and limited
partner in Mt. Jordan Limited Partnership, owning approximately 15.2% of Mt.
Jordan Limited Partnership. Geneva Rock is presently negotiating with Mt.
Jordan Limited Partnership to acquire the Bluffdale pit and surrounding
property. Although Geneva Rock is hopeful that Mr. Jordan Limited Partnership
and Geneva Rock, will be successful in negotiating mutually agreeable terms for
Geneva Rock's acquisition of the Bluffdale pit, there can be no assurance that
this will occur.
TRADE NAMES
Geneva Rock uses the "Geneva Rock Products" and "Red Rock Construction"
names as service marks in connection with its business operations. J & J uses
the "J & J Building Supply" name as a service mark in connection with its
business operations.
BACKLOG
Neither Geneva Rock nor J & J has a significant backlog of projects.
Most projects are completed in the year they are begun. Geneva Rock's Ready-Mix
Concrete Division, however, will start two large projects in 1998 that will
extend into 1999. The first project is for the supply of about 100,000 cubic
yards of concrete to the new Little America Grand Hotel in downtown Salt Lake
City, and the other project is for the supply of about 150,000 cubic yards of
concrete to Wasatch Constructors over the next four years in connection with the
I-15 freeway reconstruction. All other Geneva Rock projects were substantially
completed in 1997.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which Geneva Rock is
a party. From time to time, Geneva Rock is involved in ordinary, routine legal
proceedings which are incidental to its business, but which do not have a
material adverse impact on its business or operations.
MARKET PRICE OF AND DIVIDENDS ON GENEVA ROCK COMMON STOCK
There is no public trading market for Geneva Rock Common Stock. The
approximate number of Geneva Rock shareholders of record as of the Record Date
was 81.
In 1995, Geneva Rock paid cash dividends of $30.00 per share of Geneva
Rock Common Stock to shareholders. In 1996, Geneva Rock paid cash dividends of
$30.00 per share of Geneva Rock Common Stock to shareholders. In 1997, Geneva
Rock paid cash dividends of $30.00 per share of Geneva Rock Common Stock to
shareholders. After the Merger, dividends will be paid by CCI in such amounts
and at such times as the CCI Board of Directors deems to be appropriate based on
the results of operations, financial condition and liquidity needs of CCI. The
amount, type and frequency of dividends paid by CCI to its shareholders will not
be equivalent to the amount, type and frequency of dividends paid by Geneva Rock
prior to the Merger. See "Summary--Selected Financial Information--Comparative
Per Share Data".
GENEVA ROCK MANAGEMENT
DIRECTORS
The names and ages of Geneva Rock's Directors are currently as follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION(S) WITH GENEVA ROCK SINCE
- ---- --- ---------------------------- -----
<S> <C> <C> <C>
William R. Clyde.............79 Director, Secretary 1954
Norman D. Clyde..............67 Director 1959
Richard C. Clyde.............62 Director 1971
Paul B. Clyde................56 Director 1971
Wilford W. Clyde.............44 Director, President 1978
Albert T. Schellenberg.......51 Director, Vice President 1984
John R. Young................54 Director, Concrete Division Manager 1987
A. Ray Gammell...............39 Director, Equipment and Facilities Manager 1987
</TABLE>
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For a description of the business backgrounds of Richard C. Clyde, Paul
B. Clyde, and William R. Clyde, see "Clyde Companies, Inc.--CCI Management Prior
to Consummation of the Merger," of Wilford W. Clyde, see "Clyde Companies,
Inc.--CCI Management Upon Consummation of the Merger," and of Norman D. Clyde,
see "Clyde--Clyde Management."
Albert T. Schellenberg has been a director since 1984. He has also been
Vice President since 1988, with responsibility for construction, human
resources, property management, safety, and assisting the President where
needed. Mr. Schellenberg is professional engineer and has worked at Geneva Rock
as project manager, construction division manager, assistant
secretary/treasurer, and now as vice president. He has been involved with road
construction and design for 25 years, with previous employment at Kennecott
Copper Mine in Utah. Mr. Schellenberg has also served on the Board of Directors
of J & J. since 1997.
John R. Young has been a director since 1987. He has also been the
Concrete Division Manager for Geneva Rock since 1973. He has worked at Geneva
Rock for over 30 years in the concrete sales and production area. He has been a
salesman, plant manager and now division manager.
A. Ray Gammell has been a director since 1987. He has been the Equipment
and Facilities Manager for Geneva Rock since 1985. He has worked at Geneva Rock
for 17 years in the equipment and asphalt construction divisions. He is
currently responsible for all ordering, repair and implementation of all
equipment at Geneva Rock. Mr. Gammell has also served on the Board of Directors
of J & J since 1996, on the Board of Directors of Utah Service since 1995 and as
the Vice President of Utah Service since 1997. A. Ray Gammell is the son of
Louise C. Gammell, who is currently the Secretary and Treasurer of CCI, a
director of CCI and Utah Service; and the brother of B. Clyde Gammell, who is
currently the Vice President and a director of Beehive Insurance.
Members of the Board of Directors of J & J includes Wilford W. Clyde,
Albert T. Schellenberg, William R. Clyde, Richard C. Clyde, Paul B. Clyde,
Norman D. Clyde, A. Ray Gammell and David O. Cook. For a description of the
business background of David O. Cook, see "Utah Service--Utah Service
Management" below.
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The names, ages and positions of Geneva Rock's executive officers and
significant employees are currently as follows:
<TABLE>
<CAPTION>
CURRENT POSITION(S)
NAME AGE WITH GENEVA ROCK SINCE
- ---- --- ---------------- -----
<S> <C> <C> <C>
Wilford W. Clyde.........................44 President 1988
Albert T. Schellenberg...................51 Vice President 1988
William R. Clyde.........................79 Secretary 1969
Don C. McGee.............................44 Assistant Secretary, Treasurer 1988
John R. Young............................54 Concrete Division Manager 1983
A. Ray Gammell...........................39 Equipment and Facilities Division Manager 1983
</TABLE>
For a description of the business backgrounds of Wilford W. Clyde, see
"Clyde Companies, Inc.--CCI Management Upon Consummation of the Merger," of
William R. Clyde, see "Clyde Companies, Inc.--CCI Management Prior to
Consummation of the Merger," and of Albert T. Schellenberg, John R. Young and A.
Ray Gammell, see "Geneva Rock--Geneva Rock Management--Directors".
Don C. McGee has served as Assistant Secretary and Treasurer of Geneva
Rock since 1988, with responsibility for all of the accounting functions and tax
reporting requirements. Don has a B.S. in accounting and has been employed as
Credit Manager, Accounting Manager, Controller and currently is Assistant
Secretary and Treasurer. He has been involved with accounting for 20 years with
previous employment at Exxon Oil Company as an internal auditor from 1976 to
1979. Mr. McGee has also served as Secretary and Treasurer of J & J since 1996.
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<PAGE> 77
COMMITTEES OF GENEVA ROCK BOARD
The Board of Directors of Geneva Rock does not have any committee and no
plans to establish any committee.
ATTENDANCE AT GENEVA ROCK BOARD MEETINGS
As of the date hereof, the Board of Directors met two times in 1997, and
no director attended fewer than 75% of these meetings, except Norman Clyde who
is currently on a leave of absence for church service for a period of
approximately three years.
COMPENSATION OF DIRECTORS OF GENEVA ROCK
Directors that are not full time employees of Geneva Rock received
$1,500 in 1994, 1995, and 1996 for serving on the Geneva Rock Board of
Directors. Members of the Board of Directors that were full time employees
(i.e., Wilford W. Clyde, Albert T. Schellenberg, John R. Young and A. Ray
Gammell) received no compensation for serving as directors.
PRINCIPAL SHAREHOLDERS OF GENEVA ROCK
The following table sets forth certain information regarding the
beneficial ownership of Geneva Rock Common Stock as of the Record Date as to (i)
each person who is known by Geneva Rock to own beneficially 5% or more of the
outstanding shares of Common Stock, (ii) each Director of Geneva Rock, (iii)
each executive officer and (iv) all Directors and executive officers as a group.
Except as otherwise noted, Geneva Rock believes the persons listed below have
sole investment and voting power with respect to the Geneva Rock Common Stock
that they are deemed to beneficially own.
<TABLE>
<CAPTION>
COMMON STOCK
------------
SHARES APPROXIMATE
BENEFICIALLY PERCENTAGE
OWNED(1) OWNED(1)
-------- --------
<S> <C> <C>
Paul B. Clyde (2).......................................................12,831 58.85%
3308 N 350 E
Provo, Utah 84601
Richard C. Clyde(3).....................................................12,366 56.72%
776 South 600 West
Orem, Utah 84057
William R. Clyde(4)....................................................12,335 56.58%
2000 Canyon Road
Springville, Utah 84663
David E. and Carol C. Salisbury(5).....................................12,308 56.45%
1423 Devonshire Drive
Salt Lake City, UT 84108
Norman D. Clyde(6)......................................................8,535 39.15%
3223 Apache Lane
Provo, Utah 84604
Wilford W. Clyde(7).....................................................7,804 35.79%
1324 E 950 S
</TABLE>
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<PAGE> 78
<TABLE>
<S> <C> <C>
Springville, Utah 84663
Steven L. Clyde(8)......................................................7,768 35.63%
8604 South Woodland Hills Drive
Spanish Fork, UT 84660
W.W. Clyde & Co.........................................................7,581 34.77%
P. O. Box 350
Springville, Utah 84663
Jeffrey R. Clyde(9).....................................................7,581 34.77%
4753 West Wasatch
Highland, UT 84003
Ila C. Cook(10).........................................................4,727 21.68%
2711 Sherwood Dr.
Salt Lake City, UT 84108
Louise C. Gammell(11)...................................................4,726 21.68%
1100 E. 400 S.
Springville, UT 84663
Clyde Companies, Inc....................................................4,725 21.67%
1423 Devonshire Drive
Salt Lake City, Utah 84108
Albert T. Schellenberg.....................................................10 *
11089 N 5020 W
Highland, Utah 84003
John R. Young..............................................................10 *
1404 Cherry Canyon Way
Draper, Utah 84020
A. Ray Gammell..............................................................1 *
1294 N 1000 W
Mapleton, Utah 84663
All Directors and Executive Officers as a group (8 people)(12).........14,118 64.76%
</TABLE>
- ----------------
* Less than 1%.
(1) Applicable percentage of ownership is based on 21,802 shares of Common
Stock outstanding as of the Record Date. Beneficial ownership is determined
in accordance with the rules of the Commission, and includes voting and
investment power with respect to such shares.
(2) Includes 143 shares owned directly by Paul B. Clyde, 37 shares owned
jointly by Paul B. and Jeanette Clyde (husband and wife), 7,581 shares
owned by Clyde, which shares Mr. Clyde may be deemed to beneficially own as
a result of his position as a director and Vice President of Clyde, and
4,725 shares owned by CCI, which shares Mr. Clyde may be deemed to
beneficially own as a result of his position as a director of CCI.
(3) Includes 60 shares owned directly by Richard C. Clyde, 7,581 shares owned
by Clyde, which shares Mr. Clyde may be deemed to beneficially own as a
result of his position as a director, President and General Manager of
Clyde, and 4,725 shares owned by CCI, which shares Mr. Clyde may be deemed
to beneficially own as a result of his position as a director of CCI.
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<PAGE> 79
(4) Includes 26 shares owned indirectly by William R. Clyde through the William
R. Clyde Trust, 3 shares owned indirectly by Mr. Clyde through the Reklaw &
Co. Trust, 7,581 shares owned by Clyde, which shares Mr. Clyde may be
deemed to beneficially own as a result of his position as a director of
Clyde, and 4,725 shares owned by CCI, which shares Mr. Clyde may be deemed
to beneficially own as a result of his position as a director of CCI.
(5) David E. and Carol C. Salisbury (husband and wife) may be deemed to be the
beneficial owners of two shares owned directly by Carol C. Salisbury, all
of the 7,581 shares owned by Clyde as a result of Mr. Salisbury's position
as a director of Clyde and all of the 4,725 shares owned by CCI as a result
of Ms. Salisbury's position as President and Director of CCI.
(6) Includes 304 shares owned directly by Norman D. Clyde, 650 shares owned
jointly by Norman D. and Phyllis Clyde (husband and wife) and 7,581 shares
owned by Clyde, which shares Mr. Clyde may be deemed to beneficially own as
a result of his position as a director of Clyde.
(7) Includes 186 shares owned directly by Wilford W. Clyde, 37 shares owned
jointly by Wilford W. and Natalie Clyde (husband and wife) and 7,581 shares
owned by Clyde, which shares Mr. Clyde may be deemed to beneficially own as
a result of his position as a director of Clyde.
(8) Includes 187 shares owned directly by Steven L. Clyde and 7,581 shares
owned by Clyde, which shares Mr. Clyde may be deemed to beneficially own as
a result of his position as a director of Clyde.
(9) Jeffrey R. Clyde may be deemed to be the beneficial owners of all of the
7,581 shares owned by Clyde as a result of his position as a director of
Clyde. Mr. Clyde does not own any shares of Geneva Rock Common Stock
directly.
(10) Includes two shares owned directly by Ila C. Cook and 4,725 shares owned by
CCI, which shares Ms. Cook may be deemed to beneficially own as a result of
her position as Vice President and Director of CCI.
(11) Includes one share owned directly by Louise C. Gammell and 4,725 shares
owned by CCI, which shares Ms. Gammell may be deemed to beneficially own as
a result of her position as Secretary, Treasurer and Director of CCI.
(12) In computing the aggregate number of shares owned by officers and directors
as a group, the shares owned by CCI and Clyde, which shares certain of the
officers and directors may be deemed to beneficially own, are counted only
once.
SELECTED FINANCIAL INFORMATION FOR GENEVA ROCK
The following selected statement of earnings and balance sheet data as
of and for each of the years in the five year period ended December 31, 1996 are
derived from the financial statements of Geneva Rock which have been audited by
Squire. The selected statement of earnings for the nine month periods ended
September 30, 1997 and 1996 are unaudited, but, in the opinion of management,
the unaudited financial statements reflect all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the information
included therein. The financial data for Geneva Rock should be read in
conjunction with the Financial Statements and Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
Geneva Rock" included elsewhere herein. The results for the nine month period
ended September 30, 1997 are not necessarily indicative of results that may be
expected for the full year.
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
------------------ -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- -------- -------- ------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of earnings data:
Gross sales and contract income $94,736 $85,260 $116,349 $100,422 $80,526 $70,556 $56,507
Cost of sales and contracts 79,560 71,566 98,908 80,811 65,205 58,133 49,853
General and administrative 4,143 2,784 4,979 3,173 2,655 2,905 2,254
------- ------- -------- -------- ------- ------- -------
</TABLE>
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<PAGE> 80
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Operating income 11,033 10,910 12,462 16,438 12,666 9,518 4,400
Other income (expense), net 255 810 781 918 1,201 430 235
Income taxes 4,143 3,675 4,809 6,378 5,062 3,321 1,488
------- ------- -------- -------- ------- ------- -------
Net earnings $ 7,145 $ 8,045 $ 8,434 $ 10,978 $ 8,805 $ 6,627 $ 3,147
======= ======= ======== ======== ======= ======= =======
Earnings per common share $327.72 $369.04 $ 386.85 $ 503.54 $403.85 $304.01 $144.39
Weighted average shares outstanding 21,802 21,802 21,802 21,802 21,802 21,802 21,802
Balance sheet data:
Current assets $42,113 $ 35,240 $ 31,230 $25,373 $19,346 $13,244
Current liabilities 9,913 8,036 5,289 4,307 3,964 2,484
Total assets 84,598 74,848 56,702 45,294 35,919 28,290
Total liabilities 20,274 17,669 7,303 6,219 5,060 3,579
Stockholders' equity 64,077 57,179 49,399 39,075 30,859 24,710
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF GENEVA ROCK
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Management's Discussion and
Analysis of Financial Condition and Results of Operations of Geneva Rock and
other sections of this Proxy Statement/Prospectus, including without limitation
statements containing the words "believes," "anticipates," "intends," "expects"
and words of similar import, constitute forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Constituent Corporations to be materially different from any future results,
performance or achievements expressed or implied by such forward looking
statements. Such factors include, among other things, the following: (1)
expected cost savings from the Merger may not be realized; (2) costs or
difficulties related to the integration of the businesses of Clyde, Geneva Rock,
Utah Service and Beehive Insurance may be greater than expected; (3) an increase
of competitive pressure in the industries of Clyde, Geneva Rock, Utah Service
and Beehive Insurance may adversely affect the businesses of those companies;
and (4) general economic conditions, either nationally or in the states in which
Clyde, Geneva Rock, Utah Service and Beehive Insurance do business, may be less
favorable than expected. CCI disclaims any obligation to update such factors or
to publicly announce the result of any revisions to any forward-looking
statements included or incorporated by reference herein to reflect future events
or developments.
RESULTS OF OPERATIONS
The following discussions should be read in conjunction with the
financial statements and related notes of Geneva Rock included elsewhere in this
Proxy Statement/Prospectus.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1996
Gross sales and contract income increased by $9,476,000 or 11% for the
nine-month period ended September 30, 1997, as compared to the comparable period
in 1996. This increase was primarily due to the acquisition of J & J on June 28,
1996 resulting in only three months of comparable sales figures for 1996
compared
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<PAGE> 81
to nine months in 1997. However, net earnings decreased by $374,900 or 5%
primarily due to lower prices resulting from increased competition and losses
experienced by J & J.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Gross sales and contract income for the year ended December 31, 1996
totaled $116,348,692, which represented a 15.9% increase from $100,422,149 in
sales for the year ended December 31, 1995. Sales increased 10.9% primarily
because of Geneva Rock's acquisition of J & J. The remaining 5% increase in
sales was attributable to the strong construction market in Utah.
Net earnings for 1996 were $8,433,997 compared with net earnings of
$10,978,104 for 1995, a 23.2% decrease. This decline in net earnings was
attributable primarily to lower gross profit margins. The lower gross profit
margin for 1996 stemmed from increased competition in the Utah market resulting
in static pricing or, in some instances, lower pricing of Geneva Rock's
products. 1995 was a year with a long autumn of fair weather which made it
possible to continue construction work later in the year and contributed to
increased net earnings. In contrast, construction work ceased earlier in the
year during 1996 which contributed to a decrease in net earnings as compared to
1995. Additionally, the cost of producing Geneva Rock's products (i.e., labor
costs, equipment costs, and the cost of raw materials) saw significant increases
in 1996. Also contributing to the reduction in net income in 1996 were losses of
$363,331, attributable to Geneva Rock's investment in J & J. J & J has not
realized a profit since Geneva Rock acquired J & J in 1996 because of the
construction slowdown in the St. George, Utah, Cedar City, Utah and Mesquite,
Nevada areas and the revaluing of J & J's assets which increased the amount of
depreciation. General and administrative expenses for 1996 increased to
$4,979,299 from $3,172,944 in 1995. Increased cost of producing products and
increased overhead resulted from increased sales volumes in 1995 and 1996 which
created the need for more equipment and personnel to service the increasing
sales. Other income for the year ended 1996 declined by $136,500 from 1995. This
decrease in other income resulted primarily from Geneva Rock's investment of
approximately $12,700,000 to form J & J. Geneva Rock's investment in J & J was
comprised of $6,000,000 cash and a promissory note payable to Jenning's
Management, Inc. in the amount of $6,700,000. If the $6,000,000 cash component
of the investment in J & J had been invested in certificates of deposit or other
cash equivalents, it would have generated other income. Also, interest was
accrued and expensed on the promissory note given to Jennings Management, Inc.
in partial payment of the purchase price for the J & J assets.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Gross sales and contract income for 1995 increased 24.7% to $100,422,149
over 1994 sales of $80,525,668. Gross profit on sales for 1995 increased to
$19,610,985, a 28% increase over 1994 gross profit on sales of $15,320,393.
Increased sales in 1995 were attributable to strong increases in the Utah
construction market and to Geneva Rock's acquisition of the assets of Pioneer
Sand and Gravel. Net income before taxes increased to $10,978,104 for 1995
compared to $8,804,707 for 1994. Geneva Rock's strong net income for 1995
resulted from the strong construction industry in Utah and less price
competition than was to be experienced by Geneva Rock after 1995. Other income
for 1995 declined $283,745 from total other income for 1994. This decrease was
attributable in large part to the fact that 1994 was the last year to which the
early termination payment for the Cottonwood Pit lease was recognized (see
"Other Income" below).
OTHER INCOME
Geneva Rock's other income account is comprised of income received from
sources other than the sale of Geneva Rock's standard products. The most
significant components of other income are: (i) distributions of partnership
income to Geneva Rock as a partner in Mt. Jordan Limited Partners; (ii) proceeds
from the sale of equipment in excess of book value; (iii) interest income (net
of interest expense and bank charges); (iv) sign rental income; (v) payments
received by Geneva Rock in consideration for a covenant not to compete granted
in connection with the sale of Geneva Rock's Tooele County facility; and (vi)
proceeds from the sale of scrap materials. Other income for the nine month
period ending September 30, 1997 declined from the corresponding period in 1996
primarily due to an increase in interest expense and a decrease in interest
income and because the Mt. Jordan Limited Partners distribution for 1997 was not
paid until after September 30, 1997. The decline in other income for the year
ended December 31, 1996 from the year ended December 31, 1995 resulted primarily
from an increase in interest expense and a decrease in interest income. The
increase in interest expense and the decrease in interest income in 1996 and
1997 was the result of Geneva Rock's capital expenditures in the formation and
capitalization of J & J. Other income for the year ended December 31, 1994
included a payment in the amount of $345,834 which was the 1994 portion of a
payment received from Salt Lake County in consideration for the early
termination of the Cottonwood Pit lease.
LIQUIDITY AND CAPITAL RESOURCES
Geneva Rock's primary sources of liquidity have been funds generated by
operations. Net cash provided by operating activities was approximately
$12,052,679, $12,673,418, $9,524,490 and $6,932,153 during 1994, 1995, 1996 and
the nine months ended September 30, 1997, respectively. Net cash provided by
operating activities is primarily attributable to Geneva Rock's income before
depreciation and amortization expense.
The cash position of Geneva Rock from December 31, 1994 to December 31,
1995 was essentially unchanged. However, liquidity improved by an increase of
non-cash current assets from December 31, 1994 to December 31, 1995 by the
amount of $5,905,863. The liquidity of Geneva Rock improved from December, 1994
to December, 1995 as a result of the profitability of Geneva Rock.
The cash position of Geneva Rock dropped from a December 31, 1995
balance of $11,924,153 to a December 31, 1996 balance of $7,752,630. This
reduction of cash assets of Geneva Rock, notwithstanding net income in 1996 of
$8,433,997, resulted from a cash contribution for the stock of J & J in the
amount of $12,130,000. Non-cash current assets increased from 1995 to 1996 by
the amount of $8,180,909. Geneva Rock has historically had little or no long
term debt. In connection with J & J's acquisition of assets from J & J Mill and
Lumber Company, however, Geneva Rock incurred debt of $6,700,000. This debt,
evidenced by a promissory note in the original principal amount of $6,700,000,
is payable with interest at the rate of 8 1/4% per annum in seven
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consecutive equal annual payments of $1,297,908.83. As a result of the
investment in J & J, the December 31, 1996 balance sheet reflects an equity
position in stock in the sum of $18,466,669.
Paid-in capital remained unchanged from December 31, 1994 through
December 31, 1996, in the amount of $28,456. Retained earnings increased from
$38,828,357 on December 31, 1994 to $49,152,401 on December 31, 1995 and to
$56,932,337 on December 31, 1996.
In addition to substantial cash assets on December 31, 1995 and December
31, 1996, Geneva Rock has established a line of credit with First Security Bank
of Utah, N.A. Geneva Rock's line of credit at First Security was $1,000,000 in
1996 and has been increased to $2,000,000 for the year 1997. As of the date
hereof, Geneva Rock had not drawn on this line of credit.
Management of Geneva Rock has determined that Geneva Rock needs to
continually upgrade its fleet and equipment if it is to maintain and/or expand
its market position. Geneva Rock is committed to purchase and/or lease equipment
that was delivered in March of 1997, with 1997 lease payments in the aggregate
amount of $642,988. Management of Geneva Rock believes that the Company's
current cash reserves and future sales revenues will be adequate to service
Geneva Rock's commitments for the purchase and lease payments to be made on this
equipment, without impairing Geneva Rock's liquidity requirements.
INFLATION
Inflation in the U.S. economy has been relatively moderate during the
last few years. Price increases for labor and materials kept pace with inflation
for 1995. In 1996, although price increases were introduced, increased
competition in the Utah market from outside vendors precluded Geneva Rock from
passing on to its customers all increases in the cost of producing its products.
Geneva Rock expects that inflation will affect the cost of wages and materials
to Geneva Rock in 1998 and that the current competitive circumstance of the Utah
market will preclude Geneva Rock from passing all of such increases on to its
customers. This circumstance may result in lower profit margins for Geneva Rock
in 1998.
SEASONALITY
Because of the location of Geneva Rock's operations primarily in central
and northern Utah, Geneva Rock experiences significantly lower sales during the
winter months due to adverse weather conditions. Historically, the months of
November through March have shown losses for Geneva Rock, with Geneva Rock's
profitable months being April through October. Geneva Rock has historically
dealt well with these seasonal variations in sales and has established adequate
reserves to address the liquidity requirements of Geneva Rock in the winter
months. Also, the acquisition of J & J in southern Utah may reduce the losses
historically experienced in the winter months, although it will not eliminate
losses in the winter months.
THE YEAR 2000 ISSUE
Geneva Rock utilizes computer hardware and software in its operations.
Certain computer applications could fail or create erroneous results due to the
upcoming change in the century (the "Year 2000 Issue"). Geneva Rock regularly
upgrades its computer hardware and believes that it will not incur any
additional expenses to modify computer hardware due to the Year 2000 Issue. In
addition, Geneva Rock has received commitments from software vendors that will
allow Geneva Rock to upgrade third-party software programs with minimal expense
to Geneva Rock. Geneva Rock anticipates, however, that it will incur expenses of
approximately $300,000 over the next two years to upgrade certain proprietary
software developed for Geneva Rock. Geneva Rock does not expect that its
expenditures related to the Year 2000 Issue will have a material adverse effect
on the results of operations or financial condition of Geneva Rock
CERTAIN TRANSACTIONS
The following is a summary of related party transactions that occurred
during the years ended December 31, 1996 and 1995. Geneva Rock provided
construction services and materials to Clyde totaling approximately $353,197 and
$57,707 for the years ended December 31, 1996 and 1995, respectively. Geneva
Rock paid $519,000 and $1,700,000 for the years ended December 31, 1996 and
1995, respectively, for construction services and materials provided by Clyde,
and $637,833 and $645,138 for the years ended December 31, 1996 and 1995,
respectively, for construction materials provided by Utah Service. Beehive
Insurance received $193,025 and $183,885 in commission revenue for insurance
purchased by Geneva Rock in 1996 and 1995, respectively. Geneva Rock also leases
part of its office building in Murray, Utah to Beehive Insurance. Transactions
with related parties were not effected at below market prices.
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UTAH SERVICE
BACKGROUND
Utah Service was founded in 1937 by W.W. Clyde to service Clyde. Utah
Service owns and operates a hardware store and lumber yard and an adjacent
gasoline station/convenience store, all located at 400 South Main Street in
Springville, Utah. Utah Service's customer base is well diversified, with none
of its customers generating more than 10% of total sales. The products and
services offered by Utah Service are described below.
PRODUCTS AND SERVICES
BUILDING MATERIALS AND LUMBER
Utah Service is a retailer of lumber and building materials. Utah
Service stocks a wide range of building materials and lumber to provide
customers with quality products needed to build, repair or remodel residential
or commercial property. Wood products include lumber, plywood, roof trusses,
floor trusses, treated lumber, sheathing, wood siding and specialty lumber.
Building materials include roofing, vinyl siding, doors, windows, molding,
drywall, insulation, cement and nails.
Utah Service sells its products to general contractors, such as
residential and commercial building professionals, repair contractors and
remodeling contractors, and to the general public, such as retail customers
involved in home improvement and remodeling projects. Utah Service concentrates
its efforts on service, product assortment, specialist advice, convenient
location, scheduled on time job-site delivery and competitive prices. Utah
Service's retail building materials and lumber market is largely confined to the
Springville/Mapleton area. Utah Service's customer base is well diversified,
with no customers accounting for more than 10% of total sales. Most of Utah
Service's advertising is in the form of direct mail and advertisements in the
local newspaper. These marketing efforts are generally targeted at the general
public which includes individual homeowners, students, and other retail
customers.
Utah Service is formulating plans for moving to a new, fully operational
building material and lumber contractor yard by the fall of 1998 on a 7.3 acre
site owned by Utah Service and located one-half mile west of Utah Service's
current location. The yard will be surfaced and comprised of lumber sheds and a
contractor's office. Utah Service estimates that the cost of this new facility
will be approximately $825,000.
HARDWARE
Utah Service is also a retailer in the home improvement industry. Utah
Service sells an assortment of building materials, home improvement, lawn and
garden supplies, housewares, appliances and seasonal items, such as plumbing,
heating, lighting, electrical, hardware, tools and paint. The hardware store
stocks approximately 42,000 product items ranging in color and size with a
variety of quality and nationally advertised brand names, such as "Ace". Utah
Service's retail hardware sales are largely confined to the
Springville/Mapleton, Utah area.
Utah Service plans to open a new full service hardware and garden store
at an existing site in Spanish Fork, a city adjacent to Springville, by the fall
of 1998. The leased store will be 24,500 square feet and stocked with everything
currently sold at the Springville store, other than lumber packages which will
be supplied by the Springville store. The location of the new store will help
maintain customer satisfaction by reducing delays in shopping, increasing
utilization by existing customers and attracting new customers to a more
convenient location. The hardware department will also continue to offer a broad
assortment of high quality merchandise at competitive prices. Utah Service
estimates that the cost of this new facility will be approximately $725,000.
CHEVRON GAS STATION/CONVENIENCE STORE
Utah Service also owns and operates a Chevron gas station/convenience
retail store. The gas station/convenience store sells Chevron gasoline and
diesel products exclusively under an independent dealership arrangement with
Chevron. The store also offers a wide variety of products, such as milk, ice
cream, groceries,
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beverages, snack foods, candy, deli products, hot dogs, chili, soup, nachos,
baked goods, other food items, tobacco products and health and beauty aids. The
store also supplies various automotive supplies, such as oil, brake fluid,
windshield wipers, fix-a-flat and air fresheners. Utah Service's retail service
station/convenience store market is largely confined to the
Springville/Mapleton, Utah area.
Utah Service plans to upgrade and remodel its Chevron gas
station/convenience store on its existing location in late 1998 or early 1999
once the lumber yard is moved to its new site. These remodeling plans include
modernizing and changing the store's appearance, upgrading the gasoline
facilities, increasing the number of gas pumps from 4 to 8 and installing modern
environmental protection equipment. Utah Service estimates that the cost of
upgrading and remodeling this facility will be approximately $250,000.
AUTOMOTIVE AND INDUSTRIAL SUPPLIES
Utah Service is also an automotive specialty retailer in the automotive
aftermarket. The automotive aftermarket refers to products and services
purchased for vehicles after the original sale, such as accessories, maintenance
and repairs, replacement parts, including brake shoes, brake pads, belts, hoses,
starters, alternators, batteries, shocks, struts, CV boots, carburetors,
transmission parts, clutches, electrical components, suspension and engine
parts. Other automotive products sold include batteries, oil, antifreeze, brake
and power steering fluid, engine additives, wax and protectants, floor mats,
seat covers, and more. Utah Service is not in the business of selling tires or
performing automotive repairs. Utah Service's retail automotive supply market is
largely confined to the automotive repair shops and retail customers in the
Springville/Mapleton, Utah area. The department also sells industrial supplies,
including crusher bowls, conveyor belting, and fasteners for industrial use.
SUPPLIERS
Utah Service purchases its products for each department from numerous
vendors. The majority of its building materials, lumber, automotive and
industrial supplies are purchased directly from manufacturers, while the
remaining products are purchased from combination manufacturers/wholesalers. Its
main hardware vendor is Ace Hardware. The hardware department purchases
approximately 62% of its hardware items from Ace. Utah Service purchase all of
its gasoline and diesel products through Chevron's local wholesaler. Convenience
store items are purchased through various vendors. Utah Service is not fully
dependent on any single vendor and management believes that alternative sources
of products and supplies are available for all of its products.
COMPETITION
Utah Service's business is highly competitive. Utah Service's building
materials and lumber business competes primarily with national or regional
building centers, warehouses, and home center retailing, such as Anderson
Lumber, Burton Lumber and BMC West. Utah Service's hardware business competes
primarily with chains of building supply houses, home improvement stores,
national hardware stores and warehouse clubs, such as Anderson Lumber, Eagle
Hardware and Home Base. Utah Service's gas station/convenience store business
currently competes with other convenience stores, large, nationally recognized
gas stations, supermarket chains, independent gasoline stations, fast food
operations and other similar retail stores. As of September 30, 1997,
Springville had seven other gasoline stations and/or convenience stores which
competed with Utah Service's Chevron station. Automotive products similar or
identical to those sold at the Utah Service store are generally available from a
variety of different competitors in and around Springville. Key competitive
factors include location, quality service, product selection, pricing, hours of
operation, expertise of sales staff and product promotions. Management believes
that Utah Service competes favorably on each of these factors.
SEASONALITY OF BUSINESS
Utah Service's businesses are generally adversely affected by cold
weather patterns in the first and fourth quarters when sales tend to decline by
approximately 35% to 40% from average annual sales. Hardware sales usually rise,
however, during the fourth quarter due to holiday shopping. Utah Service
generally experiences higher revenues and profit margins during the warmer
months in the second and third quarters. For example, gas sales
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during this period tend to increase by approximately 25% from average annual
sales as a result of an increase in vacation traveling and the use of
recreational vehicles, boats, jet skis and motorcycles.
EMPLOYEES
As of January 30, 1998, Utah Service had a total of 57 employees, 32
which were full time and 25 which were part time. None are unionized. Utah
Service considers its employee relations to be satisfactory.
INFORMATION SYSTEMS
Utah Service employs "point of sale" computer terminals with an
electronic bar code scanning system in every department. These systems provide
efficient customer check-out, which decreases transaction time, reduces register
lines and eliminates the time previously spent on price labeling every item. The
systems also provide management with current, valuable sales and marketing
information to help in the future planning of each store and monitor inventory
levels thereby reducing the frequency of physical inventories to only once or
twice a year.
Utah Service also makes use of the Internet to help expand its business.
Utah Service maintains a World Wide Web site at http://www.ACELB.com, which
contains valuable product and service information relating to their hardware,
lumber and building materials needs. Utah Service also has access to detailed
and up-to-date information on Ace through Ace Net.
REGULATION
Utah Service is subject to a variety of federal, state, and local laws
and regulations. Utah Service management believes that Utah Service currently
has all licenses, permits and approvals necessary for its current operations and
is in substantial compliance with all applicable government regulations.
PROPERTIES
Utah Service merged with an affiliated company, Utah Valley Industrial
Supply, on December 31, 1994. Prior to that date, the two companies operated out
of two separate facilities, Utah Service out of a 7,000 square foot building and
Utah Valley Industrial Supply out of a 4,000 square foot building, both located
where the present facilities are located. The present hardware store facility
was completed in April 1995 at a total cost of $825,000 (excluding approximately
$148,000 in new equipment purchased to equip the new facility). The facility has
a total of 23,500 square feet of space on the main (retail) floor, with an
additional 2,000 square feet of corporate office space located on the second
floor.
Utah Service's hardware store, gasoline station/convenience store, and
lumber yard are all located on a 2.75 acre parcel of land. In addition to these
facilities, Utah Service also owns a 2.67 acre parcel of land located west of
Center Street in Springville, which is used by Utah Service primarily for lumber
storage. In October 1997, Utah Service sold two retail buildings located on Main
Street in Springville to help fund Utah Service's expansion plans. These plans
include building a new, fully operational building material and lumber
contractor yard on land that it owns in Springville, opening a new full service
hardware and garden store and expanding its gas station/convenience store in
late 1998 or early 1999. See "Utah Service--Products and Services" above.
TRADE NAMES
Utah Service uses the "Chevron", "Ace Hardware" and "Parts Plus" names
as service marks in connection with its business operations. Utah Service owns
the "Utah Service, Inc." mark and currently licenses the other marks. It does
not sell any goods under any brand name owned by Utah Service.
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LEGAL PROCEEDINGS
There are no material pending legal proceedings to which Utah Service
was a party. From time to time, Utah Service becomes involved in ordinary,
routine legal proceedings incidental to the business of Utah
Service which do not have an adverse impact on its business or operations.
MARKET PRICE OF AND DIVIDENDS ON UTAH SERVICE COMMON STOCK
There is no public trading market for Utah Service Common Stock. The
approximate number of shareholders of record as of the Record Date was 52.
In 1995, Utah Service paid cash dividends of $20.00 per share of Utah
Service Common Stock to shareholders. In 1996, Utah Service paid cash dividends
of $20.00 per share of Utah Service Common Stock to shareholders. In 1997, Utah
Service paid cash dividends of $20.00 per share of Utah Service Common Stock to
shareholders. After the Merger, dividends will be paid by CCI in such amounts
and at such times as the CCI Board of Directors deems to be appropriate based on
the results of operations, financial condition and liquidity needs of CCI. The
amount, type and frequency of dividends paid by CCI to its shareholders will not
be equivalent to the amount, type and frequency of dividends paid by Utah
Service prior to the Merger. See "Summary--Selected Financial
Information--Comparative Per Share Data".
UTAH SERVICE MANAGEMENT
DIRECTORS
The names and ages of Utah Service's Directors are currently as
follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION(S) WITH UTAH SERVICE SINCE
- ---- --- ----------------------------- -----
<S> <C> <C> <C>
Vernon O. Cook ..............76 Chairman of the Board 1949
Hal M. Clyde ................70 Director 1970
Norman D. Clyde .............67 Director 1964
Paul B. Clyde ...............56 Director 1987
William R. Clyde ............79 Director 1948
A. Ray Gammell...............39 Director , Vice President 1995
Louise C. Gammell............73 Director 1968
David O. Cook................47 Director, President and Chief Executive Officer 1982
</TABLE>
For a description of the business backgrounds of Paul B. Clyde, William
R. Clyde, and Louise C. Gammell, see "Clyde Companies, Inc.--CCI Management
Prior to Consummation of the Merger," of Norman D. Clyde, see "Clyde--Clyde
Management," and of A. Ray Gammell, see "Geneva Rock--Geneva Rock Management."
Vernon O. Cook has served as a director since 1949 and as Chairman of
the Board since April 1997. He served as the President of Utah Service from 1975
to 1997. He is now retired from work in the retail and real estate industries
and from management of Utah Service. Mr. Cook graduated from the University of
California in 1949 with a degree in Physics. From 1949-1962, he was Manager of
Operations and Director of Utah Service. From 1962-1971, he was General Manager
and Executive Vice President of IRECO Chemicals, Mesabi Blasting Agents, Inc.
and Intermountain Research and Engineering Co., Inc. Since the early 1970s, Mr.
Cook has purchased and operated income property and has formed a private
corporation called Vernon O. Cook & Co., Inc. for real estate sales and
operations. Vernon O. Cook is the husband of Ila C. Cook, who is currently Vice
President and a director of CCI; and the father of David O. Cook, who is
currently President, CEO and a director of Utah Service.
Hal M. Clyde has served as a director since 1970. He retired in 1992
after 44 years of employment with Clyde. Mr. Clyde currently serves as a
Commissioner on the UDOT Commission. He has also served on the Board of
Directors of Beehive Insurance since 1963. Hal M. Clyde is the brother of Norman
D. Clyde, who is currently a director of Utah Service, Clyde, Geneva Rock, and
Beehive Insurance; the father of H. Michael Clyde, who has agreed to become a
director
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of CCI upon consummation of the Merger; and an uncle of Tawna Clyde Smith, who
has agreed to become a director of CCI upon consummation of the Merger.
Louise C. Gammell has been a director since 1968. She has a Bachelors
degree from the University of Utah. Ms. Gammell has been a director of CCI since
1961. Louise C. Gammell is the mother of A. Ray Gammell, who is currently the
Vice President and a director of Utah Service and a director of Geneva Rock, and
B. Clyde Gammell, who is currently the Vice President and a director of Beehive
Insurance; the sister of William R. Clyde, Ila C. Cook and Carol C. Salisbury;
and an aunt of Richard C. Clyde, Paul B. Clyde, Wilford W. Clyde, Steven L.
Clyde and David O. Cook.
David O. Cook has been a director since 1982. He was elected President
and Chief Executive Officer of Utah Service in April 1997. He has served as the
General Manager of Utah Service since 1980. He was Vice President of Utah
Service from 1991 to 1997. He graduated from BYU, Hawaii with a Bachelors degree
in Accounting and Business Administration. Mr. Cook is a Certified Public
Accountant and a member of the American Institute of Certified Public
Accountants and Utah Association of Certified Public Accountants. Prior to
joining Utah Service, Mr. Cook was Assistant Controller for NRP, Staff
Accountant and Supervisor for Robinson, Hill and Co. from 1973 to 1975. David O.
Cook is the son of Vernon O. Cook, who is currently Chairman of the Board of
Utah Service, and of Ila C. Cook who is currently the Vice President and a
director of CCI.
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The names, ages and positions of Utah Service's executive officers and
significant employees are currently as follows:
<TABLE>
<CAPTION>
CURRENT POSITION(S)
NAME AGE WITH UTAH SERVICE SINCE
- ---- --- ----------------- -----
<S> <C> <C> <C>
Vernon O. Cook...........................76 Chairman of Board 1997
David O. Cook............................47 President and Chief Executive Officer 1997
A. Ray Gammell...........................39 Vice President 1997
Lawrence Kosmuch.........................45 Accounting Manager, Secretary and Treasurer 1979
</TABLE>
For a description of the business backgrounds of A. Ray Gammell, see
"Geneva Rock--Geneva Rock Management," and of Vernon O. Cook and David O. Cook,
see "Utah Service--Utah Service Management Directors" above.
Lawrence Kosmuch has been the Accounting Manager, Secretary and
Treasurer of Utah Service since 1979.
COMMITTEES OF UTAH SERVICE BOARD
The Board of Directors of Utah Service does not have any committee and
no plans to establish any committees.
ATTENDANCE AT UTAH SERVICE BOARD MEETINGS
As of the date hereof, the Board of Directors met four times in 1997,
and no director attended fewer than 75% of these meetings, except Norman Clyde
who is currently on a leave of absence for church service for a period of
approximately three years.
COMPENSATION OF DIRECTORS OF UTAH SERVICE
Vernon O. Cook receives $2,000 annually for his services as Chairman of
the Board of Directors of Utah Service. Directors who are not employed by Utah
Service, including Hal M. Clyde, Norman D. Clyde, Paul B.
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Clyde, William R. Clyde, A. Ray Gammell and Louise Clyde Gammell, receive $750
per year for their services as directors.
PRINCIPAL SHAREHOLDERS OF UTAH SERVICE
The following table sets forth certain information regarding the
beneficial ownership of Utah Service Common Stock as of the Record Date as to
(i) each person who is known by Utah Service to own beneficially 5% or more of
the outstanding shares of Common Stock, (ii) each Director of Utah Service,
(iii) each executive officer and (iv) all Directors and executive officers as a
group. Except as otherwise noted, Utah Service believes the persons listed below
have sole investment and voting power with respect to the Utah Service Common
Stock that they are deemed to beneficially own.
<TABLE>
<CAPTION>
COMMON STOCK
------------
SHARES APPROXIMATE
BENEFICIALLY PERCENTAGE
OWNED(1) OWNED(1)
-------- --------
<S> <C> <C>
Louise C. Gammell(2).....................................................2,084 38.50%
1100 E. 400 S.
Springville, UT 84663
Vernon O. Cook and Ila C. Cook(3)........................................2,019 37.30%
2711 Sherwood Dr.
Salt Lake City, UT 84108
Carol Clyde Salisbury(4).................................................1,946 35.95%
1423 Devonshire Dr.
Salt Lake City, UT 84108
Richard C. Clyde(5)......................................................1,720 31.78%
776 South 600 West
Orem, UT 84057
Paul B. Clyde(6).........................................................1,719 31.76%
3308 N. 350 E.
Provo, UT 84601
William. R. Clyde(7).....................................................1,712 31.63%
2000 Canyon Rd.
Springville, UT 84663
Clyde Companies, Inc.....................................................1,698 31.37%
1423 Devonshire Drive
Salt Lake City, UT 84108
David O. Cook(8)...........................................................568 10.49%
1498 E. Center St.
Springville, UT 84663
Hal M. Clyde(9)............................................................192 3.55%
908 Hillcrest Dr.
Springville, UT 84663
</TABLE>
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<TABLE>
<S> <C> <C>
Norman D. Clyde............................................................191 3.53%
3223 Apache Lane
Provo, UT 84604
A. Ray Gammell...............................................................5 *
1294 N. 1000 W.
Mapleton , UT 84664
All Directors and executive officers as a group (8 people)(10)...........3,396 62.27%
</TABLE>
- -----------------
* Less than 1%.
(1) Applicable percentage of ownership is based on 5,413 shares of Common Stock
outstanding as of the Record Date. Beneficial ownership is determined in
accordance with the rules of the Commission, and includes voting and
investment power with respect to such shares.
(2) Includes 300 shares owned directly by Louise C. Gammell, 86 shares owned
directly by Ms. Gammell's husband, Blake Gammell, which shares Ms. Gammell
may be deemed to beneficially own, and 1,698 shares owned by CCI, which
shares Ms. Gammell may be deemed to beneficially own as a result of her
position as Secretary, Treasurer and a director of CCI.
(3) Includes 129 shares owned indirectly by Vernon O. Cook through the Vernon O.
Cook Family Trust, 192 shares owned indirectly by Ila C. Cook through the
Ila C. Cook Family Trust, and 1,698 shares owned by CCI, which shares Ila C.
Cook may be deemed to beneficially own as a result of her position as Vice
President and a director of CCI.
(4) Includes 248 shares owned directly by Carol C. Salisbury and 1,698 shares
owned by CCI, which shares Ms. Salisbury may be deemed to beneficially own
as a result of her position as President and a director of CCI.
(5) Includes 22 shares owned directly by Richard C. Clyde and 1,698 shares owned
by CCI, which shares Mr. Clyde may be deemed to beneficially own as a result
of his position as a director of CCI.
(6) Includes 21 shares jointly owned by Paul B. and Jeanette Clyde (husband and
wife) and 1,698 shares owned by CCI, which shares Mr. Clyde may be deemed to
beneficially own as a result of his position as a director of CCI.
(7) Includes 14 shares owned directly by William R. Clyde and 1,698 shares owned
by CCI, which shares Mr. Clyde may be deemed to beneficially own as a result
of his position as Vice President and a director of CCI.
(8) Includes 379 shares owned directly by David O. Cook and 189 shares owned by
INVO, L.C., which shares Mr. Cook may be deemed to beneficially own as a
result of his position as an officer, director and shareholder of INVO, L.C.
(9) Includes 192 shares owned indirectly by Hal M. Clyde through the Hal M.
Clyde Trust.
(10) In computing the aggregate number of shares owned by officers and directors
as a group, the shares owned by CCI, which shares certain of the officers
and directors may be deemed to beneficially own, are counted only once.
SELECTED FINANCIAL INFORMATION FOR UTAH SERVICE
The following selected statement of earnings and balance sheet data as
of and for the nine months ended September 30, 1997 are derived from the
financial statements of Utah Service which have been audited by Grant Thornton.
The selected statement of earnings and balance sheet data as of and for each of
the years in the five year period ended December 31, 1996 and the selected
statement of earnings data for the nine months ended September 30, 1996 are
unaudited, but, in the opinion of management, the unaudited financial statements
reflect all adjustments (consisting of normal recurring adjustments) necessary
for a fair presentation of the information included therein. The financial data
for Utah Service should be read in conjunction with the Financial Statements and
Notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations of Utah Service" included elsewhere herein. The
results for the nine month period ended September 30, 1997 are not necessarily
indicative of results that may be expected for the full year.
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<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
----------------- -------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------ ------ ------- ------- ------- ------ ------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of earnings data:
Operating revenues $9,258 $9,939 $13,108 $13,580 $10,690 $8,252 $6,141
Cost of goods sold 7,590 8,373 10,915 11,633 9,159 7,053 5,152
General and administrative 1,168 1,121 1,628 1,498 915 800 691
------ ------ ------- ------- ------- ------ ------
Operating income 500 445 565 449 616 399 298
Other income (expense), net 71 89 114 101 95 165 123
Income taxes 213 183 258 199 265 217 148
------ ------ ------- ------- ------- ------ ------
Net earnings $ 358 $ 351 $ 421 $ 351 $ 446 $ 347 $ 273
====== ====== ======= ======= ======= ====== ======
Earnings per common share $66.20 $64.81 $ 77.78 $ 64.77 $ 89.18 $69.23 $54.66
Weighted average shares outstanding 5,413 5,413 5,413 5,413 5,000 5,000 5,000
Balance sheet data (at period end):
Current assets $3,539 $ 3,057 $ 2,911 $ 2,339 $2,098 $1,741
Current liabilities 826 626 608 359 489 400
Total assets 4,815 4,387 4,278 2,857 2,618 2,281
Total liabilities 958 853 977 359 489 400
Stockholders' equity 3,857 3,534 3,301 2,498 2,130 1,881
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF UTAH SERVICE
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Management's Discussion and
Analysis of Financial Condition and Results of Operations of Utah Service and
other sections of this Proxy Statement/Prospectus, including without limitation
statements containing the words "believes," "anticipates," "intends," "expects"
and words of similar import, constitute forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Constituent Corporations to be materially different from any future results,
performance or achievements expressed or implied by such forward looking
statements. Such factors include, among other things, the following: (1)
expected cost savings from the Merger may not be realized; (2) costs or
difficulties related to the integration of the businesses of Clyde, Geneva Rock,
Utah Service and Beehive Insurance may be greater than expected; (3) an increase
of competitive pressure in the industries of Clyde, Geneva Rock, Utah Service
and Beehive Insurance may adversely affect the businesses of those companies;
and (4) general economic conditions, either nationally or in the states in which
Clyde, Geneva Rock, Utah Service and Beehive Insurance do business, may be less
favorable than expected. CCI disclaims any obligation to update such factors or
to publicly announce the result of any revisions to any forward-looking
statements included or incorporated by reference herein to reflect future events
or developments.
RESULTS OF OPERATIONS
The following discussions should be read in conjunction with the
financial statements and related notes of Utah Service included elsewhere in
this Proxy Statement/Prospectus.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1996
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Operating revenues for the nine months ended September 30, 1997 totaled
$9,258,000, which represented a 6.9% decrease from $9,939,000 in operating
revenues from the comparable period in 1996. This decline resulted from a
decrease in lumber sales attributable primarily to a decline in sales of lumber
to commercial construction projects in the first nine months of 1997. Hardware
sales for the nine months ended September 30, 1997 increased by more than 20%
over hardware sales for the comparable period in 1996. Because hardware
inventory typically has a higher gross profit margin than lumber, Utah
Services' gross profit margin for the nine months ended September 30, 1997
increased approximately 2.2% as a percentage of sales over the comparable
period in 1996. General and administrative expenses for the nine months ended
September 30, 1997 increased by approximately 1.3% over general and
administrative expenses for the comparable period in 1996. The increase in
general and administrative expenses in 1996 resulted primarily from increased
costs of labor. Labor costs are increasing as a result of a very low
unemployment rate in Utah, making if difficult to attract the required labor
force at historical labor rates.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Operating revenues for the year ended December 31, 1996 totaled
$13,107,947, which represented a 3.5% decrease from $13,580,133 in operating
revenues for the year ended December 31, 1995. Approximately one million dollars
of the operating revenues in 1995 were attributable solely to a single sale of
lumber in connection with the Pinehurst/Orchard Park project.
Operating income before income taxes for 1996 was $679,336 compared with
net income before income taxes of $550,083 for 1995, a 23.5% increase. This
increase in operating income was attributable in part to the 4.2% increase in
sales (excluding the Pinehurst/Orchard Park sale) and to an improved gross
profit margin. The improved gross profit margin for 1996 was the result of a
greater volume of sales in the hardware area, as opposed to lumber sales which
typically have a lower gross profit margin. Also, total operating expenses for
1996 experienced a 8.9% increase over 1995. Most of this increase was
attributable to additional payroll expense resulting from a tight labor market
in Utah which required Utah Service to pay higher salaries and wages to attract
and retain qualified employees. It is likely that payroll expenses in 1997 and
1998 will continue to increase at a rate somewhat higher than inflation.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Operating revenues for 1995 increased 27% to $13,580,133 over 1994
operating revenues of $10,689,864. Gross profit on sales for 1995 increased due
to increased sales with the gross profit margin remaining essentially unchanged
from 1994 to 1995. Increased sales in 1995 were attributable to the
approximately one million dollar sale of lumber to the Pinehurst/Orchard Park
project and to the opening of Utah Service's new and expanded hardware/lumber
store facility in Springville, Utah. The expansion into the new hardware/lumber
store facility caused some lost sales in 1994 due to interruption of business
for the transition. Further, 1995 benefited from increased and improved space
for marketing Utah Service's lumber and hardware products and from a strong
construction industry in Utah.
LIQUIDITY AND CAPITAL RESOURCES
Utah Service's primary sources of liquidity have been funds generated by
operations. Net cash provided by (used in) operating activities was
approximately $(227,602), $569,020 and $364,272 during 1995, 1996 and the nine
months ended September 30, 1997, respectively. Net cash provided by operating
activities is primarily attributable to Utah Service's income before
depreciation and amortization expense.
The cash position of Utah Service from December 31, 1994 to December 31,
1995 reflected a decline in cash by the amount of $388,235 from a December 31,
1994 cash balance of $603,618 to a December 31, 1995 cash balance of $215,383.
This decline in cash was more than offset in the current assets by a $942,934
increase in accounts receivable from a December 31, 1994 balance of $1,011,242
to a December 31, 1995 balance of $1,954,176. The net effect was an increase in
liquidity of Utah Service from December 31, 1994 to December 31, 1995 by the
amount of $554,699.
The cash position of Utah Service improved in 1996 from a December 31,
1995 balance of $215,383 to a December 31, 1996 balance of $479,954. This
improvement in the cash assets of Utah Service was more than offset by a
$682,974 decline in the accounts receivable balance from a December 31, 1995
balance of $1,954,176 to a December 31, 1996 balance of $1,271,202. Total
current assets saw a modest increase from a December 31, 1995 balance of
$2,911,288 to a December 31, 1996 balance of $3,057,394.
The liquidity of Utah Service was also affected by an increase in
current liabilities from a December 31, 1994 balance of $359,115 to a December
31, 1995 balance of $608,183. Current liabilities as of December 31, 1996
increased to a level of $626,226. Most of the increase in current liabilities
from December 31, 1994 to December 31, 1996 resulted from increases in the
accounts payable of Utah Service. With the expansion of the
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hardware and lumber sales facilities of Utah Service in December 31, 1995,
accounts payable levels are likely to remain higher than the December 31, 1994
level.
The expansion of Utah Service's hardware and lumber sales facilities in
Springville, Utah resulted in an $824,938 increase in the book value of
buildings and store equipment from a December 31, 1994 balance of $377,541 to a
December 31, 1995 balance of $1,202,479. Utah Service financed its acquisition
of additional building and store equipment assets with a loan from First
Security Bank of Utah, N.A. in the amount of $369,257 as of December 31, 1995
and from cash balances of Utah Service. Paid-in capital and assets of Utah
Service increased by the amount of $555,348 in 1995 by reason of the merger of
Utah Valley Industrial Supply into Utah Service. On December 31, 1996 paid in
capital remained essentially unchanged at a level of $556,397, while the First
Security Bank of Utah, N.A. Promissory Note had been reduced to a December 31,
1996 balance of $198,081.
Management believe that cash on hand and other current assets are
consistent with historical levels and sufficient for meeting the needs of Utah
Service's ongoing obligations.
INFLATION
Inflation in the U.S. economy has been relatively moderate during the
last few years. Price increases for Utah Service's products have kept pace with
inflation for both 1995 and 1996. Utah Service expects that inflation will
affect the cost of wages for its employees in 1998 and Utah Service expects that
it will be able to pass such increases on by increasing its prices for Utah
Service's products. Fuel and lumber prices typically fluctuate upward and
downward and do not typically track consumer inflation indices. As a result of
these factors, Utah Service anticipates that it will be in a position to
maintain essentially the same profit margin in 1998 that it has experienced in
1996 and 1997.
SEASONALITY
Because of the location of Utah Service's operations in Utah County,
Utah, Utah Service experiences lower sales during the winter months due to
adverse weather conditions. Historically, the months of December through
February have shown decreased sales, with Utah Service's more profitable months
being March through November. Utah Service has historically dealt well with
these seasonal variations in sales and has established adequate reserves to
address the liquidity requirements of Utah Service in the winter months.
THE YEAR 2000 ISSUE
Utah Service utilizes computer hardware and software in its operations.
Certain computer applications could fail or create erroneous results due to the
upcoming change in the century (the "Year 2000 Issue"). Utah Service regularly
upgrades its computer hardware and believes that it will not incur any
additional expenses to modify computer hardware due to the Year 2000 Issue. In
addition, Utah Service has received commitments from software vendors that will
allow Utah Service to upgrade third-party software programs with minimal expense
to Utah Service. Utah Service anticipates, however, that it will incur expenses
of approximately $30,000 over the next two years to upgrade certain proprietary
software developed for Utah Service. Utah Service does not expect that its
expenditures related to the Year 2000 Issue will have a material adverse effect
on the results of operations or financial condition of Utah Service.
CERTAIN TRANSACTIONS
During the years ended December 31, 1996 and 1995, Utah Service sold
construction materials to Clyde totaling approximately $303,633 and $313,946,
respectively, and to Geneva Rock totaling approximately $637,833 and $645,138,
respectively. Beehive Insurance received $6,658 and $5,641 in commission revenue
for insurance purchased by Utah Service in 1996 and 1995, respectively.
Transactions with related parties were not effected at below market prices.
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<PAGE> 93
BEEHIVE INSURANCE
BACKGROUND
Beehive Insurance was incorporated in the State of Utah in 1961 by W.W.
Clyde for the purpose of operating as an independent insurance agency for the
sale of insurance coverage to Clyde and the general public. These coverages
include personal automobile and homeowners policies as well as commercial,
property, liability, automobile, surety bonds and other related or companion
commercial insurance coverages. Beehive Insurance's operations have gradually
evolved into the sale of primarily commercial property insurance policies,
casualty insurance policies and surety bonds. Businesses owned by the W.W. Clyde
family (particularly Clyde and Geneva Rock, which collectively generated
approximately 51% of Beehive Insurance's commission revenue in 1996) comprise a
significant portion of Beehive Insurance's client base. The loss of business
from Clyde and Geneva would have a material adverse effect on the business of
Beehive Insurance. Other unaffiliated customers, however, are also serviced by
Beehive Insurance. Revenue for Beehive Insurance is derived from commissions on
the sale of insurance policies to customers, interest income and insurance
company profit sharing revenues received from insurance companies which Beehive
Insurance represents.
THE INDUSTRY AND MARKET
As an independent insurance agency, Beehive Insurance represents several
large national insurance companies and markets their insurance policies and
services to customers. Some insurance companies require certain production
requirements. Such insurance companies monitor Beehive Insurance's production
and loss ratios on insurance placed annually to determine whether to continue
their agency relationship with Beehive Insurance.
The majority of Beehive Insurance's customers are located along the
Wasatch Front (primarily Weber, Davis, Salt Lake and Utah Counties) in the state
of Utah. Beehive Insurance acquires new customers primarily by referral from
existing customers. Some advertising is done, mainly in contractor trade
journals and other publications. Beehive Insurance markets insurance policies to
its customers primarily through commissioned sales associates.
INSURANCE CARRIERS
Insurance policies rendered to customers are provided through a variety
of highly rated national and local insurance companies. The financial strengths
of the insurance companies are monitored through an industry rating service
known as A.M. Best. Beehive Insurance generally markets through insurance
companies bearing ratings of A- or better from A.M. Best. One of the challenges
associated with marketing insurance policies is to have the right insurance
company available to meet the customer's need when it arises. Beehive Insurance
believes that it has been successful in attracting and retaining representation
of insurance companies suited to its customer base with stable financial
resources.
The primary carriers currently represented by Beehive Insurance include
St. Paul Fire & Marine and Reliance Insurance Co., which provides coverage and
surety bonds for Clyde, and Royal Insurance Co. and USF&G which insures Geneva
Rock. Other carriers represented by Beehive Insurance in smaller amounts include
Ohio Casualty and Unigard Insurance.
Because of Beehive Insurance's relatively small size, Beehive Insurance
relies on the insurance companies for development of policies, programs and
services that can be offered to customers.
COMPETITION
Beehive Insurance encounters strong competition in the insurance
services business from other insurance brokerages or agencies, many of which are
larger and have greater financial and other resources than Beehive Insurance. In
addition, certain insureds or groups of insureds establish programs of self
insurance as a supplement or alternative to third party insurance, thereby
reducing in some cases, the need for insurance placement services. Some of
Beehive Insurance's strongest competition has come from specialized insurance
companies providing a
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certain niche or specialized type of insurance coverage suited to a specific
industry such as equipment dealers, roofing contractors and metal fabrication,
etc. In many cases these specialized programs are not accessible to Beehive
Insurance in traditional distribution channels.
SEASONALITY OF BUSINESS
The business activity of Beehive Insurance remains fairly constant
throughout the year. There are periods of seasonal activity relative to the time
certain customer accounts renew during the year. Beehive Insurance experiences
particularly heavy activity for January 1 renewals. Such renewals constitute
approximately 67% of Beehive's annual premium production on customer insurance
policies.
REGULATION
While the laws and regulations vary among jurisdictions, each state
requires an insurance agent, broker, consultant or solicitor to have an
individual and/or company license from a governmental agency or self regulatory
organization. If Beehive Insurance transacts insurance coverage for a customer
located in a state other than Utah, Beehive Insurance must obtain a non-resident
license from that state. Insurance policies transacted under the non-residence
license must be countersigned (in most cases) by a resident agent of the
particular state. In the states of Nevada and Wyoming, a portion of the
commission must be shared with the resident countersigning agent. In most cases,
the insurance company providing the coverage arranges for countersignature.
Beehive Insurance is currently licensed as a resident agent in the state of Utah
and as a non-resident agent in Idaho, Wyoming, Colorado, New Mexico, Arizona,
Montana, Nevada, Oregon, Indiana, Kansas and Connecticut. Beehive Insurance's
non-resident agent license is pending in California. An insurance company doing
business in the foregoing states must undergo a prequalification process for
admission to the state. An insurance company meeting the state qualifications is
known as an admitted carrier. Not all insurance companies doing business in the
state of Utah are admitted carriers. Beehive insurance currently provides
insurance coverage, in some cases in Utah, to customers through non-admitted
carriers. These carriers are not regulated by the State Insurance Department in
the same way or to the extent admitted carriers are. Non-admitted carriers are
also known as surplus lines carriers. In order for Beehive Insurance to provide
policies to customers through surplus lines carriers, a surplus lines broker
license is required. Beehive Insurance holds a surplus lines broker license for
Utah. The surplus lines broker is obligated to collect from the customer surplus
lines taxes and remit the taxes to the Surplus Lines Association of Utah.
The business of Beehive Insurance may be subject to more restrictive
regulations as a result of the Merger because the Utah Insurance Code restricts
the amount of premiums an insurance agency may receive for placing insurance
upon "controlled business" to less than 50% of the insurance agency's total
premiums during the preceding 12 months. "Controlled business" is defined in the
Utah Insurance Code to include insurance procurred by an insurance agent upon
the property of its shareholders. Beehive Insurance's business with the other
Operating Companies during the 12 months preceding September 30, 1997 accounted
for approximately 58% of Beehive Insurance's total premiums. Upon consummation
of the Merger, CCI will be the sole shareholder of Beehive Insurance and the
other Operating Companies. As a result of CCI's common ownership of the
Operating Companies, the insurance that Beehive Insurance places upon the
property of other Operating Companies might be deemed to be placed upon
"controlled business" for purposes of the Utah Insurance Code. If so, Beehive
Insurance may have to restrict or reduce such coverage.
EMPLOYEES
As of January 30, 1998, Beehive Insurance had four full-time employees
providing management and production, customer service, accounting/record keeping
and clerical functions.
PROPERTIES
Beehive Insurance leases from Geneva Rock approximately 1,200 square
feet of office space at 302 West 5400 South, Suite 109, Murray, Utah. Beehive
Insurance owns a single story brick office building situated at 227 West 600
South, Salt Lake City, Utah . The building is approximately 2,500 square feet
and is situated on a 1/3 acre lot that is also owned by Beehive Insurance.
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<PAGE> 95
TRADE NAMES
Beehive Insurance uses the "Beehive Insurance Agency" name as a service
mark in connection with its business operations. Beehive Insurance has
registered "Beehive Insurance Agency, Inc." with the states of Utah and Nevada,
but has no federal registration.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which Beehive
Insurance was a party. From time to time, Beehive Insurance becomes involved in
ordinary, routine legal proceedings incidental to the business of Beehive
Insurance which do not have a material adverse effect on its business or
operations.
MARKET PRICE OF AND DIVIDENDS ON BEEHIVE INSURANCE COMMON STOCK
There is no public trading market for Beehive Insurance Common Stock.
The approximate number of shareholders of record on the Record Date was 52.
In 1995, Beehive Insurance paid cash dividends of $9.50 per share of
Beehive Insurance Common Stock to shareholders. In 1996, Beehive Insurance paid
cash dividends of $10.00 per share of Beehive Insurance Common Stock to
shareholders. In 1997, Beehive Insurance paid cash dividends of $10.00 per share
of Beehive Insurance Common Stock to shareholders. After the Merger, dividends
will be paid by CCI in such amounts and at such times as the CCI Board of
Directors deems to be appropriate based on the results of operations, financial
condition and liquidity needs of CCI. The amount, type and frequency of
dividends paid by CCI to its shareholders will not be equivalent to the amount,
type and frequency of dividends paid by Beehive Insurance prior to the Merger.
See "Summary--Selected Financial Information--Comparative Per Share Data".
BEEHIVE INSURANCE MANAGEMENT
DIRECTORS
The names and ages of Beehive Insurance's Directors are currently as
follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION(S) WITH BEEHIVE INSURANCE SINCE
- ---- --- ---------------------------------- -----
<S> <C> <C> <C>
W. Douglas Snow............ 41 Director, President, General Manager 1987
B. Clyde Gammell........... 49 Director, Vice President 1971
Carol C. Salisbury......... 70 Director, Secretary, Treasurer 1971
J. Richard Walton.......... 73 Director 1961
Richard C. Clyde........... 62 Director 1987
Wilford W. Clyde........... 44 Director 1988
Norman D. Clyde............ 67 Director 1970
Hal M. Clyde............... 70 Director 1963
</TABLE>
For a description of the business backgrounds of Carol C. Salisbury and
Richard C. Clyde, see "Clyde Companies, Inc.--CCI Management Prior to
Consummation of the Merger," of Wilford W. Clyde, see "Clyde Companies,
Inc.--CCI Management Upon Consummation of the Merger," of Norman D. Clyde, see
"Clyde--Clyde Management," and of Hal M. Clyde, see "Utah Service--Utah Service
Management."
W. Douglas Snow has been a director since 1987. He joined Beehive
Insurance in July of 1979 following a brief period of employment with Fireman's
Fund Insurance Company in the commercial underwriting department. Mr. Snow was
appointed as President and General Manager of Beehive Insurance in 1991.
B. Clyde Gammell has been a director since 1971. He has also been
Vice President of Beehive Insurance since 1997 and the owner and operator
of Clydeco Building Supplies, Inc. since 1975. B. Clyde Gammell is the
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<PAGE> 96
son of Louise C. Gammell, who is currently the Secretary, Treasurer and a
director of CCI and a director of Utah Service; the brother of A. Ray Gammell
who is currently Vice President and a director of Utah Service and a director of
Geneva Rock; and a nephew of William R. Clyde, Ila C. Cook, and Carol C.
Salisbury.
J. Richard Walton has been a director since 1961 and is one of the
founders of Beehive Insurance. He served as President and General Manager of
Beehive Insurance from its inception in 1961 to 1991.
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The names, ages and positions of Beehive Insurance's executive officers
and significant employees are currently as follows:
<TABLE>
<CAPTION>
CURRENT POSITION(S)
NAME AGE WITH BEEHIVE INSURANCE SINCE
- ---- --- ---------------------- -----
<S> <C> <S> <C>
W. Douglas Snow .........................41 President and General Manager 1991
B. Clyde Gammell.........................49 Vice President 1997
Carol C. Salisbury.......................70 Secretary, Treasurer 1988
</TABLE>
For a description of the business backgrounds of Carol C. Salisbury, see
"Clyde Companies, Inc.--CCI Management Prior to Consummation of the Merger," and
of W. Douglas Snow and B. Clyde Gammel, see "Beehive Insurance--Beehive
Insurance Management--Directors."
COMMITTEES OF BEEHIVE INSURANCE BOARD
Currently, there is an Executive Committee of the Board of Directors of
Beehive Insurance consisting of W. Douglas Snow, B. Clyde Gammell and Carol C.
Salisbury. The executive committee meets regularly with Douglas Snow to review
progress of the agency and review the agendas prior to Board of Directors
meetings and shareholders meetings.
ATTENDANCE AT BEEHIVE INSURANCE BOARD MEETINGS
As of the date hereof, the Board of Directors met three times in 1997,
and no director attended fewer than 75% of these meetings, except Norman Clyde
who is currently on a leave of absence for church service for a period of
approximately three years.
COMPENSATION OF DIRECTORS OF BEEHIVE INSURANCE
Each director receives an annual director fee of $500. In addition, B.
Clyde Gammell and Carol C. Salisbury receive an additional $1,000 for serving on
the Executive Committee.
PRINCIPAL SHAREHOLDERS OF BEEHIVE INSURANCE
The following table sets forth certain information regarding the
beneficial ownership of Beehive Insurance Common Stock as of the Record Date as
to (i) each person who is known by Beehive Insurance to own beneficially 5% or
more of the outstanding shares of Common Stock, (ii) each Director of Beehive
Insurance, (iii) each executive officer and (iv) all Directors and executive
officers as a group. Except as otherwise noted, Beehive Insurance believes the
persons listed below have sole investment and voting power with respect to the
Beehive Insurance Common Stock that they are deemed to beneficially own.
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<PAGE> 97
<TABLE>
<CAPTION>
COMMON STOCK
------------
SHARES APPROXIMATE
BENEFICIALLY PERCENTAGE
OWNED(1) OWNED(1)
-------- --------
<S> <C> <C>
Louise C. Gammell(2).....................................................4,774 22.22%
1100 E. 400 S.
Springville, UT 84663
Carol C. Salisbury(3)....................................................4,389 20.43%
1423 Devonshire Drive
Salt Lake City, UT 84108
Ila C. Cook(4)...........................................................4,388 20.42%
2711 Sherwood Dr.
Salt Lake City, UT 84108
Richard C. Clyde(5)......................................................4,200 19.55%
776 South 600 West
Orem, UT 84057
William R. Clyde(6)......................................................4,004 18.63%
2000 Canyon Road
Springville, UT 84663
Paul B. Clyde(7).........................................................3,768 17.54%
3308 N. 350 E.
Provo, UT 84601
Clyde Companies, Inc.....................................................3,700 17.22%
1423 Devonshire Drive
Salt Lake City, UT 84108
J. Richard Walton(8).....................................................3,000 13.96%
2370 Logan Way
Salt Lake City, UT 84108
Edna T. Clyde............................................................1,788 8.32%
380 East 200 South
Springville, UT 84663
Louise C. Clyde..........................................................1,690 7.87%
240 East Center Street
Springville, UT 84663
Norman D. Clyde..........................................................1,366 6.36%
3223 Apache Lane
Provo, UT 84604
Hal M. Clyde...............................................................916 4.26%
908 Hillcrest Dr.
Springville, UT 84663
W. Douglas Snow............................................................200 *
</TABLE>
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<TABLE>
<S> <C> <C>
640 East 1400 South
Kaysville, UT 84037
Wilford W. Clyde............................................................58 *
1324 East 950 South
Springville, UT 84663
B. Clyde Gammell.............................................................5 *
1045 West 1200 North
Mapleton, UT 84664
All Directors and Executive Officers as a group (8 People)(9)...........10,834 50.42%
</TABLE>
- -----------------------
* Less than 1%.
(1) Applicable percentage of ownership is based on 21,487 shares of Common Stock
outstanding as of the Record Date. Beneficial ownership is determined in
accordance with the rules of the Commission, and includes voting and
investment power with respect to such shares.
(2) Includes 669 shares owned directly by Louise C. Gammell, 5 shares owned
directly by her husband, Blake Gammell, 400 shares owned jointly by Louise
and Blake Gammell, and 3,700 shares owned by CCI, which shares Ms. Gammell
may be deemed to beneficially own as a result of her position as Secretary,
Treasurer and as director of CCI.
(3) Includes 689 shares owned directly by Carol C. Salisbury and 3,700 shares
owned by CCI, which shares Ms. Salisbury may be deemed to beneficially own
as a result of her position as President and as director of CCI.
(4) Includes 688 shares owned indirectly by Ila C. Cook through the Ila C. Cook
Family Trust and 3,700 shares owned by CCI, which shares Ms. Cook may be
deemed to beneficially own as a result of her position as Vice President and
a director of CCI.
(5) Includes 10 shares owned indirectly by Richard C. Clyde through the Richard
C. Clyde Trust, 490 shares owned indirectly by Patricia Clyde, through the
Patricia Clyde Trust and 3,700 shares owned by CCI, which shares Mr. Clyde
may be deemed to beneficially own as a result of his position as a director
of CCI.
(6) Includes 16 shares owned indirectly by William R. Clyde through the William
R. Clyde Trust, 288 shares owned indirectly by Mr. Clyde through the Reklaw
and Co. Trust and 3,700 shares owned by CCI, which shares William R. Clyde
may be deemed to beneficially own as a result of his position as Vice
President and as director of CCI.
(7) Includes 10 shares owned directly by Paul B. Clyde, 58 shares jointly owned
by Paul B. and Jeanette Clyde (husband and wife) and 3,700 shares of owned
by CCI, which shares Paul B. Clyde may be deemed to beneficially own as a
result of his position as a director of CCI.
(8) Includes 3,000 shares owned indirectly by Mr. Walton through the J. Richard
Walton Revocable Trust.
(9) In computing the aggregate number of shares owned by officers and directors
as a group, the shares owned by CCI, which shares certain of the officers
and directors may be deemed to beneficially own, are counted only once.
SELECTED FINANCIAL INFORMATION FOR BEEHIVE INSURANCE
The following selected statement of earnings and balance sheet data as
of and for each of the years in the five year period ended December 31, 1996 are
derived from the financial statements of Beehive Insurance which have been
audited by Daines. The selected statement of earnings for the nine month periods
ended September 30, 1997 and 1996 are unaudited, but, in the opinion of
management, the unaudited financial statements reflect all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of the information included therein. The financial data for Beehive Insurance
should be read in conjunction with the Financial Statements and Notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations of Beehive Insurance" included elsewhere herein. The results for the
nine month period ended September 30, 1997 are not necessarily indicative of
results that may be expected for the full year.
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<PAGE> 99
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
------------------ ---------------------------------------- -------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of earnings data:
Commission revenue $ 523 $ 501 $ 578 $ 538 $ 598 $ 507 $ 519
General and administrative 217 194 244 357 254 239 246
------- ------- ------- ------- ------- ------- -------
Operating income 306 307 334 181 344 268 273
Other income (expense), net 19 20 29 38 27 21 29
Income taxes 121 108 129 88 129 100 104
------- ------- ------- ------- ------- ------- -------
Net earnings $ 204 $ 219 $ 234 $ 131 $ 242 $ 189 $ 198
======= ======= ======= ======= ======= ======= =======
Earnings per common share $ 9.49 $ 10.19 $ 10.88 $ 6.10 $ 11.26 $ 8.76 $ 9.20
Weighted average shares outstanding 21,487 21,487 21,487 21,487 21,487 21,487 21,487
Balance sheet data:
Current assets $ 840 $ 679 $ 827 $ 960 $ 846 $ 946
Current liabilities 470 377 554 555 473 560
Total assets 945 756 914 988 879 972
Total liabilities 470 377 554 555 473 560
Stockholders' equity 475 379 360 433 406 411
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF BEEHIVE INSURANCE
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Management's Discussion and
Analysis of Financial Condition and Results of Operations of Beehive Insurance
and other sections of this Proxy Statement/Prospectus, including without
limitation statements containing the words "believes," "anticipates," "intends,"
"expects" and words of similar import, constitute forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of the Constituent Corporations to be materially different from any future
results, performance or achievements expressed or implied by such forward
looking statements. Such factors include, among other things, the following: (1)
expected cost savings from the Merger may not be realized; (2) costs or
difficulties related to the integration of the businesses of Clyde, Geneva Rock,
Utah Service and Beehive Insurance may be greater than expected; (3) an increase
of competitive pressure in the industries of Clyde, Geneva Rock, Utah Service
and Beehive Insurance may adversely affect the businesses of those companies;
and (4) general economic conditions, either nationally or in the states in which
Clyde, Geneva Rock, Utah Service and Beehive Insurance do business, may be less
favorable than expected. CCI disclaims any obligation to update such factors or
to publicly announce the result of any revisions to any forward-looking
statements included or incorporated by reference herein to reflect future events
or developments.
RESULTS OF OPERATIONS
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<PAGE> 100
The following discussions should be read in conjunction with the
financial statements and related notes of Beehive Insurance included elsewhere
in this Proxy Statement/Prospectus.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1996
Commission revenue for the nine month period increased 4.4% from the
comparable period in 1996 due to the acquisition of J & J by Geneva Rock in June
1996, resulting in increased commission revenue primarily derived from insurance
policies sold to J & J subsequent to the acquisition. Net earnings also
increased by the same margin.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Commission revenue for the year ended December 31, 1996 totaled
$577,562, which represented a 7.4% increase from $537,792 in commission revenue
for the year ended December 31, 1995. The increase in 1996 of commission revenue
resulted from an increase in insurance commissions in 1996 to $517,497, which
were up 14.5% from 1995 insurance commissions in the amount of $451,940.
Insurance commissions in 1996 increased due to the addition of several new
customers and an increase in surety bond business, which pays a higher
commission rate.
The increase of insurance commissions for 1996 was not fully reflected
in commission revenue for 1996 because of a 30% decline in 1996 profit sharing
commissions, from $85,852 in 1995 to $60,065 in 1996. Profit sharing commissions
are paid by the insurance carriers to insurance agencies based on the level of
premium production during the preceding year and how profitable that business is
to the insurance company. The profit sharing commissions declined in 1996
primarily because the premium production of Beehive Insurance in 1995 was less
than premium production in 1994. In addition to the declining premium volumes of
1995, the cost of claims to the insurance companies from Beehive Insurance's
policyholders resulted in a decline in the profitability of Beehive Insurance's
business to the insurance companies. Accordingly, the profit sharing income was
less in 1996 because it was based upon the lower premium production and higher
claims of 1995.
Net earnings for 1996 were $233,783, compared with net earnings of
$131,007 for 1995, resulting in a 78.5% increase. This increase in net earnings
was attributable in large part to a reduction of pension expenses to $12,641 in
1996, down from $104,487 in 1995. The increase in pension expenses in 1995 was
caused by an actuarial adjustment. The increase in commission revenue discussed
above also had a material impact on net earning for 1996. Additionally, income
during 1996 benefited from a decline in selling, general and administrative
expenses from $105,947 in 1995, to $80,823 in 1996, a savings of $25,124. The
decline in selling, general and administrative expenses was attributable to the
manner of presentation of Beehive Insurance's state corporation franchise tax
payments on the 1996 Statement of Income and Retained Earnings. In 1996 the
State Income Tax was reported with Beehive Insurance's income tax. In 1995 the
State Income Tax was reported in Beehive Insurance's account for selling,
general and administrative expenses.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Commission revenue for 1995 declined 10.1% to $537,792, down from 1994
commission revenue of $598,125. The decline in commission revenue was
attributable to a 12.9% decline in insurance commissions from 1994 insurance
commissions of $518,935 to insurance commissions in 1995 of $451,940. This
decline was mitigated to some extent by an 8.4% increase in profit sharing
commissions from $79,190 in 1994 to $85,852 in 1995. The 12.9% decline in
insurance commissions from 1994 to 1995 resulted from Beehive Insurance's loss
of certain customer accounts. Also, contract surety bond commissions were less
in 1995 than in 1994.
Net income for 1995 was down 45.9% to $131,007 from net income for 1994
of $242,005. Most of this decline was attributable to the 1995 pension expenses
in the amount of $104,487, none of which were recognized on the financial
statements for 1994.
LIQUIDITY AND CAPITAL RESOURCES
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<PAGE> 101
Beehive Insurance's primary sources of liquidity have been funds
generated by operations. Net cash provided by operating activities was
approximately $623,956, $92,584, $135,588 and $110,230 during 1994, 1995, 1996
and the nine months ended September 30, 1997, respectively. Net cash provided by
operating activities is primarily attributable to Beehive Insurance's income
before depreciation and amortization expense.
On December 31, 1994 Beehive Insurance had cash of $779,895 and total
current assets of $960,204. This amount declined to balances on December 31,
1995 of $640,669 cash and $827,348 total current assets. On December 31, 1996
cash on hand in Beehive Insurance was $558,642 with total current assets of
$678,501. This decrease in cash and current assets of Beehive Insurance from
December 31, 1994 to December 31, 1995 did not jeopardize the liquidity or cash
requirements of Beehive Insurance. The decline in cash and current assets must
be viewed in connection with the reduction in insurance premiums payable to
insurance companies together with the increased amount of accounts receivable.
If the accrued pension liability was eliminated, the current liabilities would
be less in 1995 with correspondingly reduced cash for the payment of the current
liabilities. Also, Beehive Insurance expended cash in 1995 for the purchase of
an automobile, computer equipment and the replacement of the roof on the
building owned by Beehive Insurance. Management believes Beehive Insurance's
cash position is sufficient to meet Beehive Insurance's ongoing obligations.
Paid in capital remained unchanged from December 31, 1994 to December
31, 1996 at the amount of $24,997, less $120 and 13 shares of treasury stock.
Retained earnings decreased from $408,303 on December 31, 1994 to $335,184 on
December 31, 1995. Retained earnings increased from $335,184 on December 31,
1995 to $354,097 on December 31, 1996. Dividends were paid in 1996, 1995, and
1994 in the amounts of $10.00, $9,50, and $10.00 per share, respectively.
INFLATION
Inflation in the U.S. economy has been relatively moderate during the
last few years. The impact of inflation on Beehive Insurance has been mainly the
increase in employee salaries. Also, increases have been noticed in the cost of
health insurance coverage for employees.
SEASONALITY
The business activity of Beehive Insurance remains fairly consistent
through each year. There may be periods of seasonal activity relative to the
time certain customers' accounts renew during each year. Beehive Insurance
experiences particularly heavy activity for January 1 renewals. Such renewals
account for approximately 67% of Beehive Insurance's annual production on
customer insurance policies.
THE YEAR 2000 ISSUE
Beehive Insurance utilizes computer hardware and software in its
operations. Certain computer applications could fail or create erroneous results
due to the upcoming change in the century (the "Year 2000 Issue"). Beehive
Insurance has not regularly upgraded its computer hardware and software in the
past and anticipates that it will incur expenses of approximately $25,000 over
the next two years to upgrade its computer hardware and proprietary software
developed for the insurance agency business. The management of Beehive Insurance
believes that such upgrades will prevent the Year 2000 Issue from having a
material adverse effect on the business and operations of Beehive Insurance.
CERTAIN TRANSACTIONS
During the years ended December 31, 1996 and 1995, Clyde, Geneva Rock, J
& J, and Utah Service each purchased substantially all of their insurance
coverages through Beehive Insurance, and together they accounted for
approximately 58% of Beehive Insurance's total commission revenue. As of
December 31, 1996 Clyde, Geneva Rock, J & J and Utah Service generated $51,291
or 9.91%, $193,025 or 37.30%, $19,204 or 3.71%, and $6,658 or 1.29%,
respectively, of the total commission revenue received by Beehive Insurance
during the preceding 12 months. As of December 31, 1995 Clyde, Geneva Rock and
Utah Service generated $42,254 or 9.35%. $183,885 or
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<PAGE> 102
40.69%, and $5,641 or 1.25%, respectively, of the total commission revenue
received by Beehive Insurance during the preceding 12 months.
Beehive Insurance leases from Geneva Rock approximately 1,200 square
feet of office space owned by Geneva Rock and situated at 302 West 5400 South,
Murray, Utah. The monthly rental amount paid by Beehive Insurance to Geneva Rock
for the leased space is $1,614.17. Transactions with related parties were not
effected at below market prices.
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<PAGE> 103
THE SPECIAL MEETINGS
TIME, DATE AND PLACE OF THE SPECIAL MEETINGS
The Special Meetings of CCI, Clyde, Geneva Rock, Utah Service and
Beehive Insurance will be held at 11:30, 8:00, 9:30, 10:30 and 11:00 a.m.,
respectively, on Tuesday March 17, 1998, at the offices of Geneva Rock located
at 1565 West 400 North, Orem, Utah.
PURPOSES OF THE SPECIAL MEETINGS
At the Special Meetings, the shareholders of each of CCI, Clyde, Geneva
Rock, Utah Service and Beehive Insurance will consider and vote upon a proposal
to approve the Merger Agreement and the transactions contemplated thereby. A
copy of each of the Merger Agreement is attached to this Proxy
Statement/Prospectus as Annex A.
VOTE REQUIRED; RECORD DATE
CCI
CCI shareholders of record at the close of business on January 30,
1998 (the "Record Date") will be entitled to notice of and to vote at the CCI
Special Meeting and at any adjournment or postponement thereof. There were
issued and outstanding 2,303,920 shares of CCI Common Stock as of the Record
Date, held by approximately 56 shareholders of record.
The Utah Revised Business Corporation Act ("URBCA") does not require
that the Merger be approved by the CCI shareholders since only CCI, as the sole
shareholder of its subsidiaries, will vote on the merger of its subsidiaries
with Clyde, Geneva Rock, Utah Service and Beehive Insurance. However, the Board
of Directors of CCI has determined that it is in the best interest of CCI and
its shareholders for CCI to submit the Merger to its shareholders for approval.
Under the terms of the Merger Agreement, the affirmative vote of holders of at
least a majority of the outstanding shares of CCI is required to approve the
Merger. In determining whether the approval of the Merger has received the
requisite number of affirmative votes, abstentions and shares not represented at
the CCI Special Meeting will have the same effect as a vote against any such
proposal. Holders of a majority of the shares entitled to vote at the CCI
Special Meeting, represented in person or by proxy, will constitute a quorum.
Each holder will be entitled to cast one vote for each share of CCI Common Stock
held.
As of the Record Date, the directors and officers of CCI and their
affiliates owned 759,160 shares, representing approximately 32.95% of the
outstanding shares of CCI Common Stock. Such persons have indicated that they
intend to vote their shares FOR approval of the Merger.
CLYDE
Clyde shareholders of record at the close of business on the Record Date
will be entitled to notice of and to vote at the Clyde Special Meeting and at
any adjournment or postponement thereof. There were issued and outstanding
94,544 shares of Clyde Common Stock as of the Record Date, held by approximately
98 shareholders of record.
Under the URBCA, the approval of the Merger by the Clyde shareholders
requires the affirmative vote of the holders of at least a majority of the
outstanding shares of Clyde Common Stock. In determining whether the approval of
the Merger has received the requisite number of affirmative votes, abstentions,
and shares not represented at the Special Meeting will have the same effect as a
vote against any such proposal. Holders of a majority of the shares entitled to
vote at the Clyde Special Meeting, represented in person or by proxy, will
constitute a quorum. Each holder will be entitled to cast one vote for each
share of Clyde Common Stock held.
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As of the Record Date, the directors and officers of Clyde and their
affiliates owned 12,680 shares, representing approximately 13.41% of the
outstanding shares of Clyde Common Stock, and CCI owned 31,935 shares,
representing approximately 33.78% of the outstanding shares of Clyde Common
Stock. Such persons have indicated that they intend to vote their shares FOR
approval of the Merger.
GENEVA ROCK
Shareholders of record at the close of business on the Record Date will
be entitled to notice of and to vote at the Geneva Rock Special Meeting and at
any adjournment or postponement thereof. There were issued and outstanding
21,802 shares of Geneva Rock Common Stock as of the Record Date, held by
approximately 81 shareholders of record.
Under the URBCA, the approval of the Merger by the Geneva Rock
shareholders requires the affirmative vote of the holders of at least a majority
of the outstanding shares of Geneva Rock Common Stock. In determining whether
the approval of the Merger has received the requisite number of affirmative
votes, abstentions, and shares not represented at the Special Meeting will have
the same effect as a vote against any such proposal. Holders of a majority of
the shares entitled to vote at the Geneva Rock Special Meeting, represented in
person or by proxy, will constitute a quorum. Each holder will be entitled to
cast one vote for each share of Geneva Rock Common Stock held.
As of the Record Date, the directors and officers of Geneva Rock and
their affiliates owned 1,812 shares, representing approximately 8.31% of the
outstanding shares of Geneva Common Stock, Clyde owned 7,581 shares,
representing approximately 34.77% of the outstanding shares of Geneva Rock
Common Stock, and CCI owned 4,725 shares, representing approximately 21.67% of
the outstanding shares of Geneva Rock Common Stock. Such persons have indicated
that they intend to vote their shares FOR approval of the Merger, thereby
assuring approval of the Merger by the Geneva Rock shareholders.
UTAH SERVICE
Utah Service shareholders of record at the close of business on the
Record Date will be entitled to notice of and to vote at the Utah Service
Special Meeting and at any adjournment or postponement thereof. There were
issued and outstanding 5,413 shares of Utah Service Common Stock as of the
Record Date, held by approximately 52 shareholders of record.
Under the URBCA, the approval of the Merger by the Utah Service
shareholders requires the affirmative vote of the holders of at least a majority
of the outstanding shares of Utah Service Common Stock. In determining whether
the approval of the Merger has received the requisite number of affirmative
votes, abstentions, and shares not represented at the Special Meeting will have
the same effect as a vote against any such proposal. Holders of a majority of
the shares entitled to vote at the Utah Service Special Meeting, represented in
person or by proxy, will constitute a quorum. Each holder will be entitled to
cast one vote for each share of Utah Service Common Stock held.
As of the Record Date, the directors and officers of Utah Service and
their affiliates owned 1,423 shares, representing approximately 26.89% of the
outstanding shares of Utah Services Common Stock, and CCI owned 1,698 shares,
representing approximately 31.37% of the outstanding shares of Utah Service
Common Stock. Such persons have indicated that they intend to vote their shares
FOR approval of the Merger, thereby assuring approval of the Merger by the Utah
Service shareholders.
BEEHIVE INSURANCE
Shareholders of record at the close of business on the Record Date will
be entitled to notice of and to vote at the Beehive Insurance Special Meeting
and at any adjournment or postponement thereof. There were issued and
outstanding 21,487 shares of Beehive Insurance Common Stock as of the Record
Date, held by approximately 50 shareholders of record.
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Under the URBCA, the approval of the Merger by the Beehive Insurance
shareholders requires the affirmative vote of the holders of at least a majority
of the outstanding shares of Beehive Insurance Common Stock. In determining
whether the approval of the Merger has received the requisite number of
affirmative votes, abstentions, and shares not represented at the Special
Meeting will have the same effect as a vote against any such proposal. Holders
of a majority of the shares entitled to vote at the Beehive Insurance Special
Meeting, represented in person or by proxy, will constitute a quorum. Each
holder will be entitled to cast one vote for each share of Beehive Insurance
Common Stock held.
As of the Record Date, the directors and officers of Beehive Insurance
and their affiliates owned 6,734 shares, representing approximately 31.34% of
the outstanding shares of Beehive Insurance Common Stock, and CCI owned 3,700
shares of Beehive Insurance Common Stock, representing approximately 17.2% of
the outstanding shares of Beehive Insurance Common Stock. All such persons
except J. Richard Walton have indicated that they intend to vote their shares
FOR approval of the Merger. Although J. Richard Walton, a director of Beehive
Insurance, believes that the Merger is in the best interest of Beehive Insurance
and its shareholders and, therefore, voted in favor of the Merger as a director
of Beehive Insurance, he has advised CCI that, because of personal financial
considerations, he intends to vote his shares AGAINST approval of the Merger at
the Beehive Insurance Special Meeting and exercise his dissenter's rights. See
"Dissenters' Rights."
If the Merger Agreement is not approved by the requisite number of
votes at the Special Meetings, the Merger Agreement will be terminated and each
Constituent Corporation will bear its pro-rata share of the expenses that have
been incurred in connection with the Merger Agreement. See "The Merger
Agreement -- Fees and Expenses." In such case, it is anticipated that CCI will
continue to be a holding company for the shares of the Operating Companies
which it owns, and that the Operating Companies will continue to operate their
respective businesses.
PROXIES; REVOCATION OF PROXIES
Shares of CCI Common Stock, Clyde Common Stock, Geneva Rock Common
Stock, Utah Service Common Stock and Beehive Insurance Common Stock represented
by properly executed and unrevoked proxies will be voted at the CCI Special
Meeting, Clyde Special Meeting, Geneva Rock Special Meeting, Utah Service
Special Meeting and Beehive Insurance Special Meeting, respectively, in
accordance with the directions contained therein. If no direction is made in a
properly executed and unrevoked proxy, the shares of Clyde Common Stock, CCI
Common Stock, Geneva Rock Common Stock, Utah Service Common Stock and Beehive
Insurance Common Stock represented by such proxy will be voted FOR the adoption
and approval of the Merger, and the transactions contemplated thereby.
Any CCI, Clyde, Geneva Rock, Utah Service or Beehive Insurance
shareholder is empowered to revoke a proxy at any time before its exercise. A
proxy may be revoked by filing with the Secretary of the respective company a
written revocation or a duly executed proxy bearing a later date. Any written
notice revoking a proxy should be sent to (i) in the case of CCI, Clyde
Companies, Inc., 1423 Devonshire Drive, Salt Lake City, Utah, 84108, Attention:
Secretary, or hand delivered to the Secretary at or before the taking of the
vote at the CCI Special Meeting; (ii) in the case of Clyde, W.W. Clyde & Co.,
1375 North Main Street, Springville, Utah, 84663, Attention: Secretary, or hand
delivered to the Secretary at or before the taking of the vote at the Clyde
Special Meeting; (iii) in the case of Geneva Rock, Geneva Rock Products, Inc.,
1565 West 400 North, Orem, Utah, 84057, Attention: Secretary, or hand delivered
to the Secretary at or before the taking of the vote at the Geneva Rock Special
Meeting; (iv) in the case of Utah Service, Utah Service, Inc., 35 East 400
South, Springville, Utah, 84663, Attention: Secretary, or hand delivered to the
Secretary at or before the taking of the vote at the Utah Service Special
Meeting; or (v) in the case of Beehive Insurance, Beehive Insurance Agency,
Inc., 302 West 5400 South, Suite 109, Murray, Utah, 84107, Attention: Secretary,
or hand delivered to the Secretary at or before the taking of the vote at the
Beehive Insurance Special Meeting.
CCI, Clyde, Geneva Rock, Utah Service and Beehive Insurance will bear
the costs of soliciting proxies from their respective shareholders. In addition
to soliciting proxies by mail, directors, officers and employees of each of CCI,
Clyde, Geneva Rock, Utah Service and Beehive Insurance may solicit proxies by
telephone, by courier service, by telegram or in person. Such directors,
officers and employees will not be additionally compensated for such
solicitation but may be reimbursed for their out-of-pocket expenses incurred in
connection therewith. Arrangements may also be made with banks, brokerage houses
and other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of common stock held of record by
such persons, and upon request, CCI, Clyde, Geneva Rock, Utah Service or Beehive
Insurance will reimburse such custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses in connection therewith.
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THE MERGER
GENERAL
The following is a brief summary of all material aspects of the Merger.
This summary does not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement, a copy of which is attached to this Proxy
Statement/Prospectus as Annex A and is incorporated herein by reference.
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARDS OF DIRECTORS OF CCI,
CLYDE, GENEVA ROCK, UTAH SERVICE AND BEEHIVE INSURANCE
In accepting the recommendation of the Task Force to approve the Merger,
the Boards of Directors of CCI, Clyde, Geneva Rock, Utah Service and Beehive
Insurance considered a number of factors in evaluating the Merger, most of which
were positive, but some of which were negative. After carefully weighing all of
these factors, the Boards of Directors concurred with the Task Force that, on
balance, the Merger is fair and in the best interest of each Constituent
Corporation and its respective shareholders. Accordingly, the Boards of
Directors of each Constituent Corporation unanimously approved the Merger
Agreement and recommends that their respective shareholders vote FOR approval of
the Merger Agreement and the transactions contemplated thereby. In considering
whether to vote for approval of the Merger Agreement, shareholders should be
aware that certain members of the Task Force and certain Directors of the
Constituent Corporations may be subject to conflicts of interest in recommending
that shareholders vote for approval of the Merger Agreement, and that the
Constituent Corporations did not have separate legal representation in
connection with negotiating the terms and provisions of the Merger Agreement and
the transactions contemplated thereby. See "The Merger -- Task Force" and
"--Interests of Certain Persons in the Merger."
Among the negative factors considered by the Boards of Directors of
the Constituent Corporations were the following. As a result of the Merger,
some shareholders will have a smaller equity interest in CCI than they had in
the Constituent Corporation(s) in which they owned shares and, therefore, they
will have less voice in the business and affairs of CCI than they had with
respect to the business and affairs of such Constituent Corporation(s). Also,
it is anticipated that the dividends to be paid by CCI on its Common Stock will
be less than the dividends previously paid on the Common Stock of Utah Service
and Beehive Insurance (see "Summary -- Selected Financial Information --
Comparative Per Share Data") and that Beehive Insurance may lose some of the
premiums it receives from insurance placed with CCI and Clyde -- see "Beehive
Insurance -- Regulation." In addition, the Merger will result in a consolidation
of management, which may result in a loss of autonomy for the Constituent
Corporations.
Set forth below are the positive factors considered by the Task Force
and the Boards of Directors of the Constituent Corporations in reaching their
conclusion that the Merger Agreement and the transactions contemplated thereby
are in the best interest of each Constituent Corporation and their respective
shareholders. No attempt has yet been made to quantify any of the following
potential cost savings or potential increases in return on capital described
below. There can be no assurance that any of the factors described below will
actually result in cost savings or increased returns.
INCREASED FINANCIAL AND COMPETITIVE STRENGTH
The Boards of Directors of the Constituent Corporations believe that the
Merger will combine the financial strength of Clyde and Geneva and increase
their respective competitive positions, placing Clyde in a better competitive
position to bid on larger design/build projects with increased bonding
capability. This is particularly important due to the general consolidation
which has taken place in the construction industry, resulting in larger and
better financed players coming into the regional construction market in which
Clyde operates.
PROFESSIONAL MANAGEMENT TEAM
After the Merger, the benefits of a professional management team will be
made available to each of the Constituent Corporations to help them move forward
and grow their businesses. Under the current management structure, each of the
Constituent Corporations draws on its own independent management personnel. The
Merger will make the management personnel of the Constituent Corporations
available to each of the other Constituent Corporations. Management believes
that the consolidated professional management team will help the consolidated
company to identify and take advantage of future opportunities and investments.
SPIN-OFFS OR SALES OF OPERATIONS
While management does not have any present plans to sell any of the
Operating Companies, management believes that the Merger will increase
shareholder value by creating a unified ownership structure that will make it
easier to sell one or more of the Operating Companies should CCI decide to do so
at some point in the future. From time to time, certain of the Constituent
Corporations have received offers from buyers interested in purchasing
operations or entire businesses of the Constituent Corporations (no such offers
have been received in the last two years). The diffused and overlapping
shareholder structure has made it difficult to respond effectively to such
offers. The simplified shareholder structure resulting from the Merger will
allow the management of CCI to more effectively engage in negotiations with
potential buyers and consider attractive offers that have the potential to
increase shareholder value.
INCREASED PURCHASING POWER
The combination of entities resulting from the Merger will potentially
create greater purchasing power due to increased volume and will eliminate some
duplicative purchasing that currently occurs among the Operating Companies. The
increased volume of purchasing will potentially reduce the cost of obtaining
such items as fuel,
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construction materials and equipment. Currently, the Operating Companies
negotiate, order and purchase on an independent basis. This has resulted in a
certain amount of duplication which can be eliminated in part through the
Merger.
CONSOLIDATION OF OPERATIONS
After the Merger, the management of CCI will be in a better position to
combine divisions of the Operating Companies that now have similar or identical
operations. In particular, the Merger will make it possible to combine the road
construction operations of Clyde and Geneva Rock. After the consummation of the
Merger, the Board of Directors of CCI will consider combining other operations
of the Operating Companies with a view to realizing overall cost savings.
CONSOLIDATION OF ADMINISTRATIVE FUNCTIONS
It is anticipated that the Merger will result in cost savings to each of
the Constituent Corporations generated by the elimination of certain duplicative
management and administrative functions now being carried out separately by each
of the Constituent Corporations. In particular, the Merger will make it possible
to explore the consolidation of the various separate financial accounting
systems now used by the Constituent Corporations, resulting in potential cost
savings. Also, the Merger will allow Utah Service and Beehive Insurance to enjoy
the benefits of the human resource departments that have been developed by Clyde
and Geneva Rock. Utah Service and Beehive Insurance have not had the financial
capacity to invest in a large and well-developed human resources department to
the extent of Clyde and Geneva Rock. The Merger will make it possible to spread
these and other administrative benefits to all the employees of the various
Constituent Corporations.
POTENTIAL TAX SAVINGS
As a consequence of the Merger, taxable dividends to CCI and Clyde from
the other Constituent Corporations will be eliminated, resulting in tax savings
to CCI and Clyde. It is anticipated that the Merger will produce some tax
savings for the Constituent Corporations as a whole. This is primarily due to
the elimination of sales tax on certain intercompany transactions and the fact
that, after the consummation of the Merger, CCI will file consolidated tax
returns for federal and state tax purposes on behalf of itself and all of the
Constituent Corporations, eliminating the necessity for each Operating Company
to pay a separate corporate tax on earnings.
TASK FORCE
In order to facilitate the Merger, an informal working group of
shareholders of the Constituent Corporations (the "Task Force") was formed for
the purpose of considering and making recommendations to the Boards of Directors
of each Constituent Corporation with respect to the economic and other terms of
the Merger. The Task Force is comprised of (i) David E. Salisbury, who is a
director of Clyde and the husband of Carol C. Salisbury, who is the President
and a director of CCI and the Secretary, Treasurer and a director of Beehive
Insurance, (ii) Hal M. Clyde, who is a director of Utah Service and Beehive
Insurance, (iii) Wilford W. Clyde, who is the President and General Manager of
Geneva Rock and a director of Clyde, Geneva Rock and Beehive Insurance, (iv)
Richard C. Clyde, who is the President and General Manager of Clyde and a
director of CCI, Clyde, Geneva Rock and Beehive Insurance, (v) Paul B. Clyde,
who is a Vice President of Clyde and a director of CCI, Clyde, Geneva Rock and
Utah Service, (vi) David O. Cook, who is the President and a director of Utah
Service, (vii) James C. Gramoll, who is a grandson of Harry S. Clyde, (viii)
Steven L. Clyde, who is the Project Superintendent and a director of Clyde, (ix)
A. Ray Gammell, who is a director of Geneva Rock and Utah Service and (x) Norman
D. Clyde, who is a director of Clyde, Geneva Rock, Utah Service and Beehive
Insurance.
A majority of the Task Force recommended that the Boards of Directors of
the Constituent Corporations approve the material terms of the Merger Agreement
and the transactions contemplated thereby as set forth in the Proxy
Statement/Prospectus, including: (i) the adoption of the Second HVA Reports for
each Constituent Corporation and the exchange ratios which were based on the
valuations set forth in such reports; (ii) the composition of and the
compensation to be received by the Board of Directors and executive officers of
CCI and the Operating Companies following the Merger; (iii) the Stock Redemption
Plan; (iv) the Employment Agreement for Richard C. Clyde; (v) the Voting
Agreement; (vi) the Bylaws of CCI; (vii) the allocation among the Constituent
Corporations of the fees and expenses incurred in connection with the Merger
Agreement; and (viii) the terms and provisions of the Merger Agreement. All of
the members of the Task Force, except James Gramoll, concurred in such
recommendations. As more fully explained below under "The Merger--Valuation
Reports for Operating Companies by Financial Advisors, Houlihan Financial
Advisors--Recommendation of Task Force," it was the position of Mr. Gramoll that
the First HVA Report with respect to Clyde should be used for the purpose of
determining the exchange ratios in the Merger. The Board of Directors of each of
the Constituent Corporations has considered and approved the recommendations of
the majority of the Task Force with respect to the Merger.
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VALUATION REPORTS FOR OPERATING COMPANIES BY FINANCIAL ADVISOR, HOULIHAN
VALUATION ADVISORS
BACKGROUND
The Task Force requested Houlihan Valuation Advisors ("HVA") to prepare
valuation reports with respect to Clyde, Geneva Rock, Utah Service and Beehive
Insurance. HVA provides professional services relative to business valuations,
fairness and solvency opinions, economic loss analyses and other valuation and
economic issues. Other than the instructions by the Task Force that each
Constituent Corporation should be valued as a stand alone entity and with the
assumption that they would be combining in a tax free transaction as described
below, no limitations were placed on HVA with respect to the result of the
valuation reports described below or the scope of HVA's investigations of Clyde,
Geneva Rock, Utah Service and Beehive Insurance. HVA prepared two separate
valuation reports for these companies as of June 30, 1997, the first dated
September 12, 1997 (the "First HVA Report") and the second dated October 23,
1997 (the "Second HVA Report"). Both the First HVA Report and the Second HVA
Report resulted in the same valuations for each of Geneva Rock, Utah Service and
Beehive Insurance. The Second HVA Report resulted in a different valuation for
Clyde, as explained below. These reports were submitted to the Board of
Directors of Clyde, Geneva Rock, Utah Service and Beehive Insurance.
In preparing its valuation reports, HVA employed the following four
methods that are widely recognized in estimating the fair market enterprise
value of a business entity: (i) book value, (ii) liquidation value, (iii)
market value and (iv) income value. Book value consists of the carrying
balances of the equity accounts on a company's financial records. Liquidation
value is the difference between the realizable value of all assets and the
realizable value of all liabilities of a company, assuming an orderly
liquidation of the company. The market value approach attempts to determine the
value of a company as if its shares were traded on an exchange in an active,
public market. This is accomplished by determining a comparative price-earnings
ratio, which is the ratio of the market price of a share of stock to the
earnings per share; a comparative price to cash flow ratio, which is the ratio
of the market price of a share of stock to the operating cash flow (net income
plus depreciation) per share; a comparative price to revenue ratio, which is
the ratio of the market price of a share of stock to the dollar sales per
share; and a comparative price to book ratio, which is the ratio of the market
price of a share of stock to the book value per share. Appropriate ratios for
companies like Clyde, Geneva Rock, Utah Service and Beehive Insurance can be
determined by comparing the respective company with others in the same industry
and inferring market value ratios based on ratios in the industry. The income
value method estimates the worth of a company's stock by determining the
present value of the future income stream expected to accrue to holder of the
company's stock. This is accomplished by forecasting the company's future
income stream and the disposition of that income stream and then discounting
the income stream at a rate commensurate with the risk to which the income
stream is exposed. HVA has prepared income statement projections for the five
year period from 1997 to 2001 for each of Clyde, Geneva Rock, Utah Service and
Beehive Insurance. These projections were prepared based on an analysis of each
company's historical operating results and conversations between HVA and the
respective companies.
After applying the valuation methods described above to each of the
Operating Companies, HVA arrived at a final valuation by assigning a particular
weight to the estimates provided by each valuation method. The weights assigned
were based on HVA's professional judgment and its experience in valuing
companies similar to the Operating Companies. The particular assumptions used
by HVA in performing its valuations of the Constituent Companies are described
in valuation reports. The full text of the Second HVA Report with respect to
any Operating Company can be obtained by sending a written request to the
Secretary of such Operating Company.
At the request of the Task Force, the First HVA Report was prepared
valuing each of Clyde, Geneva Rock, Utah Service and Beehive Insurance as a
stand alone entity. This approach took into account certain tax liabilities that
would be incurred by Clyde with respect to Geneva Rock Common Stock owned by
Clyde in the event Clyde and its assets were to be liquidated. Pursuant to this
valuation approach, HVA estimated the fair market enterprise value of Clyde
Common Stock as follows: (i) book value was estimated at $370 per share for a
total value of $34,947,000 and assigned a weight of 0% in the final calculation;
(ii) liquidation value was estimated at $533 per share for a total value of
$50,400,000 and assigned a weight of 40% in the final calculation; (iii) the
price-earnings method yielded a value of $546 per share for a total value of
$51,604,000 and was assigned a weight of 10% in the final calculation; (iv) the
price to cash flow method yielded a value of $544 per share for a total value of
$51,417,000 and was assigned a weight of 10% in the final calculation; (v) the
price to revenue method yielded a value of $429 per share for a total value of
$40,561,000 and was assigned a weight of 0% in the final calculation; (vi) the
price to book value method yielded a value of $545 per share for a total value
of $51,554,000 was assigned a weight of 10% in the final calculation; and (vii)
income value was estimated at $479 per share for a total value of $45,332,000
and was assigned a weight of 30% in the final calculation. Based on the
foregoing estimated values and weights, the fair market enterprise value of the
Clyde Common Stock as of June 30, 1997 was estimated to be $520 per share for a
total value of $49,200,000.
At the request of the Task Force, the Second HVA Report was prepared
valuing each of Clyde, Geneva Rock, Utah Service and Beehive Insurance based on
the assumption that they would be combining in a tax free transaction where
Clyde would incur no tax liabilities with respect to its Geneva Rock Common
Stock. In this second valuation of Clyde, all the various valuation methods were
considered, but the liquidation method was given 100% weight because this method
resulted in a significantly higher value than the other methods which assume a
going concern. Based on this second approach the fair market enterprise value of
Clyde as of June 30, 1997 was estimated to be $657 per share for a total value
of $62,100,000.
VALUATIONS OF OPERATING COMPANIES
The valuation of each Operating Company is described below.
CLYDE. As explained above, the Second HVA Report for Clyde estimated the
fair market enterprise value of Clyde Common Stock as of June 30, 1997 to be
$657 per share for a total value of $62,100,000.
GENEVA ROCK. Both the First HVA Report and the Second HVA Report
estimated the fair market enterprise value of Geneva Rock Common Stock as
follows: (i) book value was estimated at $2,623 per share for a total value of
$57,179,000 and assigned a weight of 0% in the final calculation; (ii)
liquidation value was estimated at $4,162 per share for a total value of
$90,730,000 and assigned a weight of 10% in the final calculation; (iii) the
price-earnings method yielded a value of $4,963 per share for a total value of
$108,203,000 and was assigned a weight of 10% in
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the final calculation; (iv) the price to cash flow method yielded a value of
$4,666 per share for a total value of $101,732,000 and was assigned a weight of
10% in the final calculation; (v) the price to revenue method yielded a value of
$4,626 per share for a total value of $100,865,000 and was assigned a weight of
10% in the final calculation; (vi) the price to book value method yielded a
value of $4,304 per share for a total value of $93,831,000 and was assigned a
weight of 10% in the final calculation; and (vii) income value was estimated at
$4,740 per share for a total value of $103,339,000 and was assigned a weight of
50% in the final calculation. Based on the foregoing estimated values and
weights, the fair market enterprise value of the Geneva Rock Common Stock as of
June 30, 1997 was estimated to be $4,633 per share for a total value of
$101,206,000 and rounded to $101,000,000.
UTAH SERVICE. Both the First HVA Report and the Second HVA Report
estimated the fair market enterprise value of Utah Service Common Stock as
follows: (i) book value was estimated at $668 per share for a total value of
$3,614,500 and assigned a weight of 0% in the final calculation; (ii)
liquidation value was estimated at $756 per share for a total value of
$4,090,000 and assigned a weight of 10% in the final calculation; (iii) the
price-earnings method yielded a value of $1,009 per share for a total value of
$5,459,500 and was assigned a weight of 10% in the final calculation; (iv) the
price to cash flow method yielded a value of $653 per share for a total value of
$3,533,000 and was assigned a weight of 10% in the final calculation; (v) the
price to revenue method yielded a value of $676 per share for a total value of
$3,658,100 and was assigned a weight of 10% in the final calculation; (vi) the
price to book value method yielded a value of $856 per share for a total value
of $4,635,600 and was assigned a weight of 10% in the final calculation; and
(vii) income value was estimated at $892 per share for a total value of
$4,830,100 and was assigned a weight of 50% in the final calculation. Based on
the foregoing estimated values and weights, the fair market enterprise value of
the Utah Service Common Stock as of June 30, 1997 was estimated to be $841 per
share for a total value of $4,552,800 and rounded to $4,550,000.
BEEHIVE INSURANCE. Both the First HVA Report and the Second HVA Report
estimated the fair market enterprise value of Beehive Insurance Common Stock as
follows: (i) book value was estimated at $17.63 per share for a total value of
$378,900 and assigned a weight of 0% in the final calculation; (ii) the
price-earnings method yielded a value of $88.14 per share for a total value of
$1,893,800 and was assigned a weight of 20% in the final calculation; (iii) the
price to cash flow method yielded a value of $68.87 per share for a total value
of $1,479,900 and was assigned a weight of 20% in the final calculation; (iv)
the price to revenue method yielded a value of $23.71 per share for a total
value of $509,400 and was assigned a weight of 0% in the final calculation; (v)
the price to book value method yielded a value of $25.89 per share for a total
value of $556,200 and was assigned a weight of 0% in the final calculation; and
(vi) income value was estimated at $86.95 per share for a total value of
$1,868,200 and was assigned a weight of 60% in the final calculation. Based on
the foregoing estimated values and weights, the fair market enterprise value of
Beehive Insurance Common Stock as of June 30, 1997 was estimated to be $83.77
per share for a total value of $1,795,700 and rounded to $1,800,000.
VALUATION OF CCI BY TASK FORCE
Since CCI's only assets are cash and the shares of common stock it owns
in the Operating Companies, the Task Force did not request HVA to prepare a
valuation report for CCI. It is anticipated that the cash held by CCI, will be
used to pay the tax liabilities and other expenses that CCI will incur in
connection with the Merger. Accordingly, the Task Force determined the value of
CCI Common Stock to be equal to the total value of the shares of the Operating
Companies owned by CCI. Based on the HVA valuations described above, the Task
Force determined that the total value of the shares of the Operating Companies
owned by CCI is approximately $44,610,187, which results in a valuation of
approximately $19.36 per share of CCI Common Stock. For the purpose of
establishing the exchange ratios in the Merger, the Task Force discounted the
above per share valuation for CCI by 25% to $14.52 per share to reflect the
value of minority shareholder interest. Based on this valuation and in
anticipation of the Merger, in November 1997 each outstanding share of CCI
Common Stock was converted into 40 shares, and presently there are 2,303,920
outstanding shares of CCI Common Stock.
RECOMMENDATION OF TASK FORCE
All members of the Task Force, except James C. Gramoll, recommended to
the Board of Directors of each of CCI, Clyde, Geneva Rock, Utah Service and
Beehive Insurance that the Second HVA Report be accepted for the purpose of
determining the exchange ratios in the Merger. It is the position of James C.
Gramoll that the First HVA Report with respect to Clyde (reflecting the tax
liability which would be incurred by Clyde with respect to its
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Geneva Rock Common Stock in the event Clyde were to be liquidated) should be the
basis for calculating the exchange ratios in the Merger. The Boards of Directors
of each of CCI, Clyde, Geneva Rock, Utah Service and Beehive Insurance
considered and approved the majority Task Force recommendation to use the Second
HVA Report for the purpose of determining the exchange ratios in the Merger.
Shareholders of the Constituent Corporations should be aware that certain
members of the Task Force and certain Directors of the Constituent Corporations
may be subject to conflicts of interest in recommending that shareholders vote
for approval of the Merger Agreement. See "The Merger-Task Force" and "The
Merger-Interests of Certain Persons in the Merger."
Each of the valuation reports was prepared by HVA on the assumption the
HVA was valuing a controlling interest in each corporation; that is, each
corporation was valued on a stand-alone basis as if the entire enterprise were
being sold. In determining the exchange ratios, the Task Force applied a
discount to HVA's valuation for each corporation. It should be noted that the
application of the same discount to each corporation does not have any effect on
the exchange ratios. The Task Force and the Boards of Directors determined to
apply a 25% discount, because this is the discount that will be used in setting
the price for shares to be redeemed under the Stock Redemption Plan. See "Clyde
Companies, Inc.--Stock Redemption Plan." This minority discount reflects the
inability of a minority shareholder to sell or liquidate his or her shares, to
mandate the payment of dividends, or to otherwise influence corporate policies.
Although HVA recommended that a 30% discount be used for this purpose, the Task
Force and the Boards of Directors decided to use only a 25% discount in order to
provide shareholders with a higher valuation for their shares. HVA has indicated
that a 25% discount would be in the range of reasonableness for an appropriate
minority discount. Based on this discount, for the purpose of establishing the
exchange ratios in the Merger, the per share valuation of a share of CCI, Clyde,
Geneva Rock, Utah Service and Beehive Insurance Common Stock would be $14.52,
$492.63, $3,474.45, $630.43 and $62.83, respectively.
LIMITATIONS ON HVA VALUATIONS
HVA did not express any opinion as to what the value of CCI Common Stock
will be when issued to the shareholders of CCI, Clyde, Geneva Rock, Utah Service
and Beehive Insurance pursuant to the Merger or the prices at which CCI Common
Stock will actually trade at any time (there is no trading market for such
shares and it is not anticipated that a trading market will develop). The full
text of the Second HVA Report with respect to any Operating Company can be
obtained by sending a written request to the Secretary of such Operating
Company.
In preparing its valuations, HVA used information provided by each of
Clyde, Geneva Rock, Utah Service and Beehive Insurance, respectively. The
management of each of the foregoing companies represented to HVA that the
information provided was reasonably complete and accurate. HVA did not make
independent examinations of any financial statements or other information
prepared by the management of any of the foregoing companies which was relied
upon and, accordingly, HVA made no representations or warranties and did not
express any opinion regarding the accuracy or reasonableness of such financial
statements and other information. All of the information made available to HVA
was carefully analyzed and reasonable attempts were made by HVA to find
additional information which would be helpful in the valuation study.
Financial projections utilized in the First and Second HVA Reports were
prepared based on analysis of each respective company's historical operating
results and conversations with the management of each respective company.
FORECASTING THE FUTURE IS AT BEST A DIFFICULT AND TENUOUS PROCESS. THERE WILL
UNDOUBTEDLY BE DISPARITIES BETWEEN THE PROJECTED FIGURES AND ACTUAL RESULTS,
SINCE EVENTS AND CIRCUMSTANCES FREQUENTLY DO NOT OCCUR AS EXPECTED, AND THOSE
DISPARITIES MAY BE MATERIAL. THE HVA VALUATION REPORTS DO NOT CONSTITUTE A
RECOMMENDATION TO ANY SHAREHOLDER OF ANY OF THE CONSTITUENT CORPORATIONS AS TO
HOW SUCH SHAREHOLDER SHOULD VOTE AT ANY OF THE SPECIAL MEETINGS OF ANY
CONSTITUENT CORPORATION.
Both the First HVA Report and the Second HVA Report were prepared for
the specific purpose of valuing the common stock of Clyde, Geneva Rock, Utah
Service and Beehive Insurance on an enterprise value basis pursuant to the
proposed Merger. In arriving at its valuations of the fair market enterprise
value (assuming controlling interest) of the common stock of each of Clyde,
Geneva Rock, Utah Service and Beehive Insurance, HVA defined "fair market value"
as that value at which a willing buyer and willing seller, neither being
compelled to act and both being well informed of the relevant facts and
conditions which might be anticipated, would effect a sale of an asset at "arm's
length" on a given date. HVA's valuation study was undertaken using widely
accepted principles of financial analysis and valuation. In particular, the book
value, liquidation value, market value, and income value methods of valuation
were utilized in arriving at an estimate of the fair market enterprise value of
the common stock of Clyde, Geneva Rock, Utah Service and Beehive Insurance.
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Valuation is an imprecise science, and HVA has not purported to be a
guarantor of the valuations set forth in the Valuation Reports. Value is a
question of informed judgment, and reasonable persons can differ in their
estimates of value. HVA has certified that the First HVA Report and the Second
HVA Report were conducted and the conclusions arrived at independently using
conceptually sound and commonly accepted methods of valuation.
The Task Force selected HVA because HVA has experience valuing hundreds
of privately held companies and businesses and has been involved in a wide array
of other financial analysis and consulting activities since 1986. Neither HVA or
its principals have any present or intended interest in any of the Constituent
Corporations. There is no material relationship or affiliation between HVA and
its affiliates and any of the Constituent Corporations and their respective
affiliates. HVA's fees for providing the Valuation Reports are based on
professional time charges, and are in no way contingent upon the final valuation
figures. The actual fees paid to HVA for the performance of the valuations
amounted to approximately $20,000.
EXCHANGE RATIOS
The exchange ratios at which shares of common stock of Clyde, Geneva
Rock, Utah Service and Beehive Insurance will be exchanged for shares of CCI
Common Stock were determined by the Task Force and approved by the Board of
Directors of each Constituent Corporation. The exchange ratios were determined
by dividing the discounted value determined by HVA for each share of common
stock of Clyde, Geneva Rock, Utah Service and Beehive Insurance, respectively,
by $14.52, the amount which the Task Force determined to be the discounted per
share value of CCI Common Stock. This resulted in an exchange ratio of (i) 33.93
shares of CCI Common Stock for each outstanding share of Clyde Common Stock,
(ii) 239.27 shares of CCI Common Stock for each outstanding share of Geneva Rock
Common Stock, (iii) 43.43 shares of CCI Common Stock for each outstanding share
of Utah Service Common Stock and (iv) 4.33 shares of CCI Common Stock for each
outstanding share of Beehive Insurance Common Stock, respectively.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Shareholders of CCI, Clyde, Geneva Rock, Utah Service and Beehive
Insurance should be aware that certain members of the Task Force and certain
directors and executive officers of each of CCI, Clyde, Geneva Rock, Utah
Service and Beehive Insurance have interests in the Merger that are in addition
to the interests as shareholders generally and which may create conflicts of
interest. These interests include, among other things, the following: (i)
certain Task Force members and directors and executive officers of CCI, Clyde,
Geneva Rock, Utah Service and Beehive Insurance are related family members; (ii)
certain Task Force members and directors and executive officers of each of CCI,
Clyde, Geneva Rock, Utah Service and Beehive Insurance will be directors and/or
executive officers of CCI; (iii) certain directors and executive officers of CCI
may be deemed to be principal shareholders of CCI, Clyde, Geneva Rock, Utah
Service and Beehive Insurance Common Stock; (iv) as a consequence of the Merger,
taxable dividends to CCI and Clyde from other Constituent Companies will be
eliminated, resulting in significant savings to CCI and Clyde; (v) Richard C.
Clyde will enter into an employment agreement with CCI; (vi) the shareholders of
CCI as constituted prior to the Merger will enter into a ten year Voting
Agreement with respect to the election of CCI directors and certain other
matters; (vii) as a result of certain provisions in the CCI Bylaws, the W.W.
Clyde family will have effective control of the Board of Directors of CCI
following the Merger; and (viii) David E. Salisbury, a director of Clyde, is a
shareholder of the law firm of Van Cott, Bagley, Cornwall & McCarthy, which has
represented each of CCI, Clyde, Geneva Rock, Utah Service and Beehive Insurance
in connection with the Merger. These interests are more fully described below.
CLYDE FAMILY TREE
For ease of reference, the following sets forth the family relationships
among members of the W.W. Clyde family that are currently serving on the Task
Force or as officers or directors of the Constituent Corporations. The three
brothers involved in the founding of the Constituent Corporations were W.W.
Clyde, Edward Clyde and harry S. Clyde.
W.W. CLYDE FAMILY. The children of W.W. Clyde whose names or whose
children's names appear elsewhere in this Proxy Statement/Prospectus are Cornell
Clyde (deceased), Blaine Clyde (deceased), William R. Clyde, Ila C. Cook, Louise
C. Gammell and Carol C. Salisbury. The spouses, children and grandchildren of
the foregoing whose names appear elsewhere in this Proxy Statement/Prospectus
are as follows:
(i) CORNELL CLYDE. Richard C. Clyde is the son of Cornell Clyde;
Jeffrey R. Clyde is the son of Richard C. Clyde.
(ii) BLAINE CLYDE. Paul B. Clyde and Wilford W. Clyde are each
sons of Blaine Clyde.
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(iii) WILLIAM R. CLYDE. Steven L. Clyde is the son of William R.
Clyde.
(iv) ILA C. COOK. David O. Cook is the son of Vernon O. and Ila
C. Cook.
(v) LOUISE C. GAMMELL. B. Clyde Gammell and A. Ray Gammell are
each sons of Louise C. Gammell.
(vi) CAROL C. SALISBURY. David E. Salisbury is the husband of
Carol C. Salisbury.
EDWARD CLYDE FAMILY. The children of Edward Clyde whose names appear
elsewhere in this Proxy Statement/Prospectus are Hal M. Clyde and Norman D.
Clyde. The children of the foregoing whose names appear elsewhere in this Proxy
Statement/Prospectus are as follows:
(i) HAL M. CLYDE. H. Michael Clyde is the son of Hal M. Clyde.
(ii) NORMAN D. CLYDE. Tawna Clyde Smith is the daughter of Norman
D. Clyde.
HARRY S. CLYDE FAMILY. The only descendant of Harry S. Clyde whose name
appears elsewhere in this Proxy Statement/Prospectus is James C. Gramoll, who is
a grandson of Harry S. Clyde.
FAMILY RELATIONSHIPS; INTERRELATED MANAGEMENT AND STOCK OWNERSHIP
Carol C. Salisbury is the President and a director of CCI and the
Secretary and Treasurer and a director of Beehive Insurance. After the
consummation of the Merger, Ms. Salisbury will become the Secretary and
Treasurer of CCI. Ms. Salisbury is the wife of David E. Salisbury, who is
currently a member of the Task Force and a director of Clyde; a sister of
William R. Clyde, Ila C. Cook and Louise C. Gammell; and an aunt of Richard C.
Clyde, Paul B. Clyde, Wilford W. Clyde, Steven L. Clyde, David O. Cook, A. Ray
Gammell and B. Clyde Gammell. As of the Record Date, Ms. Salisbury may be deemed
to beneficially own or control (i) 122,360 shares or approximately 5.31% of the
outstanding CCI Common Stock; (ii) 34,275 shares or approximately 36.25% of the
outstanding Clyde Common Stock; (iii) 12,308 shares or approximately 56.45% of
the outstanding Geneva Rock Common Stock; (iv) 1,946 shares or approximately
35.95% of the outstanding Utah Service Common Stock; and (v) 4,389 shares or
approximately 20.43% of the outstanding Beehive Insurance Common Stock. Upon the
consummation of the Merger, Ms. Salisbury may be deemed to beneficially own or
control 2,519,909 shares or approximately 36.32% of the outstanding CCI Common
Stock. See "Clyde Companies, Inc.--Principal Shareholders of CCI Prior to
Consummation of the Merger", "Clyde Companies, Inc.--Principal Shareholders of
CCI Upon Consummation of the Merger", "Clyde--Principal Shareholders of Clyde",
"Geneva Rock--Principal Shareholders of Geneva Rock", "Utah Service--Principal
Shareholders of Utah Service" and "Beehive Insurance--Principal Shareholders of
Beehive Insurance".
Ila C. Cook is Vice President and a director of CCI. Ms. Cook is the
wife of Vernon O. Cook, who is currently the Chairman of the Board of Utah
Service, the mother of David O. Cook, who is currently a member of the Task
Force and the President, Chief Executive Officer and a director of Utah Service;
the sister of William R. Clyde, Louise C. Gammell and Carol C. Salisbury; and an
aunt of Richard C. Clyde, Paul B. Clyde, Wilford W. Clyde, Steven L. Clyde, A.
Ray Gammell and B. Clyde Gammell. As of the Record Date, Ms. Cook may be deemed
to beneficially own or control (i) 31,935 shares or approximately 33.78% of the
outstanding Clyde Common Stock; (ii) 4,727 shares or approximately 21.68% of the
outstanding Geneva Rock Common Stock; (iii) 2,019 shares or approximately 37.30%
of the outstanding Utah Service Common Stock; and (iv) 4,388 shares or
approximately 20.42% of the outstanding Beehive Insurance Common Stock. Upon the
consummation of the Merger, Ms. Cook may be deemed to beneficially own or
control 2,321,319 shares or approximately 33.45% of the outstanding CCI Common
Stock. See "Clyde--Principal Shareholders of Clyde", "Geneva Rock--Principal
Shareholders of Geneva Rock", "Utah Service--Principal Shareholders of Utah
Service" and "Beehive Insurance--Principal Shareholders of Beehive Insurance".
William R. Clyde is Vice President of CCI and a director of CCI, Clyde,
Geneva Rock and Utah Service. William R. Clyde is the father of Steven L. Clyde,
who is currently a member of the Task Force and the Project Superintendent and a
director of Clyde, and the brother of Ila C. Cook, Louise C. Gammell and Carol
C. Salisbury; and an uncle of Richard C.
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Clyde, Paul B. Clyde, Wilford W. Clyde, David O. Cook, A. Ray Gammell and B.
Clyde Gammell. As of the record Date, Mr. Clyde may be deemed to beneficially
own or control (i) 180,160 shares or approximately 7.82% of the outstanding CCI
Common Stock; (ii) 32,040 shares or approximately 33.89% of the outstanding
Clyde Common Stock; (iii) 12,335 shares or approximately 56.58% of the
outstanding Geneva Rock Common Stock; (iv) 1,712 shares or approximately 31.63%
of the outstanding Utah Service Common Stock; and (v) 4,004 shares or
approximately 18.63% of the outstanding Beehive Insurance Common Stock. Upon the
consummation of the Merger, Mr. Clyde may be deemed to beneficially own or
control 2,496,505 shares or approximately 35.98% of the outstanding CCI Common
Stock. See "Clyde Companies, Inc.--Principal Shareholders of CCI Prior to
Consummation of the Merger", "Clyde Companies, Inc.--Principal Shareholders of
CCI Upon Consummation of the Merger", "Clyde--Principal Shareholders of Clyde",
"Geneva Rock--Principal Shareholders of Geneva Rock", "Utah Service--Principal
Shareholders of Utah Service" and "Beehive Insurance--Principal Shareholders of
Beehive Insurance".
Louise C. Gammell is currently Secretary and Treasurer of CCI and a
director of CCI and Utah Service. Ms. Gammell is the mother of A. Ray Gammell,
who is currently a member of the Task Force, the Vice President and a director
of Utah Service and a director of Geneva Rock; the mother of B. Clyde Gammell,
who is currently the Vice President and a director of Beehive Insurance; the
sister of William R. Clyde, Ila C. Cook and Carol C. Salisbury; and an aunt of
Richard C. Clyde, Paul B. Clyde, Wilford W. Clyde, Steven L. Clyde and David O.
Cook. As of the Record Date, Ms. Gammell may be deemed to beneficially own or
control (i) 269,120 shares or approximately 11.68% of the outstanding CCI Common
Stock; (ii) 34,255 shares or approximately 36.25% of the outstanding Clyde
Common Stock; (iii) 4,726 shares or approximately 21.68% of the outstanding
Geneva Rock Common Stock; (iv) 300 shares or approximately 5.54% of the
outstanding Utah Service Common Stock; and (v) 3,969 shares or approximately
18.47% of the outstanding Beehive Insurance Common Stock. Upon the consummation
of the Merger, Ms. Gammell may be deemed to beneficially own or control
2,673,412 shares or approximately 38.53% of the outstanding CCI Common Stock.
See "Clyde Companies, Inc.--Principal Shareholders of CCI Prior to Consummation
of the Merger", "Clyde Companies, Inc.--Principal Shareholders of CCI Upon
Consummation of the Merger", "Clyde--Principal Shareholders of Clyde", "Geneva
Rock--Principal Shareholders of Geneva Rock", "Utah Service--Principal
Shareholders of Utah Service" and "Beehive Insurance--Principal Shareholders of
Beehive Insurance".
Paul B. Clyde is a member of the Task Force, the Vice President of
Construction of Clyde and a director of CCI, Clyde, Geneva Rock and Utah
Services. Mr. Clyde is the brother of Wilford W. Clyde, who will become the Vice
President and Chief Operating Officer of CCI after consummation of the Merger,
the President and a director of Geneva Rock, a director of Clyde and Beehive
Insurance, and a member of the Task Force; a nephew of William R. Clyde, Ila C.
Cook, Louise C. Gammell and Carol C. Salisbury. As of the Record Date, Mr. Clyde
may be deemed to beneficially own or control (i) 72,320 shares or approximately
3.14% of the outstanding CCI Common Stock; (ii) 33,660 shares or approximately
35.60% of the outstanding Clyde Common Stock; (iii) 12,831 shares or
approximately 58.85% of the outstanding Geneva Rock Common Stock; (iv) 1,719
shares or approximately 31.76% of the outstanding Utah Service Common Stock; and
(v) 3,768 shares or approximately 17.54% of the outstanding Beehive Insurance
Common Stock. Upon the consummation of the Merger, Mr. Clyde may be deemed to
beneficially own or control 2,481,924 shares or approximately 35.77% of the
outstanding CCI Common Stock. See "Clyde Companies, Inc.--Principal Shareholders
of CCI Prior to Consummation of the Merger", "Clyde Companies, Inc.--Principal
Shareholders of CCI Upon Consummation of the Merger", "Clyde--Principal
Shareholders of Clyde", "Geneva Rock--Principal Shareholders of Geneva Rock",
"Utah Service--Principal Shareholders of Utah Service" and "Beehive
Insurance--Principal Shareholders of Beehive Insurance".
Richard C. Clyde is a member of the Task Force, a director of CCI and
after the consummation of the Merger will become the President and Chief
Executive Officer of CCI. Mr. Clyde is also the President and General Manager of
Clyde and a director of Clyde, Geneva Rock and Beehive Insurance. Mr. Clyde is
the father of Jeffrey R. Clyde, who is currently the Contracts Manager and a
director of Clyde; and a nephew of William R. Clyde, Ila C. Cook, Louise C.
Gammell and Carol C. Salisbury. As of the Record Date, Mr. Clyde may be deemed
to beneficially own or control (i) 115,200 shares or approximately 5.00% of the
outstanding CCI Common Stock; (ii) 34,535 shares or approximately 36.53% of the
outstanding Clyde Common Stock; (iii) 12,366 shares or approximately 56.72% of
the outstanding Geneva Rock Common Stock; (iv) 1,720 shares or approximately
31.78% of the outstanding Utah Service Common Stock; and (v) 4,200 shares or
approximately 19.55% of the outstanding Beehive Insurance Common Stock. Upon the
consummation of the Merger, Mr. Clyde may be deemed to beneficially own or
control 2,524,814 shares or
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approximately 36.39% of the outstanding CCI Common Stock. See "Clyde Companies,
Inc.--Principal Shareholders of CCI Prior to Consummation of the Merger", "Clyde
Companies, Inc.--Principal Shareholders of CCI Upon Consummation of the Merger",
"Clyde--Principal Shareholders of Clyde", "Geneva Rock--Principal Shareholders
of Geneva Rock", "Utah Service--Principal Shareholders of Utah Service" and
"Beehive Insurance--Principal Shareholders of Beehive Insurance".
Wilford W. Clyde will become the Chief Operating Officer of CCI after
the consummation of the Merger. Mr. Clyde is currently a member of the Task
Force, the President of Geneva Rock and a director of Clyde, Geneva Rock and
Beehive Insurance. Mr. Clyde is the brother of Paul B. Clyde, who is currently a
member of the Task Force, the Vice President of Construction of Clyde and a
director of Clyde, CCI, Geneva Rock and Utah Service; and a nephew of William R.
Clyde, Ila C. Cook, Louise C. Gammell and Carol C. Salisbury. As of the Record
Date, Mr. Clyde may be deemed to beneficially own or control (i) 72,320 shares
or approximately 3.14% of the outstanding CCI Common Stock; (ii) 1,675 shares or
approximately 1.77% of the outstanding Clyde Common Stock; (iii) 7,804 shares or
approximately 35.79% of the outstanding Geneva Rock Common Stock; (iv) 21 shares
or approximately 0.39% of the outstanding Utah Service Common Stock; and (v) 58
shares or approximately 0.27% of the outstanding Beehive Insurance Common Stock.
Upon the consummation of the Merger, Mr. Clyde may be deemed to beneficially own
or control 183,673 shares or approximately 2.65% of the outstanding CCI Common
Stock. See "Clyde Companies, Inc.--Principal Shareholders of CCI Upon
Consummation of the Merger", "Clyde--Principal Shareholders of Clyde", "Geneva
Rock--Principal Shareholders of Geneva Rock" and "Beehive Insurance--Principal
Shareholders of Beehive Insurance".
H. Michael Clyde has agreed to become a director of CCI upon
consummation of the Merger. Mr. Clyde is the son of Hal M. Clyde, who is
currently a member of the Task Force and a director of Utah Service and Beehive
Insurance; and a nephew of Norman D. Clyde, who is currently a member of the
Task Force and a director of Utah Service, Clyde, Geneva Rock, and Beehive
Insurance. As of the Record Date, Mr. Clyde may be deemed to beneficially own or
control (i) 500 shares or approximately 0.53% of the outstanding Clyde Common
Stock and (ii) 25 shares or approximately 0.11% of the outstanding Geneva Rock
Common Stock. Upon the consummation of the Merger, Mr. Clyde may be deemed to
beneficially own or control 22,946 shares or less than 1% of the outstanding CCI
Common Stock.
Tawna Clyde Smith has agreed to become a director of CCI upon
consummation of the Merger. Ms. Smith is the daughter of Norman D. Clyde, who is
currently a member of the Task Force and a director of Utah Service, Clyde,
Geneva Rock, and Beehive Insurance; and a niece of Hal M. Clyde, who is
currently a member of the Task Force and a director of Utah Service and Beehive
Insurance. As of the Record Date, Ms. Smith may be deemed to beneficially own or
control (i) 500 shares or approximately 0.53% of the outstanding Clyde Common
Stock and (ii) 100 shares or approximately 0.47% of the outstanding Beehive
Insurance Common Stock. Upon the consummation of the Merger, Ms. Smith may be
deemed to beneficially own or control 17,398 shares or less than 1% of the
outstanding CCI Common Stock.
TASK FORCE
As explained above, in order to facilitate the Merger, an informal
working group of shareholders of the Constituent Corporations (the "Task Force")
was formed for the purpose of considering and making recommendations to the
Board of Directors of each Constituent Corporation with respect to the economic
and other terms of the Merger. The Board of Directors of each of the Constituent
Corporations has considered and approved the recommendations of the majority of
the Task Force with respect to the Merger. See "The Merger--The Task Force" for
a description of the members of the Task Force and their recommendations to the
Boards of Directors. Shareholders of the Constituent Corporations should be
aware that certain members of the Task Force have interests in the Merger that
are in addition to the interests of shareholders generally and which may create
conflicts of interest because certain members of the Task Force are Directors
and/or officers of the Constituent Corporations and/or have family relationships
with other Directors and officers, and certain members of the Task Force are
parties to the Voting Agreement.
TAX SAVINGS FOR CCI AND CLYDE
As a consequence of the Merger, taxable dividends paid to CCI and Clyde
by the other Constituent Corporations will be eliminated, resulting in
significant tax savings to CCI and Clyde. This tax savings does not apply to the
other Constituent Corporations, although it is anticipated that the Merger will
result in tax savings for the Constituent Corporations on a whole due to the
elimination of sales tax on certain intercompany transactions and the filing of
consolidated tax returns that will replace the current practice of each
Constituent Corporation filing a separate tax return.
EMPLOYMENT AGREEMENT
It is contemplated that upon consummation of the Merger, CCI will enter
into an employment agreement with Richard C. Clyde pursuant to which Richard C.
Clyde will be employed as President and Chief Executive Officer for a term of
three years from the 1998 annual shareholders meeting of CCI. The employment
agreement will provide for a minimum annual base salary of $110,000 for Richard
C. Clyde and a discretionary annual incentive bonus in an amount as the Board of
Directors of CCI may determine. The employment agreement will also provide that
if Richard C. Clyde is terminated by CCI prior to the end of the term of
employment, other than for cause, death or disability, CCI will pay Richard C.
Clyde an amount equal to his annual salary multiplied by the number of years
remaining under the term of the employment agreement. See also "Clyde Companies,
Inc.--Employment Agreement."
VOTING AGREEMENT
On all matters with respect to which CCI's shareholders have a right to
vote, including the election of directors, each share of CCI Common Stock is
entitled to one vote. The Original CCI Shareholders have entered into a 10-year
Voting Agreement for the purpose of controlling the voting of the 2,303,920
shares of CCI Common Stock owned by the Original CCI Shareholders on the Record
Date, representing approximately 33.20% of the shares of CCI Common Stock to be
outstanding upon consummation of the Merger. So long as the Voting
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Agreement is in place, the Original CCI shareholders may have the ability
(subject to the restrictions in CCI's Bylaws relating to the configuration of
its Board of Directors) to elect the entire Board of Directors of CCI and
determine the outcome of all matters involving a shareholder vote. Control of
CCI by the Original CCI shareholders could make it more difficult for a third
party to acquire, or could discourage a third party from attempting to acquire,
control of CCI. See "Clyde Companies, Inc.--Voting Agreement."
BYLAWS OF CCI
Section 3.2(c) of the CCI Bylaws, which are attached as Annex C hereto,
restricts the configuration of the CCI Board of Directors during the five year
period beginning on November 12, 1997 and ending on November 12, 2002. During
this period, six of the directors on the CCI Board of Directors must be direct
descendants (or the spouse of a direct descendant) of W.W. Clyde and two of the
directors must be direct descendants (or the spouse of a direct descendant) of
Edward Clyde. The CCI Bylaws require that there be between eight and eleven
directors on the CCI Board of Directors. The effect of the foregoing restriction
on CCI Board membership is that, during the five year period described above,
the W.W. Clyde family will have effective control of the CCI Board. Such control
will give the W.W. Clyde family the ability to determine all matters that come
before the CCI Board, such as the amount which will be made available by CCI to
fund the redemption of shares of CCI Common Stock and the amount of dividends to
be paid on CCI Common Stock. See "Comparison of the Rights of Holders of CCI
Common Stock and Clyde, Geneva Rock, Utah Service and Beehive Insurance Common
Stock--Provisions Relating to Directors."
LACK OF SEPARATE LEGAL REPRESENTATION
The law firm of Van Cott, Bagley, Cornwall & McCarthy ("Van Cott")
previously has represented each of the Constituent Corporations, as well as
certain individual Task Force members, directors, officers and shareholders of
the Constituent Corporations. Because each Constituent Corporation is affiliated
through family relationships, interconnected Boards of Directors and cross stock
ownership, and in an effort to reduce the costs of the Merger, the Boards of
Directors of each Constituent Corporation determined to use Van Cott to
represent all of the Constituent Corporations in connection with the Merger and
the transactions contemplated thereby, including the preparation of this joint
Proxy Statement/Prospectus. Van Cott did not represent any Constituent
Corporation or individual separately in negotiating the exchange ratios or any
of the other terms or provisions of the Merger Agreement, nor did Van Cott
undertake any due diligence investigation with respect to any Constituent
Corporation, such as an investigation of the validity of the outstanding shares
of the Constituent Corporations, or the status of legal agreements, pending
legal proceedings or other legal matters with respect to the Constituent
Corporations. Such representation by Van Cott involves a conflict of interest to
the extent that the interest of one Constituent Corporation in the Merger may be
separate from or opposed to the interest of the other Constituent Corporations
or individuals (mentioned above) who may also be clients of Van Cott. Because of
such conflicts of interest, Van Cott obtained a written waiver of such conflicts
from the Boards of Directors of each Constituent Corporation and certain
individual shareholders, pursuant to which each corporation and individual
shareholder acknowledged the existence of the conflicts of interest, waived any
objection thereto and agreed to Van Cott's representation of all of the
Constituent Corporations. David E. Salisbury, who is a shareholder of Van Cott,
was a member of the Task Force that negotiated the pertinent terms and
provisions of the Merger Agreement, including the exchange ratios. Mr. Salisbury
participated on the Task Force in his capacity as a director of Clyde, and as a
direct or indirect owner of shares of Common Stock of the Constituent
Corporations. See also "Risk Factors--Lack of Separate Legal Representation".
ACCOUNTING TREATMENT
For accounting and financial reporting purposes, it is expected that the
Merger will be accounted for in a manner similar to a "pooling of interests."
Under this method of accounting, the previously recorded assets and liabilities
of CCI, Clyde, Geneva Rock, Utah Service and Beehive Insurance prior to the
consummation of the Merger will be carried forward to CCI, Clyde, Geneva Rock,
Utah Service and Beehive Insurance, respectively, subsequent to the consummation
of the Merger, at their recorded amounts; income and expenses of CCI, Clyde,
Geneva Rock, Utah Service and Beehive Insurance subsequent to the consummation
of the Merger would include income and expenses of CCI, Clyde, Geneva Rock, Utah
Service and Beehive Insurance, respectively, for the entire fiscal year in which
the Merger occurs.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The firm of Grant Thornton, independent accountants, has rendered an
opinion to the Constituent Corporations and their shareholders regarding certain
federal income tax consequences of the Merger, as described below. The following
discussion summarizes the material federal income tax considerations associated
with the Merger under the Internal Revenue Code of 1986, as amended (the
"Code"), to holders who hold shares of CCI, Clyde, Geneva Rock, Utah Service or
Beehive Insurance Common Stock as capital assets. As it is not feasible to
describe all of the tax consequences associated with the Merger, each
shareholder should consult his or her tax advisor with respect to the tax
consequences of the Merger applicable to his or her specific circumstances. The
following summary is based on the Code, applicable Treasury Regulations,
judicial authority and administrative rulings and practice, all as of the date
hereof. There can be no assurance that future legislative, judicial or
administrative changes or interpretations will not adversely affect the
statements and conclusions set forth herein. Any such changes or interpretations
could be applied retroactively and could affect the tax consequences of the
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Merger to CCI, Clyde, Geneva Rock, Utah Service or Beehive Insurance and their
respective shareholders. Furthermore, the following discussion addresses only
certain federal income tax matters and does not consider any state, local or
foreign tax consequences of the Merger.
Neither CCI nor Clyde, Geneva Rock, Utah Service or Beehive Insurance
has requested or will request any ruling from the Internal Revenue Service
("IRS") in connection with the Merger. However, the Merger has been structured
with the intention that it qualify as (i) a transfer to a controlled corporation
described in Section 351 of the Code and/or as (ii) a reorganization under
Section 368(a)(1)(B) of the Code.
Assuming the Merger qualifies under Section 351 of the Code or the
Merger is treated as a reorganization under the Code, the following federal
income tax consequences, among others, generally will apply to shareholders of
CCI, Clyde, Geneva Rock, Utah Service and Beehive Insurance:
(i) No gain or loss will be recognized by a holder of Clyde, Geneva
Rock, Utah Service or Beehive Insurance Common Stock with respect to the
receipt of CCI Common Stock in exchange for such Clyde, Geneva Rock,
Utah Service or Beehive Insurance Common Stock pursuant to the Merger
(except with respect to any cash received in lieu of fractional shares
of CCI Common Stock).
(ii) The aggregate tax basis of CCI Common Stock received by each holder
of Clyde, Geneva Rock, Utah Service or Beehive Insurance Common Stock
will be the same as the aggregate tax basis of the Clyde, Geneva Rock,
Utah Service or Beehive Insurance Common Stock received by such
shareholder in the Merger, decreased by the amount of any tax basis
allocable to fractional shares of CCI Common Stock in lieu of which cash
will be paid.
(iii) The holding period of CCI Common Stock received by each holder of
Clyde, Geneva Rock, Utah Service or Beehive Insurance Common Stock will
include the period for which the Clyde, Geneva Rock, Utah Service or
Beehive Insurance Common Stock received in exchange therefor was
considered to be held, provided the Clyde, Geneva Rock, Utah Service or
Beehive Insurance Common Stock so received is held as a capital asset at
the effective time of the Merger.
(iv) Payment received by holders of Clyde, Geneva Rock, Utah Service or
Beehive Insurance Common Stock in lieu of fractional shares of CCI
Common Stock will be treated as payment in redemption of such fractional
shares and, provided that the redeemed interest is held as a capital
asset at the effective time of the Merger, will generally result in the
recognition of capital gain or loss by such holders measured by the
difference between the amount received and the tax basis allocable to
such fractional shares.
Each holder of Clyde, Geneva Rock, Utah Service or Beehive Insurance
Common Stock who receives cash in lieu of a fractional interest will recognize
gain or loss as of the effective time of the Merger equal to the difference
between the amount of cash received and the portion of such holder's adjusted
tax basis in the shares of Clyde, Geneva Rock, Utah Service or Beehive Insurance
Common Stock allocable to such fractional share interest. Any gain or loss
generally will be capital gain or loss if such shareholder holds Clyde, Geneva
Rock, Utah Service or Beehive Insurance Common Stock as a capital asset at the
effective time of the Merger and will be long-term capital gain or loss if the
holding period (determined as described above) for the fractional share interest
deemed to be received and then redeemed is more than one year. Under recently
enacted legislation, an individual holder of Clyde, Geneva Rock, Utah Service or
Beehive Insurance Common Stock is generally subject to a maximum capital gains
rate of 28% for Clyde, Geneva Rock, Utah Service or Beehive Insurance Common
Stock held more than one year and a maximum capital gains rate of 20% for Clyde,
Geneva Rock, Utah Service or Beehive Insurance Common Stock held in excess of 18
months.
Holders of Clyde, Geneva Rock, Utah Service or Beehive Insurance Common
Stock who exercise their dissenters' rights and who receive cash in exchange for
their respective shares will be treated as having received such payment in
redemption of such shares. In general, if such shares are held as a capital
asset at the effective time of the Merger, the holder will recognize capital
gain or loss measured by the difference between the amount of cash received and
the holder's adjusted tax basis for the shares. If, however, the holder owns,
either actually or constructively, any Clyde, Geneva Rock, Utah Service or
Beehive Insurance Common Stock that is exchanged in
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the Merger for CCI Common Stock, the payment for dissenting shares to such
holder could, in certain circumstances, be treated as dividend income. In
general, under the constructive ownership rules of the Code, a holder may be
considered to own stock that is owned, and in some cases constructively owned,
by certain related individuals or entities, as well as stock that the holder (or
related individuals or entities) has the right to acquire by exercising an
option or converting a convertible security. Each holder who contemplates
exercising dissenters' rights should consult such holder's own tax advisor as to
the possibility that any payment to such holder will be treated as dividend
income.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION ONLY AND IS NOT A COMPLETE
DESCRIPTION OF ALL POTENTIAL TAX CONSEQUENCES THAT MAY OCCUR AS A RESULT OF THE
MERGER. SHAREHOLDERS SHOULD THEREFORE CONSULT THEIR TAX ADVISORS REGARDING THE
FEDERAL TAX CONSEQUENCES OF THE MERGER, THE HOLDING AND DISPOSING OF CCI COMMON
STOCK RECEIVED IN THE MERGER, AND THE TAX CONSEQUENCES OF THE MERGER ARISING
UNDER THE LAWS OF ANY STATE, LOCAL OR OTHER JURISDICTION.
REGULATORY APPROVAL
CCI and Geneva Rock filed a notification with the Federal Trade
Commission ("FTC"), pursuant to the Hart Scott Rodino Antitrust Improvement Act
of 1976, requesting early termination of the waiting period required under that
Act. On November 21, 1997, the FTC granted CCI's and Geneva Rock's request for
early termination of the waiting period. See "The Merger Agreement--Conditions
to the Merger."
FEDERAL SECURITIES LAW CONSEQUENCES
The shares of CCI Common Stock to be received in the Merger by the
shareholders of Clyde, Geneva Rock, Utah Service and Beehive Insurance have been
registered under the Securities Act and will be freely transferable, except that
(i) shares of CCI Common Stock received by persons who are deemed to be
"affiliates" (as such term is defined under the Securities Act) of CCI, Clyde,
Geneva Rock, Utah Service and Beehive Insurance will be restricted and (ii)
shares of CCI Common Stock that are subject to the Voting Agreement described
above under "Clyde Companies, Inc.--Voting Agreement" will be subject to certain
restrictions thereunder. Shareholders should understand that there is no market
for CCI Common Stock and it is not anticipated that a market will develop. If
there were a public market for such shares, resales by affiliates would be
subject to Rule 145 under the Securities Act. Generally, Rule 145 would permit
an affiliate to sell within any three month period a number of shares that does
not exceed the greater of 1% of the then outstanding shares of CCI Common Stock
or the average weekly trading volume reported on the national securities
exchanges during the four calendar weeks preceding such sale, provided that CCI
has filed certain reports with the Securities and Exchange Commission and
provided that such sales are "broker transactions" without the solicitation of
buy orders by the broker of such affiliates or in transactions, directly with a
"market maker."
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THE MERGER AGREEMENT
GENERAL
The description of the material terms and conditions of the Amended and
Restated Agreement and Plan of Merger dated as of November 13, 1997 (the "Merger
Agreement") and any related documents in this Proxy Statement/Prospectus is
qualified in its entirety by reference to the copy of the Merger Agreement
attached hereto as Annex A. Shareholders of CCI, Clyde, Geneva Rock, Utah
Service and Beehive Insurance are urged to read the Merger Agreement in their
entirety for a more complete description of the terms of such agreements.
CONVERSION OF SHARES
At the Effective Time, each outstanding share of the Operating Companies
except (i) those shares of the Operating Companies owned by CCI, (ii) those
shares of Geneva Rock owned by Clyde, which will be distributed as a dividend to
CCI and (iii) to the extent that the holders of shares of Clyde Common Stock,
Geneva Rock Common Stock, Utah Service Common Stock or Beehive Insurance Common
Stock duly elect to exercise their dissenters' rights under Part 13 of the
URBCA) will be converted into shares of CCI Common Stock equal to (i) in the
case of Clyde Common Stock, 33.93 shares of CCI Common Stock, (ii) in the case
of Geneva Rock Common Stock, 239.27 shares of CCI Common Stock, (iii) in the
case of Utah Service Common Stock, 43.43 shares of CCI Common Stock, and (iv) in
the case of Beehive Insurance Common Stock, 4.33 shares of CCI Common Stock (the
ratios set forth in clauses (i) through (iv) above are sometimes referred to
herein as the "Exchange Ratios"). Fractional shares of CCI Common Stock will not
be issued. In lieu of fractional shares, shareholders of Clyde, Geneva Rock,
Utah Service and Beehive Insurance will receive cash equal to the product of (i)
such fraction multiplied by (ii) $14.52.
CRC will merge with and into Clyde, GRRC will merge with and into Geneva
Rock, USRC will merge with and into Utah Service and BIRC will merge with and
into Beehive Insurance, with the Operating Companies being the surviving
corporations of such mergers. Each share of CRC, GRRC, USRC and BIRC Common
Stock issued and outstanding immediately prior to the Effective Time will be
converted into one share of common stock of the respective Operating Company.
CONDITIONS TO THE MERGER
Consummation of the Merger provided for in the Merger Agreement is
subject to the satisfaction of various conditions, including but not limited to
(i) the approval and adoption of the Merger Agreement by the requisite vote of
the shareholders of each of the Constituent Corporations; (ii) the aggregate
number of dissenting shares shall not be more than 5% of the total number of
shares of CCI that would be outstanding upon consummation of the Merger if no
dissenters' rights were exercised (there would be 6,938,709 outstanding CCI
shares and 5% of that number is 346,935); (iii) no governmental authority shall
have issued any order, and there shall not be any statute, rule, decree or
regulation restraining, prohibiting or making illegal the consummation of the
Merger; (iv) any waiting period applicable to the consummation of the Merger
under the Hart Scott Rodino Act shall have expired or been terminated (such
waiting period has been terminated); (v) the representations and warranties of
CCI contained in the Merger Agreement shall be true and correct in all material
respects when made and as of the closing date of the Merger (the "Closing Date")
(except for such matters which specifically address a particular date which need
only be true and correct as of such date); (vi) CCI shall have performed in all
material respects all of the obligations to be performed by it under the Merger
Agreement prior to the Closing Date; (vii) a responsible officer of CCI shall
have provided each of the Operating Companies with a certificate with respect to
the matters referred to in the Merger Agreement; (viii) the representations and
warranties of each of the Operating Companies contained in the Merger Agreement
shall be true and correct in all material respects when made and as of the
Closing Date (except for matters which specifically address a particular date
which need only be true and correct as of such date); (ix) each of the Operating
Companies shall have performed in all material respects all of the obligations
to be performed by it under the Merger Agreement prior to the Closing Date; (x)
a responsible officer of each of the Operating Companies shall have provided CCI
with a certificate with respect to the matters referred to in the Merger
Agreement; and (xi) the receipt of an opinion from Grant Thornton to the effect
that the Merger will qualify as a tax free reorganization.
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WAIVER AND AMENDMENT
Any of the provisions of the Merger Agreement subject to waiver may be
waived in writing by the Board of Directors of the respective company that is
entitled to the benefits of such provision. The Boards of Directors of the
Constituent Corporations are not required to obtain shareholder approval prior
to consenting to such waivers. The only provision of the Merger Agreement that
is not subject to waiver is the condition that the Merger Agreement be approved
by a majority of the outstanding Common Stock of each Constituent Corporation.
The Merger Agreement may be amended, modified or supplemented at any time prior
to the Closing Date by the written agreement of each of the parties thereto.
TERMINATION
The Merger Agreement may be terminated and the Merger may be abandoned
at any time prior to the Effective Time, whether before or after approval of the
shareholders of the Constituent Corporations, under the circumstances specified
therein, including (i) automatically, without any further actions by any of the
parties (except as may be otherwise required by the URBCA), (A) if the Merger of
each of the Constituent Corporations has not been consummated on or prior to
June 30, 1998 or (B) if any governmental authority shall have issued a statute,
order, decree or regulation or taken any other action permanently restraining or
enjoining or otherwise materially restricting the consummation of the
transactions contemplated by the Merger Agreement and such statute, order,
decree, regulation or other action shall have become final and non-appealable,
(ii) by the Boards of Directors of the Operating Companies, acting jointly, if
CCI breaches or fails in any material respect to perform or comply with any of
its covenants and agreements contained in the Merger Agreement or breaches its
representations and warranties therein in any material respect and fails to cure
such breach as provided for therein, or (iii) by the Board of Directors of CCI,
if any of the Operating Companies breaches or fails in any material respect to
perform or comply with any of its respective covenants and agreements contained
in the Merger Agreement or breaches its representations and warranties in any
material respect and fails to cure such breach as provided for therein.
FEES AND EXPENSES
If the Merger is consummated, CCI will pay all fees and expenses
incurred in connection with the Merger from the dividends CCI receives from the
Operating Companies. If the Merger is not consummated, each of the Constituent
Corporations will bear their pro-rata share of all such fees and expenses.
SURRENDER OF CERTIFICATES
Certificates nominally representing shares of the common stock of the
Operating Companies, other than any certificate representing dissenting shares,
if any, ("Operating Company Certificates"), as of the Effective Time, for all
purposes, shall be deemed to evidence the number of shares of CCI Common Stock
determined in accordance with the applicable Exchange Ratio. As soon as
practicable after the Effective Time, CCI shall mail to each record holder of an
outstanding Operating Company Certificate, as of the Effective Time, a form of
letter of transmittal (the "Transmittal Letter") that contains instructions for
use in effecting the surrender of each Operating Company Certificate in exchange
for a CCI Common Stock certificate ("CCI Certificate"). Upon surrender to CCI of
an Operating Company Certificate, together with a duly executed Transmittal
Letter (and any other documents which may be reasonably required by CCI, if
any), the holder of such Operating Company Certificate shall receive promptly in
exchange therefor a CCI Certificate for the number of shares of CCI Common Stock
evidenced thereby in accordance with the applicable Exchange Ratio. At that
time, the Operating Company Certificate shall be canceled. If a CCI Certificate
is to be issued to a person other than the person in whose name the surrendered
Operating Company Certificate is registered, it shall be a condition of issuance
of the CCI Certificate (x) that the Operating Company Certificate so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and (y)
that the person requesting such issuance shall pay any transfer or other taxes
required by reason of the issuance to a person other than the registered holder
of the Operating Company Certificate surrendered or establish to the
satisfaction of CCI that such tax has been paid or is not applicable. CCI shall
pay all charges and expenses, including those of the Operating Companies, in
connection with the distribution of CCI Certificates.
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CORPORATE STRUCTURE AND RELATED MATTERS AFTER THE MERGER
At the Effective Time, CRC will merge with and into Clyde, GRRC will
merge with and into Geneva Rock, USRC will merge with and into Utah Service and
BIRC will merge with and into Beehive Insurance, with the Operating Companies
being the surviving corporations of such mergers. Each share of CRC, GRRC, USRC
and BIRC Common Stock issued and outstanding immediately prior to the Effective
Time will be converted into one share of common stock of the respective
Operating Company and all of the issued and outstanding shares of the common
stock of each of the Operating Companies will be owned by CCI.
The Articles of Incorporation of each of the Operating Companies, as
amended, shall continue to be the Articles of Incorporation of such Operating
Company. The Bylaws of each of the Operating Companies, as amended, shall
continue to be the Bylaws of such Operating Company. The directors and officers
of each Operating Company prior to the Merger shall continue to be the officers
and directors of such Operating Company.
BUSINESS OF THE OPERATING COMPANIES PENDING THE MERGER
Prior to the Effective Time, each of the Operating Companies is required
to operate its businesses in accordance with sound business practices and not
engage in any transactions other than in the ordinary course of business. In
addition, neither CCI nor any of the Operating Companies is permitted to issue
any additional shares of its capital stock (except, CCI shall issue shares of
CCI Common Stock in accordance with the Merger Agreement).
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DISSENTERS' RIGHTS
If the Merger is consummated, holders of shares of Clyde Common Stock,
Geneva Rock Common Stock, Utah Service Common Stock and Beehive Insurance Common
Stock will be entitled to dissenters' rights under the Utah Revised Business
Corporation Act ("URBCA"), provided that they comply with the conditions of
Sections 16-10a-1301 through 16-10a-1331 of the URBCA.
SECTIONS 16-10A-1301 THROUGH 16-10A-1331 OF THE URBCA ARE REPRINTED IN
THEIR ENTIRETY AS ANNEX D TO THIS PROXY STATEMENT/PROSPECTUS. THE FOLLOWING
DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW RELATING TO DISSENTERS' RIGHTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO ANNEX D. THIS DISCUSSION AND
APPENDIX SHOULD BE REVIEWED CAREFULLY BY ANY HOLDER OF CLYDE COMMON STOCK,
GENEVA ROCK COMMON STOCK, UTAH SERVICE COMMON STOCK OR BEEHIVE INSURANCE COMMON
STOCK WHO WISHES TO EXERCISE STATUTORY DISSENTERS' RIGHTS OR WHO WISHES TO
PRESERVE THE RIGHT TO DO SO. FAILURE TO COMPLY WITH THE PROCEDURES SET FORTH IN
SECTIONS 16-10A-1301 THROUGH 16-10A-1331 OF THE URBCA WILL RESULT IN THE LOSS OF
DISSENTERS' RIGHTS.
If the Merger is consummated, holders of record of shares of Clyde
Common Stock, Geneva Rock Common Stock, Utah Service Common Stock and Beehive
Insurance Common Stock who (a) deliver to Clyde, Geneva Rock, Utah Service and
Beehive Insurance, respectively, before the vote is taken written notice of
their intent to demand payment for such shares if the proposed Merger is
effectuated, (b) refrain from voting in favor of the Merger Agreement, by either
voting against the adoption of the Merger Agreement or abstaining from voting,
and (c) comply with the provisions of Sections 16-10a-1301 through 16-10a-1331
of the URBCA, will then be entitled to have paid to them the "fair value" of
their shares at the time of the Merger. The following is a brief summary of the
material provisions of Sections 16-10a-1301 through 16-10a-1331 of the URBCA,
which sets forth the procedures for demanding statutory dissenters' rights. This
summary is qualified in its entirety by reference to Sections 16-10a-1301
through 16-10a-1331 of the URBCA, the text of which is attached hereto in
Annex C.
If the Merger is approved and consummated, those shareholders of Clyde,
Geneva Rock, Utah Service and Beehive Insurance who elect to exercise their
dissenters' rights and who properly and timely perfect such rights will be
entitled to receive the "fair value" in cash for their shares of Geneva Rock
Common Stock, Utah Service Common Stock and Beehive Insurance Common Stock,
respectively. Pursuant to Section 16-10a-1301(4) of the URBCA, such "fair value"
means the value of the shares immediately before the effectuation of the Merger,
excluding any appreciation or depreciation in anticipation of the Merger.
A shareholder who elects to exercise his or her dissenters' rights must
perfect such rights by delivering to Clyde, Geneva Rock, Utah Service and
Beehive Insurance, as the case may be, prior to the vote at the applicable
Special Meeting written notice of his or her intent to demand payment, and not
vote his or her shares in favor of the Merger Agreement, by either voting
against the adoption of the applicable Merger Agreement or abstaining from
voting.
If a shareholder fails to deliver written notice to Clyde, Geneva Rock,
Utah Service and Beehive Insurance, as the case may be, of the shareholder's
intent to demand payment prior to the vote at the applicable Special Meeting or
if the shareholder votes his or her shares in favor of the Merger Agreement,
such shareholder will lose the right to receive the fair value of his or her
shares.
If the Merger is approved, within ten days after the date on which the
Merger is consummated, Clyde, Geneva Rock, Utah Service and Beehive Insurance,
as the case may be, will deliver to those shareholders who deliver to Clyde,
Geneva Rock, Utah Service and Beehive Insurance, respectively, prior to the vote
written notice of their intent to demand payment and who refrain from voting in
favor of the Merger Agreement a written dissenters' notice (the "Dissenters'
Notice"). The Dissenters' Notice will state that the Merger was authorized and
the effective date or proposed effective date of the Merger. The Dissenters'
Notice will set forth the address to which the shareholder must send the payment
demand, where and when certificates for such shares must be deposited and the
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date by which Clyde, Geneva Rock, Utah Service and Beehive Insurance, as the
case may be, must receive the payment demand (which date must not be fewer than
30 days nor more that 70 days after the date on which the Dissenters' Notice is
delivered). In addition, the Dissenters' Notice must include (a) a form for
demanding payment which requests the dissenting shareholder to state the address
to which payment is to be made and which includes the date of the first
announcement to the shareholders of the terms of the Merger and requires the
shareholder to certify whether he or she acquired beneficial ownership of the
shares before that date, and (b) a copy of the sections of the URBCA pertaining
to dissenters' rights.
A shareholder who is sent a Dissenters' Notice must demand payment in
writing, certifying whether he or she acquired beneficial ownership of the
shares before the date specified in such notice and deposit his or her
certificates in accordance with the Dissenters' Notice. A shareholder who does
not demand payment by the date set in the Dissenters' Notice or who does not
deposit his or her certificates where required and by the date set in the
Dissenter's Notice is not entitled to a dissenters' right of payment for his or
her shares.
Upon the later of consummation of the Merger or receipt of the payment
demand, Clyde, Geneva Rock, Utah Service and Beehive Insurance, as the case may
be, shall pay each holder of their respective shares who has complied with the
requirements set forth above the amount that Clyde, Geneva Rock, Utah Service
and Beehive Insurance, as the case may be, estimates to be the fair value of
such shares, plus accrued interest. The payment must be accompanied by the
latest available financial statements of Clyde, Geneva Rock, Utah Service and
Beehive Insurance, as the case may be, a statement of the estimate of the fair
value of the respective shares and the amount of interest payable with respect
to such shares, a statement of the dissenters' rights if the dissenter is
dissatisfied with the payment and a copy of the sections of the URBCA pertaining
to dissenters' rights.
If (a) the dissenter believes that the amount paid by Clyde, Geneva
Rock, Utah Service and Beehive Insurance, as the case may be, is less than the
fair value of his or her shares or that the interest due is incorrectly
calculated, (b) Clyde, Geneva Rock, Utah Service or Beehive Insurance, as the
case may be, fail to make payment within 60 days after the date set in the
Dissenters' Notice for demanding payment, or (c) the Merger is not consummated
and Clyde, Geneva Rock, Utah Service or Beehive Insurance, as the case may be,
do not return to the dissenter the deposited certificates within 60 days after
the date set in the Dissenters' Notice for demanding payment, the dissenter may
notify Clyde, Geneva Rock, Utah Service or Beehive Insurance, as the case may
be, of his or her estimate of the fair value of his or her shares and the amount
of interest due and demand payment of his or her estimate, less any payment
previously received. The dissenter must notify Clyde, Geneva Rock, Utah Service
or Beehive Insurance, as the case may be, of his or her demand in writing within
30 days after Clyde, Geneva Rock, Utah Service and Beehive Insurance, as the
case may be, made or offered payment for the dissenters' shares. If, within 60
days after receipt by Clyde, Geneva Rock, Utah Service or Beehive Insurance, as
the case may be, of a demand described in this paragraph, the demand remains
unsettled, CCI, Clyde, Geneva Rock, Utah Service or Beehive Insurance, as the
case may be, shall commence a proceeding and shall petition the court to
determine the fair value of the shares and accrued interest thereon. If Clyde,
Geneva Rock, Utah Service or Beehive Insurance, as the case may be, do not bring
the respective proceeding within such 60-day period, it shall pay each dissenter
whose demand remains unsettled the amount demanded. If the respective proceeding
is brought within the 60-day period, the dissenter shall be entitled to judgment
for the amount by which the court finds the fair value of his or her shares plus
interest exceeds the amount paid by Clyde, Geneva Rock, Utah Service and Beehive
Insurance, as the case may be.
One of the conditions to the consummation of the Merger Agreement is
that the aggregate number of dissenting shares shall not be more than 5% of the
total number of shares of CCI Common Stock that would be outstanding upon
consummation of the Merger if there were no dissenting shares (there would be
6,938,709 outstanding CCI shares and 5% of that number is 346,935).
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<PAGE> 123
DESCRIPTION OF CCI CAPITAL STOCK
At the effective time of the Merger, the authorized capital stock of CCI
will consist of 10,000,000 shares of CCI Common Stock. For a discussion of
significant differences between CCI's Articles of Incorporation and Bylaws and
the Articles of Incorporation and Bylaws for Clyde, Geneva Rock, Utah Service
and Beehive Insurance, see "Comparison of the Rights of Holders of CCI Common
Stock and Clyde, Geneva Rock, Utah Service and Beehive Insurance Common Stock."
COMMON STOCK
Holders of shares of CCI Common Stock will be entitled to one vote per
share on all matters to be voted on by shareholders. Holders of CCI Common Stock
will be entitled to receive ratably such dividends as may be declared by the
Board of Directors out of funds legally available therefor. In the event of a
liquidation, dissolution, or winding up of CCI, the holders of CCI Common Stock
will be entitled to share ratably in all assets remaining after payment of
liabilities. Holders of CCI Common Stock will have no preemptive rights and will
have no rights to convert their CCI Common Stock into any other securities.
Holders of CCI Common Stock will have certain limited rights to have their
shares of CCI Common Stock redeemed for cash pursuant to the terms of the Stock
Redemption Plan. For a summary of such rights, see "Clyde Companies, Inc.--Stock
Redemption Plan." CCI Common Stock to be outstanding upon completion of the
offering will be validly issued, fully paid and non-assessable.
UTAH CONTROL SHARES ACQUISITION ACT
The Utah Control Shares Acquisition Act (the "Control Shares Act")
essentially provides that, when a person or group (the "Acquiror") acquires
shares (or the power to direct the voting of shares) of a corporation that is
subject to the Control Shares Act equal to or in excess of 20%, 33 1/3% or a
majority of the voting power of the corporation, the Acquiror is not permitted
to vote (or to direct the voting of) the shares unless a majority of the
corporation's shares (voting in voting groups, if applicable), excluding shares
held by the Acquiror or by the officers and employee-directors of the
corporation, approve a resolution granting the Acquiror the right to vote the
shares. Shareholder approval may occur at the next meeting of the shareholders
or, if the Acquiror requests a special meeting and agrees to pay the associated
costs of the corporation for the requested special meeting, at the requested
special meeting of the shareholders (to be held within 50 days of the
corporation's receipt of the request by the Acquiror).
If authorized by the corporation's articles of incorporation or bylaws,
the corporation may redeem the Acquiror's shares at their fair market value if
the Acquiror does not file an "acquiring person statement." CCI's Articles of
Incorporation and Bylaws do not provide for redemption of an Acquiror's shares
in the event the Acquiror fails to file an "acquiring person statement." An
Acquiror's shares are not subject to redemption after an "acquiring person
statement" has been filed unless the shares are not accorded full voting rights
by the shareholders.
If the Acquiror obtains the right to vote, and if the Acquiror obtains a
majority of the voting power of the corporation, the shareholders may be
entitled to dissenters' rights.
The Control Shares Act does not apply if (a) a corporation's articles of
incorporation or bylaws provide that the Control Shares Act does not apply, (b)
the acquisition of shares of the corporation is consummated pursuant to a merger
(to which the corporation is a party) , or (c) under certain other specified
circumstances. In addition, the Control Shares Act applies only to Utah
corporations that (a) have 100 or more shareholders, (b) have their (i)
principal place of business, (ii) principal office, or (iii) substantial assets
in the State of Utah, and (c) have (i) more than 10% of their shareholders who
are residents of Utah, (ii) more than 10% of their shares owned by Utah
residents, or (iii) 10,000 or more shareholders who are residents of Utah.
CCI's Articles of Incorporation and Bylaws contain no additional
provision restricting transactions with interested shareholders or other
takeover situations, nor do they contain provisions opting out of the Control
Shares Act.
105
<PAGE> 124
CERTAIN PROVISIONS OF CCI'S ARTICLES OF INCORPORATION AND BY-LAWS
The description of certain provisions of the Articles of Incorporation
and the By-Laws set forth in "Comparison of the Rights of Holders of CCI Common
Stock and Clyde, Geneva Rock, Utah Service and Beehive Insurance Common Stock"
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, CCI's Articles of Incorporation and By-Laws.
106
<PAGE> 125
COMPARISON OF THE RIGHTS OF HOLDERS OF CCI COMMON STOCK AND CLYDE,
GENEVA ROCK, UTAH SERVICE AND BEEHIVE INSURANCE COMMON STOCK
As a consequence of the Merger, the shareholders of Clyde, Geneva Rock,
Utah Service and Beehive Insurance will become shareholders of CCI. The
following is a summary of material differences between the rights of holders of
CCI Common Stock and the rights of holders of Clyde, Geneva Rock, Utah Service
and Beehive Insurance Common Stock.
Shareholders of Clyde, Geneva Rock, Utah Service and Beehive Insurance,
whose rights as shareholders are currently governed by each of Clyde's, Geneva
Rock's, Utah Service's and Beehive Insurance's respective Articles of
Incorporation (the "Clyde Articles", "Geneva Rock Articles", "Utah Service
Articles" and "Beehive Insurance Articles") and each of Clyde's, Geneva Rock's,
Utah Service's and Beehive Insurance's respective By-laws (the "Clyde By-laws",
"Geneva Rock By-laws", "Utah Service By-laws" and "Beehive Insurance By-laws")
will, upon consummation of the Merger, automatically become shareholders of CCI,
and their rights will be governed by CCI's Articles of Incorporation (the "CCI
Articles") and CCI's By-laws (the "CCI By-laws"). The following is a discussion
of only those material similarities and differences between the rights of
shareholders of Clyde, Geneva Rock, Utah Service and Beehive Insurance under the
Clyde Articles and By-laws, Geneva Rock Articles and By-laws, Utah Service
Articles and By-laws and Beehive Insurance Articles and By-laws on the one hand
and shareholders of CCI under the CCI Articles and By-laws on the other hand.
This summary does not purport to be a complete discussion of, and is qualified
in its entirety by reference to the CCI Articles and By-laws, Clyde Articles and
By-laws, Geneva Rock Articles and By-laws, Utah Service Articles and By-laws and
Beehive Insurance Articles and By-laws.
AMENDMENTS TO ARTICLES AND BY-LAWS
The URBCA generally provides that in order for an amendment to the
articles of incorporation of a corporation to be adopted, the board of directors
of the corporation must recommend the amendment to the shareholders to be voted
on by the shareholders. In order for an amendment to a corporation's articles of
incorporation to be adopted, the amendment must be approved by a majority of the
votes entitled to be cast on the amendment by any voting group with respect to
which the amendment would create dissenters' rights or materially and adversely
affect other rights of shareholders and by every other voting group entitled to
vote on the amendment.
Under the URBCA, a corporation's board of directors may amend the
corporation's bylaws unless the corporation's articles of incorporation, the
by-laws or the URBCA reserves the power to amend the by-laws exclusively to the
shareholders in whole or in part. The URBCA also provides that a corporation's
shareholders may also amend or repeal the corporation's by-laws. The Clyde
By-laws, Geneva Rock By-laws and Beehive Insurance By-laws provide that no
by-law adopted by the shareholders can be altered by the board of directors. The
Clyde By-laws, Geneva Rock By-laws, Utah Service By-laws and Beehive Insurance
By-laws provide that they cannot be amended by the board of directors in a way
that would fix a greater quorum or voting requirement for shareholder votes. The
CCI By-laws provide that the board of directors may not adopt, amend or repeal a
by-law that fixes a greater quorum or voting requirement for shareholder votes.
The CCI By-Laws also provide that the provisions in the CCI By-Laws regarding
the qualifications of directors (described below) can only be amended by the
approval of a 75% majority of the directors or shareholders of CCI.
SPECIAL MEETINGS OF SHAREHOLDERS
The URBCA provides that a special meeting of shareholders may be called
by the board of directors or the holders of 10% or more of the votes entitled to
be cast on any issue proposed to be considered at the proposed special meeting,
or by such persons as are specified in the articles of incorporation or bylaws.
The Clyde and Beehive Insurance By-laws provide that special meetings may be
called by the chairman of the board of directors, the president or by the board
of directors, or in the absence or disability of the foregoing, by any vice
president. The Geneva Rock Articles and By-laws provide that a special meeting
may be called by the president, vice president or any two directors. The Beehive
Insurance Articles provide that a special meeting may be called by a majority of
the directors. The Utah Service Articles provide that the president, vice
president or any three directors may call a
107
<PAGE> 126
special meeting. The Utah Service Bylaws provide that a special meeting may be
called by the president or the board of directors. The CCI By-laws state that
special meetings of shareholders may be called by the president or the board of
directors and that the president is required to call a special meeting of
shareholders upon a request made by the holders of not less than 10% of CCI
Common Stock.
CORPORATE ACTION BY WRITTEN CONSENT OF SHAREHOLDERS
The URBCA permits corporate action by shareholders without a
shareholders meeting upon the written consent of all the shareholders entitled
to vote on the action with respect to any corporation, such as CCI, Clyde,
Geneva Rock, Utah Service or Beehive Insurance, formed prior to July 1, 1992.
The written consent of the holders of shares having not less than the minimum
number of votes that would be necessary to authorize or take the action at a
meeting at which all the shares entitled to vote thereon were present and voted
is sufficient if all the shareholders entitled to vote have first approved a
resolution to that effect. As of the date hereof, no such shareholder resolution
has been approved by the shareholders of Clyde, Geneva Rock, Utah Service or
Beehive Insurance Common Stock. The shareholders of CCI Common Stock have,
however, approved such a resolution.
DIVIDENDS
Under the URBCA, the board of directors of a corporation may authorize
and the corporation may make distributions (including dividends) to shareholders
only if after giving effect to the distribution (i) the corporation would be
able to pay its debts as they become due in the usual course of business and
(ii) the corporation's total assets would at least equal the sum of its total
liabilities plus, unless the corporation's articles of incorporation permit
otherwise, the amount that would be needed if the corporation were to be
dissolved at the time of the distribution to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
CAPITAL STOCK
The authorized capital stock of CCI consists of 10,000,000 shares of CCI
Common Stock and no preferred stock. The authorized capital stock of Clyde
consists of 200,000 shares of Clyde Common Stock and no preferred stock. The
authorized capital stock of Geneva Rock consists of 50,000 shares of Geneva Rock
Common Stock and no preferred stock. The authorized capital stock of Utah
Service consists of 5,000 shares of Utah Service Common Stock and no preferred
stock. The authorized capital stock of Beehive Insurance consists of 50,000
shares of Beehive Insurance Common Stock and no preferred stock.
DISSENTERS' RIGHTS
Holders of common stock of any of Operating Companies are entitled under
the URBCA to certain dissenters' rights, as more fully described in "Dissenters'
Rights" above.
PROVISIONS RELATING TO DIRECTORS
Under the URBCA, a corporation must have a board of directors consisting
of at least three directors, unless the number of shareholders is less than
three, in which case the number of directors must be at least equal to the
number of shareholders. The Clyde Articles provide that the Clyde Board of
Directors shall consist of not less than three nor more than fifteen directors.
The Clyde By-laws fix the number of directors at nine. Only eight directors are
currently serving, and the Clyde Board of Directors has not filled the remaining
vacancy. The Board of Directors, by a majority vote, or the shareholders, by a
three-fourths vote, may amend the Clyde By-laws to change from time to time the
number of directors. The Geneva Rock By-laws provide that the Geneva Rock Board
of Directors shall consist of nine directors. Only eight directors are currently
serving, and the Geneva Rock Board of Directors has not filled the remaining
vacancy. The Board of Directors, by a majority vote, or the shareholders, by a
three-fourths vote, may amend the Geneva Rock By-laws to change from time to
time the number of directors. The Utah Service Articles provide that the Utah
Service Board of Directors shall consist of not less than three nor more than
nine directors. The Utah Service By-laws fix the number of directors at nine.
The Board of Directors or shareholders may change from time to time the number
of directors by approving an amendment to the Utah Service
108
<PAGE> 127
By-laws. The Beehive Insurance Articles provide that the Beehive Insurance Board
of Directors shall consist of not less than three nor more than thirteen
directors. The Beehive Insurance By-laws fix the number of directors at nine.
The Board of Directors or shareholders may change from time to time the number
of directors by approving an amendment to the Beehive Insurance By-laws. Only
eight directors are currently serving, and the Beehive Insurance Board of
Directors has not filled the remaining vacancy.
The CCI By-laws provide that the CCI Board of Directors shall consists
of not less than eight nor more than eleven directors. Section 3.2( c) of the
CCI By-laws provides that directors must have the following qualifications: (i)
for a period of five years after the date on which the CCI By-laws are adopted,
(a) six of the directors must be direct descendants (or the spouse of a direct
descendant) of W.W. Clyde and (b) two of the directors must be direct
descendants (or the spouse of a direct descendant) of Edward Clyde; and (ii) no
person over seventy-five years of age will be elected or appointed a director of
CCI except for any director elected within sixty days after the adoption of the
CCI By-laws and serving during the five year period described above.
The Clyde, Geneva Rock and Beehive Insurance By-laws provide that
vacancies in their respective boards of directors may be filled by the vote of
the remaining directors. The CCI and Utah Service By-laws provide that vacancies
in their respective boards of directors may be filled by the vote of the
shareholders, the board of directors or the affirmative vote of a majority of
the remaining directors if less than a quorum.
The URBCA allows the articles of incorporation of a corporation to
provide for staggering the terms of directors by dividing the total number of
directors into two or three groups, with each group containing 1/2 or 1/3 of the
total, as near as may be. None of the Articles or By-laws of any of the
Constituent Corporations or CCI provide for staggering the terms of directors.
Under the URBCA, one or more directors may be removed with or without
cause by the shareholders of a corporation unless the articles of incorporation
provide that directors may be removed only for cause. The CCI, Clyde, Geneva
Rock, Utah Service and Beehive Insurance Articles do not provide that the
directors may be removed only for cause. If a director is selected by a voting
group of shareholders, only the shareholders of that voting group may
participate in the vote to remove the director. If cumulative voting is
authorized, a director may not be removed if the number of votes sufficient to
elect the director under cumulative voting is voted against the director's
removal. If cumulative voting is not authorized, a director may be removed only
if the number of votes cast to remove the director exceeds the number of votes
cast not to remove the director. A director may be removed by the shareholders
only at a meeting called for the purpose of removing the director and the
meeting notice must state that the purpose, or one of the purposes, of the
meeting is removal of the director.
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<PAGE> 128
VALIDITY OF CCI COMMON STOCK
The validity of the shares of CCI Common Stock to be issued in
connection with the Merger has been passed upon by Van Cott, Bagley, Cornwall &
McCarthy, Salt Lake City, Utah. See "Risk Factors--Lack of Separate Legal
Representation" and "The Merger--Interests of Certain Persons in the
Merger--Lack of Separate Legal Representation".
EXPERTS
The audited financial statements of CCI, Clyde and Utah Service included
in this Proxy Statement/Prospectus have been so included in reliance on the
reports of Grant Thornton, given on the authority of said firm as experts in
auditing and accounting. The audited financial statements of Geneva Rock
included in this Proxy Statement/Prospectus have been so included in reliance on
the reports of Squire, given on the authority of said firm as experts in
auditing and accounting. The audited financial statements of Beehive Insurance
included in this Proxy Statement/Prospectus have been so included in reliance on
the reports of Daines, given on the authority of said firm as experts in
auditing and accounting.
OTHER MATTERS
None of the Boards of Directors of CCI, Clyde, Geneva Rock, Utah Service
and Beehive Insurance intend to bring any matters before the Special Meetings
other than those specifically set forth in the Notices of Special Meeting, nor
do they know of any matters to be brought before the CCI, Clyde, Geneva Rock,
Utah Service and Beehive Insurance Special Meeting, respectively, by others. If
any other matters properly come before the CCI, Clyde, Geneva Rock, Utah Service
and Beehive Insurance Special Meeting, it is the intention of the persons named
in the accompanying proxies to vote such proxies in accordance with the judgment
of the Boards of Directors of CCI, Clyde, Geneva Rock, Utah Service and Beehive
Insurance, respectively.
SHAREHOLDER PROPOSALS
If the Merger is consummated, shareholder proposals must be received by
CCI by October 14, 1998 in order to be included in CCI's Proxy Statement for its
1998 Annual Meeting of Shareholders. Such shareholder proposals should be
submitted to Clyde Companies, Inc., 1423 Devonshire Drive, Salt Lake City, Utah,
84108, Attention: Secretary; (ii) in the case of Clyde, W.W. Clyde & Co., 1375
North Main Street, Springville, Utah 84663, Attention: Secretary.
110
<PAGE> 129
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
CLYDE COMPANIES, INC.
Report of Independent Accountants F-3
Balance Sheets as of September 30, 1997 (unaudited), December 31, 1996
and December 31, 1995 F-4
Statements of Earnings and Retained Earnings for the nine months
ended September 30, 1997 (unaudited) and September 30, 1996 (unaudited)
and for the years ended December 31, 1996, December 31, 1995
and December 31, 1994 F-5
Statements of Cash Flows for the nine months ended
September 30, 1997 (unaudited) and September 30, 1996 (unaudited) and
for the years ended December 31, 1996, December 31, 1995
and December 31, 1994 F-6
Notes to Financial Statements F-7
W.W. CLYDE & CO.
Report of Independent Accountants F-19
Balance Sheets as of September 30, 1997 (unaudited),
December 31, 1996 and December 31, 1995 F-20
Statements of Earnings and Retained Earnings for the nine months
ended September 30, 1997 (unaudited) and September 30, 1996 (unaudited)
and for the years ended December 31, 1996, December 31, 1995 and December 31, 1994 F-22
Statements of Cash Flows for the nine months ended
September 30, 1997 (unaudited) and September 30, 1996 (unaudited) and
for the years ended December 31, 1996, December 31, 1995
and December 31, 1994 F-25
Notes to Financial Statements
GENEVA ROCK PRODUCTS, INC.
Report of Independent Accountants F-38
Consolidated Balance Sheets as of September 30, 1997 (unaudited),
December 31, 1996 and December 31, 1995 F-39
Consolidated Statements of Earnings for the nine months ended
September 30, 1997 (unaudited) and September 30, 1996 (unaudited) and
for the years ended December 31, 1996, December 31, 1995
and December 31, 1994 F-41
Consolidated Statement of Stockholders' Equity for the nine months ended
September 30, 1997 (unaudited) and for the years ended
December 31, 1996, December 31, 1995 and December 31, 1994 F-42
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1997 (unaudited) and September 30, 1996 (unaudited) and
for the years ended December 31, 1996, December 31, 1995 and December 31, 1994
Notes to Consolidated Financial Statements F-44
UTAH SERVICE, INC.
Report of Independent Accountants F-55
Balance sheets as of September 30, 1997 and December 31, 1996 (unaudited) F-56
Statements of Earnings for the nine months ended September 30, 1997
and September 30, 1996 (unaudited) and for the years ended
December 31, 1996 (unaudited) and December 31, 1995 (unaudited) F-58
</TABLE>
F-1
<PAGE> 130
<TABLE>
<CAPTION>
<S> <C>
Statement of Stockholders' Equity for the nine months ended September 30, 1997
and for the years ended December 31, 1996 (unaudited) and December 31, 1995
(unaudited) F-59
Statements of Cash Flows for the nine months ended September 30, 1997
and September 30, 1996 (unaudited) and for the years ended
December 31, 1996 (unaudited) and December 31, 1995 (unaudited)
F-60
Notes to Financial Statements F-62
BEEHIVE INSURANCE AGENCY, INC.
Report of Independent Accountants F-72
Balance Sheets as of September 30, 1997 (unaudited), December 31, 1996 and
December 31, 1995 F-73
Statements of Earnings for the nine months ended
September 30, 1997 (unaudited) and September 30, 1996 (unaudited) and
for the years ended December 31, 1996, December 31, 1995 and December 31, 1994 F-75
Statements of Cash Flows for the nine months ended
September 30, 1997 (unaudited) and September 30, 1996 (unaudited) and
for the years ended December 31, 1996, December 31, 1995
and December 31, 1994 F-76
Notes to Financial Statements F-77
</TABLE>
F-2
<PAGE> 131
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Clyde Companies, Inc.
We have audited the accompanying balance sheets of Clyde Companies, Inc.
(formerly W.W. Clyde Investment Co.) as of December 31, 1996 and 1995, and the
related statements of earnings and retained earnings, and cash flows for each of
the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Clyde Companies, Inc. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
Grant Thornton LLP
Provo, Utah
October 14, 1997, except for Note D for which
the date is November 13, 1997
F-3
<PAGE> 132
Clyde Companies, Inc.
(formerly W. W. Clyde Investment Co.)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31,
September 30, --------------------------
1997 1996 1995
-------------- ----------- ------------
(unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash $ 107,894 $ 27,264 $ 35,897
Other assets 15,865 4,000 4,000
----------- ----------- -----------
Total current assets 123,759 31,264 39,897
INVESTMENT IN AFFILIATES (Note B) 27,145,779 25,056,938 22,553,514
----------- ----------- -----------
$27,269,538 $25,088,202 $22,593,411
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITES -
Accrued federal income tax $ -- $ 5,385 $ 20,332
DEFERRED INCOME TAXES (Note C) 9,932,225 9,153,088 8,219,311
STOCKHOLDERS' EQUITY (Note D)
Capital stock, no par value
Authorized - 10,000,000 shares
Issued - 2,303,920 shares 706,530 706,530 706,530
Retained earnings 16,630,783 15,223,199 13,647,238
----------- ----------- -----------
17,337,313 15,929,729 14,353,768
----------- ----------- -----------
$27,269,538 $25,088,202 $22,593,411
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE> 133
Clyde Companies, Inc.
(formerly W. W. Clyde Investment Co.)
STATEMENTS OF EARNINGS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
------------------------- --------------------------------------------
1997 1996 1996 1995 1994
----------- ----------- ------------ ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Operating expenses $ 4,874 $ 4,886 $ 6,510 $ 6,582 $ 7,774
----------- ----------- ------------ ------------ ------------
Other income
Dividend income from affiliates 92,558 47,188 404,320 530,210 508,373
Equity in undistributed net earnings of affiliates 2,088,841 2,668,598 2,503,424 3,412,424 2,454,520
Interest income 1,277 743 1,029 1,097 1,693
Other 18,499 -- -- 418 15,389
----------- ----------- ------------ ------------ ------------
Total other income 2,201,175 2,716,529 2,908,773 3,944,149 2,979,975
----------- ----------- ------------ ------------ ------------
Earnings before income taxes 2,196,301 2,711,643 2,902,263 3,937,567 2,972,201
Income taxes 788,717 998,001 967,484 1,321,488 962,805
----------- ----------- ------------ ------------ ------------
NET EARNINGS 1,407,584 1,713,642 1,934,779 2,616,079 2,009,396
Retained earnings at beginning of period 15,223,199 13,647,238 13,647,238 11,508,370 9,971,687
Cash dividends -- -- (358,818) (477,211) (472,713)
----------- ----------- ------------ ------------ ------------
Retained earnings at end of period $16,630,783 $15,360,880 $15,223,199 $13,647,238 $11,508,370
=========== =========== ============ ============ ============
Earnings per share $ 0.61 $ 0.74 $ 0.84 $ 1.14 $ 0.87
=========== =========== ============ ============ ============
Weighted average shares outstanding 2,303,920 2,303,920 2,303,920 2,303,920 2,303,920
=========== =========== ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE> 134
Clyde Companies, Inc.
(formerly W. W. Clyde Investment Co.)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
-------------------------- -----------------------------------------
1997 1996 1996 1995 1994
----------- ----------- ----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Increase in cash and cash equivalents
Cash flows from operating activities
Net earnings $1,407,584 $1,713,642 $1,934,779 $2,616,079 $2,009,396
Adjustments to reconcile net earnings to
net cash provided by operating activities
Equity in net earnings of affiliates (2,088,841) (2,668,598) (2,503,424) (3,412,424) (2,454,520)
Deferred income taxes 779,137 995,387 933,777 1,272,835 915,536
Changes in assets and liabilities
Other assets - (11,865) (23,708) -- -- 1,119
Accrued federal income tax (5,385) (15,456) (14,947) 1,385 2,848
----------- ----------- ----------- ----------- -----------
Total adjustments 1,326,954 (1,712,375) (1,584,594) (2,138,204) (1,535,017)
----------- ----------- ----------- ----------- -----------
Net cash provided by
operating activities 80,630 1,267 350,185 477,875 474,379
----------- ----------- ----------- ----------- -----------
Cash flows from financing activities -
Dividends paid -- -- (358,818) (477,211) (472,713)
----------- ----------- ----------- ----------- -----------
Net increase (decrease)
in cash and cash
equivalents 80,630 1,267 (8,633) 664 1,666
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents at beginning
of period 27,264 35,897 35,897 35,233 33,567
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents at end of period $ 107,894 $ 37,164 $ 27,264 $ 35,897 $ 35,233
=========== =========== =========== =========== ===========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ -- $ -- $ -- $ -- $ --
Income taxes 27,901 40,021 40,021 47,902 46,087
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE> 135
CLYDE COMPANIES, INC.
(formerly W. W. Clyde Investment Co.)
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows. Insofar
as the notes refer to the nine months ended September 30, 1997 and 1996
they are not audited. In the opinion of management, the unaudited
financial statements for the nine months ended September 30, 1997 and
1996 include all adjustments, consisting of normal recurring accruals,
necessary to present fairly the Company's financial position, results of
operations and cash flows. Operating results for the nine months ended
September 30, 1997 are not necessarily indicative of the results that may
be expected for the full year.
1. Organization
In connection with an "Amended and Restated Agreement and Plan of Merger"
adopted on November 13, 1997, Clyde Companies, Inc. (the Company) changed
its name from W. W. Clyde Investment Co. The Company is incorporated
under the laws of the State of Utah. The Company is located in Salt Lake
City, Utah and is an investment company which holds stock in four related
companies: W. W. Clyde & Co. (W.W. Clyde) (33.78%), Geneva Rock Products,
Inc. (Geneva Rock) (21.67%), Utah Service, Inc. (Utah Service) (31.37%)
and Beehive Insurance Agency, Inc. (Beehive Insurance) (17.22%) (See
Note D).
2. Cash and cash equivalents
For purposes of the financial statements, the Company considers all
short-term debt securities with an original maturity of three months or
less when purchased to be cash equivalents.
3. Income taxes
The Company utilizes the liability method of accounting for income taxes.
Under the liability method, deferred taxes are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse. An allowance against deferred tax
assets is recorded when it is more likely than not that such tax benefits
will not be realized.
F-7
<PAGE> 136
CLYDE COMPANIES, INC.
(formerly W. W. Clyde Investment Co.)
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
4. Use of estimates
In preparing the Company's financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues
and expenses during the reported period. Actual results could differ from
those estimates.
5. Fair value of financial instruments
The carrying value of the Company's cash and cash equivalents, trade
receivables, notes payable and trade payables approximate their fair
values.
6. Investments
Investments in affiliates are accounted for on the equity method.
7. Earnings per share
Earnings per common share are based upon the weighted average number of
common shares outstanding during the period presented after giving
retroactive effect to all periods presented for the 40:1 stock split as
described in Note D.
8. Recently issued accounting statements not yet adopted
Earnings per share
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings
Per Share." SFAS 128 eliminates the presentation of primary earnings per
share (EPS) and requires the presentation of basic EPS, which includes no
common stock equivalents and thus no dilution. The statement also
eliminates the modified treasury stock method of computing potential
common shares. This statement is effective for financial statements
issued for periods ending after December 15, 1997.
F-8
<PAGE> 137
CLYDE COMPANIES, INC.
(formerly W. W. Clyde Investment Co.)
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
8. Recently issued accounting statements not yet adopted - continued
Capital Structure
Also in February 1997, the FASB issued Statement of Financial Accounting
Standards No. 129 (SFAS 129), "Disclosure of Information about Capital
Structure." SFAS 129 consolidates in one statement disclosures about the
rights of outstanding securities and changes in the number of equity
securities during the period, disclosures about liquidation preferences
and preferred stock, and disclosures about redemption requirements of
certain redeemable stock. Disclosures were previously included in
Accounting Principles Board (APB) Opinion 15, APB Opinion 10 and SFAS 47.
The statement does not change the required disclosures about capital
structure for entities currently subject to the requirements of APB
Opinions 10 and 15 and SFAS 47. SFAS 129 is effective for financial
statements for interim and annual periods ending after December 15, 1997.
Comprehensive income
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130 (SFAS 130), "Reporting Comprehensive Income." SFAS 130 requires
entities presenting a complete set of financial statements to include
details of comprehensive income that arise in the reporting period.
Comprehensive income consists of net income or loss for the current
period and other comprehensive income, which consists of revenue,
expenses, gains, and losses that bypass the income statement and are
reported directly in a separate component of equity. Other comprehensive
income includes, for example, foreign currency items, minimum pension
liability adjustments, and unrealized gains and losses on certain
investment securities. SFAS 130 requires that components of comprehensive
income be reported in a financial statement that is displayed with the
same prominence as other financial statements. This statement is
effective for fiscal years beginning after December 15, 1997, and
requires restatement of prior period financial statements presented for
comparative purposes.
F-9
<PAGE> 138
CLYDE COMPANIES, INC.
(formerly W. W. Clyde Investment Co.)
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
8. Recently issued accounting statements not yet adopted - continued
Disclosure of segments
Also in June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131 (SFAS 131), "Disclosures about Segments of an
Enterprise and Related Information." This statement requires an entity to
report financial and descriptive information about their reportable
operating segments. An operating segment is a component of an entity for
which financial information is developed and evaluated by the entity's
chief operating decision maker to assess performance and to make
decisions about resource allocation. Entities are required to report
segment profit or loss, certain specific revenue and expense items and
segment assets based on financial information used internally for
evaluating performance and allocating resources. This statement is
effective for fiscal years beginning after December 15, 1997, and
requires restatement of prior period financial statements presented for
comparative purposes.
The Company does not believe that the adoption of SFAS 128, SFAS 129,
SFAS 130 and SFAS 131 will have a material effect on the Company's
financial statements.
9. Certain reclassifications
Certain nonmaterial reclassifications have been made to the 1996, 1995
and 1994 financial statements to conform to the September 30, 1997
presentation.
F-10
<PAGE> 139
CLYDE COMPANIES, INC.
(formerly W. W. Clyde Investment Co.)
NOTES TO FINANCIAL STATEMENTS
NOTE B - INVESTMENT IN AFFILIATES
The Company owns 33.78% of the outstanding common stock of W. W. Clyde,
21.67% of the outstanding common stock of Geneva Rock, 31.37% of the
outstanding common stock of Utah Service, and 17.22% of the outstanding
common stock of Beehive Insurance. These investments are accounted for
under the equity method (See Note D).
The Company's investments in affiliates consist of the following:
<TABLE>
<CAPTION>
Geneva Utah Beehive
W.W. Clyde Rock Service Insurance Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Initial investment at cost $ 427,002 $ 63,178 $ 22,703 $ 4,947 $ 517,830
------------ ------------ ------------ ------------ ------------
Equity in investment at
January 1, 1994 8,894,907 6,571,220 637,252 65,361 16,168,740
Share of net earnings for
the year 873,167 1,908,185 139,868 41,673 2,962,893
Dividends received for the
year (319,350) (127,575) (24,448) (37,000) (508,373)
------------ ------------ ------------ ------------ ------------
Equity in investment at
December 31, 1994 9,448,724 8,351,830 752,672 70,034 18,623,260
Share of net earnings for
the year 1,430,881 2,379,210 109,984 22,559 3,942,634
Dividends received for the
year (319,350) (141,750) (33,960) (35,150) (530,210)
------------ ------------ ------------ ------------ ------------
Equity in investment at
December 31, 1995 10,560,255 10,589,290 828,696 57,443 22,035,684
</TABLE>
F-11
<PAGE> 140
CLYDE COMPANIES, INC.
(formerly W. W. Clyde Investment Co.)
NOTES TO FINANCIAL STATEMENTS
NOTE B - INVESTMENT IN AFFILIATES - CONTINUED
<TABLE>
<CAPTION>
Geneva Utah Beehive
W.W. Clyde Rock Service Insurance Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Share of net earnings for
the year 907,565 1,827,843 132,079 40,257 2,907,744
Dividends received for the
year (191,610) (141,750) (33,960) (37,000) (404,320)
------------ ------------ ------------ ------------ ------------
Equity in investment at
December 31, 1996 11,276,210 12,275,383 926,815 60,700 24,539,108
Share of net earnings for
the period 485,388 1,548,483 112,420 35,108 2,181,399
Dividends received for the
period (63,870) -- (10,188) (18,500) (92,558)
------------ ------------ ------------ ------------ ------------
Equity in investment at
September 30, 1997 11,697,728 13,823,866 1,029,047 77,308 26,627,949
------------ ------------ ------------ ------------ ------------
Total Investment $12,124,730 $13,887,044 $ 1,051,750 $ 82,255 $27,145,779
============ ============ ============ ============ ============
Percent Ownership 33.78% 21.67% 31.37% 17.22%
</TABLE>
Condensed balance sheets of W.W. Clyde consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
------------- ---------------------------
1997 1996 1995
------------- ----------- -----------
<S> <C> <C> <C>
Assets
Current assets $16,287,000 $16,357,000 $16,320,000
Property and equipment, net of depreciation 8,578,000 8,678,000 8,328,000
Other assets 22,366,000 19,881,000 17,177,000
----------- ----------- -----------
Total assets $47,231,000 $44,916,000 $41,825,000
=========== =========== ===========
Liabilities and stockholders' equity
Current liabilities $1,126,000 $1,092,000 $1,297,000
Long-term liabilities 9,888,000 8,877,000 7,539,000
----------- ----------- -----------
Total liabilities 11,014,000 9,969,000 8,836,000
Stockholders' equity 36,217,000 34,947,000 32,989,000
----------- ----------- -----------
Total liabilities and stockholders' equity $47,231,000 $44,916,000 $41,825,000
=========== =========== ===========
</TABLE>
F-12
<PAGE> 141
CLYDE COMPANIES, INC.
(formerly W. W. Clyde Investment Co.)
NOTES TO FINANCIAL STATEMENTS
NOTE B - INVESTMENT IN AFFILIATES - CONTINUED
Condensed statements of earnings of W.W. Clyde are as follows:
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
------------------------ -------------------------------------
1997 1996 1996 1995 1994
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Construction revenue $9,696,000 $14,674,000 $19,056,000 $21,325,000 $20,222,000
Cost of construction 9,452,000 12,756,000 17,116,000 18,199,000 18,590,000
---------- ----------- ----------- ----------- -----------
Gross profit 244,000 1,918,000 1,940,000 3,126,000 1,632,000
Operating expenses 1,108,000 995,000 1,443,000 1,255,000 1,321,000
Other income, net 3,159,000 3,207,000 3,700,000 4,796,000 3,723,000
---------- ----------- ----------- ----------- -----------
Earnings before income taxes 2,295,000 4,130,000 4,197,000 6,667,000 4,034,000
Income taxes 858,000 1,584,000 1,510,000 2,431,000 1,449,000
---------- ----------- ----------- ----------- -----------
Net earnings 1,437,000 2,546,000 2,687,000 4,236,000 2,585,000
Ownership percentage 33.78% 33.78% 33.78% 33.78% 33.78%
---------- ----------- ----------- ----------- -----------
Equity in net earnings of affiliate $ 485,000 $ 860,000 $ 908,000 $1,431,000 $ 873,000
========== =========== =========== =========== ===========
</TABLE>
F-13
<PAGE> 142
CLYDE COMPANIES, INC.
(formerly W. W. Clyde Investment Co.)
NOTES TO FINANCIAL STATEMENTS
NOTE B - INVESTMENT IN AFFILIATES - CONTINUED
Condensed balance sheets of Geneva Rock consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
------------ ---------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Assets
Current assets $42,113,000 $35,240,000 $31,230,000
Property and equipment, net of depreciation 39,742,000 36,528,000 24,580,000
Other assets 2,743,000 3,080,000 892,000
----------- ----------- -----------
Total assets $84,598,000 $74,848,000 $56,702,000
=========== =========== ===========
Liabilities and stockholders' equity
Current liabilities $ 9,912,000 $ 8,036,000 $ 5,289,000
Long-term liabilities 10,362,000 9,633,000 2,014,000
----------- ----------- -----------
Total liabilities 20,274,000 17,669,000 7,303,000
Stockholders' equity 64,324,000 57,179,000 49,399,000
----------- ----------- -----------
Total liabilities and stockholders' equity $84,598,000 $74,848,000 $56,702,000
=========== =========== ===========
</TABLE>
Condensed statements of earnings of Geneva Rock are as follows:
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
--------------------------- --------------------------------------------
1997 1996 1996 1995 1994
----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Net sales $94,736,000 $85,260,000 $105,451,000 $100,422,000 $80,526,000
Cost of sales 79,560,000 71,566,000 88,900,000 80,811,000 65,205,000
----------- ----------- ------------ ------------ -----------
Gross profit 15,176,000 13,694,000 16,551,000 19,611,000 15,321,000
Operating expenses 3,888,000 1,973,000 3,023,000 3,073,000 2,117,000
------------ ------------ ------------ ------------ ------------
Earnings before income taxes 11,288,000 11,721,000 13,528,000 16,538,000 13,204,000
Income taxes 4,143,000 4,201,000 5,094,000 5,560,000 4,399,000
----------- ----------- ------------ ------------ -----------
Net earnings 7,145,000 7,520,000 8,434,000 10,978,000 8,805,000
Ownership percentage 21.67% 21.67% 21.67% 21.67% 21.67%
----------- ----------- ------------ ------------ -----------
Equity in net earnings of affiliate $1,548,000 $1,630,000 $ 1,828,000 $ 2,379,000 $1,908,000
=========== =========== ============ ============ ===========
</TABLE>
F-14
<PAGE> 143
CLYDE COMPANIES, INC.
(formerly W. W. Clyde Investment Co.)
NOTES TO FINANCIAL STATEMENTS
NOTE B - INVESTMENT IN AFFILIATES - CONTINUED
Condensed balance sheets of Utah Service consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
------------ --------------------------
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
Assets
Current assets $3,539,000 $3,057,000 $2,911,000
Property and equipment, net of depreciation 1,211,000 1,256,000 1,360,000
Other assets 65,000 75,000 7,000
---------- ---------- ----------
Total assets $4,815,000 $4,388,000 $4,278,000
========== ========== ==========
Liabilities and stockholders' equity
Current liabilities $ 825,000 $ 626,000 $ 608,000
Long-term liabilities 132,000 226,000 369,000
---------- ---------- ----------
Total liabilities 957,000 852,000 977,000
Stockholders' equity 3,858,000 3,536,000 3,301,000
---------- ---------- ----------
Total liabilities and stockholders' equity $4,815,000 $4,388,000 $4,278,000
========== ========== ==========
</TABLE>
Condensed statements of earnings of Utah Service are as follows:
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
1997 1996 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales $9,258,000 $9,939,000 $13,108,000 $13,580,000 $10,690,000
Operating expenses 7,590,000 8,373,000 10,915,000 11,633,000 9,159,000
----------- ----------- ----------- ----------- -----------
Gross profit 1,668,000 1,566,000 2,193,000 1,947,000 1,531,000
Operating expenses 1,168,000 1,121,000 1,690,000 1,498,000 915,000
Other income, net 72,000 89,000 142,000 101,000 95,000
----------- ----------- ----------- ----------- -----------
Earnings before income taxes 572,000 534,000 645,000 550,000 711,000
Income taxes 213,000 183,000 224,000 199,000 265,000
----------- ----------- ----------- ----------- -----------
Net earnings 359,000 351,000 421,000 351,000 446,000
Ownership percentage 31.37% 31.37% 31.37% 31.37% 31.37%
----------- ----------- ----------- ----------- -----------
Equity in net earnings of affiliate $ 113,000 $ 110,000 $ 132,000 $ 110,000 $ 140,000
=========== =========== =========== =========== ===========
</TABLE>
F-15
<PAGE> 144
CLYDE COMPANIES, INC.
(formerly W. W. Clyde Investment Co.)
NOTES TO FINANCIAL STATEMENTS
NOTE B - INVESTMENT IN AFFILIATES - CONTINUED
Condensed balance sheets of Beehive Insurance consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
------------ ------------------------
1997 1996 1995
------------ -------- --------
<S> <C> <C> <C>
Assets
Current assets $840,000 $679,000 $827,000
Property and equipment, net of depreciation 59,000 41,000 48,000
Other assets 46,000 36,000 39,000
-------- -------- --------
Total assets $945,000 $756,000 $914,000
======== ======== ========
Liabilities and stockholders' equity
Current liabilities $470,000 $377,000 $554,000
Long-term liabilities - - -
-------- -------- --------
Total liabilities 470,000 377,000 554,000
Stockholders' equity 475,000 379,000 360,000
-------- -------- --------
Total liabilities and stockholders' equity $945,000 $756,000 $914,000
======== ======== ========
</TABLE>
Condensed statements of earnings of Beehive Insurance are as follows:
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
---------------------- ----------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales $523,000 $501,000 $578,000 $538,000 $598,000
Operating expenses 217,000 194,000 244,000 357,000 254,000
-------- -------- -------- -------- --------
Operating income 306,000 307,000 334,000 181,000 344,000
Other income, net 19,000 20,000 29,000 38,000 27,000
-------- -------- -------- -------- --------
Earnings before income taxes 325,000 327,000 363,000 219,000 371,000
Income taxes 121,000 108,000 129,000 88,000 129,000
-------- -------- -------- -------- --------
Net earnings 204,000 219,000 234,000 131,000 242,000
Ownership percentage 17.22% 17.22% 17.22% 17.22% 17.22%
-------- -------- -------- -------- --------
Equity in net earnings of affiliate $35,100 $37,700 $40,300 $22,600 $41,700
======== ======== ======== ======== ========
</TABLE>
F-16
<PAGE> 145
CLYDE COMPANIES, INC.
(formerly W. W. Clyde Investment Co.)
NOTES TO FINANCIAL STATEMENTS
NOTE C - INCOME TAXES
Income tax expense consists of the following:
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
---------------------- -----------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Current
Federal $ 4,206 $ 472 $ 13,765 $ 22,397 $ 22,397
State 5,373 2,142 19,942 26,256 25,505
-------- -------- -------- ---------- --------
9,579 $ 2,614 33,707 48,653 47,269
-------- -------- -------- ---------- --------
Deferred
Federal 674,696 861,957 808,606 1,102,214 792,810
State 104,442 133,430 125,171 170,621 122,726
-------- -------- -------- ---------- --------
779,138 995,387 933,777 1,272,835 915,536
-------- -------- -------- ---------- --------
$788,717 $998,001 $967,484 $1,321,488 $962,805
======== ======== ======== ========== ========
</TABLE>
The income tax provision reconciled to the tax computed at the federal
statutory rate of 34% is as follows:
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
---------------------- -----------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Income taxes at statutory rate $746,742 $921,959 $986,769 $1,338,773 $1,010,548
State income taxes, net of federal
tax benefit 72,478 89,484 95,775 129,940 98,083
Dividends received deduction (25,176) (14,081) (109,975) (144,217) (138,277)
All other (5,327) 639 (5,085) (3,008) (7,549)
-------- -------- -------- ---------- ----------
$788,717 $998,001 $967,484 $1,321,488 $ 962,805
======== ======== ======== ========== ==========
</TABLE>
Deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
------------ ------------------------
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
Long-term deferred tax liability
Investment in W. W. Clyde, Geneva Rock,
Utah Service and Beehive Insurance $9,932,225 $9,153,088 $8,219,311
========== ========== ==========
</TABLE>
F-17
<PAGE> 146
CLYDE COMPANIES, INC.
(formerly W. W. Clyde Investment Co.)
NOTES TO FINANCIAL STATEMENTS
NOTE D - SUBSEQUENT EVENTS
Agreement and plan of merger
As of November 13, 1997, the Company adopted an "Amended and Restated
Agreement and Plan of Merger" whereby the following was effected:
1. The name of the Company was changed to Clyde Companies, Inc.
2. The Company changed its capital structure by authorizing ten million
shares of "no par value" common stock and declaring a 40:1 stock
split resulting in 2,303,920 shares outstanding.
3. Directors of the Company approved the merger of the Company with
W.W. Clyde & Co., Geneva Rock Products, Inc., Utah Service, Inc. and
Beehive Insurance Agency, Inc., all related companies through common
shareholders and the Company's equity investment in each entity
(Note B).
4. The merger upon majority approval of the shareholders of each
respective company, will be effected by the exchange of shares of
the Company's common stock with the respective shares of common
stock held by the shareholders of each respective entity. The merger
transaction will be accounted for in a manner similar to a pooling
of interests. The exchange rates used in determining the number of
shares to be exchanged are based upon independent valuations
performed on each company to be acquired.
Stock redemption plan
The Company has adopted a stock redemption plan (the Plan) effective
January 1, 1999. The Plan provides for the creation of a "Redemption
Fund" (the Fund) which would be used to annually redeem shares of
outstanding common stock from willing shareholders. The Fund will have an
amount allocated to it annually by the Company between 5% and 10% of
consolidated net earnings. The per share price to be paid the
shareholders will be based on an annual valuation of the Company's common
stock.
F-18
<PAGE> 147
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
W. W. Clyde & Co.
We have audited the accompanying balance sheets of W. W. Clyde & Co. as of
December 31, 1996 and 1995, and the related statements of earnings and retained
earnings and cash flows for each of the three years in the period ended December
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of W. W. Clyde & Co. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
Grant Thornton, LLP
Provo, Utah
February 27, 1997
F-19
<PAGE> 148
W. W. Clyde & Co.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
------------- -----------------------------
1997 1996 1995
----------- ----------- -----------
(unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents (Notes B and J) $2,250,706 $3,616,669 $5,563,295
Interest-bearing deposits in banks (Note J) 8,430,509 8,218,785 7,550,022
Contracts receivable
Current 3,202,655 2,191,928 2,084,533
Retention 394,967 545,982 600,922
Income taxes receivable 143,686 405,669 6,783
Other receivables - - 20,418
Costs and estimated earnings in excess of billings:
Contracts in progress (Note C) 887,860 904,105 269,753
Contracts completed 720,471 268,945 -
Prepaid expenses and other assets - 2,431 4,182
Inventories 198,624 176,727 220,520
Deferred income taxes (Note F) 57,073 25,487 -
----------- ----------- -----------
Total current assets 16,286,551 16,356,728 16,320,428
PROPERTY AND EQUIPMENT, AT COST
Buildings and improvements 328,338 328,338 313,733
Machinery and equipment 30,932,302 33,033,819 31,676,827
Transportation equipment 7,065,930 6,745,645 6,545,954
Furniture and fixtures 130,462 127,391 92,525
----------- ----------- -----------
38,457,032 40,235,193 38,629,039
Less accumulated depreciation and amortization 30,163,992 31,842,600 30,585,703
----------- ----------- -----------
8,293,040 8,392,593 8,043,336
Land 285,027 285,027 285,027
----------- ----------- -----------
8,578,067 8,677,620 8,328,363
INVESTMENT IN AFFILIATE (Note D) 22,366,054 19,881,754 17,176,684
----------- ----------- -----------
$47,230,672 $44,916,102 $41,825,475
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-20
<PAGE> 149
W.W. Clyde & Co.
BALANCE SHEETS - CONTINUED
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
------------ ----------------------------
1997 1996 1995
------------ ------------ ------------
(unaudited)
<S> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 598,979 $ 498,475 $ 610,000
Subcontractors payable
Current 41,062 112,393 --
Retention 21,729 231,601 60,350
Accrued expenses (Note G) 367,397 152,964 175,849
Billings in excess of costs and estimated
earnings on contracts in progress (Note C) 96,481 96,481 195,637
Income taxes payable -- -- 246,594
Deferred income taxes (Note F) -- -- 8,165
------------ ------------ ------------
Total current liabilities 1,125,648 1,091,914 1,296,595
ACCRUED PENSION COSTS (Note I) 223,780 258,417 --
DEFERRED INCOME TAXES (Note F) 9,664,438 8,618,592 7,539,268
COMMITMENTS (Notes I and K) -- -- --
STOCKHOLDERS' EQUITY (Notes E and L)
Common stock, $10 par value;
authorized 200,000 shares;
issued 100,000 shares 1,000,000 1,000,000 1,000,000
Retained earnings 35,895,426 34,647,517 32,527,923
------------ ------------ ------------
36,895,426 35,647,517 33,527,923
Less cost of 5,456 shares of stock held
in treasury (538,311) (538,311) (538,311)
Excess of additional pension cost over un-
recognized net pension obligation,
net of applicable income taxes (Note I) (140,309) (162,027) --
------------ ------------ ------------
36,216,806 34,947,179 32,989,612
------------ ------------ ------------
$ 47,230,672 $ 44,916,102 $ 41,825,475
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-21
<PAGE> 150
W. W. Clyde & Co.
STATEMENTS OF EARNINGS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
------------------------ ---------------------------------------
1997 1996 1996 1995 1994
----------- ----------- ----------- ----------- -----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Earnings from construction (Notes H, J and K)
Construction revenue $9,695,784 $14,674,157 $19,055,543 $21,325,495 $20,222,246
Cost of construction 9,452,460 12,756,171 17,115,558 18,198,944 18,590,221
----------- ----------- ----------- ----------- -----------
Gross profit 243,324 1,917,986 1,939,985 3,126,551 1,632,025
General and administrative expenses 1,107,568 994,955 1,443,165 1,254,961 1,321,299
----------- ----------- ----------- ----------- -----------
Operating profit (loss) (864,244) 923,031 496,820 1,871,590 310,726
Other income (expense)
Gain on sale of property and equipment 253,542 63,541 63,541 196,165 29,685
Interest income 386,053 474,390 640,667 697,056 547,246
Interest expense -- -- -- -- (1,464)
Other income, net 35,001 53,938 63,663 85,693 86,096
Equity in net earnings of affiliate (Note D) 2,484,300 2,614,700 2,932,500 3,817,100 3,061,500
----------- ----------- ----------- ----------- -----------
3,158,896 3,206,569 3,700,371 4,796,014 3,723,063
----------- ----------- ----------- ----------- -----------
Earnings before income taxes 2,294,652 4,129,600 4,197,191 6,667,604 4,033,789
Income taxes (Note F) 857,655 1,583,933 1,510,333 2,431,461 1,448,767
----------- ----------- ----------- ----------- -----------
NET EARNINGS 1,436,997 2,545,667 2,686,858 4,236,143 2,585,022
Retained earnings at beginning of period 34,647,517 32,527,923 32,527,923 29,237,220 27,597,638
Cash dividends (Note E) (189,088) - (567,264 ) (945,440) (945,440)
----------- ----------- ----------- ----------- -----------
Retained earnings at end of period $35,895,426 $35,073,590 $34,647,517 $32,527,923 $29,237,220
=========== =========== =========== =========== ===========
Earnings per common share $ 15.20 $ 26.92 $ 28.42 $ 44.81 $ 27.34
Weighted average shares outstanding 94,544 94,544 94,544 94,544 94,544
</TABLE>
The accompanying notes are an integral part of these statements.
F-22
<PAGE> 151
W. W. Clyde & Co.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
--------------------------- -------------------------------------------
1997 1996 1996 1995 1994
----------- ----------- ----------- ----------- -----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Increase in cash and cash equivalents
Cash flows from operating activities
Net earnings $ 1,436,997 $ 2,545,667 $ 2,686,858 $ 4,236,143 $ 2,585,022
Adjustments to reconcile net earnings to
net cash provided by operating activities
Depreciation 1,184,747 1,441,219 1,815,721 1,691,221 1,431,047
Gain on sale of property and
equipment (253,542) (63,541) (63,541) (196,165) (29,685)
Equity in net earnings of affiliate (2,484,300) (2,614,700) (2,932,500) (3,817,100) (3,061,500)
Deferred income taxes 1,001,341 1,148,397 1,142,062 1,297,225 1,022,238
Changes in assets and liabilities
Contracts receivable (859,712) 543,630 (52,455) (730,840) 3,678,751
Costs and estimated earnings in
excess of billings on contracts
in progress and completed (435,281) (3,070,225) (903,297) 367,850 164,270
Prepaid expenses and other assets 2,431 4,182 1,751 298,565 70,133
Income taxes receivable 261,983 6,783 (398,886) 208,075 152,477
Other receivables -- 16,575 20,418 (20,418) 78,593
Inventories (21,897) (36,288) 43,793 (136,617) 11,239
Accounts payable 100,504 (459,744) (111,525) 84,079 (708,911)
Subcontractors payable (281,203) 9,886 283,644 (44,713) (8,954)
Other liabilities and accrued
expenses 214,433 125,309 (22,885) (76,292) 63,504
Income taxes payable -- (172,765) (246,594) 245,755 (29,360)
Billings in excess of costs and
estimated earnings on
contracts in progress -- -- (99,156) (85,404) 249,435
----------- ----------- ----------- ----------- -----------
Total adjustments (1,570,496) (3,211,282) (1,523,450) (914,779) 3,083,277
----------- ----------- ----------- ----------- -----------
Net cash provided by
(used in) operating
activities (133,499) (575,615) 1,163,408 3,321,364 5,668,299
----------- ----------- ----------- ----------- -----------
</TABLE>
(Continued)
The accompanying notes are an integral part of these statements.
F-23
<PAGE> 152
W. W. Clyde & Co.
STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
--------------------------- -------------------------------------------
1997 1996 1996 1995 1994
----------- ----------- ----------- ----------- ------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from investing activities
Purchases of property and equipment (1,266,193) (2,178,681) (2,220,046) (4,551,214) (996,085)
Proceeds from sale of property and
equipment 434,541 117,340 118,609 246,875 58,743
Net increase in interest-bearing
deposits (211,724) (1,149,978) (668,763) (2,857,022) --
Proceeds from maturity of held-to-maturity
securities -- -- -- 4,976,979 13,311,520
Purchase of investments -- -- -- -- (14,854,043)
Dividends received from affiliate -- -- 227,430 227,430 204,687
----------- ----------- ----------- ----------- ------------
Net cash used in
investing activities (1,043,376) (3,211,319) (2,542,770) (1,956,952) (2,275,178)
----------- ----------- ----------- ----------- ------------
Cash flows from financing activities -
dividends paid (189,088) -- (567,264) (945,440) (945,440)
----------- ----------- ----------- ----------- ------------
Net (decrease) increase
in cash and cash equivalents (1,365,963) (3,786,934) (1,946,626) 418,972 2,447,681
Cash and cash equivalents at beginning
of period 3,616,669 5,563,295 5,563,295 5,144,323 2,696,642
----------- ----------- ----------- ----------- ------------
Cash and cash equivalents at end of period $ 2,250,706 $ 1,776,361 $ 3,616,669 $ 5,563,295 $ 5,144,323
=========== =========== =========== =========== ============
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ -- $ -- $ -- $ -- $ 1,500
Income taxes 704,610 759,070 759,070 887,500 313,000
</TABLE>
Noncash investing and financing activities
At September 30, 1997 and December 31, 1996, the Company had an excess of
additional pension cost over unrecognized net pension obligation of $140,309 and
$162,027, respectively. As a result, deferred tax assets were increased by
$83,471 and $12,919, respectively.
The accompanying notes are an integral part of these statements.
F-24
<PAGE> 153
W. W. CLYDE & CO.
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows. Insofar
as the notes refer to September 30, 1997 and to the nine months ended
September 30, 1997 and September 30, 1996, they are not audited. In the
opinion of management, the unaudited financial statements for the nine
months ended September 30, 1997 and September 30, 1996 include all
adjustments, consisting of normal recurring accruals, necessary to
present fairly the Company's results of operations and cash flows.
Operating results for the nine months ended September 30, 1997 are not
necessarily indicative of the results that may be expected for the full
year.
1. Financial Statement Presentation
The accounting and reporting policies of W. W. Clyde & Co. (the Company)
conform with generally accepted accounting principles and with general
practices in the construction industry. In preparing the financial
statements, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities as of the date of
the balance sheet and revenues and expenses for the period. Actual
results could differ significantly from those estimates.
2. Business activity
The Company is involved in the construction of highways, bridges, dams,
and other types of construction work involving the moving of large
quantities of earth.
3. Inventories
Inventories consisting of steel products, pipe, oil and grease, and tires
are recorded at the lower of cost or market, using the first-in,
first-out method.
4. Method of accounting for long-term contracts
The accompanying financial statements have been prepared using the
percentage-of-completion method of accounting and, therefore, take into
account the costs, estimated earnings, and revenue to date on contracts
not yet completed.
The amount of revenue recognized at statement date is that portion of the
total contract price that cost expended to date bears to anticipated
final total cost, based on current estimates of cost to complete. At the
time a loss on a contract becomes known, the entire amount of the
estimated ultimate loss is recognized in the financial statements.
Contract costs include all direct labor and benefits, materials unique to
or installed in the project, subcontractor costs and indirect cost
allocations, employee benefits, and construction equipment expense. As
long-term contracts extend over one or more years, revisions in cost and
earnings estimates during the course of the work are reflected in the
accounting period in which the facts that require the revision become
known.
F-25
<PAGE> 154
W. W. CLYDE & CO.
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
4. Method of accounting for long-term contracts - continued
The current assets, "costs and estimated earnings in excess of billings
on contracts in progress and completed," represent revenues recognized in
excess of amounts billed (underbillings), and the current liability,
"billings in excess of costs and estimated earnings on contracts in
progress," represents billings in excess of revenues recognized
(overbillings).
5. Depreciation
Depreciation of property and equipment is provided principally on
accelerated methods for both financial and tax reporting purposes.
Estimated useful lives used in the computation of depreciation are as
follows:
<TABLE>
<CAPTION>
Years
-----
<S> <C>
Buildings and improvements 5-30
Machinery and equipment 7
Transportation equipment 5-7
Furniture and fixtures 5-10
</TABLE>
6. Cash flows
For purposes of the financial statements, the Company considers all
highly liquid investments purchased with a maturity of 90 days or less to
be cash equivalents. For those cash equivalents, the carrying amount is a
reasonable estimate of fair value.
7. Deferred income taxes
The Company utilizes the liability method of accounting for income taxes.
Under the liability method, deferred income tax assets and liabilities
are recorded based on the difference between the financial statement and
tax bases of assets and liabilities as measured by the currently enacted
tax rates in effect for the years in which these differences are expected
to reverse. Deferred tax expense or benefit is the result of changes in
deferred tax assets and liabilities.
8. Earnings per share
Earnings per common share are based upon the weighted average number of
common shares outstanding during the period presented.
9. Fair value of financial instruments
The carrying value of the Company's cash and cash equivalents,
receivables, accounts payable and accrued liabilities approximate their
fair values.
F-26
<PAGE> 155
W. W. CLYDE & CO.
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
10. Recently issued accounting statements not yet adopted
Earnings per share
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings
Per Share." SFAS 128 eliminates the presentation of primary earnings per
share (EPS) and requires the presentation of basic EPS, which includes no
common stock equivalents and thus no dilution. The statement also
eliminates the modified treasury stock method of computing potential
common shares. This statement is effective for financial statements
issued for periods ending after December 15, 1997.
Capital Structure
Also in February 1997, the FASB issued Statement of Financial Accounting
Standards No. 129 (SFAS 129), "Disclosure of Information about Capital
Structure." SFAS 129 consolidates in one statement disclosures about the
rights of outstanding securities and changes in the number of equity
securities during the period, disclosures about liquidation preferences
and preferred stock, and disclosures about redemption requirements of
certain redeemable stock. Disclosures were previously included in
Accounting Principles Board (APB) Opinion 15, APB Opinion 10 and SFAS 47.
The statement does not change the required disclosures about capital
structure for entities currently subject to the requirements of APB
Opinions 10 and 15 and SFAS 47. SFAS 129 is effective for financial
statements for interim and annual periods ending after December 15, 1997.
Comprehensive income
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130 (SFAS 130), "Reporting Comprehensive Income." SFAS 130 requires
entities presenting a complete set of financial statements to include
details of comprehensive income that arise in the reporting period.
Comprehensive income consists of net income or loss for the current
period and other comprehensive income, which consists of revenue,
expenses, gains, and losses that bypass the income statement and are
reported directly in a separate component of equity. Other comprehensive
income includes, for example, foreign currency items, minimum pension
liability adjustments, and unrealized gains and losses on certain
investment securities. SFAS 130 requires that components of comprehensive
income be reported in a financial statement that is displayed with the
same prominence as other financial statements. This statement is
effective for fiscal years beginning after December 15, 1997, and
requires restatement of prior period financial statements presented for
comparative purposes.
F-27
<PAGE> 156
W. W. CLYDE & CO.
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
10. Recently issued accounting statements not yet adopted - continued
Disclosure of segments
Also in June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131 (SFAS 131), "Disclosures about Segments of an
Enterprise and Related Information." This statement requires an entity to
report financial and descriptive information about their reportable
operating segments. An operating segment is a component of an entity for
which financial information is developed and evaluated by the entity's
chief operating decision maker to assess performance and to make
decisions about resource allocation. Entities are required to report
segment profit or loss, certain specific revenue and expense items and
segment assets based on financial information used internally for
evaluating performance and allocating resources. This statement is
effective for fiscal years beginning after December 15, 1997, and
requires restatement of prior period financial statements presented for
comparative purposes.
The Company does not believe that the adoption of SFAS 128, SFAS 129,
SFAS 130 and SFAS 131 will have a material effect on the Company's
consolidated financial statements.
11. Reclassifications - not material
Certain reclassifications have been made to the 1996, 1995 and 1994
financial statements to conform to the September 30, 1997 presentation.
NOTE B - CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, cash and cash equivalents
consist of the following:
<TABLE>
<CAPTION>
December 31,
September 30, ----------------------------
1997 1996 1995
------------- ---------- ----------
<S> <C> <C> <C>
Cash and interest bearing deposits in banks $ 585,712 $1,992,328 $2,956,484
Repurchase agreements 1,664,994 1,624,341 2,606,811
---------- ---------- ----------
Total cash and cash equivalents $2,250,706 $3,616,669 $5,563,295
========== ========== ==========
</TABLE>
F-28
<PAGE> 157
W. W. CLYDE & CO.
NOTES TO FINANCIAL STATEMENTS
NOTE C - CONTRACTS IN PROGRESS
Costs incurred to date, estimated earnings, and the related progress
billings to date on contracts in progress are as follows:
<TABLE>
<CAPTION>
December 31,
September 30, ------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Costs incurred to date $20,162,312 $17,561,289 $18,308,195
Estimated earnings 4,088,328 3,597,419 3,360,428
----------- ----------- -----------
Revenue recognized 24,250,640 21,158,708 21,668,623
Progress billings to date 23,459,261 20,351,084 21,594,507
----------- ----------- -----------
Net underbillings $ 791,379 $ 807,624 $ 74,116
=========== =========== ===========
</TABLE>
The following are included in the accompanying balance sheets under the captions
below:
<TABLE>
<CAPTION>
December 31,
September 30, -----------------------------
1997 1996 1995
------------- ---------- ----------
<S> <C> <C> <C>
Costs and estimated earnings in excess
of billings on contracts in progress $887,860 $904,105 $ 269,753
Billings in excess of costs and estimated
earnings on contracts in progress (96,481) (96,481) (195,637)
-------- -------- ---------
$791,379 $807,624 $ 74,116
======== ======== =========
</TABLE>
F-29
<PAGE> 158
W. W. CLYDE & CO.
NOTES TO FINANCIAL STATEMENTS
NOTE D - INVESTMENT IN AFFILIATE
The Company owns 34.77% of the outstanding common stock of Geneva Rock
Products, Inc. The investment is accounted for under the equity method.
The complete financial statements of Geneva Rock Products, Inc. are
included in the S-4 registration statement.
The investment in Geneva Rock Products, Inc., consists of the following:
<TABLE>
<CAPTION>
September 30, December 31,
------------- --------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Investment, at cost $ 94,410 $ 94,410 $ 94,410
----------- ----------- -----------
Equity in unrealized increase in investment
Balance at beginning of period 19,787,344 17,082,274 13,492,604
Unrealized net income before deferred
income taxes of $926,644 in 1997,
$1,578,791 in 1996 and $1,338,910 in 1995 2,484,300 2,932,500 3,817,100
Less dividends received during the period -- 227,430 227,430
----------- ----------- -----------
Total equity in unrealized increase
in investment 22,271,664 19,787,344 17,082,274
----------- ----------- -----------
Total investment in Geneva Rock
Products, Inc. $22,366,054 $19,881,754 $17,176,684
=========== =========== ===========
</TABLE>
Summary balance sheets of Geneva Rock Products, Inc. consist of the
following:
<TABLE>
<CAPTION>
September 30, December 31,
------------- --------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Assets
Current assets $42,113,000 $35,240,000 $31,230,000
Property and equipment, net of
depreciation 39,742,000 36,528,000 24,580,000
Other assets 2,743,000 3,080,000 892,000
----------- ----------- -----------
Total assets $84,598,000 $74,848,000 $56,702,000
=========== =========== ===========
Liabilities and stockholders' equity
Current liabilities $ 9,912,000 $ 8,036,000 $ 5,289,000
Long-term liabilities 10,362,000 9,633,000 2,014,000
----------- ----------- -----------
Total liabilities 20,274,000 17,669,000 7,303,000
Stockholders' equity 64,324,000 57,179,000 49,399,000
----------- ----------- -----------
Total liabilities and stock-
holders' equity $84,598,000 $74,848,000 $56,702,000
=========== =========== ===========
</TABLE>
F-30
<PAGE> 159
W. W. CLYDE & CO.
NOTES TO FINANCIAL STATEMENTS
NOTE D - INVESTMENT IN AFFILIATE - CONTINUED
Summary statements of earnings of Geneva Rock Products, Inc., are as
follows:
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
--------------------------- ---------------------------------------------
1997 1996 1996 1995 1994
----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Net sales $94,736,000 $85,260,000 $105,451,000 $100,422,000 $80,526,000
Cost of sales 79,560,000 71,566,000 88,900,000 80,811,000 65,205,000
----------- ----------- ------------ ------------ -----------
Gross profit 15,176,000 13,694,000 16,551,000 19,611,000 15,321,000
Operating expenses 3,888,000 1,973,000 3,023,000 3,073,000 2,117,000
----------- ----------- ------------ ------------ -----------
Income before income taxes 11,288,000 11,721,000 13,528,000 16,538,000 13,204,000
Income taxes 4,143,000 4,201,000 5,094,000 5,560,000 4,399,000
----------- ----------- ------------ ------------ -----------
Net earnings 7,145,000 7,520,000 8,434,000 10,978,000 8,805,000
Ownership percentage 34.77% 34.77% 34.77% 34.77% 34.77%
----------- ----------- ------------ ------------ -----------
Equity in net earnings of affiliate $ 2,484,300 $ 2,614,700 $ 2,932,500 $ 3,817,100 $ 3,061,500
=========== =========== ============ ============ ===========
</TABLE>
NOTE E - DIVIDENDS
Dividends of $2 per share for the nine month period ended September 30,
1997 and dividends of $6 per share for the year ended December 31, 1996,
respectively, were declared on 94,544 shares outstanding. Dividends of
$10 per share were declared for the years ended December 31, 1995 and
1994, respectively, on 94,544 shares outstanding.
NOTE F - INCOME TAXES
Income tax expense (benefit) consists of the following:
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
------------------------- --------------------------------------
1997 1996 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Current
Federal $ (124,425) $ 377,153 $ 318,905 $ 982,194 $ 369,354
State ( 19,261) 58,383 49,366 156,042 57,175
---------- ---------- ---------- ---------- ----------
(143,686) 435,536 368,271 1,134,236 426,529
---------- ---------- ---------- ---------- ----------
Deferred
Federal 867,113 994,456 988,971 1,123,334 885,209
State 134,228 153,941 153,091 173,891 137,029
---------- ---------- ---------- ---------- ----------
1,001,341 1,148,397 1,142,062 1,297,225 1,022,238
---------- ---------- ---------- ---------- ----------
$ 857,655 $1,583,933 $1,510,333 $2,431,461 $1,448,767
========== ========== ========== ========== ==========
</TABLE>
F-31
<PAGE> 160
The income tax provision reconciled to the tax computed at the federal
statutory rate of 34% is as follows:
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
---------------------- ----------------------------------------
1997 1996 1996 1995 1994
-------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Income taxes at statutory rate $780,182 $1,404,064 $1,427,045 $2,266,985 $1,371,500
Differences due to dividends received
deduction -- -- (61,861) (61,861) 55,675
Nondeductible expense 1,596 1,197 -- -- 1,849
State income taxes, net of federal
tax benefit 75,877 134,496 138,780 220,031 42,428
Other -- 44,176 6,369 6,306 (22,685)
-------- ---------- ---------- ---------- ----------
$857,655 $1,583,933 $1,510,333 $2,431,461 $1,448,767
======== ========== ========== ========== ==========
</TABLE>
Deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
------------- ---------------------------
1997 1996 1995
------------- ----------- -----------
(unaudited)
<S> <C> <C> <C>
Deferred tax assets (liabilities)
Construction contracts $ 57,073 $ 25,487 $ (8,165)
Accrued pension cost 164,655 138,059 --
Equipment temporary differences (1,447,955) (1,332,631) (1,124,239)
Investment in Geneva Rock Products, Inc. (8,381,138) (7,424,020) (6,415,029)
----------- ----------- -----------
$(9,607,365) $(8,593,105) $(7,547,433)
=========== =========== ===========
</TABLE>
F-32
<PAGE> 161
W. W. CLYDE & CO.
NOTES TO FINANCIAL STATEMENTS
NOTE G - OTHER LIABILITIES AND ACCRUED EXPENSES
Other liabilities and accrued expenses consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
------------- ------------------------
1997 1996 1995
------------- ---------- ----------
<S> <C> <C> <C>
Accrued pension costs $217,654 $111,715 $ --
Accrued insurance 119,269 -- --
Payroll and related expenses -- 40,809 6,728
Other 30,474 440 169,121
-------- -------- --------
$367,397 $152,964 $175,849
======== ======== ========
</TABLE>
NOTE H - RELATED PARTY TRANSACTIONS
The following is a summary of related party transactions that occurred
during the nine months ended September 30, 1997 and 1996 and the years
ended December 31, 1996, 1995 and 1994. Related parties considered herein
include the officers and stockholders of the Company, Geneva Rock
Products, Inc., and other entities owned by the owners of the Company.
The Company performed construction work for and sold construction
materials to affiliates totaling approximately $214,191 and $291,172 for
the nine months ended September 30, 1997 and 1996, respectively, and
$519,000, $1,700,000, and $447,000 for the years ended December 31, 1996,
1995 and 1994, respectively.
The Company was charged $1,035,560 and $1,023,549 for the nine months
ended September 30, 1997 and 1996, respectively, and $1,246,000, $351,000
and $583,000 for the years ended December 31, 1996, 1995 and 1994,
respectively, for construction work, services, and construction materials
provided by affiliates.
NOTE I - PENSION PLAN
The Company has a noncontributory defined benefit pension plan covering
substantially all of its non-union employees. The benefits are based on
years of service and the employee's compensation during the last five
years of employment. The Company's funding policy is to contribute
annually the maximum amount that can be deducted for federal income tax
purposes. Contributions are intended to provide not only for benefits
attributed to services to date but also for those benefits expected to be
earned in the future. Employees vest 100% after five years.
F-33
<PAGE> 162
W. W. CLYDE & CO.
NOTES TO FINANCIAL STATEMENTS
NOTE I - PENSION PLAN - CONTINUED
Actuarial present value of benefit obligations are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
------------- -----------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Accumulated benefit obligation, including
vested benefits of $1,786,040 ($1,685,462 in
1996 and $1,941,766 in 1995) $ 1,818,070 $ 1,715,688 $ 1,957,939
=========== =========== ===========
Projected benefit obligation for service
rendered to date $(2,607,865) $(2,461,007) $(3,399,116)
Plan assets at fair value, primarily listed
stocks 1,376,636 1,345,556 2,433,257
----------- ----------- -----------
Plan assets in deficiency of projected
benefit obligation (1,231,229) (1,115,451) (965,859)
Unrecognized net loss from past ex-
perience different from that assumed
and effects of changes in assumptions 1,246,118 1,264,184 1,316,454
Unrecognized net obligation at January 1,
1989, being recognized over 15 years (232,543) (260,448) (297,655)
----------- ----------- -----------
Prepaid (accrued) pension cost $ (217,654) $ (111,715) $ 52,940
=========== =========== ===========
</TABLE>
Net pension cost includes the following components:
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
------------------------- ----------------------------------------
1997 1996 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Service cost--benefits earned during
the period $ 51,774 $ 69,164 $ 92,218 $ 80,383 $ 62,299
Interest cost on projected benefit
obligation 128,250 115,605 154,140 128,193 145,383
Actual return on plan assets (64,246) (62,645) (83,527) (214,787) (91,906)
Net amortization and deferral (9,839) 1,367 1,824 25,133 (99,396)
-------- -------- -------- --------- --------
Net periodic pension cost $105,939 $123,491 $164,655 $ 18,922 $ 16,380
======== ======== ======== ========= ========
</TABLE>
F-34
<PAGE> 163
W. W. CLYDE & CO.
NOTES TO FINANCIAL STATEMENTS
NOTE I - PENSION PLAN - CONTINUED
The following table sets forth the funded status and amounts recognized in the
Company's balance sheet at September 30, 1997 and December 31, 1996:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Actuarial present value of benefit obligations
Vested benefit obligation $1,786,040 $1,685,462
========== ==========
Projected benefit obligation $2,607,865 $2,461,007
========== ==========
Accumulated benefit obligation $1,818,070 $1,715,688
Plan assets at fair value (primarily U.S.
government securities and common stock
funds) 1,376,636 1,345,556
---------- ----------
Accumulated benefit obligation greater
than plan assets 441,434 370,132
Pension liability included in accrued
expenses 217,654 111,715
---------- ----------
Additional accrued pension costs
recognized on the balance sheet 223,780 258,417
Applicable income taxes 83,471 96,390
---------- ----------
Excess of additional pension cost over
unrecognized net pension obligation
recorded as reduction of stockholders'
equity $ 140,309 $ 162,027
========== ==========
</TABLE>
The weighted-average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected benefit
obligation ranged from 7% and 4% for the nine months ended September 30, 1997
and 1996 respectively and 7% to 7.5% and 4% to 3%, respectively, for the years
ended December 31, 1996, 1995 and 1994. The expected long-term rate of return on
assets ranged from 7.5% for the nine months ended September 30, 1997 and 1996
and 7.5% to 6.5% for the years ending December 31, 1996, 1995, and 1994,
respectively.
F-35
<PAGE> 164
W. W. CLYDE & CO.
NOTES TO FINANCIAL STATEMENTS
NOTE J - CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS
The Company maintains cash balances and interest bearing deposits at
several financial institutions located in the United States. Accounts at
each institution are secured by the Federal Deposit Insurance Corporation
up to $100,000. Uninsured balances aggregate to approximately $8,545,000
as of September 30, 1997 and $8,900,000 and $13,400,000 as of December
31, 1996 and 1995, respectively.
The Company has billed and unbilled receivables of approximately
$5,206,000 for the nine months ended September 30, 1997 and $3,911,000
and $2,950,000 as of December 31, 1996 and 1995, respectively from
project owners in the private and governmental sector which relate to
work performed primarily in Wyoming and Utah. Total retained and
unbilled contract receivables are expected to be collected within one
year.
At September 30, 1997, December 31, 1996 and 1995, the Company had
contracts receivable due from its largest customer approximating
$2,315,850, $2,109,940 and $1,718,558, respectively. Remaining contracts
receivable at September 30, 1997, December 31, 1996 and 1995 were due
from a variety of other customers under normal credit terms.
Construction revenue for the nine months ended September 30, 1997,
December 31, 1996 and 1995 from the Company's largest customer (only
customer in excess of 10%) represented approximately 26%, 38% and 33%,
respectively.
NOTE K - BACKLOG
The following schedule shows backlog activity representing signed
contracts, excluding fees from management contracts, from January 1, 1997
through September 30, 1997:
<TABLE>
<S> <C>
Balance, January 1, 1997 $ 827,998
Contract adjustments 4,019,457
New contracts 13,204,508
-----------
18,051,963
Less contract revenue earned 9,695,784
-----------
Balance, September 30, 1997 $ 8,356,179
===========
</TABLE>
In addition, between September 30, 1997 and November 11, 1997, the
Company entered into additional construction with revenues of $1,856,774.
NOTE L - SUBSEQUENT EVENTS
As of November 13, 1997, Clyde Companies, Inc., which owns 33.78% of the
Company, adopted an "Amended and Restated Agreement and Plan of Merger"
which provides for the merger of Clyde Companies, Inc. with the Company
and certain other companies related through common stockholders.
F-36
<PAGE> 165
W. W. CLYDE & CO.
NOTES TO FINANCIAL STATEMENTS
NOTE L - SUBSEQUENT EVENTS - CONTINUED
The merger upon majority approval of the stockholders of each respective
company, will be effected by the exchange of shares of Clyde Companies,
Inc. common stock with the respective shares of common stock held by the
Company's stockholders. The merger transaction will be accounted for in a
manner similar to a pooling of interests. The exchange rates used in
determining the number of shares to be exchanged are based upon
independent valuations performed on each company to be acquired.
In connection with the transaction, Clyde Companies, Inc. is preparing to
file a registration statement Form S-4 with the Securities and Exchange
Commission.
F-37
<PAGE> 166
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Geneva Rock Products, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheets of Geneva Rock
Products, Inc. and Subsidiary as of December 31, 1996 and 1995, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the years in the three year period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Geneva Rock
Products, Inc. and Subsidiary as of December 31, 1996 and 1995, and the
consolidated results of their operations and their consolidated cash flows for
each of the years in the three year period ended December 31, 1996, in
conformity with generally accepted accounting principles.
Squire & Company, PC
Orem, Utah
February 15, 1997
F-38
<PAGE> 167
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996 1995
------------- ------------ ------------
(unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 5,245,294 $ 7,752,630 $ 11,924,153
Accounts receivable 28,874,541 18,545,642 15,437,932
Inventory 7,759,314 6,844,977 2,511,753
Prepaid expenses 233,520 244,239 488,944
Federal and state income taxes receivable 1,830,825 867,414
Deferred tax asset -- 21,269 --
------------ ------------ ------------
Total current assets 42,112,669 35,239,582 31,230,196
PROPERTY, PLANT AND EQUIPMENT:
Land 9,175,552 11,286,396 8,963,628
Buildings 5,079,264 2,623,128 1,293,964
Office equipment 866,337 797,253 511,259
Machinery and equipment 26,055,659 23,031,549 13,318,367
Transportation equipment 22,707,634 20,382,107 18,112,947
Batch plant 10,164,939 9,095,766 8,004,380
Wells 120,764 120,764 147,147
Accumulated depreciation and depletion (34,428,121) (30,809,018) (25,771,872)
------------ ------------ ------------
Net fixed assets 39,742,028 36,527,945 24,579,820
OTHER ASSETS:
Non-compete agreements 84,000 153,154 420,440
Long-term investment 238,120 270,717 303,018
Other 373,220 396,538 168,314
Goodwill, net of accumulated amortization 2,047,746 2,259,730 --
------------ ------------ ------------
Total other assets 2,743,086 3,080,139 891,772
------------ ------------ ------------
Total assets $ 84,597,783 $ 74,847,666 $ 56,701,788
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-39
<PAGE> 168
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
------------- -------------------------
1997 1996 1995
----------- ----------- -----------
(unaudited)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of notes and
capital leases payable $ 3,173,911 $ 1,689,494 $ 224,002
Accounts payable 6,213,911 4,450,178 3,646,944
Accrued liabilities 2,117,901 1,896,453 1,417,709
Income tax payable 859,961 -- --
----------- ----------- -----------
Total current liabilities 12,365,684 8,036,125 5,288,655
LONG-TERM LIABILITIES:
Notes payable and capital leases payable 5,291,698 7,496,531 667,339
Long-term pension payable 168,330 168,330 --
Deferred tax liability 2,448,281 1,967,867 1,346,917
----------- ----------- -----------
Total long-term liabilities 7,908,309 9,632,728 2,014,256
----------- ----------- -----------
Total Liabilities 20,273,993 17,668,853 7,302,911
STOCKHOLDERS' EQUITY:
Common stock, $10 par value, 21,802 shares
issued and outstanding, 50,000
shares authorized 218,020 218,020 218,020
Paid-in-capital in excess of par 28,456 28,456 28,456
Retained earnings 64,077,314 56,932,337 49,152,401
----------- ----------- -----------
Total stockholders' equity 64,323,790 57,178,813 49,398,877
----------- ----------- -----------
Total liabilities and stockholders' equity $84,597,783 $74,847,666 $56,701,788
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-40
<PAGE> 169
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Nine Months Ended Year Ended December 31,
------------------------------ -----------------------
September 30, September 30,
1997 1996 1996 1995 1994
------------- ------------- ------------- ------------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
GROSS SALES AND CONTRACT INCOME $ 94,736,195 $ 85,260,106 $ 116,348,692 $ 100,422,149 $ 80,525,668
COST OF SALES AND CONTRACTS 79,559,984 71,565,986 98,907,330 80,811,164 65,205,275
------------- ------------- ------------- ------------- -------------
GROSS PROFIT ON SALES AND CONTRACTS 15,176,211 13,694,120 17,441,362 19,610,985 15,320,393
GENERAL AND ADMINISTRATIVE EXPENSES 4,143,083 2,783,935 4,979,299 3,172,944 2,655,499
------------- ------------- ------------- ------------- -------------
OPERATING INCOME 11,033,128 10,910,185 12,462,063 16,438,041 12,664,894
OTHER INCOME (EXPENSE):
Income from long-term investment -- -- 28,601 52,454 46,992
Other income 255,151 810,317 766,958 865,318 1,154,525
Gain (loss) on fixed assets -- -- (14,288) -- --
------------- ------------- ------------- ------------- -------------
Total other income 255,151 810,317 781,271 917,772 1,201,517
------------- ------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES 11,288,279 11,720,502 13,243,334 17,355,813 13,866,411
INCOME TAXES:
Current 3,641,619 3,691,887 4,577,464 6,190,700 4,985,977
Deferred 501,683 508,726 231,873 187,009 75,727
------------- ------------- ------------- ------------- -------------
Total income taxes 4,143,302 4,200,613 4,809,337 6,377,709 5,061,704
------------- ------------- ------------- ------------- -------------
NET INCOME $ 7,144,977 $ 7,519,889 $ 8,433,997 $ 10,978,104 $ 8,804,707
============= ============= ============= ============= =============
EARNING PER SHARE $ 327.72 $ 344.92 $ 386.85 $ 503.54 $ 403.85
============= ============= ============= ============= =============
Average shares outstanding 21,802 21,802 21,802 21,802 21,802
============= ============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
F-41
<PAGE> 170
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1996,
1995, 1994 and Nine Months Ended September 30, 1997
<TABLE>
<CAPTION>
Capital in
Common excess of Retained
stock par value earnings
------------ ------------ ------------
<S> <C> <C> <C>
Balance at December 31, 1993 $ 218,020 $ 28,456 $ 30,612,304
Net Income for 1994 -- -- 8,804,707
Cash Dividends Paid on Common Stock -- -- (588,654)
------------ ------------ ------------
Balance at December 31, 1994 218,020 28,456 38,828,357
Net Income for 1995 -- -- 10,978,104
Cash Dividends Paid on Common Stock -- -- (654,060)
------------ ------------ ------------
Balance at December 31, 1995 218,020 28,456 49,152,401
Net Income for 1996 -- -- 8,433,997
Cash Dividends Paid on Common Stock -- -- (654,061)
------------ ------------ ------------
Balance at December 31, 1996 218,020 28,456 56,932,337
(UNAUDITED)
Net Income for nine months -- -- 7,144,977
Cash Dividends Paid on Common Stock -- -- --
------------ ------------ ------------
Balance at September 30, 1997 $ 218,020 $ 28,456 $ 64,077,314
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-42
<PAGE> 171
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended Year Ended December 31,
----------------------------- --------------------------------------------
September 30, September 30,
1997 1996 1996 1995 1994
------------ ------------ ------------ ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,144,977 $ 7,519,889 $ 8,433,997 $10,978,104 $ 8,804,707
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion, and amortization 5,838,225 4,896,001 7,422,456 6,556,760 5,189,467
Gain on investments -- -- (26,375) (52,454) (46,992)
Deferred income taxes 501,683 508,726 231,874 187,009 75,727
Absorbed loss on consolidation -- -- 367,807 -- --
Deferred pension payable (168,330) -- 168,330 -- --
Loss on disposal of property -- -- 14,287 -- 136,805
Changes in assets and liabilities:
Accounts receivable (10,328,899) (8,970,494) (3,107,710) (5,005,945) (1,643,148)
Prepaid expenses 10,719 239,225 244,705 (434,261) 175,642
Inventories (914,337) (4,058,271) (4,333,224) 267,015 (998,603)
Income taxes receivable 1,830,825 736,258 (963,411) (732,672) 231,260
Other assets 3,818 (106,006) (80,224) (43,298) (7,965)
Organization costs -- (130,000) (130,000) -- --
Accounts payable 1,763,733 3,982,549 803,234 454,622 453,828
Accrued liabilities 389,778 981,728 478,744 505,659 56,271
Deferred revenue -- -- -- (7,121) (374,320)
Income taxes payable 859,961 994,214 -- -- --
------------ ------------ ------------ ------------ ------------
Total adjustments (212,824) (926,070) 1,090,493 1,695,314 3,247,972
------------ ------------ ------------ ------------ ------------
Net Cash Provided by Operating Activities 6,932,153 6,593,819 9,524,490 12,673,418 12,052,679
CASH FLOW FROM INVESTING ACTIVITIES:
Cash payments for the purchase of property (7,716,733) (8,266,668) (9,688,706) (11,908,065) (8,647,653)
Cash payments for the purchase of
long-term investment -- -- (1,000) -- --
Cash received from long-term investment 32,597 58,675 58,676 35,723 28,836
Cash received from sale of assets -- -- 112,545 -- --
Cash payments for the acquisition of
Quality Concrete, Inc. -- -- (3,139,556) -- --
------------ ------------ ------------ ------------ ------------
Net Cash Used in Investing Activities (7,684,136) (8,207,993) (12,658,041) (11,872,342) (8,618,817)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt -- -- -- -- 980,010
Repayment of long-term debt (1,755,353) (318,497) (383,912) (196,002) (32,667)
Payment of dividends -- -- (654,060) (654,060) (588,654)
------------ ------------ ------------ ------------ ------------
Net Cash Provided by (Used in)
Financing Activities (1,755,353) (318,497) (1,037,972) (850,062) 358,689
------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH (2,507,336) (1,932,671) (4,171,523) (48,986) 3,792,551
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 7,752,630 11,924,153 11,924,153 11,973,139 8,180,588
------------ ------------ ------------ ------------ ------------
CASH AND EQUIVALENTS, END OF PERIOD $ 5,245,294 $ 9,991,482 $ 7,752,630 $ 11,924,153 $ 11,973,139
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-43
<PAGE> 172
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of certain significant accounting
policies followed in the preparation of these financial
statements. The financial statements and notes are
representations of the Company's management, which is responsible
for their integrity and objectivity. The policies conform to
generally accepted accounting principles and have been
consistently applied. Insofar as the notes refer to the nine
months ended September 30, 1997 and 1996, they are not audited.
In the opinion of management, the unaudited interim financial
statements for the nine months ended September 30, 1997 and 1996
include all adjustments, consisting of normal recurring accruals,
necessary to present fairly the Company's results of operations
and cash flows. The financial position for the interim period,
September 30, 1997, and the income statement, statement of
stockholders equity and statement of cash flows for the nine
month period then ended are not necessarily indicative of the
results that may be expected for the full year.
Nature of Operations - Geneva Rock Products, Inc. (the Company)
was incorporated on August 8, 1954 as a Utah corporation. The
Company is engaged in the manufacturing of construction materials
consisting mostly of concrete, asphalt, sand, and gravel
products. Currently, the Company has manufacturing facilities in
Utah and Nevada. The Company also owns J & J Building Supply,
Inc. (J & J). The results of J & J's operations are included in
these financial statements.
On May 17, 1996, Geneva Rock formed J & J Building Supply, Inc.
(J & J) and on June 28, 1996 acquired the assets of J & J Mill &
Lumber Supply Co. of St. George, Utah.
The detail of the acquisition is as follows:
<TABLE>
<S> <C>
Working capital $ 1,936,800
Equipment and land 8,711,206
Intangible and other assets 2,219,716
Long-term debt assumed (6,700,000)
Capital leases assumed (456,206)
-----------
Cash used to acquire J & J Supply Co. $ 5,711,516
===========
</TABLE>
The details of the financial condition and results of operations
of J & J Mill and Lumber Supply Co. were never made available to
Geneva Rock.
On October 23, 1996, J & J purchased the assets of Quality
Concrete, Inc. The detail of the acquisition is as follows:
<TABLE>
<S> <C>
Working capital $ 70,828
Equipment and land 3,192,979
Intangible and other assets 49,600
Long-term debt assumed (81,941)
Capital leases assumed (91,910)
----------
Cash used to acquire Quality Concrete $3,139,556
==========
</TABLE>
As of September 30, 1997, Geneva Rock's total investment in J & J
was $18.47 million. J & J is headquartered in St. George, Utah
and also has operations in Cedar City, Utah and Mesquite, Nevada.
J & J's primary construction products consist of rock products,
including sand, gravel and ready mix concrete; concrete block
products, which it produces through its
F-44
<PAGE> 173
concrete block plant in St. George; and other building
materials; such as lumber, paint, sheet rock, roofing, plumbing,
electrical supplies and hardware products, which it sells
through its store in St. George and Cedar City.
Principles of Consolidation - The consolidated statements include
the accounts of the Company and its wholly-owned subsidiary. All
material intercompany accounts and transactions have been
eliminated in consolidation.
Use of Estimates in Preparation of Financial Statements - The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Accounts Receivable - Accounts receivable are shown net of an
allowance for uncollectible accounts of $154,536 for 1996,
$100,000 for 1995 and $212,723 at September 30, 1997.
F-45
<PAGE> 174
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Inventories - Inventories consist of sand, gravel, cement,
additives, truck repair and maintenance parts and office
supplies. The sand and gravel as well as the block and masonry
components of inventory are stated at cost using the full
absorption method. The truck repair parts are stated at lower of
cost (first-in, first-out) or market value. The purchased
inventory is valued at the lower of cost or market using the
weighted average method. The components of inventory are as
follows:
<TABLE>
<CAPTION>
December 31,
September 30, --------------------------------
1997 1996 1995
------------- ------------- ------------
<S> <C> <C> <C>
Sand and gravel $3,131,254 $2,105,067 $1,463,525
Block and masonry 710,000 1,038,725 -
Fuel 43,250 37,502 -
Cement and additives 1,271,676 1,206,377 397,328
Lumber and hardware 1,818,471 1,701,392 -
Concrete piping 34,839 34,839 -
Truck repair and maintenance 735,117 708,368 641,630
Office supplies 14,707 12,707 9,270
---------- ---------- ----------
Total $7,759,314 $6,844,977 $2,511,753
========== ========== ==========
</TABLE>
Depreciation, Depletion and Amortization - Provisions for
depreciation of property, plant and equipment are computed on the
declining-balance and straight-line methods for financial
reporting purposes. Depreciation is based upon estimated useful
lives of individual units or classes of property as follows:
<TABLE>
<S> <C>
Buildings 10 to 33 Years
Office equipment 5 to 10 Years
Machinery and equipment 5 to 10 Years
Transportation equipment 5 to 8 Years
Batch plant 8 to 10 Years
Wells 20 Years
</TABLE>
Maintenance, repairs, and renewals which neither materially add
to the value of the property nor appreciably prolong its life are
charged to expense as incurred. Gains and losses from
dispositions of fixed assets are reflected in income.
Depletion of the Company's sand and gravel pits is computed by
the cost method, (i.e. - the pit's basis divided by total
recoverable tons, times tons removed during any given year.)
F-46
<PAGE> 175
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Non-compete agreements purchased by the Company from unaffiliated
parties are being amortized using the straight-line method over
the life of the agreements. The amortization expense was
$267,286, $257,952 and $239,286 for 1996, 1995 and 1994,
respectively and $186,038 for the nine month period ended
September 30, 1997.
Depreciation, depletion and amortization expense has been
allocated on the income statement to the following areas:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
---------------------------- ---------------------------
1997 1996 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cost of sales and contracts $5,405,892 $6,951,817 $6,479,280 $5,111,393
General and administrative 246,295 470,639 77,480 78,074
----------- ----------- ----------- -----------
Total $5,652,187 $7,422,456 $6,556,760 $5,189,467
=========== =========== =========== ===========
</TABLE>
Income Recognition - Income is recognized as products are sold or
contracts are completed. For those contracts not complete at year
end, income is recorded on the percentage-of-completion method.
Income being recognized is that percentage of estimated total
income that incurred costs to date bear to estimated total costs
after giving effect to estimates of costs to complete based upon
the most recent information.
As these long-term contracts extend over one or more years,
revisions in cost and profit estimates during the course of the
work are reflected in the accounting period in which the facts
which require the revision become known.
At the time a loss on a contract becomes known, the entire amount
of the estimated ultimate loss on both short and long-term
contracts is recognized.
Costs and estimated profits in excess of amounts billed were
$61,944, $24,099 and $32,710 at December 31, 1996, 1995 and 1994,
respectively. There was no adjustment to work in process at
September 30, 1997. These additional amounts billed are included
in accounts receivable. Accounts receivable also included
retention due from long-term contracts of $65,596, $173,607 and
$75,682 at September 30, 1997, December 31, 1996 and 1995,
respectively. All retention was expected to be collected within
one year.
Income taxes - The Company provides for income taxes based on
income reported for financial statement purposes. Income tax
expense differs from amounts currently payable due to timing
differences in the recognition of certain income and expense
items for tax and financial statement purposes, primarily
depreciation of fixed assets. Tax accumulated depreciation
exceeded book accumulated depreciation by $1,327,162 at December
31, 1996 and $1,275,734 at September 30, 1997.
Depletion of $510,333 in 1996, $484,925 in 1995, and $296,662 in
1994 and $59,647 for the nine months ending September 30, 1997,
are allowed as deductions for tax purposes but are not recorded
on the books.
F-47
<PAGE> 176
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings per share - Earnings per share are computed using the
average number of common shares outstanding, 21,802 shares in
1996, 1995 and 1994 and for the nine month period ending September
30, 1997.
Cash and cash equivalents - For purpose of the statements of cash
flows, cash equivalents include time deposits, money market funds,
and overnight repurchase agreements with maturities of less than
90 days.
Supplemental cash flow information - During the nine months ended
September 30, 1997 and the years ended December 31, 1996, 1995 and
1994 the Company's cash outlay for federal income tax was
$3,907,475, $5,321,611, $6,240,220 and $4,457,981, respectively.
The Company disbursed cash for interest during the nine months
ended September 30, 1997 and the years ended December 31, 1996,
1995 and 1994 of $472,707, $357,317, $58,468 and $10,528,
respectively.
The Company had the following non-cash activity for the year. The
Company acquired intangible assets of $130,000 and tangible assets
in the amount of $6,700,000 by issuing debt. The company acquired
tangible assets in the amount of $559,927 by obtaining long-term
financing, and also acquired assets in the amount of $1,122,878 by
entering in capital lease obligations.
NOTE 2. GOODWILL
The excess of the purchase price over the value of the assets
purchased is reported as goodwill. Goodwill is being amortized
over fifteen years. The accumulated amortization was $77,922 at
December 31, 1996 and $211,984 at September 30, 1997.
On an ongoing basis, management reviews the valuation and
amortization of intangible assets to determine possible impairment
by comparing the carrying value to the undiscounted estimated
future cash flows of the related assets, and necessary
adjustments, if any, are recorded.
NOTE 3. ACCOUNTS PAYABLE - J & J MILL
As part of the purchase agreement of J & J Mill, the Company did
not purchase the outstanding accounts receivable. The Company was
paid to collect the outstanding accounts receivable and remit the
amounts collected to J & J Mill. At December 31, 1996, the Company
had collected $74,546 that had not been remitted and at September
30, 1997 the Company had collected $13,835 that remained
unremitted.
F-48
<PAGE> 177
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. OPERATING LEASE COMMITMENTS
The Company has entered into several long-term leases for real
property and has assumed leases of machinery and equipment, and
trucks and vehicles. The Company also leases trucks and other
equipment under non-cancelable operating leases. The following is
a schedule by years of future minimum lease payments:
<TABLE>
<CAPTION>
Machinery &
Equipment and
Trucks & Vehicles Real Property Total Leases
----------------- ------------- ------------
<S> <C> <C> <C>
1997 $ 3,077,590 $ 445,238 $ 3,522,828
1998 3,034,299 263,246 3,297,545
1999 2,842,858 262,000 3,104,858
2000 2,580,146 262,000 2,842,146
2001 1,459,450 136,000 1,595,450
Thereafter 478,136 -- 478,136
----------- ---------- -----------
Total $13,472,479 $1,368,484 $14,840,963
=========== ========== ===========
</TABLE>
For the years ended December 31, 1996, 1995 and 1994, rental
payments for these operating leases amounted to $1,417,484,
$719,484, and $592,746, respectively and $2,481,227 and $1,063,113
for the nine months ended September 30, 1997 and 1996.
NOTE 5. OBLIGATIONS UNDER CAPITAL LEASES
<TABLE>
<CAPTION>
September 30, December 31,
------------- -------------------------
1997 1996 1995
----------- ----------- ----------
<S> <C> <C> <C>
The Company leases trucks and other
equipment bearing various terms and
collateralized by specific equipment $ 839,540 $1,122,817 $ --
Less current maturities (413,106) (464,295) --
--------- ---------- ----------
Obligations under capital leases $ 426,434 $ 658,522 $ --
========= ========== ==========
</TABLE>
Future minimum lease payments on capital lease obligations are as
follows:
<TABLE>
<CAPTION>
Years Ending
September 30 Amount
------------ -----------
<S> <C> <C>
1998 $413,106
1999 345,308
2000 68,939
2001 12,187
2002 -
-------
$839,540
========
</TABLE>
Machinery and construction equipment includes equipment that is
held under capital leases. At December 31, 1996 and September 30,
1997, the total capitalized amount was $1,122,817.
F-49
<PAGE> 178
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. COMMITTED COSTS
The Company has at December 31, 1996 committed to purchase
machinery in the amount of $176,050 that will be delivered early
in 1997. The Company has also committed to lease trucks, in the
amount of $642,988, that will be delivered in March of 1997. These
committed costs are not reflected in the financial statements.
NOTE 7. NOTES PAYABLE
The Company's Long-term debt obligation consists of the following:
<TABLE>
<CAPTION>
September 30, December 31, December 31,
1997 1996
-------------- ----------- -----------
<S> <C> <C> <C>
A note payable to a local concrete company. The debt was $ 408,338 $ 555,339 $ 751,341
incurred in October 1994 and carries the following terms:
Principal payments of $16,334 plus interest at 2% below
the commercial loan variable rate at Zions Bank are due
monthly. This note is collateralized by a Utah Deed
of Trust
Notes to two employees for a non-competition and 84,000 112,000 140,000
confidentiality agreements, payable at $28,000 a year,
unsecured
A note payable to Alvin & Larine Bradshaw. This debt 70,975 81,941 --
was incurred in October 1996 and carries the following
terms: Monthly payments of $1,574 including interest at
10%. The note is collateralized by a Utah Deed of Trust
A note payable to Virgin Valley Credit Union in the 220,000 220,000 --
amount of $240,000. This is a non-interest bearing note
that has been discounted for financial statement purposes
to reflect an interest rate of 8.25%
A note payable to the Small Business Administration. -- 393,928 --
This note bears a 9.996% interest rate. Principal
payments of $5,054 plus interest and administrative fees
of $182 are due monthly. This note is collateralized by
a Utah Deed of Trust
A note payable for assumed debt in the purchase of J & J 5,842,756 6,700,000 --
Building Supply, Inc., a wholly-owned subsidiary, annual
payments of $1,297,909, matures on June 28, 2003. The
note is secured by a Utah Deed of Trust
A line of credit at a bank, $3,000,000 approved, 1,000,000 -- --
bears 8.25% interest, renews annually, unsecured ----------- ----------- ---------
Total 7,626,069 8,063,208 891,341
Less Current Maturities (2,760,805) (1,225,199) (224,002)
----------- ----------- ---------
Long-term Portion $ 4,865,264 $ 6,838,009 $ 667,339
=========== =========== =========
</TABLE>
F-50
<PAGE> 179
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. NOTES PAYABLE (Continued)
Future maturities of notes payable are as follows:
<TABLE>
<CAPTION>
Year Ending
September 30 Amount
------------ -----------
<S> <C>
1998 $ 2,760,805
1999 540,805
2000 1,361,119
2001 1,312,220
2002 651,120
----------
$7,626,069
==========
</TABLE>
NOTE 8. PENSION PLAN
The Company has a defined benefit pension plan covering all
non-bargaining employees who meet age and length of service
requirements. The benefits are based on years of service and the
employee's compensation during the last five years of employment.
The Company's funding policy is to contribute annually the maximum
amount that can be deducted for federal income tax purposes.
Contributions are intended to provide not only for benefits
attributed to service to date but also for those expected to be
earned in the future.
The following table sets forth the plan's funded status:
<TABLE>
<CAPTION>
September 30, December 31,
Actuarial present value of benefit obligations: 1997 1996 1995
------------- ----------- -----------
<S> <C> <C> <C>
Accumulated benefit obligation, including
(unaudited) vested benefits of $1,603,787,
$1,456,792 and $1,414,011 for the periods
ending September 30, 1996 and December 31,
1996 and 1995, respectively $ 1,644,505 $ 1,493,778 $ 1,456,370
=========== =========== ===========
Projected benefit obligation for service
rendered to date $(2,800,219) $(2,543,566) $(1,697,814)
Plan assets at fair value 1,834,028 1,558,940 1,588,644
----------- ----------- -----------
Unfunded projected benefit obligation or
plan assets in excess of benefit obligation (966,191) (984,596) (109,170)
Unrecognized net (gain) or loss from past
experience different from that assumed
and effects of changes in assumptions 707,847 709,653 (147,961)
Unrecognized net asset at January 1, 1989
being recognized over 15 years (105,304) (117,941) (134,790)
----------- ----------- -----------
Accrued pension cost $ (363,648) $ (392,884) $ (391,921)
=========== =========== ===========
</TABLE>
F-51
<PAGE> 180
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. PENSION PLAN (Continued)
<TABLE>
<CAPTION>
Net pension cost for 1997, 1996 and 1995 September 30, December 31,
included the following components: 1997 1996 1996 1995
--------- --------- --------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Service cost-benefits earned during the $ 154,381 $ 114,377 $ 152,503 $ 209,633
period
Interest cost on projected benefit 133,538 109,466 145,955 100,308
obligation
Actual return on plan assets (81,769) (59,993) (79,991) (115,382)
Net amortization (10,830) (19,520) (3,018) (16,849)
Net asset gain (loss) during the year
deferred for later recognition -- -- (23,009) 293
--------- --------- --------- ---------
Net periodic cost $ 195,320 $ 144,330 $ 192,440 $ 178,003
========= ========= ========= =========
</TABLE>
The discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the
projected benefit obligation were 7.0% and 4.0% for 1996 and 1995
and 7.5% and 4.0% for 1994. The expected long-term rate of return
on assets was 8.0% for 1996 and 1995 and 6.5% for 1994.
NOTE 9. CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash
deposits and trade accounts receivable. The Company places all
but $1,616,320 at December 30, 1996 and $192,234 at September 30,
1997 of its cash with one federally insured institution. This
other money is in a money market account of a major brokerage
company and is uninsured. Concentrations of credit risk with
respect to trade receivables are limited due to the large number
of customers comprising the Company's customer base. However,
customers are concentrated in the construction industry primarily
in northern and central Utah. Neither cash nor accounts
receivable are collateralized.
NOTE 10. RELATED PARTY TRANSACTIONS
The following is a summary of related party transactions that
occurred during the nine months ended September 30, 1997 and 1996
(unaudited) and the years ended December 31, 1996, 1995 and 1994.
Related parties considered herein include W.W. Clyde & Co., Utah
Service, Inc., Beehive Insurance Agency, Inc., J & J Building
Supply, Inc., and W.W. Clyde Investment Company.
The Company performed construction work for and sold construction
materials to affiliates totaling approximately $250,000 and
$43,280 for the nine months ended September 30, 1997 and 1996,
respectively, and $57,707, $21,000, and $45,000 for the years
ended December 31, 1996, 1995 and 1994, respectively.
The Company was charged $2,116,167 and $1,811,490 for the nine
months ended September 30, 1997 and 1996, respectively, and
$2,415,320, $3,610,517 and $2,596,624 for the years ended
December 31, 1996, 1995 and 1994, respectively, for construction
work, services, and construction materials provided by
affiliates.
F-52
<PAGE> 181
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. PROVISION FOR INCOME TAXES
Income tax expense consists of the following:
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
------------------------ --------------------------------------
1997 1996 1996 1995 1994
---------- ---------- ---------- ---------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Current - Federal $3,153,466 $3,196,996 $3,928,829 $5,372,806 $4,323,239
Current - State 488,153 494,891 648,635 817,894 662,738
Deferred - Federal 436,464 442,592 220,280 162,698 65,882 16
Deferred - State 65,219 66,134 11,593 24,311 9,845
---------- ---------- ---------- ---------- ----------
Total $4,143,302 $4,200,613 $4,809,337 $6,377,709 $5,061,704
========== ========== ========== ========== ==========
</TABLE>
The income tax provision reconciled to the tax computed at the
federal statutory rate is as follows:
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
--------------------------- -------------------------------------------
1997 1996 1996 1995 1994
----------- ----------- ----------- ----------- -----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Income taxes at statutory rate $ 3,850,898 $ 4,002,176 $ 4,535,167 $ 5,974,534 $ 4,714,580
Environmental tax -- -- -- 18,305 14,263
Difference due to depletion (133,962) (133,962) (173,513) (164,875) (100,865)
Nondeductible expense 46,813 46,813 60,633 2,263 2,201
State income taxes, net of
federal tax benefit 322,181 326,628 374,276 539,810 437,407
Other 57,372 (41,042) 12,774 7,672 (5,882)
----------- ----------- ----------- ----------- -----------
Total $ 4,143,302 $ 4,200,613 $ 4,809,337 $ 6,377,709 $ 5,061,704
=========== =========== =========== =========== ===========
</TABLE>
Deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996 1995
------------ ------------- ------------
<S> <C> <C> <C>
Deferred tax assets (liabilities)
Equipment temporary
differences....................... $(2,448,281) $(1,967,867) $(1,346,917)
----------- ----------- -----------
Allowance for doubtful accounts... 21,269
$(2,448,281) $1,946,598) $
----------- ---------- -----------
(1,346,917)
-----------
</TABLE>
NOTE 12. RECENTLY ISSUED ACCOUNTING STATEMENTS NOT YET ADOPTED
Earnings per share - In February 1997, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting
Standards No. 128 (SFAS 128), "Earnings Per Share." SFAS 128
eliminates the presentation of primary earnings per share (EPS)
and requires the presentations of basic EPS, which includes no
common stock equivalents and thus no dilution. The statement also
eliminates the modified treasury stock method of computing
potential common shares. This statement is effective for
financial statements issued for periods ending after December 15,
1997.
F-53
<PAGE> 182
GENEVA ROCK PRODUCTS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12. RECENTLY ISSUED ACCOUNTING STATEMENTS NOT YET ADOPTED (Continued)
Capital structure - Also in February 1997, the FASB issued
Statement of Financial Accounting Standards No. 129 (SFAS 129),
"Disclosure of Information about Capital Structure." SFAS 129
consolidates in one statement disclosures about the rights of
outstanding securities and changes in the number of equity
securities during the period, disclosures about liquidation
preferences and preferred stock, and disclosures about redemption
requirements of certain redeemable stock.
Disclosures were previously included in Accounting Principles
Board (APB) Opinion 15, APB Opinion 10 and SFAS 47. The statement
does not change the required disclosures about capital structure
for entities currently subject to the requirements of APB
Opinions 10 and 15 and SFAS 47. SFAS 129 is effective for
financial statements for interim and annual periods ending after
December 15, 1997.
Comprehensive income - In June 1997, the FASB issued Statement of
Financial Accounting Standards No. 130 (SFAS 130), "Reporting
Comprehensive Income." SFAS 130 requires entities presenting a
complete set of financial statements to include details of
comprehensive income that arise in the reporting period.
Comprehensive income consists of net income or loss for the
current period and other comprehensive income, which consists of
revenue, expenses, gains, and losses that bypass the income
statement and are reported directly in a separate component of
equity. Other comprehensive income includes, for example, foreign
currency items, minimum pension liability adjustments, and
unrealized gains and losses on certain investment securities.
SFAS 130 requires that components of comprehensive income be
reported in a financial statement that is displayed with the same
prominence as other financial statements. This statement is
effective for fiscal years beginning after December 15, 1997, and
requires restatement of prior period financial statements
presented for comparative purposes.
Disclosure of segments - Also in June 1997, the FASB issued
Statement of Financial Accounting Standards No. 131 (SFAS 131),
"Disclosure about Segments of an Enterprise and Related
Information." This statement requires an entity to report
financial and descriptive information about their reportable
operating segments. An operating segment is a component of an
entity for which financial information is developed and evaluated
by the entity's chief operating decision maker to assess
performance and to make decisions about resource allocation.
Entities are required to report segment profit or loss, certain
specific revenue and expense items and segment assets based on
financial information used effective for fiscal years beginning
after December 15, 1997 and requires restatement of prior period
financial statements presented for comparative purpose.
The Company does not believe that the adoption of SFAS 128, SFAS
129, SFAS 130 and SFAS 131 will have a material effect on the
Company's financial statements.
NOTE 13. CERTAIN RECLASSIFICATIONS
Certain nonmaterial reclassifications have been made to the 1995
and 1996 financial statements to conform to the September 30,
1997 presentation.
F-54
<PAGE> 183
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Utah Service, Inc.
We have audited the accompanying balance sheet of Utah Service, Inc. as of
September 30, 1997, and the related statements of earnings, stockholders'
equity, and cash flows for the nine months then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Utah Service, Inc. as of
September 30, 1997, and the results of its operations and its cash flows for the
nine months then ended in conformity with generally accepted accounting
principles.
Grant Thornton, LLP
Provo, Utah
October 14, 1997
F-55
<PAGE> 184
Utah Service, Inc.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
(unaudited)
CURRENT ASSETS
Cash and cash equivalents (Note B) $ 666,391 $ 479,954
Receivables (Note B) 1,385,233 1,271,202
Prepaid expenses 9,348 8,138
Inventories (Note C) 1,478,010 1,298,100
----------- -----------
Total current assets 3,538,982 3,057,394
PROPERTY AND EQUIPMENT, AT COST (Note D)
Buildings 1,004,713 1,004,713
Furniture and equipment 402,447 392,330
Transportation equipment 340,230 321,328
Surfacing 112,910 112,910
----------- -----------
1,860,300 1,831,281
Less accumulated depreciation and amortization 827,805 754,446
----------- -----------
1,032,495 1,076,835
Land 178,419 178,419
----------- -----------
1,210,914 1,255,254
DEFERRED TAX ASSETS - LONG TERM (Note G) 43,517 34,575
OTHER ASSETS 21,557 39,967
----------- -----------
$ 4,814,970 $ 4,387,190
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-56
<PAGE> 185
Utah Service, Inc.
BALANCE SHEETS - CONTINUED
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term obligation (Note E) $ 81,743 $ 99,264
Accounts payable 619,553 401,533
Accrued liabilities (Note F) 123,922 125,429
----------- -----------
Total current liabilities 825,218 626,226
LONG-TERM OBLIGATION (Note E) -- 98,817
ACCRUED PENSION COSTS (Note H) 132,226 127,660
COMMITMENTS (Notes D and H) -- --
STOCKHOLDERS' EQUITY (Notes H and I)
Common stock - $10 par value
Authorized - 50,000
Issued - 5,413 54,130 54,130
Additional paid-in capital 533,457 533,457
Retained earnings 3,352,845 3,026,943
Excess of additional pension cost over
unrecognized net pension obligation, net
of applicable income taxes (82,906) (80,043)
----------- -----------
Total stockholders' equity 3,857,526 3,534,487
----------- -----------
$ 4,814,970 $ 4,387,190
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-57
<PAGE> 186
Utah Service, Inc.
STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Nine months ended Year ended
September 30, December 31,
------------ ------------ ------------ ------------
1997 1996 1996 1995
------------ ------------ ------------ ------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Operating revenues (Note B) $ 9,257,713 $ 9,938,724 $ 13,107,947 $ 13,580,133
Cost of goods sold 7,589,882 8,373,180 10,915,126 11,632,581
------------ ------------ ------------ ------------
Gross margin 1,667,831 1,565,544 2,192,821 1,947,552
Operating expenses
Salaries, wages and benefits 814,387 730,432 1,078,599 970,076
Operating supplies and expenses 264,934 278,734 377,311 343,607
Depreciation 77,209 95,552 128,036 130,014
Other 11,312 15,990 43,579 54,100
------------ ------------ ------------ ------------
Total operating expenses 1,167,842 1,120,708 1,627,525 1,497,797
------------ ------------ ------------ ------------
Other income (expense)
Interest expense (8,117) (22,430) (28,098) (22,457)
Service charge income 31,400 79,012 98,350 92,333
Other, net (Note D) 48,307 32,278 43,788 30,452
------------ ------------ ------------ ------------
71,590 88,860 114,040 100,328
------------ ------------ ------------ ------------
Earnings before income taxes 571,579 533,696 679,336 550,083
Income taxes (Note G) 213,199 199,069 258,286 199,468
------------ ------------ ------------ ------------
NET EARNINGS $ 358,380 $ 334,627 $ 421,050 $ 350,615
============ ============ ============ ============
Earnings per common share $ 66.20 $ 61.82 $ 77.78 $ 64.77
============ ============ ============ ============
Weighted average shares outstanding 5,413 5,413 5,413 5,413
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-58
<PAGE> 187
UTAH SERVICE, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
Year ended December 31, 1996 and 1995 and nine months ended September 30, 1997
<TABLE>
<CAPTION>
Common stock
-------------------------- Additional
Number paid-in Treasury Retained
of shares Amount capital stock earnings Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995 5,000 $ 50,000 $ -- $ (24,220) $ 2,471,798 $ 2,497,578
Issuance of common stock 413 4,130 -- -- -- 4,130
Contributions from stockholders -- -- 556,628 -- -- 556,628
Retirement of treasury stock -- -- (24,220) 24,220 -- --
Dividends paid -- -- -- -- (108,260) (108,260)
Net earnings for the year -- -- -- -- 350,615 350,615
----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1995 5,413 54,130 532,408 -- 2,714,153 3,300,691
Contributions from stockholders -- -- 1,049 -- -- 1,049
Dividends paid -- -- -- -- (108,260) (108,260)
Net earnings for the year -- -- -- -- 421,050 421,050
----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1996 5,413 54,130 533,457 -- 3,026,943 3,614,530
Dividends paid -- -- -- -- (32,478) (32,478)
Net earnings for the period -- -- -- -- 358,380 358,380
----------- ----------- ----------- ----------- ----------- -----------
Balance at September 30, 1997 5,413 $ 54,130 $ 533,457 $ -- $ 3,352,845 $ 3,940,432
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
F-59
<PAGE> 188
Utah Service, Inc.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine months ended Year ended
September 30, December 31,
------------------------- -------------------------
1997 1996 1996 1995
---------- ---------- ---------- ----------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Increase in cash and cash equivalents
Cash flows from operating activities
Net earnings $ 358,380 $ 350,839 $ 421,050 $ 350,615
---------- ---------- ---------- ----------
Adjustments to reconcile net earnings to
net cash provided by operating activities
Depreciation 73,359 97,681 130,873 132,852
Deferred income taxes (13,343) -- -- --
Changes in assets and liabilities
Accounts receivable (114,031) 593,982 682,974 (942,934)
Prepaid expenses (1,210) 65,228 63,243 (66,734)
Inventories (179,910) (577,089) (627,752) 49,531
Other assets (1,000) 1,778 1,778
Accounts payable 243,534 (58,214) (144,233) 251,173
Other liabilities and accrued
expenses (1,507) 33,475 41,087 (2,105)
---------- ---------- ---------- ----------
Total adjustments 5,892 156,841 147,970 (578,217)
---------- ---------- ---------- ----------
Net cash provided by (used in)
operating activities 364,272 507,680 569,020 (227,602)
---------- ---------- ---------- ----------
Cash flows from investing activities
Purchases of property and equipment (29,019) (26,833) (26,062) (996,387)
---------- ---------- ---------- ----------
</TABLE>
(Continued)
The accompanying notes are an integral part of these statements.
F-60
<PAGE> 189
Utah Service, Inc.
STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
Nine months ended Year ended
September 30, December 31,
---------- ---------- ---------- ----------
1997 1996 1996 1995
---------- ---------- ---------- ----------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Cash flows from financing activities
Proceeds from issuance of long-term obligations -- -- -- 369,257
Principal payments on long-term obligations (116,338) (52,025) (171,176) --
Contributions from stockholders -- -- 1,049 574,757
Dividends paid (32,478) (32,478) (108,260) (108,260)
---------- ---------- ---------- ----------
Net cash (used in) provided
by financing activities (148,816) (84,503) (278,387) 835,754
---------- ---------- ---------- ----------
Net increase (decrease)
in cash and cash
equivalents 186,437 396,344 264,571 (388,235)
Cash and cash equivalents at beginning
of period 479,954 215,383 215,383 603,618
---------- ---------- ---------- ----------
Cash and cash equivalents at end of period $ 666,391 $ 611,727 $ 479,954 $ 215,383
========== ========== ========== ==========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 8,117 $ 22,430 $ 28,098 $ 22,457
Income taxes 193,740 155,650 258,286 199,468
</TABLE>
Noncash investing and financing activities
At September 30, 1997 and December 31, 1996, the Company had an excess of
additional pension cost over unrecognized net pension obligations of $82,906
and $80,043, respectively. As a result, deferred tax assets were decreased by
$22,285 and $20,375, respectively.
The accompanying notes are an integral part of these statements.
F-61
<PAGE> 190
UTAH SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows. Insofar
as the notes refer to the nine months ended September 30, 1996 and the
year ended December 31, 1996 and 1995, they are not audited. In the
opinion of management, the unaudited financial statements for the nine
months ended September 30, 1996 and the year ended December 31, 1996 and
1995 include all adjustments, consisting of normal recurring accruals,
necessary to present fairly the Company's financial position, results of
operations and cash flows. Operating results for the interim period as of
and for the nine months ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the full year.
1. Organization
Utah Service, Inc. (the Company), was incorporated under the laws of the
State of Utah. The Company is located in Springville, Utah and is a
retailer of hardware, home improvement and petroleum products.
2. Cash and cash equivalents
For purposes of the financial statements, the Company considers all
short-term debt securities with an original maturity of three months or
less when purchased to be cash equivalents.
3. Inventories
Inventories are valued at the lower of cost or market, with cost being
determined using the first-in, first-out method.
4. Property and equipment
Property and equipment is stated at cost. Expenditures for maintenance
and repairs are charged to operations as incurred, whereas major
replacements and improvements are capitalized and subsequently
depreciated. Depreciation is provided on a straight-line basis over the
estimated useful lives of the assets.
5. Income taxes
The Company utilizes the liability method of accounting for income taxes.
Under the liability method, deferred taxes are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse. An allowance against deferred tax
assets is recorded when it is more likely than not that such tax benefits
will not be realized.
F-62
<PAGE> 191
UTAH SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
6. Use of estimates
In preparing the Company's financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues
and expenses during the reported period. Actual results could differ from
those estimates.
7. Fair value of financial instruments
The carrying value of the Company's cash and cash equivalents,
receivables, long-term obligations and accounts payable approximate their
fair values.
8. Recently issued accounting statements not yet adopted
Earnings per share
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings
Per Share." SFAS 128 eliminates the presentation of primary earnings per
share (EPS) and requires the presentation of basic EPS, which includes no
common stock equivalents and thus no dilution. The statement also
eliminates the modified treasury stock method of computing potential
common shares. This statement is effective for financial statements
issued for periods ending after December 15, 1997.
Capital structure
Also in February 1997, the FASB issued Statement of Financial Accounting
Standards No. 129 (SFAS 129), "Disclosure of Information about Capital
Structure." SFAS 129 consolidates in one statement disclosures about the
rights of outstanding securities and changes in the number of equity
securities during the period, disclosures about liquidation preferences
and preferred stock, and disclosures about redemption requirements of
certain redeemable stock. Disclosures were previously included in
Accounting Principles Board (APB) Opinion 15, APB Opinion 10 and SFAS 47.
The statement does not change the required disclosures about capital
structure for entities currently subject to the requirements of APB
Opinions 10 and 15 and SFAS 47. SFAS 129 is effective for financial
statements for interim and annual periods ending after December 15, 1997.
F-63
<PAGE> 192
UTAH SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
8. Recently issued accounting pronouncements not yet adopted -
continued
Comprehensive income
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130 (SFAS 130), "Reporting Comprehensive Income." SFAS 130 requires
entities presenting a complete set of financial statements to include
details of comprehensive income that arise in the reporting period.
Comprehensive income consists of net income or loss for the current
period and other comprehensive income, which consists of revenue,
expenses, gains, and losses that bypass the income statement and are
reported directly in a separate component of equity. Other comprehensive
income includes, for example, foreign currency items, minimum pension
liability adjustments, and unrealized gains and losses on certain
investment securities. SFAS 130 requires that components of comprehensive
income be reported in a financial statement that is displayed with the
same prominence as other financial statements. This statement is
effective for fiscal years beginning after December 15, 1997, and
requires restatement of prior period financial statements presented for
comparative purposes.
Disclosure of segments
Also in June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131 (SFAS 131), "Disclosures about Segments of an
Enterprise and Related Information." This statement requires an entity to
report financial and descriptive information about their reportable
operating segments. An operating segment is a component of an entity for
which financial information is developed and evaluated by the entity's
chief operating decision maker to assess performance and to make
decisions about resource allocation. Entities are required to report
segment profit or loss, certain specific revenue and expense items and
segment assets based on financial information used internally for
evaluating performance and allocating resources. This statement is
effective for fiscal years beginning after December 15, 1997 and requires
restatement of prior period financial statements presented for
comparative purposes.
The Company does not believe that the adoption of SFAS 128, SFAS 129,
SFAS 130 and SFAS 131 will have a material effect on the Company's
financial statements.
9. Certain reclassifications
Certain nonmaterial reclassifications have been made to the 1995 and 1996
financial statements to conform to the September 30, 1997 presentation
F-64
<PAGE> 193
UTAH SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE B - CREDIT CONCENTRATION, MAJOR CUSTOMERS, AND RELATED PARTIES
1. Credit concentration
The Company maintains cash balances at several financial institutions
located in the United States. Accounts at each institution are secured by
the Federal Deposit Insurance Corporation up to $100,000. Uninsured
balances aggregate to approximately $428,000 and $329,000 as of September
30, 1997 and December 31, 1996, respectively.
Financial instruments which potentially subject the Company to credit
risk concentration consist primarily of trade accounts receivable. The
Company sells to customers in the home construction and improvement
industry throughout the Springville, Utah area. The Company sells
substantially to recurring customers wherein the customer's ability to
pay has previously been evaluated. The Company generally does not require
collateral. The majority of its trade receivables are unsecured.
Allowances are periodically evaluated by management for potential credit
losses, and such losses have been insignificant. Accordingly, no
allowance for doubtful accounts has been established as of September
30,1997 and December 31, 1996.
2. Major customer
At September 30,1997 and December 31, 1996, the Company had accounts
receivable due from its largest customer approximating $235,743 and
$62,569, respectively. Remaining accounts receivable at September 30,1997
and December 31, 1996 were due from a variety of other customers under
normal credit terms.
Revenue for the nine months ending September 30, 1997 and 1996 from the
Company's largest customer represented approximately 13% and 6% of net
revenues, respectively (6% for the years ending December 31, 1996 and
1995, respectively).
3. Related parties
Related parties include the Company's officers, directors, stockholders,
Geneva Rock Products, Inc., W.W. Clyde & Co. and other entities under
their common control.
Accounts receivable from related parties were $202,206 and $113,335 for
September 30, 1997 and December 31, 1996, respectively
The Company sold materials to affiliates totaling approximately $634,202
and $752,185 for the nine months ending September 30, 1997 and 1996,
respectively, and $941,466 and $959,084 for the years ended December 31,
1996 and 1995, respectively.
F-65
<PAGE> 194
UTAH SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE C - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Lumber $ 295,209 $ 182,764
Hardware and housewares 877,924 756,306
Automotive 245,957 304,575
Other 58,920 54,455
---------- ----------
$1,478,010 $1,298,100
========== ==========
</TABLE>
NOTE D - PROPERTY HELD FOR LEASE
The Company leases two buildings for nominal rent through October 1997.
Lease revenues from the buildings were $20,500 and $11,850 for the nine
months ended September 30, 1997 and 1996, respectively, and $17,400 and
$14,851 for the years ended December 31, 1996 and 1995, respectively.
Both leases were terminated in October 1997 when the Company sold the two
buildings.
NOTE E - LONG-TERM OBLIGATION
The Company's long-term obligation consists of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
8.5% non-revolving note payable to
a bank, due in 2000, payable in
monthly installments of $8,272
plus interest. The note is unsecured $ 81,743 $ 198,081
Less current maturities 81,743 99,264
---------- ----------
$ -- $ 98,817
========== ==========
</TABLE>
F-66
<PAGE> 195
UTAH SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE F - ACCRUED LIABILITIES
Accrued Liabilities consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Payroll, payroll taxes and benefits $ 24,427 $ 33,871
Sales tax payable 58,830 49,403
Income tax payable 14,347 40,683
Other 26,318 1,472
---------- ----------
$ 123,922 $ 125,429
========== ==========
</TABLE>
NOTE G - INCOME TAXES
Income tax expense (benefit) consists of the following:
<TABLE>
<CAPTION>
Nine months ended Year ended
September 30, December 31,
-------------------------- --------------------------
1997 1996 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Current
Federal $ 190,889 $ 175,441 $ 226,720 $ 166,058
State 29,549 27,158 35,096 25,706
--------- --------- --------- ---------
220,438 202,599 261,816 191,764
--------- --------- --------- ---------
Deferred
Federal (6,269) (3,057) (3,057) 6,671
State (970) (473) (473) 1,033
--------- --------- --------- ---------
(7,239) (3,530) (3,530) 7,704
--------- --------- --------- ---------
$ 213,199 $ 199,069 $ 258,286 $ 199,468
========= ========= ========= =========
</TABLE>
The income tax provision reconciled to the tax computed at the statutory
Federal rate is as follows:
<TABLE>
<CAPTION>
Nine months ended Year ended
September 30, December 31,
---------- ---------- ---------- ----------
1997 1996 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income taxes (benefit) computed at:
Federal statutory rate $ 194,337 $ 181,457 $ 230,974 $ 187,028
State income taxes, net of federal benefit 18,862 17,612 22,418 18,153
All other -- -- 4,894 (5,713)
---------- ---------- ---------- ----------
$ 213,199 $ 199,069 $ 258,286 $ 199,468
========== ========== ========== ==========
</TABLE>
Deferred tax assets consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Long-term deferred tax assets
Accrued pension costs $ 43,517 $ 34,575
========== ==========
</TABLE>
F-67
<PAGE> 196
UTAH SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE H - PENSION PLAN
The Company has a noncontributory defined benefit pension plan covering
substantially all of its non-union employees. The benefits are based on
years of service and the employee's compensation during the last five
years of employment. The Company's funding policy is to contribute
annually the maximum amount that can be deducted for federal income tax
purposes. Contributions are intended to provide not only for benefits
attributed to services to date but also for those benefits expected to be
earned in the future. Employees vest 100% after five years. No
contributions to the plan were required for 1996 or 1995.
Actuarial present value of benefit obligations are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
------------- -------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Accumulated benefit obligation, including
vested benefits of $528,421 as of
September 30, 1997 and $488,773 and
$412,965 as of December 31, 1996 and
1995, respectively $ 533,966 $ 493,902 $ 417,298
========== ========== ==========
Projected benefit obligation for service
rendered to date (533,966) (493,902) (417,298)
Plan assets at fair value, primarily listed
stocks 417,297 401,209 347,636
---------- ---------- ----------
Plan assets in deficiency of projected
benefit obligation (116,669) (92,693) (69,662)
Unrecognized net loss (gain) from past ex-
perience different from that assumed
and effects of changes in assumptions 137,317 133,163 101,217
Unrecognized net obligation at January 1,
1989, being recognized over 15 years (5,091) (5,503) (6,053)
Additional minimum liability (132,226) (127,660) (95,164)
---------- ---------- ----------
Prepaid (accrued) pension cost $ (116,669) $ (92,693) $ (69,662)
========== ========== ==========
</TABLE>
F-68
<PAGE> 197
UTAH SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE H - PENSION PLAN - CONTINUED
Net pension cost (credit) includes the following components:
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
------------------------ -------------------------
1997 1996 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Service cost--benefits earned during
the period $ 14,134 $ 16,466 $ 21,954 $ 19,281
Interest cost on projected benefit
obligation 25,930 21,908 29,211 26,397
Actual return on plan assets (16,088) (13,537) (18,233) (17,859)
Net amortization and deferral 7,756 (6,679) (7,205) (5,019)
---------- ---------- ---------- ----------
Net periodic pension cost $ 31,732 $ 18,158 $ 25,727 $ 22,800
========== ========== ========== ==========
</TABLE>
F-69
<PAGE> 198
UTAH SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE H - PENSION PLAN - CONTINUED
The following table sets forth the funded status and amounts recognized
in the Company's balance sheet at December 31, 1996 and September 30,
1997:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(unaudited)
<S> <C> <C>
Actuarial present value of benefit obligations
Vested benefit obligation $ 528,421 $ 488,773
========== ==========
Projected benefit obligation $ 533,966 $ 493,902
========== ==========
Accumulated benefit obligation $ 533,966 $ 493,902
Plan assets at fair value (primarily U.S.
government securities and common stock
funds) 417,297 401,209
Accumulated benefit obligation greater
than plan assets 116,669 92,693
Prepaid pension cost included in other
assets 15,557 34,967
Additional accrued pension costs
recognized on the balance sheet 132,226 127,660
Applicable income taxes 49,320 47,617
---------- ----------
Excess of additional pension cost over
unrecognized net pension obligation
recorded as reduction of stockholders'
equity $ 82,906 $ 80,043
========== ==========
</TABLE>
The weighted-average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of
the projected benefit obligation were 7% and 4%, respectively, in 1996
(7% and 3% in 1995 and 7.5% and 4% in 1994). The expected long-term rate
of return on assets was 7.5% in 1996 (6.5% in 1995).
NOTE I - SUBSEQUENT EVENTS
As of November 13, 1997, Clyde Companies, Inc., who owns 31.37% of the
Company adopted an "Amended and Restated Agreement and Plan of Merger"
which provides for the merger of Clyde Companies, Inc. with the Company
and certain other companies related through common stockholders.
F-70
<PAGE> 199
UTAH SERVICE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE I - SUBSEQUENT EVENTS - CONTINUED
The merger upon majority approval of the stockholders of each respective
company, will be effected by the exchange of shares of Clyde Companies,
Inc. common stock with the respective shares of common stock held by the
Company's stockholders. The merger transaction will be accounted for in a
manner similar to a pooling of interests. The exchange rates used in
determining the number of shares to be exchanged are based upon
independent valuations performed on each company to be acquired.
In connection with the transaction, Clyde Companies, Inc. is preparing to
file a registration statement Form S-4 with the Securities and Exchange
Commission.
F-71
<PAGE> 200
INDEPENDENT ACCOUNTANTS AUDIT REPORT
To the Shareholders and Board of Directors of
Beehive Insurance Agency, Inc.
We have audited the accompanying balance sheet of Beehive Insurance Agency, Inc.
as of December 31, 1996 and 1995, and the related statements of income for the
year ended December 31, 1996, 1995 and 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statement based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements, referred to above, present fairly, in
all material respects, the financial position of Beehive Insurance Agency, Inc.
as of December 31, 1996 and 1995, and the results of its operations and its cash
flows for the years ended December 31, 1996, 1995 and 1994 in conformity with
generally accepted accounting principles.
Daines Associates LLC
October 21, 1997
Salt Lake City, Utah
F-72
<PAGE> 201
BEEHIVE INSURANCE AGENCY, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (Note 1) $ 539,422 $ 558,642 $ 640,669
Accounts receivable 290,948 110,075 171,286
Commissions receivable 8,045 8,199 5,403
Interest receivable 1,934 -- --
Federal income tax receivable (Note 1) -- 1,585 7,374
Prepaid Utah state franchise tax -- -- 2,616
---------- ---------- ----------
Total current assets 840,349 678,501 827,348
---------- ---------- ----------
Property and equipment: (Note 1)
Automobiles 19,594 32,599 32,599
Office furniture, fixtures & equipment 42,187 29,221 26,476
Sign 1,145 1,145 1,145
Building & improvements 56,705 56,705 56,705
---------- ---------- ----------
Total property and equipment 119,631 119,670 116,925
Less: accumulated depreciation (73,313) (90,820) (82,062)
---------- ---------- ----------
Net depreciable assets 46,318 28,850 34,863
Land 12,500 12,500 12,500
---------- ---------- ----------
Net property and equipment 58,818 41,350 47,363
Prepaid expenses 5,522 -- --
Deferred tax asset (Note 3) 40,220 36,072 38,974
---------- ---------- ----------
Total assets $ 944,909 $ 755,923 $ 913,685
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-73
<PAGE> 202
BEEHIVE INSURANCE AGENCY, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
LIABILITIES AND
SHAREHOLDERS EQUITY
Current liabilities:
Accounts payable $ 1,772 $ 367 $ 641
Commissions payable 1,696 83 --
Insurance premiums payable 240,182 123,764 313,460
Accrued pension expense (Note 2) 135,481 144,779 132,138
Accrued federal income tax 27,328 -- --
Other accrued expenses 59,033 -- --
Utah income tax payable 4,041 571 --
Dividends payable -- 107,435 107,435
---------- ---------- ----------
Total current liabilities 469,533 376,999 553,674
---------- ---------- ----------
Shareholders equity:
Capital stock - par value $1.00;
authorized 50,000 shares; issued and
outstanding 21,500 shares 21,500 21,500 21,500
Less: 13 shares in treasury stock (Note 1) (120) (120) (120)
Paid in surplus 3,447 3,447 3,447
Retained earnings 450,549 354,097 335,184
---------- ---------- ----------
Total shareholders equity 475,376 378,924 360,011
---------- ---------- ----------
Total liabilities & shareholders equity $ 944,909 $ 755,923 $ 913,685
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-74
<PAGE> 203
BEEHIVE INSURANCE AGENCY, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
FOR THE NINE FOR THE NINE FOR THE YEAR FOR THE YEAR FOR THE YEAR
MONTHS ENDED MONTHS ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1996 1995 1994
------------ ------------ ------------ ------------ ------------
Revenue:
<S> <C> <C> <C> <C> <C>
Insurance commissions $ 453,693 $ 440,658 $ 517,497 $ 451,940 $ 518,935
Profit sharing commissions 69,208 60,065 60,065 85,852 79,190
----------- ----------- ----------- ----------- -----------
Total revenue 522,901 500,723 577,562 537,792 598,125
----------- ----------- ----------- ----------- -----------
Operating expense:
Salaries 110,944 103,547 141,282 136,928 139,276
Selling, general & administrative expenses 90,481 75,720 80,823 105,947 105,473
Pension expenses 11,122 9,481 12,641 104,487 --
Depreciation 4,480 5,408 8,758 9,834 8,953
----------- ----------- ----------- ----------- -----------
Total operating expense 217,027 194,156 243,504 357,196 253,702
----------- ----------- ----------- ----------- -----------
Operating income 305,874 306,567 334,058 180,596 344,423
Other income (expense):
Interest income 18,903 16,860 24,017 32,806 22,747
Rental income 400 3,600 4,800 4,200 4,200
Gain on sale of automobile -- -- -- 1,279 --
----------- ----------- ----------- ----------- -----------
Total other income (expense) 19,303 20,460 28,817 38,285 26,947
----------- ----------- ----------- ----------- -----------
Income before income taxes 325,177 327,027 362,875 218,881 371,370
Provision for income taxes (Note 3) (121,292) (108,495) (129,092) (87,874) (129,365)
----------- ----------- ----------- ----------- -----------
Net income 203,885 218,532 233,783 131,007 242,005
----------- ----------- ----------- ----------- -----------
Retained earnings at beginning of period 354,097 335,184 335,184 408,303 381,168
Less: dividends (107,433) (90,239) (214,870) (204,126) (214,870)
----------- ----------- ----------- ----------- -----------
Retained earnings at end of period $ 450,549 $ 463,477 $ 354,097 $ 335,184 $ 408,303
=========== =========== =========== =========== ===========
Earnings per share $ 9.49 $ 10.17 $ 10.88 $ 6.10 $ 11.26
Weighted Average Outstanding Shares 21,487 21,487 21,487 21,487 21,487
</TABLE>
The accompanying notes are an integral part of these statements.
F-75
<PAGE> 204
BEEHIVE INSURANCE AGENCY, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1996 1995 1994
------------- ------------- ------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C> <C> <C>
Net income $ 203,885 $ 218,352 $ 233,783 $ 131,007 $ 242,005
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 4,480 5,408 8,758 9,834 8,953
Gain on sale of automobile -- -- -- (1,279) --
Change in assets and liabilities:
Decrease (increase) in accounts
receivable (180,873) (143,526) 61,211 (13,597) 283,007
(Increase) decrease in commissions receivable 154 (168) (2,796) 1,457 2,730
Decrease (Increase) in interest receivable (1,935) (2,242) -- -- --
Decrease (Increase) in federal income tax
receivable 1,585 7,374 5,789 (7,374) --
Decrease (Increase) in prepaid Utah state
franchise tax -- (6,009) 2,616 13,144 5,280
Decrease (Increase) in deferred tax asset (4,148) 2,902 (38,974) --
(Increase) in prepaid expense (5,452) (6,946)
(Decrease) increase in accounts payable 1,405 789 (274) (330) (611)
Increase in commissions payable 1,613 1,123 83 -- --
(Decrease) increase in ins. premiums payable 116,418 115,118 (189,696) (76,206) 44,119
(Decrease) increase in federal income tax payable -- -- -- (29,585) 29,585
Increase (Decrease) in state income tax payable 3,470 -- 571 -- --
Increase in provision for federal income tax 27,328 53,505 -- -- --
Increase in other accrued expenses 59,033 27,509 -- -- --
(Decrease) in dividends payable (107,435) (107,435) -- -- --
Increase (Decrease)in accrued pension expense (9,298) 9,481 12,641 104,487 8,888
--------- --------- --------- --------- ---------
Net cash provided by operating activities 110,230 172,333 135,588 92,584 623,956
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of automobiles (9,051) -- -- (17,047) --
Purchases of office furniture, fixtures & (12,966) (2,746) (2,745) (3,153) (3,982)
equipment
Purchases of building improvements -- -- -- (9,285) --
Proceeds from sale of automobile -- -- -- 1,801 --
--------- --------- --------- --------- ---------
Net cash used in investing activities (22,017) (2,746) (2,745) (27,684) (3,982)
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (107,433) (90,239) (214,870) (204,126) (214,870)
--------- --------- --------- --------- ---------
Net cash used in financing activities (107,433) (90,239) (214,870) (204,126) (214,870)
--------- --------- --------- --------- ---------
Net (decrease) increase in cash (19,220) 79,348 (82,027) (139,226) 405,104
Cash at beginning of year 558,642 640,669 640,669 779,895 374,791
--------- --------- --------- --------- ---------
Cash at end of year $ 539,422 $ 720,017 $ 558,642 $ 640,669 $ 779,895
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-76
<PAGE> 205
BEEHIVE INSURANCE AGENCY, INC.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied
in the preparation of the accompanying financial statements follows.
Insofar as the notes refer to the nine months ended September 30, 1997
and the year ended December 31, 1996 and 1995, they are not audited. In
the opinion of management, the unaudited financial statements for the
nine months ended September 30, 1996 and the year ended December 31,
1996 and 1995 include all adjustments, consisting of normal recurring
accruals, necessary to present fairly the Company's results of
operations and cash flows. Operating results for the interim period as
of and for the nine months ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the full year.
ORGANIZATION
Beehive Insurance Agency, Inc. (the Company) was incorporated in the
State of Utah, June 20, 1961 and operates as a regular corporation. The
company serves as an independent insurance agency selling to the
general public. The following is a summary of significant accounting
policies.
ACCOUNTING METHOD
The accrual method of accounting is used to record revenue and
expenses.
CASH AND CASH EQUIVALENTS
The Company considers cash and cash equivalents to be defined as cash
on hand and cash in banks with maturities of three months or less.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is provided
using straight-line and declining-balance methods over the estimated
useful lives of the assets.
TREASURY STOCK
Treasury stock transactions are accounted for under the cost method,
using a moving average cost assumption.
INCOME TAXES
The Company accounts for income taxes using the liability method as
prescribed by Statement of Financial Accounting Standards No. 109 (SFAS
109), "Accounting for Income Taxes." SFAS 109 is an asset and liability
approach that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that
have been recognized in the Company's financial statements or tax
returns.
The Internal Revenue Service examined 1977 and 1980 under the Taxpayer
Compliance Measurement Program. There were no changes as a result of
these examinations.
F-77
<PAGE> 206
BEEHIVE INSURANCE AGENCY, INC.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments including cash, receivables,
payables and accrued liabilities approximate book values at September
30, 1997, December 31, 1996 and 1995.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially expose the Company to
concentrations of credit risk consist primarily of accounts receivable.
At December 31, 1996, accounts receivable includes amounts due from
three customers of $ 48,912, $ 21,281 and $ 19,992. Sales to
significant customers are summarized in Note 4. The Company's accounts
receivable result from its insurance contracts with customers. The
Company controls credit risk associated with accounts receivable by
leveraging the unused portion of the policy.
The Company maintains all bank accounts and temporary cash investments
at Key Bank of Utah. The accounts exceed the FDIC insured amounts by
$439,422, $458,642 and $540,669 at September 30, 1997 and December 31,
1996 and 1995 respectively.
LONG-LIVED ASSETS
The Company accounts for the impairment of long lived assets in
accordance with Statement of Financial Accounting Standards No. 121
(SFAS 121), "Accounting for the Impairment of long-lived assets to be
disposed of." The Company reviews long-lived assets for possible
impairments whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable, as measured by a comparison
of estimated future cash flows (undiscounted and without interest
charges) to the carrying value of the asset. An impairment loss is then
recognized if the carrying value of the asset exceeds the fair value of
the asset. Assets held for sale are written down to their fair value,
less cost to sell. Any subsequent revision in the fair value less cost
to sell, not to exceed the original carrying cost, is charged or
credited to income. This did not have a material effect on the
financial statements for September 30, 1997 (unaudited) and December
31, 1996 and 1995.
F-78
<PAGE> 207
BEEHIVE INSURANCE AGENCY, INC.
NOTES TO FINANCIAL STATEMENTS
2. PENSION PLAN
The Company has a defined benefit pension plan covering substantially
all of its employees. The benefits are based on years of service and
the employees compensation during the 5 highest consecutive years of
participation in the plan. The funding policy of the Company is based
upon actuarially determined contributions that take into consideration
the amount deductible for income tax purposes, however a liability
under FAS 87 has been recognized for financial purposes. The actuarial
reports were prepared by Rocky Mountain Employee Benefits. These
reports reflect in summary the following:
<TABLE>
<CAPTION>
PERIOD ENDED
-----------------------------------------------
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
1. Pension Expense
Service cost $ 4,122 $ 5,332 $ 5,453
Interest cost 10,318 12,318 23,043
Expected return 0 (2,300) (44,926)
Amortization
a. Transition asset (2,074) (1,874) (2,700)
b. (Gain) loss (1,244) (835) 2,082
c. Deferral assets
gain/(loss) 0 -- 32,879
---------- ---------- ----------
Net Periodic Costs $ 11,122 $ 12,641 $ 15,831
========== ========== ==========
</TABLE>
F-79
<PAGE> 208
BEEHIVE INSURANCE AGENCY, INC.
NOTES TO FINANCIAL STATEMENTS
2. PENSION PLAN (CONTINUED)
<TABLE>
<CAPTION>
UNDERFUNDED UNDERFUNDED UNDERFUNDED
PLAN PLAN PLAN
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
2. Funded status
Actuarial present value
of benefit obligation
Vested benefit obligation $ 140,616 $ 137,678 $ 132,284
Non-vested benefit
obligation 2,611 2,557 1,836
---------- ---------- ----------
Accumulated benefit
obligation 143,227 140,235 134,120
Effect on projected future
salary increases 45,874 44,915 43,234
---------- ---------- ----------
Projected benefit
obligation 189,101 185,150 177,354
Fair value of plan assets 48,188 37,013 48,119
Projected benefit
obligation in excess of
assets 140,913 148,137 129,235
Unrecognized net loss (17,150) (16,482) (12,095)
Unrecognized net
transition asset 11,718 13,124 14,998
---------- ---------- ----------
Accrued pension cost
in Company's financial
statements $ 135,481 $ 144,779 $ 132,138
</TABLE>
F-80
<PAGE> 209
BEEHIVE INSURANCE AGENCY, INC.
NOTES TO FINANCIAL STATEMENTS
2. PENSION PLAN (CONTINUED)
The following assumptions were used to measure the status of the
pension plan at September 30, 1997 (unaudited) and December 31, 1996
and 1995 under FAS 87.
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
Discounted rate 7% 7% 7%
Expected long-term rate of
return on assets 7% 7% 7%
Average increase in compensation
levels 3% 3% 3%
</TABLE>
In addition to the net periodic pension costs, net losses of $ 88,656 were
recorded in 1995 pursuant to FASB Statement No. 88, "Employers Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits", due to a pension settlement with a former employee of the
Company.
3. INCOME TAX
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Current
Federal $ 108,625 $ 108,396 $ 109,652
State 16,815 17,794 17,196
---------- ---------- ----------
125,440 126,190 126,848
---------- ---------- ----------
Deferred
Federal (3,781) 2,645 (35,526)
State (367) 257 (3,448)
---------- ---------- ----------
(4,148) 2,902 (38,974)
---------- ---------- ----------
Provision for income taxes $ 121,292 $ 129,092 $ 87,874
========== ========== ==========
</TABLE>
The income tax provision reconciled to the tax computed at the federal
statutory rate of 34% is as follows:
F-81
<PAGE> 210
BEEHIVE INSURANCE AGENCY, INC.
NOTES TO FINANCIAL STATEMENTS
3. INCOME TAX (CONTINUED)
A summary of the composition of the deferred income tax assets is as
follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
Long-term deferred income taxes
Accrued pension expense $ 40,220 $ 36,072 $ 38,974
</TABLE>
4. SALES TO SIGNIFICANT CUSTOMERS
Approximately 49 % of total revenues for the nine months ended
September 30, 1997 was from four customers, accounting for 36%, 8%, and
5% of total revenues. Approximately 56% of total revenues for the year
ended December 31, 1996 was from three customers, accounting for 40%,
11% and 5% of total revenues. Approximately 50% of total revenues for
the year ended December 31, 1995 was from two customers, accounting for
33% and 17% of total revenues.
5. RELATED PARTIES
Related parties include the Company's officers, directors,
stockholders, Geneva Rock Products, Inc., W. W. Clyde & Co., J &J
Building Supply, Utah Services, Inc.
Accounts receivable and insurance commission received from related
parties is as follows:
<TABLE>
<CAPTION>
Geneva Rock W. W. Clyde J & J Building Utah
Products & Co. Supply Service, Inc.
----------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
September 30, 1997:
Accounts receivable $ 146,095 $ 61,316 $ -- $ --
Insurance commissions 186,006 42,920 26,094 6,822
December 31, 1996
Accounts receivable 48,912 750 1,200 --
Insurance commissions 193,025 51,291 19,204 6,558
December 31, 1995
Accounts receivable 131,687 -- -- --
Insurance commissions 183,885 42,254 -- 5,641
</TABLE>
F-82
<PAGE> 211
ANNEX A
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this
"Agreement") is made and entered into as of November 13, 1997 by and among Clyde
Companies, Inc., a Utah corporation (the "Parent"), W.W. Clyde Reorganization
Corporation, a Utah corporation ("CRC"), W.W. Clyde & Co., a Utah corporation
("Clyde"), Geneva Rock Reorganization Corporation, a Utah corporation ("GRRC"),
Geneva Rock Products, Inc., a Utah corporation ("Geneva Rock"), Utah Service
Reorganization Corporation, a Utah corporation ("USRC"), Utah Service Inc., a
Utah corporation ("Utah Service"), Beehive Insurance Reorganization Corporation,
a Utah corporation ("BIRC"), and Beehive Insurance Agency, Inc., a Utah
corporation ("Beehive Insurance").
Recitals
WHEREAS, the parties hereto entered into an Agreement and Plan
of Merger dated as of November 13, 1997 (the ""Original Merger Agreement");
WHEREAS, the parties hereto desire to amend and restate the
Original Merger Agreement in its entirety as set forth in this Agreement
effective as of January 26, 1998;
WHEREAS, the Board of Directors of each of the Parent, and CRC,
GRRC, USRC and BIRC (collectively, the "Reorganization Corporations") and Clyde,
Geneva Rock, Utah Service and Beehive Insurance (collectively, the "Acquired
Corporations" and, together with the Parent and the Reorganization Corporations,
the "Corporations") have approved, and have determined that it is advisable and
in the best interests of each of their respective shareholders for the Parent to
acquire the Acquired Corporations on the terms and conditions set forth in this
Agreement; and
WHEREAS, to accomplish such acquisitions, (i) the Board of
Directors of each of the Parent, CRC and Clyde has determined that CRC should be
merged with and into Clyde (the "Clyde Merger"), (ii) the Board of Directors of
each of the Parent, GRRC and Geneva Rock has determined that GRRC should be
merged with and into Geneva Rock (the "Geneva Rock Merger"), (iii) the Board of
Directors of each of the Parent, USRC and Utah Service has determined that USRC
should be merged with and into Utah Service (the "Utah Service Merger"), and
(iv) the Board of Directors of each of the Parent, BIRC and Beehive Insurance
has determined that BIRC should be merged with and into Beehive Insurance (the
"Beehive Insurance Merger" and, collectively with the Clyde Merger, the Geneva
Rock Merger and the Utah Service Merger, the "Mergers") in accordance with this
Agreement and the applicable provisions of the Utah Revised Business Corporation
Act (the "URBCA") and the Internal Revenue Code of 1986, as amended (the
"Code").
Agreement
NOW, THEREFORE, pursuant to and in accordance with the URBCA and
the Code, the Corporations agree upon and prescribe the terms and conditions of
the Mergers as follows:
I. Merger
A-1
<PAGE> 212
1.1 Names and States of Incorporation. The name and state of
incorporation of each of the constituent corporations in the Mergers is as
follows:
(a) for the Clyde Merger, W.W. Clyde
Reorganization Corporation, a Utah corporation, and W.W. Clyde &
Co., a Utah corporation;
(b) for the Geneva Rock Merger, Geneva Rock Reorganization
Corporation, a Utah corporation, and Geneva Rock Products, Inc.,
a Utah corporation;
(c) for the Utah Service Merger, Utah Service
Reorganization Corporation, a Utah corporation, and Utah Service
Inc., a Utah corporation; and
(d) for the Beehive Insurance Merger, Beehive Insurance
Reorganization Corporation, a Utah corporation, and Beehive
Insurance Agency, Inc., a Utah corporation.
1.2 Closing and Effective Time. The closing of each of the Mergers (the
"Closing") shall take place concurrently at the offices of Van Cott, Bagley,
Cornwall & McCarthy at 8:30 a.m. (local time) on a date (the "Closing Date") to
be specified by the Corporations, which shall be no sooner than the date upon
which all of the conditions specified in Article V of this Agreement have been
satisfied or waived by the applicable Corporations (other than those conditions
that, by their nature, are to be satisfied at the Closing). In accordance with
the URBCA and Articles of Mergers to be filed by each of the respective Acquired
Corporations with the Utah Department of Commerce, Division of Corporations and
Commercial Code (the "Utah Division of Corporations"), the Mergers shall become
effective sequentially, with the Clyde Merger becoming effective first, followed
one hour later by the Utah Service Merger, followed one hour later by the
Beehive Insurance Merger and followed one hour later by the Geneva Rock Merger.
Each of the respective Mergers shall be effective at the date and time specified
in the applicable Articles of Merger (for each Merger, the "Effective Time").
The Closing Date shall be prior to the Effective Time.
1.3 Mergers. At the Effective Time, the following shall occur:
(a) The respective Reorganization Corporation shall be
merged with and into the corresponding Acquired Corporation, and
the separate existence of the Reorganization Corporation shall
cease.
(b) The respective Acquired Corporation shall be the
surviving corporation and shall continue its corporate existence
in accordance with the laws of the State of Utah and under its
current name.
(c) The respective Merger shall have the effects set forth
in Section 16-10a-1106 of the URBCA.
1.4 Articles of Incorporation. The Articles of Incorporation of each of
the Acquired
A-2
<PAGE> 213
Corporations shall continue to be the Articles of Incorporation of such Acquired
Corporation after the Effective Time, until amended or repealed in accordance
with the URBCA.
1.5 Bylaws. The Bylaws of each of the Acquired Corporations shall
continue to be the Bylaws of such Acquired Corporation after the Effective Time,
until amended or repealed in the manner provided by such Bylaws and the URBCA.
1.6 Directors. The directors of each of the Acquired Corporations
immediately prior to the Effective Time shall continue to serve as the directors
of such Acquired Corporation for the term specified in the Bylaws of such
Acquired Corporation.
1.7 Officers. The officers of each of the Acquired Corporations
immediately prior to the Effective Time shall continue to be officers of such
Acquired Corporation until otherwise provided in accordance with the Bylaws of
such Acquired Corporation.
1.8 Securities Filings. If required by applicable law, the Corporations
shall promptly prepare and file with the Securities and Exchange Commission (the
"SEC") a Registration Statement on Form S-4 (including any amendments or
supplements thereto, the "Registration Statement") and, as part of the
Registration Statement, a letter, notice of meeting, proxy statement and form of
proxy to the shareholders of each of the Acquired Companies in connection with
the Mergers (collectively, including any amendments or supplements thereto, the
"Proxy Statement"). Each of the Corporations shall provide reasonable
opportunities for the other Corporations to review and comment on the contents
of the Registration Statement. At any time after the preparation of the
Registration Statement, each of the Corporations agrees promptly to notify the
others of and to correct any information which any of them shall have furnished
for inclusion in the Registration Statement that shall have become false or
misleading in any material respect. Each of the Corporations shall use its
reasonable best efforts to have the Registration Statement declared effective
under the Securities Act of 1933, as amended (the "Securities Act"), as promptly
as practicable after such filing. The Parent shall also take any action required
to be taken under any applicable state securities laws in connection with the
issuance of Parent Common Stock (as defined below) in the Merger, and each of
the Corporations shall furnish all information concerning its business, affairs
and/or shareholders as may be reasonably requested in connection with any such
action.
1.9 Special Meeting. As promptly as practicable following the
execution and delivery of this Agreement, in accordance with the URBCA and other
applicable law, each of the Acquired Corporations (a) shall duly call, give
notice of, convene and hold a special meeting of its shareholders (each a
"Special Meeting") and shall submit this Agreement to a vote of such
shareholders at the Special Meeting, (b) subject to any review by the SEC, shall
include in the Proxy Statement, the recommendation of the Board of Directors
that the shareholders should vote in favor of the approval of this Agreement and
(c) shall take all such other action reasonably necessary or appropriate to
obtain the lawful approval of this Agreement by the shareholders.
1.10 Geneva Rock Common Stock Owned by Clyde. As of the date of
this Agreement, Clyde owns (and as of the Effective Time, Clyde will own) 7,518
shares (the
A-3
<PAGE> 214
"Distribution Shares") of Geneva Rock Common Stock (as defined below).
Immediately after the Effective Time of the Clyde Merger, Clyde, acting in
accordance with resolutions duly adopted by its Board of Directors, shall
distribute (in a dividend distribution) the Distribution Shares to the Parent.
Immediately upon such distribution, the Parent shall own the Distribution
Shares, and, at the Effective Time of the Geneva Rock Merger, the Distribution
Shares shall be treated in the same manner as all of the other shares of Geneva
Rock Common Stock owned by the Parent in accordance with Section 2.1(c) below.
II. Conversion of Shares
2.1 Conversion. As of the Effective Time, by virtue of each of the
Mergers and without any further action, the following shall occur:
(a) Each issued and outstanding share of Clyde Common
Stock (as defined below) (other than (i) shares of Clyde Common
Stock owned by the Parent, which shall not be converted and shall
each remain one (1) issued and outstanding share of Clyde Common
Stock, and (ii) Dissenting Shares (as defined below), if any)
shall be converted into 33.93 shares of Parent Common Stock.
(b) Each issued and outstanding share of CRC Common Stock
(as defined below) shall be converted into one (1) share of Clyde
Common Stock.
(c) Each issued and outstanding share of Geneva Rock
Common Stock (other than (i) shares of Geneva Rock Common Stock
owned by the Parent, which shall not be converted and shall each
remain one (1) issued and outstanding share of Geneva Rock Common
Stock, and (ii) Dissenting Shares, if any) shall be converted
into 239.27 shares of Parent Common Stock.
(d) Each issued and outstanding share of GRRC Common Stock
(as defined below) shall be converted into one (1) share of
Geneva Rock Common Stock.
(e) Each issued and outstanding share of Utah Service
Common Stock (as defined below) (other than (i) shares of Utah
Service Common Stock owned by the Parent, which shall not be
converted and shall each remain one (1) issued and outstanding
share of Utah Service Common Stock, and (ii) Dissenting Shares,
if any) shall be converted into 43.43 shares of Parent Common
Stock.
(f) Each issued and outstanding share of USRC Common Stock
(as defined below) shall be converted into one (1) share of Utah
Service Common Stock.
(g) Each issued and outstanding share of Beehive Insurance
Common Stock (as defined below) (other than (i) shares of Beehive
Insurance Common Stock owned by the Parent, which shall not be
converted and shall each
A-4
<PAGE> 215
remain one (1) issued and outstanding share of Beehive Insurance
Common Stock, and (ii) Dissenting Shares, if any) shall be
converted into 4.33 shares of Parent Common Stock.
(h) Each issued and outstanding share of BIRC Common Stock
(as defined below) shall be converted into one (1) share of
Beehive Insurance Common Stock.
2.2 Fractional Shares. Notwithstanding any other provision of this
Agreement to the contrary, each holder of shares of common stock of the Acquired
Corporations exchanged pursuant to the Mergers who would otherwise have been
entitled to receive a fraction of a share of Parent Common Stock (after taking
into account all Acquired Corporation Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
such fraction multiplied by $14.52 (the projected value, determined as of the
date of this Agreement, of one share of Parent Common Stock as of the Effective
Time). No such holder shall be entitled to any fractional share of Parent Common
Stock (or to any dividends, voting rights or any other rights as a shareholder
in respect of such fractional share of Parent Common Stock).
2.3 Acquired Corporation Certificates. Certificates nominally
representing shares of the common stock of the Acquired Corporations ("Acquired
Corporation Certificates") shall be treated as follows:
(a) As of the Effective Time, each Acquired
Corporation Certificate, other than any certificate representing
Dissenting Shares, if any, for all purposes, shall be deemed to
evidence the number of shares of Parent Common Stock determined
in accordance with Section 2.1 above.
(b) As soon as practicable after the Effective Time, the
Parent shall mail to each record holder of an outstanding
Acquired Corporation Certificate, as of the Effective Time, a
form of letter of transmittal (the "Transmittal Letter") that is
reasonably acceptable to the Acquired Corporations (which shall
specify that delivery of an Acquired Corporation Certificate
shall be effected, and risk of loss and title to the Acquired
Corporation Certificate shall pass, only upon proper delivery of
the Acquired Corporation Certificate to the Parent) and
instructions for use in effecting the surrender of each Acquired
Corporation Certificate in exchange for a Parent Common Stock
certificate ("Parent Certificate"). Upon surrender to the Parent
of an Acquired Corporation Certificate, together with a duly
executed Transmittal Letter (and any other documents which may be
reasonably required by the Parent, if any), the holder of such
Acquired Corporation Certificate shall receive promptly in
exchange therefor a Parent Certificate for the number of shares
of Parent Common Stock evidenced thereby in accordance with
Section 2.1 above. Thereafter, the applicable Acquired
Corporation Certificate shall be canceled. If a Parent
Certificate is to be issued to a person other than the person in
whose name the surrendered Acquired Corporation Certificate is
registered, it shall be a condition of issuance of the Parent
Certificate (x) that the Acquired Corporation Certificate so
surrendered shall be properly endorsed or otherwise be in proper
form for transfer and (y) that the person requesting such
issuance shall pay any transfer or other taxes required
A-5
<PAGE> 216
by reason of the issuance to a person other than the registered
holder of the Acquired Corporation Certificate surrendered or
establish to the satisfaction of the Parent that such tax has
been paid or is not applicable. The Parent shall pay all charges
and expenses, including those of the Acquired Corporations, in
connection with the distribution of the Parent Certificates.
(c) If any Acquired Corporation Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such Acquired Corporation
Certificate to be lost, stolen or destroyed, the Parent will
issue in exchange for such lost, stolen or destroyed Acquired
Corporation Certificate the shares of Parent Common Stock
deliverable in respect thereof as determined in accordance with
Section 2.1 above; provided that, at the option of the Parent,
the person to whom such shares are issued, as a condition
precedent to the issuance of such shares, shall give to the
Parent a bond in such sum as the Parent may direct or otherwise
indemnify the Parent in a manner satisfactory to the Parent
against any claim that may be made against the Parent with
respect to the Acquired Corporation Certificate claimed to have
been lost, stolen or destroyed.
2.4 Dissenters' Rights. Notwithstanding any other provision of this
Agreement, each share of the common stock of any of the Acquired Corporations
(a) as to which a written notice of intent to demand payment was submitted to
the applicable Acquired Corporation in accordance with Section 16-10a-1321(1)(a)
of the URBCA, (b) which is not voted in favor of approval of this Agreement at a
Special Meeting, and (c) as to which a written demand for payment of fair value
shall have been or may still be timely filed, and the Acquired Corporation
Certificate(s) for such shares shall have been or may still be deposited with
the applicable Acquired Corporation in accordance with the requirements of Part
13 of the URBCA (collectively, "Dissenting Shares"), shall not be converted into
shares of Parent Common Stock. Each holder of Dissenting Shares who becomes
entitled under the URBCA to receive payment of the fair value of such holder's
Dissenting Shares shall receive such payment from the Parent (but only after
such fair value shall have been agreed upon or finally determined) and such
Dissenting Shares shall thereupon be canceled. Each Dissenting Share as to which
dissenters' rights pursuant to the URBCA shall be effectively withdrawn or lost
shall thereupon be deemed to have been converted, at the Effective Time, into
shares of Parent Common Stock in accordance with Section 2.1 above.
2.5 Options, Warrants or Other Rights. At the Effective Time, any
options, warrants or other rights to purchase shares of any of the Acquired
Corporations, without any further action, shall be terminated.
III. Representations and Warranties of the Acquired Corporations
Each of the Acquired Corporations, solely as to itself and not as
to any other Acquired Corporation, represents and warrants to the Parent as
follows, subject only to such limitations and exceptions as are set forth below:
A-6
<PAGE> 217
3.1 Organization and Good Standing. The Acquired Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Utah, and has all requisite corporate power and corporate
authority to own, lease and operate its properties to carry on its business as
now being conducted. The Acquired Corporation is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification
necessary, except where the failure to be so qualified would not have a material
adverse effect on the Acquired Corporation.
3.2 Capital Structure of the Acquired Corporations.
(a) Clyde has an authorized capital structure consisting
of Two Hundred Thousand (200,000) shares of Ten Dollar ($10.00)
par value common stock ("Clyde Common Stock"), and Ninety-Four
Thousand Five Hundred Forty-Four (95,544) shares of Clyde Common
Stock are issued and outstanding.
(b) Geneva Rock has an authorized capital structure
consisting of Fifty Thousand (50,000) shares of Ten Dollar
($10.00) par value common stock ("Geneva Rock Common Stock"), and
Twenty-One Thousand Eight Hundred Two (21,802) shares of Geneva
Rock Common Stock are issued and outstanding.
(c) Utah Service has an authorized capital structure
consisting of One Hundred Thousand (100,000) shares of Ten Dollar
($10.00) par value common stock ("Utah Service Common Stock"),
and Five Thousand Four Hundred Thirteen (5,413) shares of Utah
Service Common Stock are issued and outstanding.
(d) Beehive Insurance has an authorized capital structure
consisting of Fifty Thousand (50,000) shares of One Dollar
($1.00) par value common stock ("Beehive Insurance Common
Stock"), and Twenty-One Thousand Four Hundred Sixty-Seven
(21,467) shares of Beehive Insurance Common Stock are issued and
outstanding.
3.3 Authority. The Acquired Corporation has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Acquired
Corporation, subject in the case of this Agreement only to the approval of this
Agreement by the shareholders of the Acquired Corporation as required under the
URBCA.
3.4 Execution and Delivery. This Agreement has been duly executed and
delivered by the Acquired Corporation and constitutes a valid and binding
obligation of the Acquired Corporation, enforceable against the Acquired
Corporation in accordance with its terms but subject to (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and equitable
principles, and (ii) statutes, rules or procedures and applicable case law
limiting the availability of or prescribing the procedural requirements for the
exercise of remedies.
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3.5 Property. The Acquired Corporation has good, valid and
marketable title to (or in the case of leased property, valid leasehold
interests in) all of its properties and assets.
3.6 No Violations. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will not,
(a) conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a material benefit
under, or the creation of a lien, pledge, security interest, charge or other
encumbrance on assets (any such conflict, violation, default, right of
termination, cancellation or acceleration, loss or creation, a "Violation")
pursuant to any provision of the Articles of Incorporation or Bylaws of the
Acquired Corporation, or (b) result in any Violation of (i) any loan or credit
agreement, note, mortgage, indenture, lease or other agreement, obligation,
instrument, permit, concession, franchise, license, statute, law, ordinance,
rule or regulation applicable to the Acquired Corporation or its properties or
assets (except for such Violations as would not, singly or in the aggregate,
have a material adverse effect on the Acquired Corporation), or (ii) any
judgment, order or decree applicable to the Acquired Corporation or its
properties or assets.
3.7 Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental agency, authority or instrumentality, domestic
or foreign (each, a "Governmental Authority"), is required by or with respect to
the Acquired Corporation in connection with the execution and delivery of this
Agreement by the Acquired Corporation, or the consummation by the Acquired
Corporation of the transactions contemplated hereby, except for (a) the filing
with the SEC of the Registration Statement (including the Proxy Statement as a
part thereof), (b) the filing of the Articles of Merger with the Utah Division
of Corporations and appropriate documents with the relevant authorities of other
states in which the Acquired Corporation is qualified to do business, (c)
notices and other filings as may be required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (d) filings as
may be required under state securities laws and (e) such filings,
authorizations, orders and approvals as may be required under foreign laws.
3.8 Information Supplied. None of the information supplied or to
be supplied by the Acquired Corporation for inclusion or incorporation by
reference in the Proxy Statement, at the date of mailing to the Acquired
Corporation's shareholders and at the time of its Special Meeting, will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. All documents that the Acquired Corporation is responsible for
filing with any Governmental Authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable law. Without limiting any of the representations and
warranties contained herein, no representation or warranty by the Acquired
Corporation as of the date thereof contains any untrue statement of material
fact, or omits a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which such statements are
or will be made, not misleading.
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3.9 Litigation. There are no actions, arbitrations, audits,
hearings, investigations, suits or litigation (whether civil, criminal,
administrative, investigative or informal) before or otherwise involving any
Governmental Authority, court or arbitrator (a "Proceeding") commenced by or
against the Acquired Corporation (or that otherwise relate to or may affect the
business or the assets of the Acquired Corporation) that either (a) challenge,
or that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of transactions specified in this Agreement, or
(b) would reasonably be expected to have a material adverse effect on the
Acquired Corporation. To the knowledge of the Acquired Corporation, (1) no such
Proceeding has been threatened, and (2) no event has occurred or circumstance
exists that may give rise to or serve as a basis for the commencement of any
such Proceeding.
3.10 Financial Statements. The financial statements of the
Acquired Corporation (including any balance sheets and statements of income,
changes in stockholders' equity and cash flow, together with any reports thereon
of independent certified public accountants) provided by the Acquired
Corporation in connection with the preparation of (a) the Registration
Statement, and (b) the appraisals of the Acquired Companies prepared by Houlihan
Valuation Advisors and dated October 23, 1997 (the "HVA Appraisals"), fairly
present the financial condition and the results of operations, changes in
stockholders' equity and cash flow of the Acquired Corporation as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with generally accepted accounting principles
("GAAP"). The financial statements referred to in this Section 3.10 reflect the
consistent application of accounting principles throughout the periods involved,
except as otherwise disclosed in the notes to such financial statements.
3.11 Taxes.
(a) All material reports, filings, statements,
declarations and returns (collectively, "Tax Returns") with
respect to taxes, charges, fees, levies or assessments
(collectively, "Taxes") required to be filed by the Acquired
Corporation as of the Effective Time have been or will be duly
filed, and such Tax Returns are or will be true and correct in
all material respects. The Acquired Corporation has paid or will
pay all Taxes shown as due and payable on such Tax Returns; and
the charges, accruals and reserves for Taxes with respect to the
Acquired Corporation reflected in the Acquired Corporation's
financial statements are adequate under GAAP to cover Taxes
accruing through the date thereof, including contested amounts
and amounts not yet due and payable.
(b) There are no material claims with respect to Taxes
pending against the Acquired Corporation and the Acquired
Corporation is not aware of any threatened claim for Taxes or any
basis for such claims. No material issues have been raised in any
examination by any Governmental Authority with respect to the
Acquired Corporation which reasonably could be expected to result
in a proposed deficiency for any other period not so examined,
and there are not now in force any waivers or agreements by the
Acquired Corporation for the extension
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of time for the assessment of any material Taxes, nor has any
such waiver or agreement been requested by any Governmental
Authority. The Acquired Corporation does not have any liability
for any material Taxes of any corporation or entity other than
the Acquired Corporation.
(c) The Acquired Corporation has paid or is withholding
and will pay when due to the proper Governmental Authorities all
material withholding amounts required to be withheld with respect
to all Taxes.
3.12 Undisclosed Liabilities. The Acquired Corporation is not
subject to any liabilities of any nature which have had or can reasonably be
expected to have a material adverse effect on its business or financial
prospects.
IV. Representations and Warranties of the Parent
The Parent represents and warrants to the Acquired Corporations
as follows, subject only to such exceptions and limitations as are set forth
below:
4.1 Organization, Standing and Authority. Each of the Parent and
the Reorganization Corporations is a corporation duly organized, validly
existing and in good standing under the laws of the State of Utah, and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Each of the Parent and the
Reorganization Corporations is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so qualified would not have a material adverse
effect on the Parent and the Reorganization Corporations considered as a whole.
4.2 Capital Structure of the Parent.
(a) As of the Effective Time, (i) the authorized capital
stock of the Parent will consist of Ten Million (10,000,000)
shares of common stock ("Parent Common Stock"), and (ii)
2,303,920 shares of Parent Common Stock will be issued and
outstanding. Shares of Parent Common Stock to be issued in the
Mergers, when issued in accordance with this Agreement, will be
validly issued, fully paid and nonassessable.
(b) Except for the Articles of Restatement of the Articles
of Incorporation of the Parent and the Amended and Restated
Articles of Incorporation of the Parent attached thereto
(collectively, the "Parent Recapitalization Documents"), there
are no options, warrants, calls, rights, commitments or
agreements of any character to which the Parent or any of the
Reorganization Corporations is a party or by which it is bound
obligating the Parent or any of the Reorganization Corporations
to issue, deliver or sell, or cause to be issued, delivered or
sold, shares of capital stock or obligating the Parent or
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any of the Reorganization Corporations to grant, extend or enter
into any such option, warrant, call, right, commitment or
agreement.
(c) Except for that certain Clyde Companies, Inc.
Stock Redemption Plan, adopted as of November 12, 1997 by the
Board of Directors of the Parent and the Parent Recapitalization
Documents, there are no outstanding contractual obligations of
the Parent or any of the Reorganization Corporations, to
repurchase, redeem or otherwise acquire any shares of capital
stock of the Parent or any of the Reorganization Corporations.
(d) Except for the Parent Recapitalization Documents, the
Parent has not (i) made or agreed to make any stock split or
stock dividend, or issued or permitted to be issued any shares of
capital stock or securities exercisable for or convertible into
shares of capital stock of the Parent or any of the
Reorganization Corporations.
(e) All of the outstanding shares of capital stock of each
Reorganization Corporation (i) are validly issued, fully paid and
nonassessable and free of any preemptive rights, and (ii) are
directly owned by the Parent, free and clear of all liens,
claims, pledges, agreements, voting or other restrictions,
charges or other encumbrances, with the result that the Parent
directly owns the entire equity interest in each of the
Reorganization Corporations.
4.3 Authority. The Parent has all requisite corporate power and
corporate authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Parent.
4.4 Execution and Delivery. This Agreement has been duly executed
and delivered by the Parent and constitutes a valid and binding obligation of
the Parent, enforceable against the Parent in accordance with its terms but
subject to (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and equitable principles, and (ii) statutes, rules or procedures and
applicable case law limiting the availability of or prescribing the procedural
requirements for the exercise of remedies.
4.5 No Violations. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will not,
(a) result in any Violation of any provision of the Articles of Incorporation or
Bylaws of the Parent, or (b) result in any Violation of (i) any loan or credit
agreement, note, mortgage, indenture, lease or other agreement, obligation,
instrument, permit, concession, franchise, license, statute, law, ordinance,
rule or regulation applicable to the Parent or its properties or assets (except
for such Violations as would not, singly or in the aggregate, have a material
adverse effect on the Parent), or (ii) any judgment, order or decree applicable
to the Parent or its properties or assets.
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4.6 Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority is required
by or with respect to the Parent in connection with the execution and delivery
of this Agreement by the Parent, or the consummation by the Parent of the
transactions contemplated hereby, except for (a) the filing with the SEC of the
Registration Statement (including the Proxy Statement as a part thereof), (b)
the filing of the Articles of Merger with the Utah Division of Corporations and
appropriate documents with the relevant authorities of other states in which the
Parent is qualified to do business, (c) notices and other filings as may be
required under the HSR Act, (d) filings as may be required under state
securities laws and (e) such filings, authorizations, orders and approvals as
may be required under foreign laws.
4.7 Information Supplied. None of the information supplied or to
be supplied by the Parent for inclusion or incorporation by reference in the
Proxy Statement, at the date of mailing to the Acquired Corporation's
shareholders and at the time of the Special Meeting, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. All documents that
the Parent is responsible for filing with any Governmental Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable law. Without limiting
any of the representations and warranties contained herein, no representation or
warranty by the Parent as of the date thereof contains any untrue statement of
material fact, or omits a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which such
statements are or will be made, not misleading.
4.8 Financial Statements. The financial statements of the Parent
(including any balance sheets and statements of income, changes in stockholders'
equity and cash flow, together with any reports thereon of independent certified
public accountants) provided by the Parent in connection with the preparation of
the Registration Statement, fairly present the financial condition and the
results of operations, changes in stockholders' equity and cash flow of the
Parent as at the respective dates of and for the periods referred to in such
financial statements, all in accordance with GAAP. The financial statements
referred to in this Section 4.8 reflect the consistent application of accounting
principles throughout the periods involved, except as otherwise disclosed in the
notes to such financial statements.
4.9 Litigation. There are no Proceedings commenced by or against
the Parent or any of the Reorganization Corporations (or that otherwise relate
to or may affect the business or the assets of the Parent or any of the
Reorganization Corporations) that either (a) challenge or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of
transactions specified in this Agreement, or (b) would reasonably be expected to
have a material adverse effect on the Parent and the Reorganization Corporations
considered as a whole. To the knowledge of the Parent, (a) no such Proceeding
has been threatened, and (b) no event has occurred or circumstance exists that
may give rise to or serve as a basis for the commencement of any such
Proceeding.
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4.10 Undisclosed Liabilities. The Parent is not subject to any
liabilities of any nature which have had or can reasonably be expected to have a
material adverse effect on its business or financial prospects.
V. Conditions to Closing
5.1 Conditions to the Corporations' Obligations. The respective
obligations of each of the Corporations to consummate the Mergers shall be
subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions:
(a) This Agreement shall have been approved by (i) the
shareholders of each of the Reorganization Corporations and the
Acquired Corporations in accordance with the URBCA, and (ii) a
majority of the shareholders of the Parent in accordance with
resolutions duly adopted by the Board of Directors of the Parent.
(b) The total number of Dissenting Shares, if converted
into shares of Parent Common Stock in accordance with Section 2.1
above, would be less than or equal to 346,935 shares of Parent
Common Stock (which number of shares of Parent Common Stock is
equal to five percent (5%) of the total number of shares of
Parent Common Stock that would be outstanding immediately after
the Mergers if there were no Dissenting Shares and all of the
shares of the common Stock of the Acquired Companies were
converted into Parent Common Stock in accordance with Section 2.1
above).
(c) The Parent and the Acquired Corporations shall have
received the opinion of Grant Thorton LLP that the Mergers
constitute tax-free transfers in accordance with Section 351 of
the Code or tax-free reorganizations in accordance with Section
368(a)(1)(B) of the Code.
(d) No Governmental Authority shall have issued any order,
and there shall not be any statute, rule, decree or regulation
restraining, prohibiting or making illegal the consummation of
the Merger.
(e) Any waiting period applicable to the consummation of
the Mergers under the HSR Act shall have expired or been
terminated.
5.2 Conditions to the Obligations of the Acquired Corporations.
The obligation of the Acquired Corporations to effect the Mergers is further
subject to the satisfaction or waiver, on or prior to the Closing Date, of each
of the following conditions:
(a) The representations and warranties of the Parent
contained in this Agreement shall be true and correct in all
material respects when made and as of the Closing Date (except
for matters which specifically address a particular date which
need only be true and correct as of such date).
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(b) The Parent shall have performed in all material
respects all of the obligations to be performed by it under this
Agreement prior to the Closing Date.
(c) A responsible officer of the Parent shall have
provided the Acquired Corporations with a certificate dated the
Closing Date which provides (i) that the matters referred to in
subsections (a) and (b) of this Section 5.2 are accurate and
complete, (ii) that the Parent is prepared in all material
respects to perform, and shall perform, all of the obligations to
be performed by it under this Agreement up to the Effective Time,
and (iii) for statements of fact with respect to such other
matters as the Acquired Corporations may reasonably request.
5.3 Conditions to the Obligations of the Parent. The obligation
of the Parent to effect the Mergers is further subject to the satisfaction or
waiver, on or prior to the Closing Date, of each of the following conditions:
(a) The representations and warranties of each of the
Acquired Corporations contained in this Agreement shall be true
and correct in all material respects when made and as of the
Closing Date (except for matters which specifically address a
particular date which need only be true and correct as of such
date).
(b) Each of the Acquired Corporations shall have performed
in all material respects all of the obligations to be performed
by it under this Agreement prior to the Closing Date.
(c) A responsible officer of each of the Acquired
Corporations shall have provided the Parent with a certificate
dated the Closing Date which provides (i) that the matters
referred to in subsections (a) and (b) of this Section 5.3 are
accurate and complete, (ii) that the Acquired Corporation is
prepared in all material respects to perform, and shall perform,
all of the obligations to be performed by it under this Agreement
up to the Effective Time, and (iii) for statements of fact with
respect to such other matters as the Parent may reasonably
request.
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VI. Termination
6.1 Right to Terminate. Notwithstanding any other provision of this
Agreement to the contrary, this Agreement may be terminated and the Mergers may
be abandoned at any time prior to the Effective Time, whether before or after
shareholder approval, in accordance with Sections 6.2 through 6.4 below.
6.2 Automatic Termination. Unless otherwise agreed in writing by
each of the Corporations, this Agreement shall be automatically terminated,
without any further actions by any of the Corporations (except as may be
otherwise required by the URBCA), if (a) any Governmental Authority shall have
issued a statute, order, decree or regulation or taken any other action
permanently restraining or enjoining or otherwise materially restricting the
consummation of the transactions contemplated by this Agreement and such
statute, order, decree, regulation or other action shall have become final and
non-appealable, or (b) the Mergers have not been consummated on or before June
30, 1998.
6.3 Termination by the Acquired Corporations. This Agreement may
be terminated by the Boards of Directors of the Acquired Corporations, acting
jointly, if the Parent breaches or fails in any material respect to perform or
comply with any of its covenants and agreements contained herein or breaches its
representations and warranties in any material respect; provided, however, that
if any such breach is curable by the breaching party through the exercise of the
breaching party's reasonable best efforts and for so long as such breaching
party shall be so attempting to cure such breach for a period not to exceed 20
days, the Acquired Corporations may not terminate this Agreement pursuant to
this Section 6.3.
6.4 Termination by the Parent. This Agreement may be terminated
by the Board of Directors of the Parent if any of the Acquired Corporations
breaches or fails in any material respect to perform or comply with any of its
covenants and agreements contained herein or breaches its representations and
warranties in any material respect; provided, however, that if any such breach
is curable by the Acquired Corporation through the exercise of the Acquired
Corporation's reasonable best efforts and for so long as the Acquired
Corporations shall be so attempting to cure such breach for a period not to
exceed 20 days, the Parent may not terminate this Agreement pursuant to this
Section 6.4.
6.5 Notice of Termination. In the event of the termination of this
Agreement as provided in Sections 6.3 or 6.4 above, written notice thereof shall
forthwith be given to the other party and such written notice shall specify the
provision of this Agreement pursuant to which such termination is made.
6.6 Effect of Termination. Upon the termination of this Agreement
pursuant to any of Sections 6.2, 6.3 or 6.4 above, this Agreement shall
thereupon become null and void and there shall be no liability on the part of
any of the Corporations to the other (or to any other person). Without limiting
the generality of the foregoing, the Corporations expressly agree (a) that the
sole remedy for any breach of this Agreement shall be the termination rights
contained in Sections 6.3 or 6.4 above, and (b) that in the event of any breach
of this Agreement, the breaching party shall have no liability to any person
whatsoever (including, without limitation, liability for actual, consequential,
punitive, exemplary or special damages).
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VII. General Provisions
7.1 Approval. This Agreement has been approved by the Board of Directors
and the shareholders of each of the Corporations as required by the URBCA.
7.2 Actions Prior to Closing. Between the date of this Agreement and the
Effective Time, (a) the Acquired Corporations shall each operate their
respective businesses in accordance with sound business practices and shall not
engage in any transactions other than in the ordinary course of business, and
(b) neither the Parent nor any of the Acquired Corporations shall issue any
additional shares of its capital stock (except, the Parent shall issue shares of
Parent Common Stock in accordance with the Parent Recapitalization Documents).
7.3 Taxation of Transaction. The Corporations intend that the
transactions contemplated by this Agreement shall constitute tax-free transfers
and/or reorganizations pursuant to Sections 351 and 368 of the Code. Therefore,
all of the terms and provisions of this Agreement shall be interpreted so that
such terms and provisions are in accordance with Sections 351 and 368 of the
Code.
7.4 Additional Actions. The officers of the Corporations shall execute
all such other documents and shall take all such other actions as may be
necessary or advisable to make this Agreement and the Mergers effective.
7.5 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented at any time prior to the
Closing Date by the written agreement of each of the Corporations and the
Parent.
7.6 Waiver of Compliance. Except as otherwise provided in this
Agreement, any failure of any of the Corporations to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
7.7 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, by overnight express
courier service or by facsimile transmission (in each case, as of the date of a
written receipt obtained by the party giving such notice), to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Clyde, to:
1375 N. Main Street
Springville, Utah 84663
Facsimile: (801) 489-7653
(b) if to Geneva Rock, to:
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302 West 5400 South
Suite 200
Murray, Utah 84107
Facsimile: (801) 765-7830
(c) if to the Utah Service, to:
35 East 400 South
Springville, Utah 84663
Facsimile: (801) 489-8978
(d) if to the Beehive Insurance, to:
302 West 5400 South
Suite 109
Murray, Utah 84107
Facsimile: (801) 685-2899
(e) if to the Parent, to:
1423 Devonshire Drive
Salt Lake City, Utah 84108
Facsimile: (801) ___-____
Copies of any notices should be provided to counsel as follows:
Van Cott, Bagley, Cornwall & McCarthy
50 South Main Street, Suite 1600
Salt Lake City, Utah 84144
Attention: David E. Salisbury, Esq.
Facsimile: (801) 534-0058
7.8 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the Corporations and their respective
successors and assigns.
7.9 Third Party Rights. This Agreement is not intended to confer upon
any other person except the Corporations any rights or remedies hereunder.
7.10 Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. All words used in this Agreement shall be construed to be of
such gender or number as the circumstances require.
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7.11 Entire Agreement. This Agreement, including any certificates and
instruments referred to herein, embody the entire agreement and understanding of
the Corporations in respect of the transactions contemplated by this Agreement.
There are no restrictions, promises, representations, warranties, covenants or
undertakings, other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between the
Corporations with respect to such transactions.
7.12 Expenses. If the Mergers are consummated in accordance with
this Agreement, the Parent shall pay all of the expenses incurred by the
Corporations in connection with transactions contemplated by this Agreement. If
this Agreement is terminated, (a) each Corporation shall pay its pro rata share
(based upon the valuation of each of the Corporations as set forth in the HVA
Appraisals) of the expenses incurred by all of the Corporations in connection
with transactions contemplated by this Agreement, and (b) the officers of each
of the Corporations shall, in good faith, take all of the actions which may be
necessary or advisable to cause such expenses to be paid in accordance with
clause (a) above.
7.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.14 Governing Law. This Agreement shall be governed by the laws of the
State of Utah (regardless of the laws that might otherwise govern under
applicable principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and remedies.
[signature page follows]
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IN WITNESS WHEREOF, this Agreement has been executed by the duly
authorized officers of the Corporations as of January 26, 1998, effective as of
the date first written above.
Acquired
Corporations: W.W. Clyde & Co., a Utah corporation
By: ____________________________
Its: ___________________________
Geneva Rock Products, Inc., a Utah corporation
By:
----------------------------
Its:
---------------------------
Utah Service Inc., a Utah corporation
By:
----------------------------
Its:
---------------------------
Beehive Insurance Agency, Inc., a Utah
corporation
By:
----------------------------
Its:
---------------------------
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Reorganization
Corporations: W.W. Clyde Reorganization
Corporation, a Utah corporation
Geneva Rock Reorganization
Corporation, a Utah corporation
Utah Service Reorganization
Corporation, a Utah corporation
Beehive Insurance Reorganization
Corporation, a Utah corporation
By:
----------------------------
Their:
---------------------------
The Parent: Clyde Companies, Inc.,
a Utah corporation
By:
----------------------------
Its:
---------------------------
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ANNEX B
[STOCK REDEMPTION PLAN]
[BEGINS ON NEXT PAGE]
<PAGE> 232
CLYDE COMPANIES, INC.
STOCK REDEMPTION PLAN
The Board of Directors (the "Board") of Clyde Companies, Inc., a Utah
corporation (the "Company"), has adopted the following stock redemption plan
(this "Plan"), effective as of January 1, 1999:
1. Purposes. Certain shareholders of the Company ("Shareholders")
desire to sell shares of the common stock of Company ("Common Stock") from time
to time. However, there is no public or other ready market for the Common Stock.
Accordingly, the Shareholders have requested that the Company redeem, on an
annual basis, a limited number of shares of Common Stock. The Board has
determined that it is advisable and in the best interests of the Company and the
Shareholders for the Company to redeem shares of Common Stock, each year on a
date established by the Board (the "Redemption Date"), in accordance with the
terms of this Plan (the "Redemption").
2. Valuation of the Common Stock. Each year, as soon as practicable
following the issuance by the Company's auditors of their report regarding the
consolidated financial statements of the Company and its subsidiaries for the
prior year (the "Financial Statements"), the Board shall cause an appraisal (or
an update of a prior appraisal) of the Company (the "Appraisal") to be completed
by an independent individual or firm selected by the Board which shall set forth
a determination of the total fair market value of the Company as of the last day
of the prior year (the "Appraisal Value"). The price to be paid to the
Shareholders for each share of redeemed Common Stock (the "Redemption Price")
shall be an amount equal to the Appraisal Value divided by the number of shares
of Common Stock outstanding on the last day of the prior year, discounted by
twenty-five percent (25%) (reflecting a lack of marketability and minority
interest).
3. Redemption Fund. As soon as practicable following the Appraisal,
the Board shall determine the amount which shall be made available by the
Company on the Redemption Date to fund the Redemption (the "Redemption Fund").
Notwithstanding any other provision of this Plan to the contrary, the Redemption
Fund shall be an amount which is greater than or equal to Five Percent (5%) and
less than or equal to Ten Percent (10%) of the net earnings of the Company
(after taxes) as recorded in the Financial Statements. Any amount of the
Redemption Fund remaining after the Redemption Date shall be reallocated for the
purposes determined by the Board.
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4. Redemption Procedures. Each year, as soon as practicable after
the determination of the amount of the Redemption Fund, the following shall
occur:
(a) The Company shall mail to each record Shareholder (i) a
form of letter of transmittal (the "Transmittal Letter") advising such
Shareholder of his or her right to redeem shares of Common Stock and specifying
(A) the Appraisal Value, (B) the Redemption Price, (C) the Redemption Date, and
(D) the instructions necessary for the Shareholders to participate in and
complete the Redemption, (ii) the Financial Statements, (iii) a copy of the
Appraisal (or a summary thereof), and (iv) such other information as shall be
required by applicable law.
(b) The Shareholders who desire to participate in the
Redemption (each a "Selling Shareholder") shall comply with all of the
requirements set forth in the Transmittal Letter and shall surrender
certificates evidencing shares of Common Stock to be redeemed to the Company. If
less than all of the shares represented by any certificate evidencing shares of
Common Stock are to be redeemed, as soon as practicable following the Redemption
Date, the Company shall issue a new certificate to the Selling Shareholder for
the appropriate number of shares of Common Stock.
(c) If the number of shares of Common Stock offered for
Redemption by the Selling Shareholders is greater than the number of shares
which may be redeemed by the Company (given the amount of the Redemption Fund
and the Redemption Price), the Company shall spend the entire amount of the
Redemption Fund and shares of Common Stock shall be redeemed from each Selling
Shareholder on a pro rata basis.
(d) If the number of shares of Common Stock offered for
Redemption by the Selling Shareholders is less than the number of shares which
may be redeemed by the Company (given the amount of the Redemption Fund and the
Redemption Price), the Company shall spend such amount of the Redemption Fund as
is necessary to redeem all of the shares of Common Stock offered for Redemption
and the remaining amounts shall be treated as set forth in paragraph 3 above.
(e) In accordance with applicable law and the Transmittal
Letter, the Company shall pay to each Selling Shareholder an amount in cash
equal to the Redemption Price multiplied by the number of shares of Common Stock
redeemed from such Selling Shareholder pursuant to this Plan.
(f) Upon Redemption, all shares of Common Stock redeemed
shall be authorized and unissued shares of the Company and any certificates
representing such shares of Common Stock shall be canceled.
5. Eligible Shares. All shares of Common Stock shall be eligible
for redemption subject to and in accordance with the terms of this Plan.
6. Administration. This Plan shall be administered and interpreted
by the Board in its sole and absolute discretion. This Plan may be repealed,
amended, modified, supplemented or changed, or the Redemption for any particular
year may be canceled, only after the approval of such action by a seventy-five
percent (75%) majority of the Board.
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ANNEX C
A M E N D E D A N D R E S T A T E D
B Y L A W S
OF
CLYDE COMPANIES, INC.
A UTAH CORPORATION
1997
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TABLE OF CONTENTS
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ARTICLE 1. OFFICES
Section 1.1. Business Offices.......................................................1
Section 1.2. Registered Office......................................................1
ARTICLE 2. SHAREHOLDERS
Section 2.1. Annual Shareholder Meeting.............................................1
Section 2.2. Special Shareholder Meetings...........................................1
Section 2.3. Place of Shareholder Meetings..........................................2
Section 2.4. Notice of Shareholder Meeting..........................................2
Section 2.5. Fixing of Record Date..................................................4
Section 2.6. Shareholder List.......................................................5
Section 2.7. Shareholder Quorum and Voting Requirements.............................5
Section 2.8. Proxies................................................................6
Section 2.9. Voting of Shares.......................................................6
Section 2.10. Corporation's Acceptance of Votes.....................................7
Section 2.11. Informal Action by Shareholders.......................................9
Section 2.12. Waiver of Notice.....................................................10
Section 2.13. Voting for Directors.................................................10
Section 2.14. Rights of Shareholders to Inspect Corporate Records..................10
Section 2.15. Furnishing Financial Statements to a Shareholder.....................12
Section 2.16. Information Respecting Shares........................................12
ARTICLE 3. BOARD OF DIRECTORS
Section 3.1. General Powers........................................................13
Section 3.2. Number, Tenure and Qualifications of Directors........................13
Section 3.3. Regular Meetings of the Board of Directors............................14
Section 3.4. Special Meetings of the Board of Directors............................14
Section 3.5. Notice and Waiver of Notice of Special Director Meetings..............14
Section 3.6. Quorum of Directors...................................................15
Section 3.7. Manner of Acting......................................................15
Section 3.8. Director Action By Written Consent....................................16
Section 3.9. Resignation of Directors..............................................16
Section 3.10. Removal of Directors.................................................16
Section 3.11. Board of Director Vacancies..........................................17
Section 3.12. Director Compensation................................................17
Section 3.13. Director Committees..................................................18
Section 3.14. Director's Rights to Inspect Corporate Records.......................18
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ARTICLE 4. EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 4.1. Creation of Committees................................................19
Section 4.2. Approval of Committees and Members....................................20
Section 4.3. Required Procedures...................................................20
Section 4.4. Authority.............................................................20
Section 4.5. Authority of Executive Committee......................................20
Section 4.6. Compensation..........................................................20
ARTICLE 5. OFFICERS
Section 5.1. Officers..............................................................21
Section 5.2. Appointment and Term of Office........................................21
Section 5.3. Resignation of Officers...............................................21
Section 5.4. Removal of Officers...................................................21
Section 5.5. The Chairman of the Board.............................................22
Section 5.6. The Vice Chairman.....................................................22
Section 5.7. Chief Executive Officer...............................................22
Section 5.8. President.............................................................23
Section 5.9. Vice Presidents.......................................................23
Section 5.10. Secretary............................................................24
Section 5.11. Treasurer............................................................24
Section 5.12. Assistant Secretaries and Assistant Treasurers.......................25
Section 5.13. General Manager......................................................25
Section 5.14. Salaries.............................................................26
Section 5.15. Surety Bonds.........................................................26
ARTICLE 6. LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 6.1. Limitation of Liability of Directors..................................26
Section 6.2. Indemnification of Directors..........................................27
Section 6.3. Advance Payment of Expenses...........................................28
Section 6.4. Indemnification of Officers, Employees, Fiduciaries, and Agents.......28
Section 6.5. Insurance.............................................................28
ARTICLE 7. EXECUTION OF INSTRUMENTS, BORROWING OF MONEY
Section 7.1. Execution of Instruments..............................................29
Section 7.2. Loans.................................................................29
Section 7.3. Deposits..............................................................29
Section 7.4. Checks, Drafts, etc...................................................30
Section 7.5. Bonds and Debentures..................................................30
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Section 7.6. Sale, Transfer, etc. of Securities....................................30
Section 7.7. Proxies...............................................................30
ARTICLE 8. CERTIFICATES FOR SHARES AND
Section 8.1. Certificates for Shares...............................................31
Section 8.2. Shares Without Certificates...........................................32
Section 8.3. Registration of Transfer of Shares....................................32
Section 8.4. Transfer Agents and Registrars........................................32
Section 8.5. Restrictions on Transfer of Shares Permitted..........................33
Section 8.6. Acquisition of Shares.................................................34
Section 8.7. Lost or Destroyed Certificates........................................34
ARTICLE 9. DISTRIBUTIONS
Section 9.1. Distributions.........................................................35
ARTICLE 10. CORPORATE SEAL
Section 10.1. Corporate Seal.......................................................35
ARTICLE 11. FISCAL YEAR
Section 11.1. Fiscal Year..........................................................35
ARTICLE 12. AMENDMENTS
Section 12.1. Amendments...........................................................35
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AMENDED AND RESTATED
BYLAWS
OF
CLYDE COMPANIES, INC.
ARTICLE 1. OFFICES
Section 1.1. Business Offices. The principal office of Clyde
Companies, Inc. (the "Corporation") shall be located at any place either within
or outside the State of Utah, as designated in the Corporation's Articles of
Incorporation or the Corporation's most recent annual report on file with the
Utah Department of Commerce, Division of Corporations and Commercial Code (the
"Division") providing such information. The Corporation may have such other
offices, either within or outside the State of Utah as the Board of Directors
may designate or as the business of the Corporation may require from time to
time. The Corporation shall maintain at its principal office a copy of those
records specified in Section 2.14 of Article II of these Bylaws.
(16-10a-102(24))*
Section 1.2. Registered Office. The registered office of the
Corporation required by the Utah Revised Business Corporation Act shall be
located within the State of Utah. The address of the registered office may be
changed from time to time. (16-10a-501 and 16-10a-502)
ARTICLE 2. SHAREHOLDERS
Section 2.1. Annual Shareholder Meeting. An annual meeting of the
shareholders shall be held each year on the date, at the time and at the place,
fixed by the Board of Directors. The annual meeting shall be held for the
purpose of electing directors and for the transaction of such other business as
may come before the meeting. (16-10a-701)
Section 2.2. Special Shareholder Meetings. Special meetings of
the shareholders may be called, for any purposes described in the notice of the
meeting, by the
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* Citations in parentheses are to Utah Code Annotated. These citations are
for reference only and shall not constitute a part of these bylaws.
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President, or by the Board of Directors and shall be called by the President at
the request of the holder(s) of not less than one-tenth of all outstanding votes
of the Corporation entitled to be cast on any issue at the meeting. (16-10a-702)
Section 2.3. Place of Shareholder Meetings. The Board of
Directors may designate any place, either within or outside the State of Utah,
as the place for any annual meeting of the shareholders. The President, the
Board of Directors or the shareholder(s) authorized by these Bylaws to request a
meeting, as the case may be, may designate any place, either within or outside
the State of Utah, as the place for any special meeting of the shareholders
called by such person or group. If no designation is made regarding the place of
the meeting, the meeting shall be held at the principal office of the
Corporation. (16-10a-701(2) and 16-10a-702(3))
Section 2.4. Notice of Shareholder Meeting.
(a) Required Notice. Written notice stating the place, day and
hour of any annual or special shareholder meeting shall be delivered not less
than ten (10) nor more than sixty (60) days before the date of the meeting,
either personally or by mail, by or at the direction of the person or group
calling the meeting, to each shareholder of record entitled to vote at such
meeting, and to any other shareholder entitled by the Utah Revised Business
Corporation Act or the Corporation's Articles of Incorporation to receive notice
of the meeting. Notice shall be deemed to be effective when mailed.
(b) Notice Not Required. Notice shall not be required to be given
to any shareholder to whom:
(1) A notice of two consecutive annual meetings, and all
notices of meetings or of the taking of action by written consent
without a meeting during the period between the two consecutive
annual meetings, have been mailed, addressed to the shareholder
at the shareholder's address as shown on the records of the
Corporation and have been returned undeliverable; or
(2) at least two payments, if sent by first class mail, of
dividends or interest on securities during a twelve month period,
have been mailed, addressed to the shareholder at the
shareholder's address as shown on the records of the Corporation,
and have been returned undeliverable.
If a shareholder to whom notice is not required to be given
delivers to the Corporation a written notice setting forth the shareholder's
current address, or if another address
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for the shareholder is otherwise made known to the Corporation, the requirement
that notice be given to the shareholder is reinstated. (16-10a-103 and
16-10a-705)
(c) Adjourned Meeting. If any shareholder meeting is adjourned to
a different date, time or place, notice need not be given of the new date, time
or place, if the new date, time or place is announced at the meeting before
adjournment. However, if the adjournment is for more than thirty (30) days, or
if after the adjournment a new record date for the adjourned meeting is or must
be fixed (see Section 2.5 of these Bylaws), then notice must be given pursuant
to the requirements of paragraph (a) of this Section 2.4 to shareholders of
record who are entitled to vote at the meeting. (16-10a-705(4))
(d) Contents of Notice. Notice of any special meeting of the
shareholders shall include a description of the purpose or purposes for which
the meeting is called. Except as provided in this paragraph (d) of Section 2.4,
in the Articles of Incorporation or in the Utah Revised Business Corporation
Act, notice of an annual meeting of the shareholders need not include a
description of the purpose or purposes for which the meeting is called.
(16-10a-705(2), (3))
(e) Waiver of Notice of Meeting. Any shareholder may waive notice
of a meeting by a writing signed by the shareholder which is delivered to the
Corporation (either before or after the date and time stated in the notice as
the date or time when any action will occur or has occurred) for inclusion in
the minutes or filing with the Corporation's records. (16-10a-706)
(f) Effect of Attendance at Meeting. A shareholder's attendance
at a meeting:
(1) Waives objection to lack of notice or defective notice
of the meeting, unless the shareholder at the beginning of the
meeting objects to holding the meeting or transacting business at
the meeting; and
(2) waives objection to consideration of a particular
matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the shareholder objects
to considering the matter when it is presented. (16-10a-706)
Section 2.5. Fixing of Record Date. For the purpose of
determining the shareholders of any voting group entitled to notice of or to
vote at any meeting of the shareholders, or the shareholders entitled to take
action without a meeting or to demand a special meeting, or the shareholders
entitled to receive payment of any distribution or dividend, or in order to make
a determination of the shareholders for any other proper purpose, the Board of
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Directors may fix in advance a date as the record date. Such record date shall
not be more than seventy (70) days prior to the date on which the particular
action, requiring such determination of the shareholders, is to be taken. If no
record date is so fixed by the Board of Directors, the record date shall be at
the close of business on the following dates:
(a) Annual and Special Meetings. With respect to an annual
meeting of the shareholders or any special meeting of the shareholders called by
the President, the Board of Directors or the shareholder(s) authorized by these
Bylaws to request a meeting, the day before the first notice is delivered to
shareholders. (16-10a-707(2))
(b) Meeting Demanded by Shareholders. With respect to a special
shareholder meeting demanded by the shareholders pursuant to the Utah Revised
Business Corporation Act, the earliest date of any of the demands pursuant to
which the meeting is called, or sixty (60) days prior to the date the first of
the written demands is received by the Corporation, whichever is later.
(16-10a-702(1)(b), (2))
(c) Action Without a Meeting. With respect to actions taken in
writing without a meeting (pursuant to Section 2.11 of these Bylaws), the date
the first shareholder delivers to the Corporation a signed written consent upon
which the action is taken.
(16-10a-704(6))
(d) Distributions. With respect to a distribution to the
shareholders (other than one involving a repurchase or reacquisition of shares),
the date the Board of Directors authorizes the distribution. (16-10a-640(2))
(e) Share Dividend. With respect to the payment of a share
dividend, the date the Board of Directors authorizes the share dividend.
(16-10a-623(3))
When a determination of the shareholders entitled to vote at any
meeting of the shareholders has been made as provided in this Section 2.5, such
determination shall apply to any adjournment thereof unless the Board of
Directors fixes a new record date, which it must do if the meeting is adjourned
to a date more than one hundred twenty (120) days after the date fixed for the
original meeting. (16-10a-707)
Section 2.6. Shareholder List. The Secretary shall make a
complete record of the shareholders entitled to vote at each meeting of
shareholders, arranged in alphabetical order within each class or series, with
the address of and the number of shares held by each. If voting groups exist
(see Section 2.7 of these Bylaws), the list must be arranged by voting group,
and within each voting group by class or series of shares. The shareholder list
must be available for inspection by any shareholder, beginning on the earlier of
ten (10) days before the meeting for
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which the list was prepared or two (2) business days after notice of the meeting
is given and continuing through the meeting and any adjournments. The list shall
be available at the Corporation's principal office or at a place identified in
the notice of the meeting in the city where the meeting is to be held. A
shareholder, his agent or attorney is entitled on written demand to inspect and,
subject to the requirements of Section 2.14 of these Bylaws, to inspect and copy
the list during regular business hours and during the period it is available for
inspection. The Corporation shall maintain the shareholder list in written form
or in another form capable of conversion into written form within a reasonable
time. (16-10a-720)
Section 2.7. Shareholder Quorum and Voting Requirements.
(a) Quorum. Unless the Articles of Incorporation, a Bylaw adopted
by the shareholders pursuant to the Utah Revised Business Corporation Act or the
Utah Revised Business Corporation Act provides otherwise, a majority of the
votes entitled to be cast on the matter by the voting group constitutes a quorum
of that voting group for action on that matter. (16-10a-725(1))
(b) Approval of Actions. If a quorum exists, action on a matter
(other than the election of directors) by a voting group is approved if the
votes cast within the voting group favoring the action exceed the votes cast
opposing the action, unless the Articles of Incorporation, a Bylaw adopted by
the shareholders pursuant to the Utah Revised Business Corporation Act or the
Utah Revised Business Corporation Act requires a greater number of affirmative
votes. (16-10a-725(3))
(c) Single Voting Group. If the Articles of Incorporation or the
Utah Revised Business Corporation Act provides for voting by a single voting
group on a matter, action on that matter is taken when approved by that voting
group.
(16-10-726(1))
(d) Voting Groups. Shares entitled to vote as a separate voting
group may take action on a matter at a meeting only if a quorum of those shares
exists with respect to that matter. (16-10a-725(1)) If the Articles of
Incorporation or the Utah Revised Business Corporation Act provides for voting
by two or more voting groups on a matter, action on that matter is taken only
when approved by each of those voting groups counted separately. One voting
group may vote on a matter even though another voting group entitled to vote on
the matter has not voted. (16-10a-726(2))
(e) Effect of Representation. Once a share is represented for any
purpose at a meeting, including the purpose of determining that a quorum exists,
it is deemed present for
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quorum purposes for the remainder of the meeting and for any adjournment of that
meeting, unless a new record date is or must be set for that adjourned meeting.
(16-10a-725(2))
Section 2.8. Proxies. At all meetings of the shareholders, a
shareholder may vote in person or by a proxy executed in any lawful manner. Such
proxy shall be filed with the Corporation before or at the time of the meeting.
No proxy shall be valid after eleven months from the date of its execution
unless otherwise provided in the proxy.
(16-10a-722)
Section 2.9. Voting of Shares.
(a) Votes per Share. Unless otherwise provided in the Articles of
Incorporation, each outstanding share entitled to vote shall be entitled to one
vote, and each fractional share shall be entitled to a corresponding fractional
vote, upon each matter submitted to a vote at a meeting of shareholders.
(16-10a-721(1))
(b) Restriction on Shares Held by Controlled Corporation. Except
as provided by specific court order, no shares of the Corporation held by
another corporation, if a majority of the shares entitled to vote for the
election of directors of such other corporation are held by the Corporation,
shall be voted at any meeting of the Corporation or counted in determining the
total number of outstanding shares at any given time for purposes of any
meeting. However, the power of the Corporation to vote any shares, including its
own shares, held by it in a fiduciary capacity is not hereby limited.
(16-10a-721(2), (3))
(c) Redeemable Shares. Redeemable shares are not entitled to be
voted after notice of redemption is mailed to the holders thereof and a sum
sufficient to redeem the shares has been deposited with a bank, trust company or
other financial institution under an irrevocable obligation to pay the holders
the redemption price on surrender of the shares. (16-10a-721(4))
Section 2.10. Corporation's Acceptance of Votes.
(a) Corresponding Name. If the name signed on a vote, consent,
waiver, proxy appointment or proxy appointment revocation corresponds to the
name of a shareholder, the Corporation, if acting in good faith, is entitled to
accept the vote, consent, waiver, proxy appointment or proxy appointment
revocation and give it effect as the act of the shareholder. (16-10a-724(1))
(b) Name does not Correspond. If the name signed on a vote,
consent, waiver, proxy appointment or proxy appointment revocation does not
correspond to the name of a shareholder, the Corporation, if acting in good
faith, is nevertheless entitled to accept the vote,
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consent, waiver, proxy appointment or proxy appointment revocation and give it
effect as the act of the shareholder if:
(1) The shareholder is an entity as defined in the Utah
Revised Business Corporation Act and the name signed purports to
be that of an officer or agent of the entity;
(2) the name signed purports to be that of an
administrator, executor, guardian or conservator representing the
shareholder and, if the Corporation requests, evidence of
fiduciary status acceptable to the Corporation has been presented
with respect to the vote, consent, waiver, proxy appointment or
proxy appointment revocation;
(3) the name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the Corporation
requests, evidence of this status acceptable to the Corporation
has been presented with respect to the vote, consent, waiver,
proxy appointment or proxy appointment revocation;
(4) the name signed purports to be that of a pledgee,
beneficial owner or attorney-in-fact of the shareholder and, if
the Corporation requests, evidence acceptable to the Corporation
of the signatory's authority to sign for the shareholder has been
presented with respect to the vote, consent, waiver, proxy
appointment or proxy appointment revocation;
(5) two or more persons are the shareholder as cotenants
or fiduciaries and the name signed purports to be the name of at
least one of the cotenants or fiduciaries and the person signing
appears to be acting on behalf of all the cotenants or
fiduciaries; or
(6) the acceptance of the vote, consent, waiver, proxy
appointment or proxy appointment revocation is otherwise proper
under rules established by the Corporation that are not
inconsistent with the provisions of this Section 2.10.
(16-10a-724(2))
(c) Shares owned by Two or More Persons. If shares of the
Corporation are registered in the names of two or more persons, or if two or
more persons have the same fiduciary relationship respecting the same shares,
unless the Secretary is given written notice to the contrary and furnished with
a copy of the instrument creating the relationship, their acts with respect to
voting shall have the following effect:
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(1) If only one votes, the act binds all;
(2) if more than one vote, the act of the majority so
voting binds all;
(3) if more than one vote, but the vote is evenly split on
any particular matter, each faction may vote the securities in
question proportionately; and
(4) if the instrument so filed or the registration of the
shares shows that any tenancy is held in unequal interests, a
majority or even split for the purpose of this Section 2.10 shall
be a majority or even split in interest. (16-10a-724(3))
(d) Rejection. The Corporation is entitled to reject a vote,
consent, waiver, proxy appointment or proxy appointment revocation if the
Secretary or other officer or agent authorized to tabulate votes, acting in good
faith, has reasonable basis for doubt about the validity of the signature on it
or about the signatory's authority to sign for the shareholder. (16-10a-724(4))
(e) No Liability. The Corporation and its officer or agent who
accepts or rejects a vote, consent, waiver, proxy appointment or proxy
appointment revocation in good faith and in accordance with the standards of
this Section 2.10 are not liable in damages to the shareholder for the
consequences of the acceptance or rejection. (16-10a-724(5))
(f) Validity. Corporate action based on the acceptance or
rejection of a vote, consent, waiver, proxy appointment or proxy appointment
revocation under this Section 2.10 is valid unless a court of competent
jurisdiction determines otherwise. (16-10a-724(6))
Section 2.11. Informal Action by Shareholders.
(a) Written Consent. Unless otherwise provided in the Articles of
Incorporation, any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice if one or
more consents in writing, setting forth the action so taken, are signed by all
of the shareholders entitled to vote on the matter. (16-10a-704)
(b) Revocation. Any shareholder giving a written consent, or the
shareholders' proxyholder, or a transferee of the shares or a personal
representative of the shareholder or their respective proxyholder, may revoke
the consent by a signed writing describing the action and stating that the
shareholder's prior consent is revoked, if the writing is received by the
Corporation prior to the effectiveness of the action. (16-10a-704(3))
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(c) Effective Date. Action taken pursuant to this Section 2.11 is
not effective unless all written consents on which the Corporation relies for
the taking of action are received by the Corporation within a sixty (60) day
period and are not revoked. Action thus taken is effective as of the date the
last written consent necessary to effect the action is received by the
Corporation; provided, however, that the effective date of the action may be any
date that is specified in all the written consents as the effective date of the
action. The writing may be received by the Corporation by electronically
transmitted facsimile or other form of communication providing the Corporation
with a complete copy thereof, including a copy of the signature. (16-10a-704(4))
(d) Effect of Action Without a Meeting. Action taken under this
Section 2.11 has the same effect as action taken at a meeting of shareholders
and may be so described in any document. (16-10a-704(7))
Section 2.12. Waiver of Notice. A shareholder may waive any
notice required by the Utah Revised Business Corporation Act, the Corporation's
Articles of Incorporation or these Bylaws. Such a waiver may be made before or
after the date and time stated in the notice as the date or time when any action
will occur or has occurred. Such a waiver must be in a writing signed by the
shareholder and must be delivered to the Corporation for inclusion in the
minutes of the relevant meeting of the shareholders or in the Corporation's
records. (16-10a-706(1))
Section 2.13. Voting for Directors. At each election of
directors, unless otherwise provided in the Articles of Incorporation or the
Utah Revised Business Corporation Act, every shareholder entitled to vote at the
election has the right to vote, in person or by proxy, all of the votes to which
the shareholder's shares are entitled for as many persons as there are directors
to be elected and for whose election the shareholder has the right to vote.
Unless otherwise provided in the Articles of Incorporation or the Utah Revised
Business Corporation Act, directors are elected by a plurality of the votes cast
by the shares entitled to be voted in the election, at a meeting at which a
quorum is present. (16-10a-728(1), (2))
Section 2.14. Rights of Shareholders to Inspect Corporate
Records.
(a) Minutes and Accounting Records. The Corporation shall keep,
as permanent records, minutes of all meetings of its shareholders and Board of
Directors, a record of all actions taken by its shareholders or Board of
Directors without a meeting, a record of all actions taken on behalf of the
Corporation by a committee of the Board of Directors in place of the Board of
Directors, and a record of all waivers of notices of meetings of its
shareholders,
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meetings of the Board of Directors, or any meetings of committees of the Board
of Directors. The Corporation shall maintain appropriate accounting records.
(16-10a-1601(1), (2))
(b) Absolute Inspection Rights. If a shareholder gives the
Corporation written notice of the shareholder's demand at least five (5)
business days before the date on which the shareholder wishes to inspect and
copy, a shareholder (or the shareholder's agent or attorney) has the right to
inspect and copy, during regular business hours, any of the following records,
all of which the Corporation is required to keep at its principal office:
(1) The Corporation's Articles of Incorporation
currently in effect;
(2) the Corporation's Bylaws currently in effect;
(3) the minutes of all shareholders' meetings, and records
of all action taken by shareholders without a meeting, for the
past three years;
(4) all written communications within the past three years
to shareholders as a group or to the holders of any class or
series of shares as a group;
(5) a list of the names and business addresses of the
Corporation's current officers and directors;
(6) the Corporation's most recent annual report delivered
to the Division; and
(7) all financial statements prepared for periods ending
during the last three years that a shareholder could request
pursuant to Section 16-10a-1605 of the Utah Revised Business
Corporation Act. (16-10a-1601(5) and 16-10a-1602(1))
(c) Conditional Inspection Rights. If a shareholder gives the
Corporation a written demand made in good faith and for a proper purpose at
least five business days before the date on which the shareholder wishes to
inspect and copy, the shareholder describes with reasonable particularity the
shareholder's purpose and the records the shareholder desires to inspect, and
the records are directly connected with the shareholder's purpose, the
shareholder (or the shareholder's agent or attorney) is entitled to inspect and
copy, during regular business hours at a reasonable location specified by the
Corporation, any of the following records of the Corporation:
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(1) Excerpts from:
(i) Minutes of any meeting of the Board of
Directors, records of any action of a committee of the
Board of Directors while acting on behalf of the
Corporation in place of the Board of Directors;
(ii) minutes of any meeting of the shareholders;
(iii)records of action taken by the shareholders
without a meeting; and
(iv) waivers of notices of any meeting of the
shareholders, of any meeting of the Board of Directors, or
of any meeting of a committee of the Board of Directors;
(2) accounting records of the Corporation; and
(3) the record of the Corporation's shareholders referred
to in Section 16-10a-1601(3) of the Utah Revised Business
Corporation Act. (16-10a-1602(2))
(d) Copy Costs. The right to copy records includes, if
reasonable, the right to receive copies made by photographic, xerographic or
other means. The Corporation may impose a reasonable charge, payable in advance,
covering the costs of labor and material, for copies of any documents provided
to a shareholder. The charge may not exceed the estimated cost of production or
reproduction of the records. (16-10a-1603)
(e) Shareholder Includes Beneficial Owner. For purposes of this
Section 2.14, the term "shareholder" shall include a beneficial owner whose
shares are held in a voting trust and any other beneficial owner who establishes
beneficial ownership.
(16-10a-1602(4)(b))
Section 2.15. Furnishing Financial Statements to a Shareholder.
Upon the written request of any shareholder, the Corporation shall mail to the
shareholder its most recent annual or quarterly financial statements showing in
reasonable detail its assets and liabilities and the results of its operations.
(16-10a-1605)
Section 2.16. Information Respecting Shares. Upon the written
request of any shareholder, the Corporation, at its own expense, shall mail to
the shareholder information respecting the designations, preferences,
limitations and relative rights applicable to each class of shares, the
variations determined for each series, and the authority of the Board of
Directors to determine variations for any existing or future class or series.
The Corporation may comply by
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mailing the shareholder a copy of its Articles of Incorporation containing such
information. (16-10a-1606)
ARTICLE 3. BOARD OF DIRECTORS
Section 3.1. General Powers. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
Corporation shall be managed under the direction of, the Board of Directors,
subject to any limitation set forth in the Articles of Incorporation or in any
agreement authorized by Section 16-10a-732 of the Utah Revised Business
Corporation Act. (16-10a-801)
Section 3.2. Number, Tenure and Qualifications of Directors.
(a) Number. The number of directors of the Corporation shall be
not less than eight (8) nor more than eleven (11). The number of directors may
be fixed or changed within the range specified in this Section 3.2 by the
shareholders or the Board of Directors, but no decrease may shorten the term of
any incumbent director. (16-10a-803(1), (2))
(b) Tenure. Each director shall hold office until the next annual
meeting of shareholders or until removed. However, if a director's term expires,
the director shall continue to serve until the director's successor shall have
been elected and qualified, or until there is a decrease in the number of
directors. (16-10a-805)
(c) Qualifications. Directors need not be residents of the State
of Utah or shareholders of the Corporation unless the Articles of Incorporation
so prescribe. (16-10a-802) Directors shall have the following qualifications:
(i) For a period of five (5) years after the date these
Amended and Restated Bylaws are adopted (but not thereafter), (A) six (6) of the
directors shall be direct descendants (or the spouse of a direct descendant) of
W.W. Clyde, and (B) two (2) of the directors shall be direct descendants (or the
spouse of a direct descendant) of Edward Clyde.
(ii) No person over seventy-five (75) years old shall be
elected or appointed a director of the Corporation; provided, however, that any
director elected within sixty (60) days after the adoption of these Amended and
Restated Bylaws shall be qualified to be a director during the period five (5)
years after the date of the adoption of these Amended and Restated Bylaws
(without regard to such person's age).
Section 3.3. Regular Meetings of the Board of Directors. A
regular meeting of the Board of Directors shall be held without other notice
than provided by this Section 3.3
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immediately after, and at the same place as, the annual meeting of shareholders.
The Board of Directors may provide, by resolution, the time and place for the
holding of additional regular meetings without other notice than such
resolution.
Section 3.4. Special Meetings of the Board of Directors. Special
meetings of the Board of Directors may be called by or at the request of the
President, a Vice President or any two (2) directors, who may fix any place,
either within or outside the State of Utah, as the place for holding the
meeting.
Section 3.5. Notice and Waiver of Notice of Special Director
Meetings.
(a) Notice. Unless the Articles of Incorporation provide for a
longer or shorter period, special meetings of the Board of Directors must be
preceded by at least two (2) days notice of the date, time and place of the
meeting. (16-10a-822(2)) Notice may be communicated in person, by telephone, by
any form of electronic communication, or by mail or private carrier.
(16-10a-103(2)) At the written request of any director, notice of any special
meeting of the Board of Directors shall be given to such director by facsimile
or telex, as the case may be, at the number designated in writing by such
director from time to time.
(b) Effective Date. Notice of any meeting of the Board of
Directors shall be deemed to be effective at the earliest of the following: (1)
when received; (2) five (5) days after it is mailed; or (3) the date shown on
the return receipt if sent by registered or certified mail, return receipt
requested, and the receipt is signed by or on behalf of the director.
(16-10a-103(5)).
(c) Waiver of Notice. A director may waive notice of any meeting.
Except as provided in this Section 3.5, the waiver must be in writing and signed
by the director entitled to the notice. The waiver shall be delivered to the
Corporation for filing with the corporate records, but delivery and filing are
not conditions to its effectiveness.
(16-10a-823(1))
(d) Effect of Attendance. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except when a
director attends a meeting for the express purpose of objecting to the
transaction of any business and at the beginning of the meeting, or promptly
upon arrival, the director objects to holding the meeting or transacting
business at the meeting because of lack of notice or defective notice, and does
not thereafter vote for or assent to action taken at the meeting.
(16-10a-823(2))
Section 3.6. Quorum of Directors. A majority of the number of
directors prescribed by resolution (or if no number is prescribed, the number in
office immediately before the meeting begins) shall constitute a quorum for the
transaction of business at any meeting of
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the Board of Directors, unless the Articles of Incorporation require a greater
number. (16-10a-824(1)(b))
Section 3.7. Manner of Acting.
(a) Action by Majority. If a quorum is present when a vote is
taken, the affirmative vote of a majority of directors present is the act of the
Board of Directors, unless the Corporation's Articles of Incorporation or the
Utah Revised Business Corporation Act requires the vote of a greater number of
directors. (16-10a-824(3))
(b) Telephonic Meetings. Unless the Articles of Incorporation
provide otherwise, any or all directors may participate in a regular or special
meeting by, or conduct the meeting through the use of, any means of
communication by which all directors participating may simultaneously hear each
other during the meeting. A director participating in a meeting by this means is
deemed to be present in person at the meeting.
(16-10a-820(2))
(c) Effect of Presence at Meeting. A director who is present at a
meeting of the Board of Directors when corporate action is taken is considered
to have assented to the action taken, unless:
(1) The director objects at the beginning of the meeting,
or promptly upon arrival, to holding it or transacting business
at the meeting;
(2) the director contemporaneously requests his dissent or
abstention as to any specific action to be entered into the
minutes of the meeting; or
(3) the director causes written notice of a dissent or
abstention as to any specific action to be received by the
presiding officer of the meeting before its adjournment or by the
Corporation promptly after adjournment of the meeting.
(16-10a-824(4))
(d) Right of Dissent or Abstention. The right of dissent or
abstention as to a specific action is not available to a director who votes in
favor of the action taken. (16-10a-824(5))
Section 3.8. Director Action By Written Consent. Unless the
Articles of Incorporation or the Utah Revised Business Corporation Act provide
otherwise, any action required or permitted to be taken by the Board of
Directors at a meeting may be taken without a meeting if all the directors
consent to the action in writing. Action is taken by written consent at the time
the last director signs a writing describing the action taken, unless, prior to
that time,
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any director has revoked a consent by a writing signed by the director and
received by the Secretary. Action taken by written consent is effective when the
last director signs the consent, unless the Board of Directors establishes a
different effective date. Action taken by written consent has the same effect as
action taken at a meeting of directors and may be described as such in any
document. (16-10a-821)
Section 3.9. Resignation of Directors. A director may resign at
any time by giving a written notice of resignation to the Corporation. A
resignation of a director is effective when the notice is received by the
Corporation unless the notice specifies a later effective date. A director who
resigns may deliver a statement of his resignation pursuant to Section
16-10a-1608 of the Utah Revised Business Corporation Act to the Division for
filing. (16-10a-807)
Section 3.10. Removal of Directors. The shareholders may remove
one or more directors at a meeting called for that purpose if notice has been
given that a purpose of the meeting is such removal. The removal may be with or
without cause, unless the Articles of Incorporation provide that directors may
only be removed with cause. If a director is elected by a voting group of
shareholders, only the shareholders of that voting group may participate in the
vote to remove the director. If cumulative voting is in effect, a director may
not be removed if the number of votes sufficient to elect the director under
cumulative voting is voted against the director's removal. If cumulative voting
is not in effect, a director may be removed only if the number of votes cast to
remove the director exceeds the number of votes cast against removal of the
director. (16-10a-808)
Section 3.11. Board of Director Vacancies.
(a) Vacancies. Unless the Articles of Incorporation provide
otherwise, if a vacancy occurs on the Board of Directors, including a vacancy
resulting from an increase in the number of directors:
(1) The shareholders may fill the vacancy;
(2) the Board of Directors may fill the vacancy; or
(3) if the directors remaining in office constitute fewer
than a quorum of the board, they may fill the vacancy by the
affirmative vote of a majority of all the directors remaining in
office. (16-10a-810(1))
(b) Rights of Voting Groups. Unless the Articles of Incorporation
provide otherwise, if the vacant office was held by a director elected by a
voting group of shareholders:
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(1) If one or more directors were elected by the same
voting group, only they are entitled to vote to fill the vacancy
if it is filled by the directors; and
(2) only the holders of shares of that voting group are
entitled to vote to fill the vacancy if it is filled by the
shareholders. (16-10a-810(2))
(c) Election of Director Prior to Vacancy. A vacancy that will
occur at a specific later date, because of a resignation effective at a later
date, may be filled before the vacancy occurs, but the new director may not take
office until the vacancy occurs. (16-10a-810(3))
(d) Effect of Expiration of Term. If a director's term expires,
the director shall continue to serve until the director's successor is elected
and qualified or until there is a decrease in the number of directors. The term
of a director elected to fill a vacancy expires at the next shareholders'
meeting at which directors are elected.
(16-10a-805(5))
Section 3.12. Director Compensation. Unless otherwise provided in
the Articles of Incorporation, by resolution of the Board of Directors, each
director may be paid his expenses, if any, of attendance at each meeting of the
Board of Directors, and may be paid a stated salary as a director or a fixed sum
for attendance at each meeting of the Board of Directors or both. No such
payment shall preclude any director from serving the Corporation in any capacity
and receiving compensation therefor.
Section 3.13. Director Committees. Committees of the Board of
Directors may be established in accordance with Article 4 of these Bylaws.
Section 3.14. Director's Rights to Inspect Corporate Records.
(a) Absolute Inspection Rights. If a director gives the
Corporation written notice of the director's demand at least five (5) business
days before the date on which the director wishes to inspect and copy, the
director (or the director's agent or attorney) has the right to inspect and
copy, during regular business hours, any of the following records, all of which
the Corporation is required to keep at its principal office:
(1) The Corporation's Articles of Incorporation
currently in effect;
(2) the Corporation's Bylaws currently in effect;
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(3) the minutes of all shareholders' meetings, and records
of all action taken by shareholders without a meeting, for the
past three years;
(4) all written communications within the past three years
to shareholders as a group or to the holders of any class or
series of shares as a group;
(5) a list of the names and business addresses of the
Corporation's current officers and directors;
(6) the Corporation's most recent annual report delivered
to the Division; and
(7) all financial statements prepared for periods ending
during the last three years that a shareholder could request.
(16-10a-1601(5) and 16-10a-1602(1))
(b) Conditional Inspection Rights. In addition, if a director
gives the Corporation a written demand made in good faith and for a proper
purpose at least five business days before the date on which the director wishes
to inspect and copy, the director describes with reasonable particularity the
director's purpose and the records the director desires to inspect, and the
records are directly connected with the director's purpose, the director (or the
director's agent or attorney) is entitled to inspect and copy, during regular
business hours at a reasonable location specified by the Corporation, any of the
following records of the Corporation:
(1) Excerpts from:
(i) Minutes of any meeting of the Board of
Directors, records of any action of a committee of the
Board of Directors while acting on behalf of the
Corporation in place of the Board of Directors;
(ii) minutes of any meeting of the shareholders;
(iii) records of action taken by the shareholders
without a meeting; and
(iv) waivers of notices of any meeting of the
shareholders, of any meeting of the Board of Directors, or
of any meeting of a committee of the Board of Directors;
(2) accounting records of the Corporation; and
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(3) the record of the Corporation's shareholders referred
to in Section 16-10a-1601(3) of the Utah Revised Business
Corporation Act. (16-10a-1602(2))
(d) Copy Costs. The right to copy records includes, if
reasonable, the right to receive copies made by photographic, xerographic or
other means. The Corporation may impose a reasonable charge, payable in advance,
covering the costs of labor and material, for copies of any documents provided
to the director. The charge may not exceed the estimated cost of production or
reproduction of the records. (16-10a-1603)
ARTICLE 4. EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 4.1. Creation of Committees. Unless the Articles of
Incorporation provide otherwise, the Board of Directors may create an Executive
Committee and such other committees as it may deem appropriate and appoint
members of the Board of Directors to serve on such committees. Each committee
must have two (2) or more members, one of whom shall be the Chairman of the
Board, if there be such an officer, and one of whom shall be the President of
the Corporation. (16-10a-825(1))
Section 4.2. Approval of Committees and Members. The creation of
a committee and appointment of members to it must be approved by the greater of:
(1) A majority of all the directors in office when the
action is taken; or
(2) the number of directors required by the Articles of
Incorporation to take such action, or, if not specified in the
Articles of Incorporation, the number required by Section 3.7 of
these Bylaws to take action.
(16-10a-825(2))
Section 4.3. Required Procedures. Sections 3.4 through 3.10 of
these Bylaws, which govern procedures applicable to the Board of Directors, also
apply to committees and their members. (16-10a-825(3))
Section 4.4. Authority. Unless limited by the Articles of
Incorporation or the Utah Revised Business Corporation Act, each committee may
exercise those aspects of the authority of the Board of Directors which the
Board of Directors confers upon such committee in the resolution creating the
committee. (16-10a-825(4))
Section 4.5. Authority of Executive Committee. The Executive
Committee shall have, and may exercise all powers of the Board of Directors with
respect to the management of the business and affairs of the Corporation during
the intervals between the
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meetings of the Board of Directors. Provided, however, the Executive Committee
shall not have the power to fill vacancies on the Board of Directors or to amend
these Bylaws.
Section 4.6. Compensation. Unless otherwise provided in the
Articles of Incorporation, the Board of Directors may provide for the payment of
a fixed sum and/or expenses of attendance to any member of a committee for
attendance at each meeting of such committee. Provided, however, no such
payments shall be made to committee members who are salaried employees of the
Corporation.
ARTICLE 5. OFFICERS AND ADVISORS
Section 5.1. Officers and Advisors. The officers of the
Corporation shall be a President, one or more Vice Presidents, a Secretary and a
Treasurer, each of whom shall be appointed by the Board of Directors. The Board
of Directors may appoint a Chief Executive Officer and such other officers and
assistant officers as may be deemed necessary. If specifically authorized by the
Board of Directors, an officer may appoint one or more officers or assistant
officers. The same individual may simultaneously hold more than one office in
the Corporation. (16-10a-830) The Board of Directors may also appoint, but shall
not be required to appoint, a Chairman of the Board and one or more Board
Advisors. The Chairman of the Board and any Board Advisors shall not be officers
of the Corporation, but shall be advisors to the Board of Directors and to the
Corporation. The Board of Directors may appoint such other advisors as may be
deemed necessary.
Section 5.2. Appointment and Term. Each of the officers and
advisors of the Corporation shall be appointed by the Board of Directors for a
term determined by the Board of Directors. If no term is specified, each officer
or advisor shall hold office until the officer or advisor resigns, dies, is
removed in the manner provided in Section 5.4 of these Bylaws, or until the
first meeting of the directors held after the next annual meeting of the
shareholders. If the appointment of officers or advisors shall not be made at
such meeting, such appointment shall be made as soon thereafter as is
convenient. If a vacancy shall occur in any office or advisory position, or if a
new office or advisory position shall be created, the Board of Directors may
appoint officer(s) or advisor(s) to fill such vacancy, office or position, and
such appointment shall be for the term determined by the Board of Directors.
Each officer and advisor shall hold office until his or her successor shall have
been duly appointed. (16-10a-830)
The designation of a specified term does not grant to the officer
or advisor any contract rights, and the Board of Directors may remove the
officer or advisor at any time prior to the end of such term. (16-10a-833)
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Section 5.3. Resignation. Any officer or advisor may resign at
any time by giving written notice of resignation to the Corporation.
(16-10a-832(1))
Section 5.4. Removal. Any officer, advisor or agent of the
Corporation may be removed by the Board of Directors at any time, with or
without cause. Such removal shall be without prejudice to the contract rights,
if any, of the person so removed. Appointment of an officer, advisor or agent
shall not of itself create contract rights. (16-10a-832)
Section 5.5. The Chairman of the Board. The Chairman of the
Board, if there be such a position, shall have the following powers and duties:
(a) To be a senior advisor to the Corporation and, in addition to
the duties specified in this Section 5.5, to perform such duties as may be
assigned to him by the Board of Directors;
(b) to preside at all meetings of the shareholders of the
Corporation;
(c) to preside at all meetings of the Board of Directors;
(d) to be a member of the Executive Committee, if any.
(16-10a-831)
Section 5.6. Board Advisors. The Board of Directors may from time
to time designate and appoint one or more Board Advisors. Each Board Advisor
shall have the right to attend meetings of the Board of Directors, but a Board
Advisor shall not be a director and shall not vote on any matter voted upon by
the directors. Each Board Advisor shall have such powers and perform such duties
as may from time to time be assigned to him or her by the Board of Directors or
by the Chairman of the Board.
Section 5.7. Chief Executive Officer. The Chief Executive
Officer, if there be such an officer, shall be the principal executive officer
of the Corporation and, subject to the control of the Board of Directors, in
general, shall supervise and control all of the business and affairs of the
Corporation. If no Chairman of the Board has been appointed, or in his absence,
the Chief Executive Officer, when present, shall preside at all meetings of the
shareholders and of the Board of Directors. The Chief Executive Officer may
sign, with the Secretary or any other proper officer of the Corporation
authorized by the Board of Directors, certificates for shares of the
Corporation, the issuance of which shall have been authorized by a resolution of
the Board of Directors, and deeds, mortgages, bonds, contracts or other
instruments, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors or by these Bylaws to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
signed or executed; and in general shall perform all duties incident to the
office of
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Chief Executive Officer and such other duties as may be prescribed by the Board
of Directors from time to time. (16-10a-831)
Section 5.8. President. The President shall be an executive
officer of the Corporation, and, if there be no Chief Executive Officer, shall
be the principal executive officer of the Corporation and, subject to the
control of the Board of Directors, in general, shall supervise and control all
of the business and affairs of the Corporation. In the absence of the Chief
Executive Officer or in the event of his death or inability or refusal to act,
the President shall perform the duties of the Chief Executive Officer, and when
so acting, shall have all the powers of and be subject to all the restrictions
upon the Chief Executive Officer. In the absence of the Chairman of the Board
and the Chief Executive Officer, the President, when present, shall preside at
all meetings of the shareholders and of the Board of Directors. The President
may sign, with the Secretary or any other proper officer of the Corporation
authorized by the Board of Directors, certificates for shares of the
Corporation, the issuance of which shall have been authorized by a resolution of
the Board of Directors, and deeds, mortgages, bonds, contracts or other
instruments, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors or by these Bylaws to some other
officer or agent of the Corporation, or shall be required by law to be otherwise
signed or executed; and in general shall perform all duties incident to the
office of President and such other duties as may be prescribed by the Chief
Executive Officer or the Board of Directors from time to time.
(16-10a-831)
Section 5.9. Vice Presidents. In the absence of the President or
in the event of his death or inability or refusal to act, the Vice President (or
in the event there be more than one Vice President, the Vice Presidents in the
order designated at the time of their election, or in the absence of any
designation, then in the order of their appointment) shall perform the duties of
the President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. If there is no Vice President, then
the Treasurer shall perform such duties of the President. Any Vice President may
sign, with the Secretary or an Assistant Secretary, certificates for shares of
the Corporation the issuance of which have been authorized by resolution of the
Board of Directors; and shall perform such other duties as from time to time may
be assigned to him or her by the Chief Executive Officer, the President or by
the Board of Directors.
(16-10a-831)
Section 5.10. Secretary. The Secretary shall have the following
powers and duties:
(a) to keep the minutes of the proceedings of the shareholders
and of the Board of Directors and the other records and information of the
Corporation required to be kept, in one or more books provided for that purpose;
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(b) to see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law;
(c) to be custodian of the corporate records and of any seal of
the Corporation;
(d) when requested or required, to authenticate any records of
the Corporation;
(e) to keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder;
(f) to sign with the Chief Executive Officer, the President or a
Vice President, certificates for shares of the Corporation, the issuance of
which shall have been authorized by resolution of the Board of Directors;
(g) to have general charge of the stock transfer books of the
Corporation; and
(h) in general, to perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him or
her by the Chief Executive Officer, the President or by the Board of Directors.
(16-10a-830 and 16-10a-831)
Section 5.11. Treasurer. The Treasurer shall have the following
powers and duties:
(a) to have charge and custody of and be responsible for all
funds and securities of the Corporation;
(b) to receive and give receipts for moneys due and payable to
the Corporation from any source whatsoever, and deposit all such moneys in the
name of the Corporation in such banks, trust companies or other depositories as
shall be selected by the Board of Directors;
(c) in general, to perform all of the duties incident to the
office of Treasurer and such other duties as from time to time may be assigned
to him or her by the Chief Executive Officer, the President or by the Board of
Directors; and
(d) if required by the Board of Directors, to give a bond for the
faithful discharge of his or her duties in such sum and with such surety or
sureties as the Board of Directors shall determine. (16-10a-831)
Section 5.12. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries, when authorized by the Board of Directors, may sign, with
the President or a Vice
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President, certificates for shares of the Corporation, the issuance of which
shall have been authorized by a resolution of the Board of Directors. The
Assistant Treasurers, if required by the Board of Directors, shall give bonds
for the faithful discharge of their duties in such sums and with such sureties
as the Board of Directors shall determine. The Assistant Secretaries and
Assistant Treasurers, in general, shall perform such duties as shall be assigned
to them by the Secretary or the Treasurer, respectively, or by the Chief
Executive Officer, the President or the Board of Directors. (16-10a-831)
Section 5.13. General Manager. The Chief Executive Officer, the
President or the Board of Directors (or the Executive Committee, if any) may
appoint a General Manager who may, or may not, be one of the officers or
directors of the Corporation. The General Manager shall have the following
powers and duties:
(a) If so designated by the Board of Directors, the General
Manager may be an executive officer of the Corporation.
(b) If so directed by the Chief Executive Officer, the President
or the Board of Directors (or the Executive Committee, if any), the General
Manager may have management of the business of the Corporation and its dealings
and, if so directed, may have general charge of the business affairs and
property of the Corporation, general supervision over its employees and agents;
provided, however, the General Manager shall be at all times subject to the
control of the Chief Executive Officer, the President or the Board of Directors
(or the Executive Committee, if any).
(c) If so directed by the Chief Executive Officer, the President
or the Board of Directors (or the Executive Committee, if any), the General
Manager may employ all employees of the Corporation, or delegate such employment
to subordinate officers or division chiefs, and shall have authority to
discharge any person so employed.
(d) The General Manager shall make a report to the Chief
Executive Officer, the President and the Board of Directors quarterly, or more
often if required to do so, setting forth the result of the operations under his
charge, together with suggestions looking to the improvement and betterment of
the condition of the Corporation, and to perform such other duties as the Board
of Directors shall require.
Section 5.14. Salaries. The salaries of the officers, advisors
and agents shall be fixed from time to time by the Board of Directors; provided,
however, that the Board of Directors may delegate to any person or group of
persons the power to fix the salaries or other compensation of any subordinate
officers, advisors or agents. No officer shall be prevented from
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receiving any such salary or compensation by reason of the fact that he is also
a director of the Corporation.
Section 5.15. Surety Bonds. In the event the Board of Directors
shall so require, any officer, advisor or agent of the Corporation shall execute
to the Corporation a bond in such sums and with such surety or sureties as the
Board of Directors may direct, conditioned upon the faithful performance of his
duties to the Corporation, including responsibility for negligence and for the
accounting for all property, monies or securities of the Corporation which may
come into his hands.
ARTICLE 6. LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 6.1. Limitation of Liability of Directors. Directors
shall not be liable to the Corporation or its shareholders for monetary damages
for any action taken or any failure to take any action, as a director, except
liability for:
(a) the amount of a financial benefit received by a director to
which he is not entitled;
(b) an intentional infliction of harm on the Corporation or its
shareholders;
(c) a violation of Section 16-10a-842 of the Utah Revised
Business Corporation Act;
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(d) an intentional violation of criminal law. (16-10a-841(1))
Section 6.2. Indemnification of Directors. Unless otherwise
provided in the Articles of Incorporation, the Corporation shall indemnify any
individual made a party to a proceeding because the individual is or was a
director of the Corporation against liability incurred in the proceeding.
Provided, however, the Corporation shall only indemnify an individual if it has
authorized the indemnification in accordance with Section 16-10a-906(4) of the
Utah Revised Business Corporation Act and a determination has been made in
accordance with the procedures set forth in Section 16-10a-906(2) of the Utah
Revised Business Corporation Act that indemnification is in accordance with the
following requirements:
(a) Standard of Conduct. The Corporation shall determine that:
(1) The individual's conduct was in good faith;
(2) the individual reasonably believed that his or her
conduct was in, or not opposed to, the Corporation's best
interests; and
(3) in the case of any criminal proceeding, the individual
had no reasonable cause to believe that his or her conduct was
unlawful.
(16-10a-902(1))
(b) No Indemnification in Certain Circumstances. The Corporation
shall not indemnify an individual under this Section 6.2:
(1) In connection with a proceeding by or in the right of
the Corporation in which the individual was adjudged liable to
the Corporation; or
(2) in connection with any other proceeding charging that
the individual derived an improper personal benefit, whether or
not involving action in the individual's official capacity, in
which proceeding he or she was adjudged liable on the basis that
he or she derived an improper personal benefit. (16-10a-902(4))
(c) Indemnification in Derivative Actions Limited.
Indemnification permitted under this Section 6.2 in connection with a proceeding
by or in the right of the Corporation is limited to reasonable expenses incurred
in connection with the proceeding.
(16-10a-902(5))
Section 6.3. Advance Payment of Expenses. Unless otherwise
provided in the Articles of Incorporation, the Corporation may pay for or
reimburse in advance of final
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disposition of any proceeding the reasonable expenses incurred by an individual
who is a party to a proceeding because he or she is or was a director of the
Corporation if (i) in accordance with the procedures and standards set forth in
Section 16-10a-906(4) of the Utah Revised Business Corporation Act, an
authorization of payment is made, and (ii) in accordance with the procedures of
Section 16-10a-906(2) of the Utah Revised Business Corporation Act, a
determination is made that the following has occurred:
(a) Written Affirmation. The individual has furnished to the
Corporation a written affirmation of the individual's good faith belief that the
individual has met the standard of conduct described in Section 6.2 of these
Bylaws.
(b) Written Undertaking. The individual has furnished to the
Corporation a written undertaking, executed personally or on the individual's
behalf, to repay the advance if it is ultimately determined that the individual
did not meet the standard of conduct (which undertaking must be an unlimited
general obligation of the individual but need not be secured and may be accepted
without reference to financial ability to make repayment).
(c) Factual Determination. A determination has been made that the
facts then known to those making the determination would not preclude
indemnification under Section 6.2 of these Bylaws or Part 9 of the Utah Revised
Business Corporation Act.
(16-10a-904)
Section 6.4. Indemnification of Officers, Employees, Fiduciaries
and Agents. Unless otherwise provided in the Articles of Incorporation, the
Corporation shall indemnify and advance expenses to any individual made a party
to a proceeding because the individual is or was an officer, employee, fiduciary
or agent of the Corporation to the same extent as to an individual made a party
to a proceeding because the individual is or was a director of the Corporation,
or to a greater extent, if not inconsistent with public policy, if provided for
by general or specific action of the Board of Directors. (16-10a-907)
Section 6.5. Insurance. The Corporation may purchase and maintain
liability insurance on behalf of a person who is or was a director, officer,
employee, fiduciary or agent of the Corporation, or who, while serving as a
director, officer, employee, fiduciary or agent of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
trustee, employee, fiduciary or agent of another foreign or domestic corporation
or other person, or of an employee benefit plan, against liability asserted
against or incurred by him or her in that capacity or arising from his or her
status as a director, officer, employee, fiduciary or agent, whether or not the
Corporation would have power to indemnify him or her against the same liability
under Sections 16-10a-902, 16-10a-903, or 16-10a-907 of the Utah Revised
Business Corporation Act. Insurance may be procured from any insurance company
designated by the Board of Directors, whether the insurance company is formed
under the laws of the State of Utah
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or any other jurisdiction of the United States or elsewhere, including any
insurance company in which the Corporation has an equity or any other interest
through stock ownership or otherwise. (16-10a-908)
ARTICLE 7. EXECUTION OF INSTRUMENTS, BORROWING OF MONEY
AND DEPOSIT OF CORPORATE FUNDS
Section 7.1. Execution of Instruments. Subject to any limitation
contained in the Utah Revised Business Corporation Act, the Articles of
Incorporation or these Bylaws, and subject to any limitations that may be
imposed by the Board of Directors, the Chief Executive Officer, President, any
Vice President or the Secretary, in the name and on behalf of the Corporation,
may execute and deliver any contract or other instrument. Subject to any
limitation contained in the Utah Revised Business Corporation Act, the Articles
of Incorporation or these Bylaws, the Board of Directors may authorize in
writing any other officer or agent to execute and deliver any contract or other
instrument in the name and on behalf of the Corporation; any such authorization
may be general or confined to specific instances.
Section 7.2. Loans. No loan or advance shall be contracted on
behalf of the Corporation, no negotiable paper or other evidence of its
obligation under any loan or advance shall be issued in its name, and no
property of the Corporation shall be mortgaged, pledged, hypothecated,
transferred or conveyed as security for the payment of any loan, advance,
indebtedness or liability of the Corporation, unless and except as authorized by
the Board of Directors. Any such authorization may be general or confined to
specific instances.
Section 7.3. Deposits. All monies of the Corporation not
otherwise employed shall be deposited from time to time to its credit in such
banks or trust companies or with such bankers or other depositories as the Board
of Directors may select, or as from time to time may be selected by any officer
or agent authorized to do so by the Board of Directors.
Section 7.4. Checks, Drafts, etc. All notes, drafts, acceptances,
checks, endorsements, and, subject to the provisions of these Bylaws, evidences
of indebtedness of the Corporation shall be signed by such officer or officers
or such agent or agents of the Corporation and in such manner as the Board of
Directors from time to time may determine. Endorsements for deposit to the
credit of the Corporation in any of its duly authorized depositories shall be in
such manner as the Board of Directors from time to time may determine.
Section 7.5. Bonds and Debentures. Every bond or debenture issued
by the Corporation shall be evidenced by an appropriate instrument which shall
be signed by the Chief Executive Officer, President or a Vice President and by
the Secretary. Where such bond or debenture is authenticated with the manual
signature of an authorized officer of the Corporation
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or other trustee designated by the indenture of trust or other agreement under
which such security is issued, the signature of any of the Corporation's
officers named thereon may be a facsimile. In case any officer who signed, or
whose facsimile signature has been used on any such bond or debenture, shall
cease to be an officer of the Corporation for any reason before the same has
been delivered by the Corporation, such bond or debenture may nevertheless be
adopted by the Corporation and issued and delivered as though the person who
signed it or whose facsimile signature has been used thereon had not ceased to
be such officer.
Section 7.6. Sale, Transfer, etc. of Securities. Sales,
transfers, endorsements, and assignments of shares of stocks, bonds, and other
securities owned by or standing in the name of the Corporation and the execution
and delivery on behalf of the Corporation of any and all instruments in writing
incident to any such sale, transfer, endorsement or assignment, shall be
effected by the Chief Executive Officer, President, any Vice President, or by
any officer or agent thereunto authorized by the Board of Directors.
Section 7.7. Proxies. Proxies to vote with respect to shares of
stock of other corporations used by or standing in the name of the Corporation
shall be executed and delivered on behalf of the Corporation by the Chief
Executive Officer, President, any Vice President, or by any officer or agent
thereunto authorized by the Board of Directors.
ARTICLE 8. CERTIFICATES FOR SHARES AND
THEIR TRANSFER
Section 8.1. Certificates for Shares.
(a) Content. Certificates representing shares of the Corporation,
at a minimum, shall state on their face the name of the Corporation and that the
Corporation is organized under the laws of the State of Utah; the name of the
person to whom issued; and the number and class of shares and the designation of
the series, if any, the certificate represents; and be in such form as is
determined by the Board of Directors. Such certificates shall be signed by the
President or a Vice President and by the Secretary or an Assistant Secretary and
may be sealed with the corporate seal or a facsimile thereof. The signatures of
the officers may be facsimiles if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the Corporation itself or an
employee of the Corporation. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate ceases to be an officer
before the certificate is issued, the certificate may be issued by the
corporation with the same effect as if the person were an officer at the date of
its issue. Each certificate for shares shall be consecutively numbered or
otherwise identified. The certificates may contain any other information the
Corporation considers necessary or appropriate. (16-10a-625)
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(b) Legend as to Class or Series. If the Corporation is
authorized to issue different classes of shares or different series within a
class, the designations, preferences, limitations, and relative rights
applicable to each class, the variations in preferences, limitations, and
relative rights determined for each series, and the authority of the Board of
Directors to determine variations for any existing or future class or series
must be summarized on the front or back of each certificate. Alternatively, each
certificate may state conspicuously on its front or back that the Corporation
will furnish the shareholder this information on request in writing and without
charge. (16-10a-625)
(c) Shareholder List. The name and address of the person to whom
the shares represented are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the Corporation.
(d) Transferring Shares. All certificates surrendered to the
Corporation for transfer shall be canceled and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered and canceled, except that in case of a lost, destroyed or mutilated
certificate a new one may be issued therefor upon such terms and indemnity to
the Corporation as the Board of Directors may prescribe.
Section 8.2. Shares Without Certificates.
(a) Issuing Shares Without Certificates. Unless the Articles of
Incorporation provide otherwise, the Board of Directors may authorize the
issuance of some or all of the shares of any or all classes or series without
certificates. The authorization does not affect shares already represented by
certificates until they are surrendered to the Corporation.
(b) Information Statement Required. Within a reasonable time
after the issuance or transfer of shares without certificates, the Corporation
shall send the shareholder a written statement containing, at a minimum, the
name of the Corporation and that it is organized under the laws of the State of
Utah; the name of the person to whom issued; and the number and class of shares
and the designation of the series, if any, of the issued shares. If the
Corporation is authorized to issue different classes of shares or different
series within a class, the written statement shall describe the designations,
preferences, limitations, and relative rights applicable to each class, the
variations in preferences, limitations, and relative rights determined for each
series, and the authority of the Board of Directors to determine variations for
any existing or future class or series. (16-10a-626)
Section 8.3. Registration of Transfer of Shares. Registration of
the transfer of shares of the Corporation shall be made only on the stock
transfer books of the Corporation. In order to register a transfer, the record
owner shall surrender the shares to the Corporation for
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cancellation, properly endorsed by the appropriate person or persons with
reasonable assurances that the endorsements are genuine and effective. Unless
the Corporation has established a procedure by which a beneficial owner of
shares held by a nominee is to be recognized by the Corporation as the owner,
the person in whose name shares stand on the books of the Corporation shall be
deemed by the Corporation to be the owner thereof for all purposes.
Section 8.4. Transfer Agents and Registrars. The Board of
Directors may appoint one or more transfer agents and one or more registrars
with respect to the certificates representing shares of stock of the Corporation
and may require all such certificates to bear the signature of either or both.
The Board of Directors may from time to time define the respective duties of
such transfer agents and registrars.
Section 8.5. Restrictions on Transfer of Shares Permitted. The
Board of Directors or the shareholders may impose restrictions on the transfer
or registration of transfer of shares (including any security convertible into,
or carrying a right to subscribe for or acquire shares). A restriction does not
affect shares issued before the restriction was adopted unless the holders of
the shares are parties to the restriction agreement or voted in favor of the
restriction or otherwise consented to the restriction.
(a) A restriction on the transfer or registration of transfer of
shares may be authorized:
(1) To maintain the Corporation's status when it is
dependent on the number or identity of its shareholders;
(2) to preserve entitlements, benefits or exemptions under
federal, state or local laws; and
(3) for any other reasonable purpose.
(b) A restriction on the transfer or registration of transfer of
shares may:
(1) Obligate the shareholder first to offer the
Corporation or other persons, separately, consecutively or
simultaneously, an opportunity to acquire the restricted shares;
(2) obligate the Corporation or other persons, separately,
consecutively or simultaneously, to acquire the restricted
shares;
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(3) require, as a condition to a transfer or registration,
that any one or more persons, including the Corporation or any of
its shareholders, approve the transfer or registration, if the
requirement is not manifestly unreasonable; or
(4) prohibit the transfer or the registration of a
transfer of the restricted shares to designated persons or
classes of persons, if the prohibition is not manifestly
unreasonable.
A restriction on the transfer or registration of transfer of
shares is valid and enforceable against the holder or a transferee of the holder
if the restriction is authorized by this Section 8.5 and its existence is noted
conspicuously on the front or back of the certificate, or if the restriction is
contained in the information statement required by Section 8.2 of these Bylaws
with regard to shares issued without certificates. Unless so noted, a
restriction is not enforceable against a person without knowledge of the
restriction. (16-10a-627)
Section 8.6. Acquisition of Shares. The Corporation may acquire
its own shares, and, unless otherwise provided in the Articles of Incorporation,
the shares so acquired constitute authorized but unissued shares.
If the Articles of Incorporation prohibit the reissue of acquired
shares, the number of authorized shares shall be reduced by the number of shares
acquired, effective upon amendment of the Articles of Incorporation, which
amendment shall be adopted by the shareholders or the Board of Directors without
shareholder action. Appropriate Articles of Amendment must be delivered to the
Division and must set forth:
(a) The name of the Corporation;
(b) the reduction in the number of authorized shares, itemized by
class and series;
(c) the total number of authorized shares, itemized by class and
series, remaining after reduction of the shares; and
(d) a statement that the amendment was adopted by the Board of
Directors without shareholder action and that shareholder action was not
required if such be the case. (16-10a-631)
Section 8.7. Lost or Destroyed Certificates. If the holder of a
certificate for shares of the Corporation claims that a certificate has been
lost, destroyed or wrongfully taken, the Corporation shall issue a new
certificate to such holder, if such holder:
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(a) so requests before the Corporation has notice that the
certificate has been acquired by a bona fide purchaser;
(b) files with the Corporation a sufficient indemnity bond; and
(c) satisfies any other reasonable requirements imposed by the
Corporation. (70A-8-405).
ARTICLE 9. DISTRIBUTIONS
Section 9.1. Distributions. The Board of Directors may authorize,
and the Corporation may make, distributions (including dividends on its
outstanding shares) in the manner and upon the terms and conditions provided by
law and in the Articles of Incorporation. (16-10a-640)
ARTICLE 10. CORPORATE SEAL
Section 10.1. Corporate Seal. The Board of Directors may provide
a corporate seal which may be circular in form and have inscribed thereon any
designation including the name of the Corporation, Utah as the state of
incorporation, and the words "Corporate Seal."
ARTICLE 11. FISCAL YEAR
Section 11.1. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
ARTICLE 12. AMENDMENTS
Section 12.1. Amendments. The Corporation's Board of Directors
may amend these Bylaws, except to the extent that the Articles of Incorporation,
these Bylaws or the Utah Revised Business Corporation Act reserve this power
exclusively to the shareholders in whole or in part. However, the Board of
Directors may not adopt, amend, or repeal a Bylaw that fixes a shareholder
quorum or voting requirement that is greater than required by the Utah Revised
Business Corporation Act.
Section 3.2 of these Bylaws may be amended by the Board of
Directors or by the shareholders; provided, however, that any such amendment of
Section 3.2 of these Bylaws must be approved by a seventy-five percent (75%)
majority of the directors or the shareholders, as the case may be.
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If authorized by the Articles of Incorporation, the shareholders
may adopt, amend or repeal a Bylaw that fixes a greater quorum or voting
requirement for shareholders, or voting groups of shareholders, than is required
by the Utah Revised Business Corporation Act. Any such action shall comply with
the provisions of the Utah Revised Business Corporation Act.
The Corporation's shareholders may amend or repeal the
Corporation's Bylaws even though the Bylaws may also be amended or repealed by
the Corporation's Board of Directors. (16-10a-1020 to 16-10a-1022)
ADOPTED as of the 12th day of November, 1997.
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ANNEX D
[SECTIONS 16-10A-1301 THROUGH 16-10A-1331 OF
THE UTAH REVISED BUSINESS CORPORATION ACT]
UTAH CODE
TITLE 16. CORPORATIONS
CHAPTER 10A. REVISED BUSINESS CORPORATION ACT
PART 13. DISSENTERS' RIGHTS
16-10a-1301. Definitions.
For purposes of Part 13:
(1) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by merger
or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 16-10a-1302 and who exercises that right when and
in the manner required by Sections 16-10a-1320 through 16-10a-1328.
(4) "Fair value" with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the statutory rate set forth in Section
15-1-1, compounded annually.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent the beneficial owner
is recognized by the corporation as the shareholder as provided in Section
16-10a-723.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
16-10a-1302. Right to dissent.
(1) A shareholder, whether or not entitled to vote, is entitled to dissent
from, and obtain payment of the fair value of shares held by him in the event
of, any of the following corporate actions:
(a) consummation of a plan of merger to which the corporation is a
party if:
(i) shareholder approval is required for the merger by Section
16-10a-1103 or the articles of incorporation; or
(ii) the corporation is a subsidiary that is merged with its parent
under Section 16-10a-1104;
(b) consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired;
(c) consummation of a sale, lease, exchange, or other disposition of
all, or substantially all, of the property of the corporation for which a
shareholder vote is required under Subsection 16-10a-1202(1), but not including
a sale for cash pursuant to a plan by which all or substantially all of the net
proceeds of the sale will be distributed to the shareholders within one year
after the date of sale; and
(d) consummation of a sale, lease, exchange, or other disposition of
all, or substantially all, of the property of an entity controlled by the
corporation if the shareholders of the corporation were entitled to vote upon
the consent of the corporation to the disposition pursuant to Subsection
16-10a-1202(2).
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(2) A shareholder is entitled to dissent and obtain payment of the fair
value of his shares in the event of any other corporate action to the extent the
articles of incorporation, bylaws, or a resolution of the board of directors so
provides.
(3) Notwithstanding the other provisions of this part, except to the
extent otherwise provided in the articles of incorporation, bylaws, or a
resolution of the board of directors, and subject to the limitations set forth
in Subsection (4), a shareholder is not entitled to dissent and obtain payment
under Subsection (1) of the fair value of the shares of any class or series of
shares which either were listed on a national securities exchange registered
under the federal Securities Exchange Act of 1934, as amended, or on the
National Market System of the National Association of Securities Dealers
Automated Quotation System, or were held of record by more than 2,000
shareholders, at the time of:
(a) the record date fixed under Section 16-10a-707 to determine the
shareholders entitled to receive notice of the shareholders' meeting at which
the corporate action is submitted to a vote;
(b) the record date fixed under Section 16-10a-704 to determine
shareholders entitled to sign writings consenting to the proposed corporate
action; or
(c) the effective date of the corporate action if the corporate action
is authorized other than by a vote of shareholders.
(4) The limitation set forth in Subsection (3) does not apply if the
shareholder will receive for his shares, pursuant to the corporate action,
anything except:
(a) shares of the corporation surviving the consummation of the plan of
merger or share exchange;
(b) shares of a corporation which at the effective date of the plan of
merger or share exchange either will be listed on a national securities exchange
registered under the federal Securities Exchange Act of 1934, as amended, or on
the National Market System of the National Association of Securities Dealers
Automated Quotation System, or will be held of record by more than 2,000
shareholders;
(c) cash in lieu of fractional shares; or
(d) any combination of the shares described in Subsection (4), or cash
in lieu of fractional shares.
(5) A shareholder entitled to dissent and obtain payment for his shares
under this part may not challenge the corporate action creating the entitlement
unless the action is unlawful or fraudulent with respect to him or to the
corporation.
16-10a-1303. Dissent by nominees and beneficial owners.
(1) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in his name only if the shareholder dissents with
respect to all shares beneficially owned by any one person and causes the
corporation to receive written notice which states the dissent and the name and
address of each person on whose behalf dissenters' rights are being asserted.
The rights of a partial dissenter under this subsection are determined as if the
shares as to which the shareholder dissents and the other shares held of record
by him were registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(a) the beneficial shareholder causes the corporation to receive the
record shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) the beneficial shareholder dissents with respect to all shares of
which he is the beneficial shareholder.
(3) The corporation may require that, when a record shareholder dissents
with respect to the shares held by any one or more beneficial shareholders, each
beneficial shareholder must certify to the corporation that both he and the
record shareholders of all shares owned beneficially by him have asserted, or
will timely assert, dissenters' rights as to all the shares unlimited on the
ability to exercise dissenters' rights. The certification requirement must be
stated in the dissenters' notice given pursuant to Section 16-10a-1322.
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16-10a-1320. Notice of dissenters' rights.
(1) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is submitted to a vote at a shareholders' meeting, the
meeting notice must be sent to all shareholders of the corporation as of the
applicable record date, whether or not they are entitled to vote at the meeting.
The notice shall state that shareholders are or may be entitled to assert
dissenters' rights under this part. The notice must be accompanied by a copy of
this part and the materials, if any, that under this chapter are required to be
given the shareholders entitled to vote on the proposed action at the meeting.
Failure to give notice as required by this subsection does not affect any action
taken at the shareholders' meeting for which the notice was to have been given.
(2) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is authorized without a meeting of shareholders pursuant to
Section 16-10a-704, any written or oral solicitation of a shareholder to execute
a written consent to the action contemplated by Section 16-10a-704 must be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this part, by a copy of this
part, and by the materials, if any, that under this chapter would have been
required to be given to shareholders entitled to vote on the proposed action if
the proposed action were submitted to a vote at a shareholders' meeting. Failure
to give written notice as provided by this subsection does not affect any action
taken pursuant to Section 16-10a-704 for which the notice was to have been
given.
16-10a-1321. Demand for payment - Eligibility and notice of intent.
(1) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights:
(a) must cause the corporation to receive, before the vote is taken,
written notice of his intent to demand payment for shares if the proposed action
is effectuated; and
(b) may not vote any of his shares in favor of the proposed action.
(2) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is authorized without a meeting of shareholders pursuant to
Section 16-10a-704, a shareholder who wishes to assert dissenters' rights may
not execute a writing consenting to the proposed corporate action.
(3) In order to be entitled to payment for shares under this part, unless
otherwise provided in the articles of incorporation, bylaws, or a resolution
adopted by the board of directors, a shareholder must have been a shareholder
with respect to the shares for which payment is demanded as of the date the
proposed corporate action creating dissenters' rights under Section 16-10a-1302
is approved by the shareholders, if shareholder approval is required, or as of
the effective date of the corporate action if the corporate action is authorized
other than by a vote of shareholders.
(4) A shareholder who does not satisfy the requirements of Subsections (1)
through (3) is not entitled to payment for shares under this part.
16-10a-1322. Dissenters' notice.
(1) If proposed corporate action creating dissenters' rights under Section
16-10a-1302 is authorized, the corporation shall give a written dissenters'
notice to all shareholders who are entitled to demand payment for their shares
under this part.
(2) The dissenters' notice required by Subsection (1) must be sent no
later than ten days after the effective date of the corporate action creating
dissenters' rights under Section 16-10a-1302, and shall:
(a) state that the corporate action was authorized and the effective
date or proposed effective date of the corporate action;
(b) state an address at which the corporation will receive payment
demands and an address at which certificates for certificated shares must be
deposited;
(c) inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
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(d) supply a form for demanding payment, which form requests a
dissenter to state an address to which payment is to be made;
(e) set a date by which the corporation must receive the payment demand
and by which certificates for certificated shares must be deposited at the
address indicated in the dissenters' notice, which dates may not be fewer than
30 nor more than 70 days after the date the dissenters' notice required by
Subsection (1) is given;
(f) state the requirement contemplated by Subsection 16-10a-1303(3), if
the requirement is imposed; and
(g) be accompanied by a copy of this part.
16-10a-1323. Procedure to demand payment.
(1) A shareholder who is given a dissenters' notice described in Section
16-10a-1322, who meets the requirements of Section 16-10a-1321, and wishes to
assert dissenters' rights must, in accordance with the terms of the dissenters'
notice:
(a) cause the corporation to receive a payment demand, which may be the
payment demand form contemplated in Subsection 16-10a-1322(2)(d), duly
completed, or may be stated in another writing;
(b) deposit certificates for his certificated shares in accordance with
the terms of the dissenters' notice; and
(c) if required by the corporation in the dissenters' notice described
in Section 16-10a-1322, as contemplated by Section 16-10a-1327, certify in
writing, in or with the payment demand, whether or not he or the person on whose
behalf he asserts dissenters' rights acquired beneficial ownership of the shares
before the date of the first announcement to news media or to shareholders of
the terms of the proposed corporate action creating dissenters' rights under
Section 16-10a-1302.
(2) A shareholder who demands payment in accordance with Subsection (1)
retains all rights of a shareholder except the right to transfer the shares
until the effective date of the proposed corporate action giving rise to the
exercise of dissenters' rights and has only the right to receive payment for the
shares after the effective date of the corporate action.
(3) A shareholder who does not demand payment and deposit share
certificates as required, by the date or dates set in the dissenters' notice, is
not entitled to payment for shares under this part.
16-10a-1324. Uncertificated shares.
(1) Upon receipt of a demand for payment under Section 16-10a-1323 from a
shareholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the transfer
of the shares until the proposed corporate action is taken or the restrictions
are released under Section 16-10a-1326.
(2) In all other respects, the provisions of Section 16-10a-1323 apply to
shareholders who own uncertificated shares.
16-10a-1325. Payment.
(1) Except as provided in Section 16-10a-1327, upon the later of the
effective date of the corporate action creating dissenters' rights under Section
16-10a-1302, and receipt by the corporation of each payment demand pursuant to
Section 16-10a-1323, the corporation shall pay the amount the corporation
estimates to be the fair value of the dissenter's shares, plus interest to each
dissenter who has complied with Section 16-10a-1323, and who meets the
requirements of Section 16-10a-1321, and who has not yet received payment.
(2) Each payment made pursuant to Subsection (1) must be accompanied by:
(a) (i) (A) the corporation's balance sheet as of the end of its most
recent fiscal year, or if not available, a fiscal year ending not more than 16
months before the date of payment;
(B) an income statement for that year;
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(C) a statement of changes in shareholders' equity for that year and
a statement of cash flow for that year, if the corporation customarily provides
such statements to shareholders; and
(D) the latest available interim financial statements, if any;
(ii) the balance sheet and statements referred to in Subsection (i)
must be audited if the corporation customarily provides audited financial
statements to shareholders;
(b) a statement of the corporation's estimate of the fair value of the
shares and the amount of interest payable with respect to the shares;
(c) a statement of the dissenter's right to demand payment under
Section 16-10a-1328; and (d) a copy of this part.
16-10a-1326. Failure to take action.
(1) If the effective date of the corporate action creating dissenters'
rights under Section 16-10a-1302 does not occur within 60 days after the date
set by the corporation as the date by which the corporation must receive payment
demands as provided in Section 16-10a-1322, the corporation shall return all
deposited certificates and release the transfer restrictions imposed on
uncertificated shares, and all shareholders who submitted a demand for payment
pursuant to Section 16-10a-1323 shall thereafter have all rights of a
shareholder as if no demand for payment had been made.
(2) If the effective date of the corporate action creating dissenters'
rights under Section 16-10a-1302 occurs more than 60 days after the date set by
the corporation as the date by which the corporation must receive payment
demands as provided in Section 16-10a-1322, then the corporation shall send a
new dissenters' notice, as provided in Section 16-10a-1322, and the provisions
of Sections 16-10a-1323 through 16-10a-1328 shall again be applicable.
16-10a-1327. Special provisions relating to shares acquired after announcement
of proposed corporate action.
(1) A corporation may, with the dissenters' notice given pursuant to
Section 16-10a-1322, state the date of the first announcement to news media or
to shareholders of the terms of the proposed corporate action creating
dissenters' rights under Section 16-10a-1302 and state that a shareholder who
asserts dissenters' rights must certify in writing, in or with the payment
demand, whether or not he or the person on whose behalf he asserts dissenters'
rights acquired beneficial ownership of the shares before that date. With
respect to any dissenter who does not certify in writing, in or with the payment
demand that he or the person on whose behalf the dissenters' rights are being
asserted, acquired beneficial ownership of the shares before that date, the
corporation may, in lieu of making the payment provided in Section 16-10a-1325,
offer to make payment if the dissenter agrees to accept it in full satisfaction
of his demand.
(2) An offer to make payment under Subsection (1) shall include or be
accompanied by the information required by Subsection 16-10a-1325(2).
16-10a-1328. Procedure for shareholder dissatisfied with payment or offer.
(1) A dissenter who has not accepted an offer made by a corporation under
Section 16-10a-1327 may notify the corporation in writing of his own estimate of
the fair value of his shares and demand payment of the estimated amount, plus
interest, less any payment made under Section 16-10a-1325, if:
(a) the dissenter believes that the amount paid under Section
16-10a-1325 or offered under Section 16-10a-1327 is less than the fair value of
the shares;
(b) the corporation fails to make payment under Section 16-10a-1325
within 60 days after the date set by the corporation as the date by which it
must receive the payment demand; or
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(c) the corporation, having failed to take the proposed corporate action
creating dissenters' rights, does not return the deposited certificates or
release the transfer restrictions imposed on uncertificated shares as required
by Section 16-10a-1326.
(2) A dissenter waives the right to demand payment under this section unless
he causes the corporation to receive the notice required by Subsection (1)
within 30 days after the corporation made or offered payment for his shares.
16-10a-1330. Judicial appraisal of shares - Court action.
(1) If a demand for payment under Section 16-10a-1328 remains unresolved,
the corporation shall commence a proceeding within 60 days after receiving the
payment demand contemplated by Section 16-10a-1328, and petition the court to
determine the fair value of the shares and the amount of interest. If the
corporation does not commence the proceeding within the 60-day period, it shall
pay each dissenter whose demand remains unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in Subsection
(1) in the district court of the county in this state where the corporation's
principal office, or if it has no principal office in this state, the county
where its registered office is located. If the corporation is a foreign
corporation without a registered office in this state, it shall commence the
proceeding in the county in this state where the registered office of the
domestic corporation merged with, or whose shares were acquired by, the foreign
corporation was located.
(3) The corporation shall make all dissenters who have satisfied the
requirements of Sections 16-10a-1321, 16-10a-1323, and 16-10a-1328, whether or
not they are residents of this state whose demands remain unresolved, parties to
the proceeding commenced under Subsection (2) as an action against their shares.
All such dissenters who are named as parties must be served with a copy of the
petition. Service on each dissenter may be by registered or certified mail to
the address stated in his payment demand made pursuant to Section 16-10a-1328.
If no address is stated in the payment demand, service may be made at the
address stated in the payment demand given pursuant to Section 16-10a-1323. If
no address is stated in the payment demand, service may be made at the address
shown on the corporation's current record of shareholders for the record
shareholder holding the dissenter's shares. Service may also be made otherwise
as provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced
under Subsection (2) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the order appointing
them, or in any amendment to it. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the proceeding commenced under
Subsection (2) is entitled to judgment:
(a) for the amount, if any, by which the court finds that the fair
value of his shares, plus interest, exceeds the amount paid by the corporation
pursuant to Section 16-10a-1325; or
(b) for the fair value, plus interest, of the dissenter's
after-acquired shares for which the corporation elected to withhold payment
under Section 16-10a-1327.
16-10a-1331. Court costs and counsel fees.
(1) The court in an appraisal proceeding commenced under Section
16-10a-1330 shall determine all costs of the proceeding, including the
reasonable compensation and expenses of appraisers appointed by the court. The
court shall assess the costs against the corporation, except that the court may
assess costs against all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds that the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under Section
16-10a-1328.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
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(a) against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Sections 16-10a-1320 through 16-10a-1328; or
(b) against either the corporation or one or more dissenters, in favor
of any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this part.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to those counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article IV, Section 1 of CCI's Articles of Incorporation provides that,
except as otherwise required by Utah law, CCI will indemnify and advance
expenses to its directors and officers and to any person who is or was serving
at CCI's request as a director or officer of another domestic or foreign
corporation or other person to the fullest extent permitted by Utah law. Article
IV, Section 2 of CCI's Articles of Incorporation provides that the personal
liability of the directors and officers of CCI to CCI or its shareholders will
be eliminated or limited to the fullest extent permitted by Utah law. Section
6.2 of CCI's Bylaws provides for indemnification of directors to the fullest
extent and in the manner permitted by Utah law. Sections 16-10a-901 through
16-10a-909 of the Utah Revised Business Corporation Law make provision for such
indemnification in terms sufficiently broad to cover directors under certain
circumstances for liabilities arising under the Securities Act of 1933, as
amended (the "Securities Act").
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
EXHIBIT
NUMBER EXHIBIT
- ------ -------
2.1 Agreement and Plan of Merger dated as of November 13, 1997 by and
among CCI, W.W. Clyde Reorganization Corporation, Clyde, Geneva Rock
Reorganization Corporation, Geneva Rock, Utah Service Reorganization
Corporation, Utah Service, Beehive Insurance Reorganization
Corporation and Beehive Insurance (amended and restated as set forth
in Exhibit 2.2).
*2.2 Amended and Restated Agreement and Plan of Merger dated as of
November 13, 1997 by and among CCI, W.W. Clyde Reorganization
Corporation, Clyde, Geneva Rock Reorganization Corporation, Geneva
Rock, Utah Service Reorganization Corporation, Utah Service,
Beehive Insurance Reorganization Corporation and Beehive Insurance.
3.1 Articles of Incorporation of CCI
3.2 Bylaws of CCI.
4.2 Form of CCI Common Stock Certificate.
5 Opinion of Van Cott, Bagley, Cornwall & McCarthy re legality of
Common Stock.
8 Opinion of Grant Thornton LLP regarding tax matters.
[CCI Material Contracts: Exhibits 10.1-10.3]
10.1 Voting Agreement dated November 14, 1997 among the persons named on
Schedule 1 thereto.
10.2 Stock Redemption Plan adopted by the Board of Directors of CCI as of
November 12, 1997.
10.3 Form of Employment Agreement between CCI and Richard C. Clyde.
[Geneva Rock Material Contracts: Exhibits 10.4-10.10C]
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10.4 Promissory Note dated June 28, 1996 in favor of J&J Mill and Lumber
Company.
10.5 Promissory Note dated October 18, 1994 in favor of Ideal Concrete
Corporation.
10.6 Lease dated January 1, 1991 between Mt. Jordan Limited Partnership
and Geneva Rock.
10.7 Asphalt Sales Contract dated February 13, 1997 between Geneva Rock
and Sinclair Oil Corporation.
10.8 Asphalt Cement Contract dated May 29, 1997 between Geneva Rock and
Crysen Refining, Inc.
10.9 Stock Purchase and Shipping Order dated May 1, 1997 between Geneva
Rock and Conoco Inc.
10.10 Stock Purchase and Shipping Order dated July 1, 1997 between Geneva
Rock and Conoco Inc.
*10.10A Real Property Purchase Agreement dated September 2, 1997 between
Geneva Rock and Orton Ranch & Development, Inc.
*10.10B Purchase Order dated May 29, 1997 from Jacobsen, Okland Joint
Venture regarding Little America Grand Hotel project.
*10.10C Material Contract dated September 12, 1997 between Geneva Rock and
Wasatch Constructors.
[Clyde Material Contracts: Exhibits 10.11-10.17]
10.11 Contract dated October 2, 1997 between Clyde and Holmes Creek
Irrigation Company.
10.12 Contract No. ES-01 dated July 21, 1997 between Clyde and Kennecott
Utah Copper Corporation.
10.13 Agreement dated September 12, 1997 between Clyde and Sun River St.
George Development, L.C.
10.14 Agreement dated July 23, 1997 between Clyde and USPCI.
10.15 Profit Participation Agreement dated September 23, 1997 between
Clyde and Overland Trails, L.L.C.
10.16 Contract dated April 28, 1997 between Clyde and the Utah Department
of Transportation.
10.17 Proposal and Contract dated September 22, 1997 between Clyde and the
United States Department of Transportation.
[Utah Service Material Contracts: Exhibits 10.18-10.19]
10.18 Supply Contract dated July 2, 1990 between Utah Service and Mike
Petersen Oil Company
10.19 Ace Dealer Franchise Agreement dated April 29, 1981 between Utah
Service and Ace Hardware Corporation
[Beehive Insurance Material Contracts: Exhibits 10.20-10.28]
10.20 Agency Agreement dated September 7, 1993 between Beehive Insurance
and St. Paul Fire and Marine Insurance Company.
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<PAGE> 280
10.21 Agency-Company Agreement dated December 27, 1994 between Beehive
Insurance and Reliance Insurance Company
10.22 Agency Agreement dated January 1, 1995 between Beehive Insurance and
The Ohio Casualty Insurance Company.
10.23 Producer Agreement dated May 16, 1988 between Beehive Insurance and
The Swett & Crawford Group, Inc.
10.24 Producer Agreement dated January 1, 1993 between Beehive Insurance
and Sobieski & Bradley, Inc.
10.25 Agency-Company Agreement dated December 15, 1992 between Beehive
Insurance and Royal Insurance Company of America.
10.26 Independent Agency Agreement dated January 1, 1997 between Beehive
Insurance and Unigard Insurance Company.
10.27 Lease Agreement dated October 31, 1997 between Beehive Insurance and
Geneva Rock.
10.28 Retirement Plan for Employees of Clyde, Geneva Rock and Beehive
Insurance.
21 Subsidiaries of the Registrant.
*23.1 Consent of Houlihan Valuation Advisors.
23.2 Consent of Van Cott, Bagley, Cornwall & McCarthy (included in
Exhibit 5.1).
*23.3 Consents of Grant Thornton LLC
*23.4 Consent of Daines Associates LLC
*23.5 Consent of Squire & Company, PC
24.1 Power of Attorney (included in the signature page hereto).
27.1 Financial Data Schedule for CCI.
27.2 Financial Data Schedule for Clyde.
27.3 Financial Data Schedule for Geneva Rock.
27.4 Financial Data Schedule for Utah Service.
27.5 Financial Data Schedule for Beehive Insurance.
99.1 Forms of Proxy Cards.
99.2 Valuation report of Houlihan Valuation Advisors with respect to
Clyde.
99.3 Valuation report of Houlihan Valuation Advisors with respect to
Geneva Rock.
99.4 Valuation report of Houlihan Valuation Advisors with respect to Utah
Service.
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99.5 Valuation report of Houlihan Valuation Advisors with respect to
Beehive Insurance.
*99.6 Form of Letter of Transmittal
- ----------
* Filed with Amendment No. 1 to the Registration Statement
(b) Financial Statement Schedules
Schedules have been omitted because the information required to be
set forth therein is not applicable or is shown in the financial
statements or notes thereto.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed
pursuant to the immediately preceding paragraph, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person of the Registrant in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and CCI being
acquired involved therein, that was not the subject of and included in the
Registration Statement when it became effective.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933:
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high and of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
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<PAGE> 282
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Salt Lake City, State of Utah, on January 21, 1998.
CLYDE COMPANIES, INC.
By: /s/ CAROL C. SALISBURY
-------------------------------------
Carol C. Salisbury
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on January 21,
1998 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* President and Director
- -------------------------------
Carol C. Salisbury
* Vice President and Director
- -------------------------------
Ila C. Cook
* Vice President and Director
- -------------------------------
William R. Clyde
* Secretary, Treasurer and Director
- -------------------------------
Louise C. Gammell
* Director
- -------------------------------
Paul B. Clyde
* Director
- -------------------------------
Richard C. Clyde
</TABLE>
* By: /s/ CAROL C. SALISBURY
- -------------------------------
Carol C. Salisbury
Attorney-in-fact
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<PAGE> 283
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT PAGE
- ----------- ------- -------
<S> <C> <C>
2.1 Agreement and Plan of Merger dated as of November 13, 1997 by and
among CCI, W.W. Clyde Reorganization Corporation, Clyde, Geneva Rock
Reorganization Corporation, Geneva Rock, Utah Service Reorganization
Corporation, Utah Service, Beehive Insurance (amended and restated
as set forth in Exhibit 2.2).
*2.2 Amended and Restated Agreement and Plan of Merger dated as of
November 13, 1997 by and among CCI, W.W. Clyde Reorganization
Corporation Clyde, Geneva Rock Reorganization Corporation, Geneva
Rock Utah Service Reorganization Corporation, Utah Service, Beehive
Insurance Reorganization Corporation and Beehive Insurance.
3.1 Articles of Incorporation of CCI
3.2 Bylaws of CCI.
4.1 Bylaws of CCI filed as Exhibit 3.2 to this Registration Statement.
4.2 Form of CCI Common Stock Certificate.
5 Opinion of Van Cott, Bagley, Cornwall & McCarthy re legality of
Common Stock.
8 Opinion of Grant Thornton LLP regarding tax matters.
[CCI Material Contracts: Exhibits 10.1-10.3]
10.1 Voting Agreement dated November 14, 1997 among the persons named on
Schedule 1 thereto.
10.2 Stock Redemption Plan adopted by the Board of Directors of CCI as of
November 12, 1997.
10.3 Form of Employment Agreement between CCI and Richard C. Clyde.
[Geneva Rock Material Contracts: Exhibits 10.4-10C]
10.4 Promissory Note dated June 28, 1996 in favor of J&J Mill and Lumber
Company.
10.5 Promissory Note dated October 18, 1994 in favor of Ideal Concrete
Corporation.
10.6 Lease dated January 1, 1991 between Mt. Jordan Limited Partnership
and Geneva Rock.
10.7 Asphalt Sales Contract dated February 13, 1997 between Geneva Rock
and Sinclair Oil Corporation.
10.8 Asphalt Cement Contract dated May 29, 1997 between Geneva Rock and
Crysen Refining, Inc.
10.9 Stock Purchase and Shipping Order dated May 1, 1997 between Geneva
Rock and Conoco Inc.
10.10 Stock Purchase and Shipping Order dated July 1, 1997 between Geneva
Rock and Conoco Inc.
*10.10A Real Property Purchase Agreement dated September 2, 1997 between
Geneva Rock and Orton Ranch & Development, Inc.
*10.10B Purchase Order dated May 29, 1997 from Jacobsen, Okland Joint
Venture regarding Little America Grand Hotel project.
*10.10C Material Contract dated September 12, 1997 between Geneva Rock and
Wasatch Constructors
[Clyde Material Contracts: Exhibits 10.11-10.17]
10.11 Contract dated October 2, 1997 between Clyde and Holmes Creek
Irrigation Company.
10.12 Contract No. ES-01 dated July 21, 1997 between Clyde and Kennecott
</TABLE>
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<PAGE> 284
<TABLE>
<S> <C> <C>
Utah Copper Corporation.
10.13 Agreement dated September 12, 1997 between Clyde and Sun River St.
George Development, L.C.
10.14 Agreement dated July 23, 1997 between Clyde and USPCI.
10.15 Profit Participation Agreement dated September 23, 1997 between
Clyde and Overland Trails, L.L.C.
10.16 Contract dated April 28, 1997 between Clyde and the Utah Department
of Transportation.
10.17 Proposal and Contract dated September 22, 1997 between Clyde and the
United States Department of Transportation.
[Utah Service Material Contracts: Exhibits 10.18-10.19]
10.18 Supply Contract dated July 2, 1990 between Utah Service and Mike
Petersen Oil Company
10.19 Ace Dealer Franchise Agreement dated April 29, 1981 between Utah
Service and Ace Hardware Corporation
[Beehive Insurance Material Contracts: Exhibits 10.20-10.28]
10.20 Agency Agreement dated September 7, 1993 between Beehive Insurance
and St. Paul Fire and Marine Insurance Company.
10.21 Agency-Company Agreement dated December 27, 1994 between Beehive
Insurance and Reliance Insurance Company
10.22 Agency Agreement dated January 1, 1995 between Beehive Insurance and
The Ohio Casualty Insurance Company.
10.23 Producer Agreement dated May 16, 1988 between Beehive Insurance and
The Swett & Crawford Group, Inc.
10.24 Producer Agreement dated January 1, 1993 between Beehive Insurance
and Sobieski & Bradley, Inc.
10.25 Agency-Company Agreement dated December 15, 1992 between Beehive
Insurance and Royal Insurance Company of America.
10.26 Independent Agency Agreement dated January 1, 1997 between Beehive
Insurance and Unigard Insurance Company.
10.27 Lease Agreement dated October 31, 1997 between Beehive Insurance and
Geneva Rock.
10.28 Retirement Plan for Employees of Clyde, Geneva Rock and Beehive
Insurance.
21 Subsidiaries of the Registrant.
*23.1 Consent of Houlihan Valuation Advisors.
23.2 Consent of Van Cott, Bagley, Cornwall & McCarthy (included in
Exhibit 5.1).
*23.3 Consents of Grant Thornton LLP
*23.4 Consent of Daines Associates LLC
*23.5 Consent of Squire & Company, PC
24.1 Power of Attorney (included in the signature page hereto).
</TABLE>
II-7
<PAGE> 285
<TABLE>
<S> <C> <C>
27.1 Financial Data Schedule for CCI.
27.2 Financial Data Schedule for Clyde.
27.3 Financial Data Schedule for Geneva Rock.
27.4 Financial Data Schedule for Utah Service.
27.5 Financial Data Schedule for Beehive Insurance.
99.1 Forms of Proxy Cards.
99.2 Valuation report of Houlihan Valuation Advisors with respect to
Clyde.
99.3 Valuation report of Houlihan Valuation Advisors with respect to
Geneva Rock.
99.4 Valuation report of Houlihan Valuation Advisors with respect to Utah
Service.
99.5 Valuation report of Houlihan Valuation Advisors with respect to
Beehive Insurance.
*99.6 Form of Letter of Transmittal
</TABLE>
*Filed with Amendment No. 1 to Registration Statement
II-8
<PAGE> 1
EXHIBIT 2.2
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this
"Agreement") is made and entered into as of the 13th day of November, 1997 by
and among Clyde Companies, Inc., a Utah corporation (the "Parent"), W.W. Clyde
Reorganization Corporation, a Utah corporation ("CRC"), W.W. Clyde & Co., a Utah
corporation ("Clyde"), Geneva Rock Reorganization Corporation, a Utah
corporation ("GRRC"), Geneva Rock Products, Inc., a Utah corporation ("Geneva
Rock"), Utah Service Reorganization Corporation, a Utah corporation ("USRC"),
Utah Service Inc., a Utah corporation ("Utah Service"), Beehive Insurance
Reorganization Corporation, a Utah corporation ("BIRC"), and Beehive Insurance
Agency, Inc., a Utah corporation ("Beehive Insurance").
Recitals
WHEREAS, the parties hereto entered into an Agreement and Plan of Merger
dated as of November 13, 1997 (the "Original Meger Agreement");
WHEREAS, the parties hereto desire to amend and restate the Original
Merger Agreement in its entirety as set forth in this Agreement;
WHEREAS, the Board of Directors of each of the Parent, and CRC, GRRC,
USRC and BIRC (collectively, the "Reorganization Corporations") and Clyde,
Geneva Rock, Utah Service and Beehive Insurance (collectively, the "Acquired
Corporations" and, together with the Parent and the Reorganization Corporations,
the "Corporations") have approved, and have determined that it is advisable and
in the best interests of each of their respective shareholders for the Parent to
acquire the Acquired Corporations on the terms and conditions set forth in this
Agreement; and
WHEREAS, to accomplish such acquisitions, (i) the Board of Directors of
each of the Parent, CRC and Clyde has determined that CRC should be merged with
and into Clyde (the "Clyde Merger"), (ii) the Board of Directors of each of the
Parent, GRRC and Geneva Rock has determined that GRRC should be merged with and
into Geneva Rock (the "Geneva Rock Merger"), (iii) the Board of Directors of
each of the Parent, USRC and Utah Service has determined that USRC should be
merged with and into Utah Service (the "Utah Service Merger"), and (iv) the
Board of Directors of each of the Parent, BIRC and Beehive Insurance has
determined that BIRC should be merged with and into Beehive Insurance (the
"Beehive Insurance Merger" and, collectively with the Clyde Merger, the Geneva
Rock Merger and the Utah Service Merger, the "Mergers") in accordance with this
Agreement and the applicable provisions of the Utah Revised Business Corporation
Act (the
<PAGE> 2
"URBCA") and the Internal Revenue Code of 1986, as amended (the "Code").
Agreement
NOW, THEREFORE, pursuant to and in accordance with the URBCA and the
Code, the Corporations agree upon and prescribe the terms and conditions of the
Mergers as follows:
I. Merger
1.1 Names and States of Incorporation. The name and state of
incorporation of each of the constituent corporations in the Mergers is as
follows:
(a) for the Clyde Merger, W.W. Clyde Reorganization Corporation, a
Utah corporation, and W.W. Clyde & Co., a Utah corporation;
(b) for the Geneva Rock Merger, Geneva Rock Reorganization
Corporation, a Utah corporation, and Geneva Rock Products, Inc., a Utah
corporation;
(c) for the Utah Service Merger, Utah Service Reorganization
Corporation, a Utah corporation, and Utah Service Inc., a Utah
corporation; and
(d) for the Beehive Insurance Merger, Beehive Insurance
Reorganization Corporation, a Utah corporation, and Beehive Insurance
Agency, Inc., a Utah corporation.
1.2 Closing and Effective Time. The closing of each of the
Mergers (the "Closing") shall take place concurrently at the offices of Van
Cott, Bagley, Cornwall & McCarthy at 8:30 a.m. (local time) on a date (the
"Closing Date") to be specified by the Corporations, which shall be no sooner
than the date upon which all of the conditions specified in Article V of this
Agreement have been satisfied or waived by the applicable Corporations (other
than those conditions that, by their nature, are to be satisfied at the
Closing). In accordance with the URBCA and Articles of Mergers to be filed by
each of the respective Acquired Corporations with the Utah Department of
Commerce, Division of Corporations and Commercial Code (the "Utah Division of
Corporations"), the Mergers shall become effective sequentially, with the Clyde
Merger becoming effective first, followed one hour later by the Utah Service
Merger, followed one hour later by the Beehive Insurance Merger and followed one
hour later by the Geneva Rock Merger. Each of the respective Mergers shall be
effective at the date and time specified in the
2
<PAGE> 3
applicable Articles of Merger (for each Merger, the "Effective Time"). The
Closing Date shall be prior to the Effective Time.
1.3 Mergers. At the Effective Time, the following shall occur:
(a) The respective Reorganization Corporation shall be merged with
and into the corresponding Acquired Corporation, and the separate
existence of the Reorganization Corporation shall cease.
(b) The respective Acquired Corporation shall be the surviving
corporation and shall continue its corporate existence in accordance
with the laws of the State of Utah and under its current name.
(c) The respective Merger shall have the effects set forth in
Section 16-10a-1106 of the URBCA.
1.4 Articles of Incorporation. The Articles of Incorporation of each of
the Acquired Corporations shall continue to be the Articles of Incorporation of
such Acquired Corporation after the Effective Time, until amended or repealed in
accordance with the URBCA.
1.5 Bylaws. The Bylaws of each of the Acquired Corporations shall
continue to be the Bylaws of such Acquired Corporation after the Effective Time,
until amended or repealed in the manner provided by such Bylaws and the URBCA.
1.6 Directors. The directors of each of the Acquired Corporations
immediately prior to the Effective Time shall continue to serve as the directors
of such Acquired Corporation for the term specified in the Bylaws of such
Acquired Corporation.
1.7 Officers. The officers of each of the Acquired Corporations
immediately prior to the Effective Time shall continue to be officers of such
Acquired Corporation until otherwise provided in accordance with the Bylaws of
such Acquired Corporation.
1.8 Securities Filings. If required by applicable law, the Corporations
shall promptly prepare and file with the Securities and Exchange Commission (the
"SEC") a Registration Statement on Form S-4 (including any amendments or
supplements thereto, the "Registration Statement") and, as part of the
Registration Statement, a letter, notice of meeting, proxy statement and form of
proxy to the shareholders of each of the Acquired Companies in connection with
the Mergers (collectively, including any amendments or supplements thereto, the
"Proxy
3
<PAGE> 4
Statement"). Each of the Corporations shall provide reasonable opportunities for
the other Corporations to review and comment on the contents of the Registration
Statement. At any time after the preparation of the Registration Statement, each
of the Corporations agrees promptly to notify the others of and to correct any
information which any of them shall have furnished for inclusion in the
Registration Statement that shall have become false or misleading in any
material respect. Each of the Corporations shall use its reasonable best efforts
to have the Registration Statement declared effective under the Securities Act
of 1933, as amended (the "Securities Act"), as promptly as practicable after
such filing. The Parent shall also take any action required to be taken under
any applicable state securities laws in connection with the issuance of Parent
Common Stock (as defined below) in the Merger, and each of the Corporations
shall furnish all information concerning its business, affairs and/or
shareholders as may be reasonably requested in connection with any such action.
1.9 Special Meeting. As promptly as practicable following the execution
and delivery of this Agreement, in accordance with the URBCA and other
applicable law, each of the Acquired Corporations (a) shall duly call, give
notice of, convene and hold a special meeting of its shareholders (each a
"Special Meeting") and shall submit this Agreement to a vote of such
shareholders at the Special Meeting, (b) subject to any review by the SEC, shall
include in the Proxy Statement, the recommendation of the Board of Directors
that the shareholders should vote in favor of the approval of this Agreement and
(c) shall take all such other action reasonably necessary or appropriate to
obtain the lawful approval of this Agreement by the shareholders.
1.10 Geneva Rock Common Stock Owned by Clyde. As of the date of this
Agreement, Clyde owns (and as of the Effective Time, Clyde will own) 7,518
shares (the "Distribution Shares") of Geneva Rock Common Stock (as defined
below). Immediately after the Effective Time of the Clyde Merger, Clyde, acting
in accordance with resolutions duly adopted by its Board of Directors, shall
distribute (in a dividend distribution) the Distribution Shares to the Parent.
Immediately upon such distribution, the Parent shall own the Distribution
Shares, and, at the Effective Time of the Geneva Rock Merger, the Distribution
Shares shall be treated in the same manner as all of the other shares of Geneva
Rock Common Stock owned by the Parent in accordance with Section 2.1(c) below.
4
<PAGE> 5
II. Conversion of Shares
2.1 Conversion. As of the Effective Time, by virtue of each of the
Mergers and without any further action, the following shall occur:
(a) Each issued and outstanding share of Clyde Common Stock (as
defined below) (other than (i) shares of Clyde Common Stock owned by the
Parent, which shall not be converted and shall each remain one (1)
issued and outstanding share of Clyde Common Stock, and (ii) Dissenting
Shares (as defined below), if any) shall be converted into 33.93 shares
of Parent Common Stock.
(b) Each issued and outstanding share of CRC Common Stock (as
defined below) shall be converted into one (1) share of Clyde Common
Stock.
(c) Each issued and outstanding share of Geneva Rock Common Stock
(other than (i) shares of Geneva Rock Common Stock owned by the Parent,
which shall not be converted and shall each remain one (1) issued and
outstanding share of Geneva Rock Common Stock, and (ii) Dissenting
Shares, if any) shall be converted into 239.27 shares of Parent Common
Stock.
(d) Each issued and outstanding share of GRRC Common Stock (as
defined below) shall be converted into one (1) share of Geneva Rock
Common Stock.
(e) Each issued and outstanding share of Utah Service Common Stock
(as defined below) (other than (i) shares of Utah Service Common Stock
owned by the Parent, which shall not be converted and shall each remain
one (1) issued and outstanding share of Utah Service Common Stock, and
(ii) Dissenting Shares, if any) shall be converted into 43.43 shares of
Parent Common Stock.
(f) Each issued and outstanding share of USRC Common Stock (as
defined below) shall be converted into one (1) share of Utah Service
Common Stock.
(g) Each issued and outstanding share of Beehive Insurance Common
Stock (as defined below) (other than (i) shares of Beehive Insurance
Common Stock owned by the Parent, which shall not be converted and shall
each remain one (1) issued and outstanding share of Beehive Insurance
Common Stock, and (ii) Dissenting Shares, if any) shall be converted
into 4.33 shares of Parent Common Stock.
5
<PAGE> 6
(h) Each issued and outstanding share of BIRC Common Stock (as
defined below) shall be converted into one (1) share of Beehive
Insurance Common Stock.
2.2 Fractional Shares. Notwithstanding any other provision of this
Agreement to the contrary, each holder of shares of common stock of the Acquired
Corporations exchanged pursuant to the Mergers who would otherwise have been
entitled to receive a fraction of a share of Parent Common Stock (after taking
into account all Acquired Corporation Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
such fraction multiplied by $14.52 (the projected value, determined as of the
date of this Agreement, of one share of Parent Common Stock as of the Effective
Time). No such holder shall be entitled to any fractional share of Parent Common
Stock (or to any dividends, voting rights or any other rights as a shareholder
in respect of such fractional share of Parent Common Stock).
2.3 Acquired Corporation Certificates. Certificates nominally
representing shares of the common stock of the Acquired Corporations ("Acquired
Corporation Certificates") shall be treated as follows:
(a) As of the Effective Time, each Acquired Corporation Certificate,
other than any certificate representing Dissenting Shares, if any, for
all purposes, shall be deemed to evidence the number of shares of Parent
Common Stock determined in accordance with Section 2.1 above.
(b) As soon as practicable after the Effective Time, the Parent
shall mail to each record holder of an outstanding Acquired Corporation
Certificate, as of the Effective Time, a form of letter of transmittal
(the "Transmittal Letter") that is reasonably acceptable to the Acquired
Corporations (which shall specify that delivery of an Acquired
Corporation Certificate shall be effected, and risk of loss and title to
the Acquired Corporation Certificate shall pass, only upon proper
delivery of the Acquired Corporation Certificate to the Parent) and
instructions for use in effecting the surrender of each Acquired
Corporation Certificate in exchange for a Parent Common Stock
certificate ("Parent Certificate"). Upon surrender to the Parent of an
Acquired Corporation Certificate, together with a duly executed
Transmittal Letter (and any other documents which may be reasonably
required by the Parent, if any), the holder of such Acquired Corporation
Certificate shall receive promptly in exchange therefor a Parent
Certificate for the number of shares of Parent
6
<PAGE> 7
Common Stock evidenced thereby in accordance with Section 2.1 above.
Thereafter, the applicable Acquired Corporation Certificate shall be
canceled. If a Parent Certificate is to be issued to a person other than
the person in whose name the surrendered Acquired Corporation
Certificate is registered, it shall be a condition of issuance of the
Parent Certificate (x) that the Acquired Corporation Certificate so
surrendered shall be properly endorsed or otherwise be in proper form
for transfer and (y) that the person requesting such issuance shall pay
any transfer or other taxes required by reason of the issuance to a
person other than the registered holder of the Acquired Corporation
Certificate surrendered or establish to the satisfaction of the Parent
that such tax has been paid or is not applicable. The Parent shall pay
all charges and expenses, including those of the Acquired Corporations,
in connection with the distribution of the Parent Certificates.
(c) If any Acquired Corporation Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Acquired Corporation Certificate to be lost, stolen
or destroyed, the Parent will issue in exchange for such lost, stolen or
destroyed Acquired Corporation Certificate the shares of Parent Common
Stock deliverable in respect thereof as determined in accordance with
Section 2.1 above; provided that, at the option of the Parent, the
person to whom such shares are issued, as a condition precedent to the
issuance of such shares, shall give to the Parent a bond in such sum as
the Parent may direct or otherwise indemnify the Parent in a manner
satisfactory to the Parent against any claim that may be made against
the Parent with respect to the Acquired Corporation Certificate claimed
to have been lost, stolen or destroyed.
2.4 Dissenters' Rights. Notwithstanding any other provision of this
Agreement, each share of the common stock of any of the Acquired Corporations
(a) as to which a written notice of intent to demand payment was submitted to
the applicable Acquired Corporation in accordance with Section 16-10a-1321(1)(a)
of the URBCA, (b) which is not voted in favor of approval of this Agreement at a
Special Meeting, and (c) as to which a written demand for payment of fair value
shall have been or may still be timely filed, and the Acquired Corporation
Certificate(s) for such shares shall have been or may still be deposited with
the applicable Acquired Corporation in accordance with the requirements of Part
13 of the URBCA (collectively, "Dissenting
7
<PAGE> 8
Shares"), shall not be converted into shares of Parent Common Stock. Each holder
of Dissenting Shares who becomes entitled under the URBCA to receive payment of
the fair value of such holder's Dissenting Shares shall receive such payment
from the Parent (but only after such fair value shall have been agreed upon or
finally determined) and such Dissenting Shares shall thereupon be canceled. Each
Dissenting Share as to which dissenters' rights pursuant to the URBCA shall be
effectively withdrawn or lost shall thereupon be deemed to have been converted,
at the Effective Time, into shares of Parent Common Stock in accordance with
Section 2.1 above.
2.5 Options, Warrants or Other Rights. At the Effective Time, any
options, warrants or other rights to purchase shares of any of the Acquired
Corporations, without any further action, shall be terminated.
III. Representations and Warranties of the Acquired Corporations
Each of the Acquired Corporations, solely as to itself and not as to any
other Acquired Corporation, represents and warrants to the Parent as follows,
subject only to such limitations and exceptions as are set forth below:
3.1 Organization and Good Standing. The Acquired Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Utah, and has all requisite corporate power and corporate
authority to own, lease and operate its properties to carry on its business as
now being conducted. The Acquired Corporation is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification
necessary, except where the failure to be so qualified would not have a material
adverse effect on the Acquired Corporation.
3.2 Capital Structure of the Acquired Corporations.
(a) Clyde has an authorized capital structure consisting of Two
Hundred Thousand (200,000) shares of Ten Dollar ($10.00) par value
common stock ("Clyde Common Stock"), and Ninety-Four Thousand Five
Hundred Forty-Four (95,544) shares of Clyde Common Stock are issued and
outstanding.
(b) Geneva Rock has an authorized capital structure consisting of
Fifty Thousand (50,000) shares of Ten Dollar ($10.00) par value common
stock ("Geneva Rock Common Stock"), and Twenty-One Thousand Eight
Hundred Two (21,802) shares of Geneva Rock Common Stock are issued and
outstanding.
8
<PAGE> 9
(c) Utah Service has an authorized capital structure consisting of
One Hundred Thousand (100,000) shares of Ten Dollar ($10.00) par value
common stock ("Utah Service Common Stock"), and Five Thousand Four
Hundred Thirteen (5,413) shares of Utah Service Common Stock are issued
and outstanding.
(d) Beehive Insurance has an authorized capital structure consisting
of Fifty Thousand (50,000) shares of One Dollar ($1.00) par value common
stock ("Beehive Insurance Common Stock"), and Twenty-One Thousand Four
Hundred Sixty-Seven (21,467) shares of Beehive Insurance Common Stock
are issued and outstanding.
3.3 Authority. The Acquired Corporation has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Acquired
Corporation, subject in the case of this Agreement only to the approval of this
Agreement by the shareholders of the Acquired Corporation as required under the
URBCA.
3.4 Execution and Delivery. This Agreement has been duly executed and
delivered by the Acquired Corporation and constitutes a valid and binding
obligation of the Acquired Corporation, enforceable against the Acquired
Corporation in accordance with its terms but subject to (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and equitable
principles, and (ii) statutes, rules or procedures and applicable case law
limiting the availability of or prescribing the procedural requirements for the
exercise of remedies.
3.5 Property. The Acquired Corporation has good, valid and marketable
title to (or in the case of leased property, valid leasehold interests in) all
of its properties and assets.
3.6 No Violations. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not, (a)
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a material benefit
under, or the creation of a lien, pledge, security interest, charge or other
encumbrance on assets (any such conflict, violation, default, right of
termination, cancellation or acceleration, loss or creation, a "Violation")
pursuant to any provision of the Articles of Incorporation or Bylaws of the
Acquired Corporation, or (b) result in any Violation of (i) any loan or credit
agreement, note, mortgage,
9
<PAGE> 10
indenture, lease or other agreement, obligation, instrument, permit, concession,
franchise, license, statute, law, ordinance, rule or regulation applicable to
the Acquired Corporation or its properties or assets (except for such Violations
as would not, singly or in the aggregate, have a material adverse effect on the
Acquired Corporation), or (ii) any judgment, order or decree applicable to the
Acquired Corporation or its properties or assets.
3.7 Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental agency, authority or instrumentality, domestic
or foreign (each, a "Governmental Authority"), is required by or with respect to
the Acquired Corporation in connection with the execution and delivery of this
Agreement by the Acquired Corporation, or the consummation by the Acquired
Corporation of the transactions contemplated hereby, except for (a) the filing
with the SEC of the Registration Statement (including the Proxy Statement as a
part thereof), (b) the filing of the Articles of Merger with the Utah Division
of Corporations and appropriate documents with the relevant authorities of other
states in which the Acquired Corporation is qualified to do business, (c)
notices and other filings as may be required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (d) filings as
may be required under state securities laws and (e) such filings,
authorizations, orders and approvals as may be required under foreign laws.
3.8 Information Supplied. None of the information supplied or to be
supplied by the Acquired Corporation for inclusion or incorporation by reference
in the Proxy Statement, at the date of mailing to the Acquired Corporation's
shareholders and at the time of its Special Meeting, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. All documents that
the Acquired Corporation is responsible for filing with any Governmental
Authority in connection with the transactions contemplated hereby will comply as
to form in all material respects with the provisions of applicable law. Without
limiting any of the representations and warranties contained herein, no
representation or warranty by the Acquired Corporation as of the date thereof
contains any untrue statement of material fact, or omits a material fact
necessary in order to make the statements contained therein, in light of the
circumstances under which such statements are or will be made, not misleading.
3.9 Litigation. There are no actions, arbitrations, audits, hearings,
investigations, suits or litigation (whether
10
<PAGE> 11
civil, criminal, administrative, investigative or informal) before or otherwise
involving any Governmental Authority, court or arbitrator (a "Proceeding")
commenced by or against the Acquired Corporation (or that otherwise relate to or
may affect the business or the assets of the Acquired Corporation) that either
(a) challenge, or that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of transactions specified in this
Agreement, or (b) would reasonably be expected to have a material adverse effect
on the Acquired Corporation. To the knowledge of the Acquired Corporation, (1)
no such Proceeding has been threatened, and (2) no event has occurred or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such Proceeding.
3.10. The financial statements of the Acquired Corporation (including
any balance sheets and statements of income, changes in stockholders' equity and
cash flow, together with any reports thereon of independent certified public
accountants) provided by the Acquired Corporation in connection with the
preparation of (a) the Registration Statement, and (b) the appraisals of the
Acquired Companies prepared by Houlihan Valuation Advisors and dated October 23,
1997 (the "HVA Appraisals"), fairly present the financial condition and the
results of operations, changes in stockholders' equity and cash flow of the
Acquired Corporation as at the respective dates of and for the periods referred
to in such financial statements, all in accordance with generally accepted
accounting principles ("GAAP"). The financial statements referred to in this
Section 3.10 reflect the consistent application of accounting principles
throughout the periods involved, except as otherwise disclosed in the notes to
such financial statements.
3.11 Taxes.
(a) All material reports, filings, statements, declarations and
returns (collectively, "Tax Returns") with respect to taxes, charges,
fees, levies or assessments (collectively, "Taxes") required to be filed
by the Acquired Corporation as of the Effective Time have been or will
be duly filed, and such Tax Returns are or will be true and correct in
all material respects. The Acquired Corporation has paid or will pay all
Taxes shown as due and payable on such Tax Returns; and the charges,
accruals and reserves for Taxes with respect to the Acquired Corporation
reflected in the Acquired Corporation's financial statements are
adequate under GAAP to cover Taxes accruing through the date thereof,
including contested amounts and amounts not yet due and payable.
11
<PAGE> 12
(b) There are no material claims with respect to Taxes pending
against the Acquired Corporation and the Acquired Corporation is not
aware of any threatened claim for Taxes or any basis for such claims. No
material issues have been raised in any examination by any Governmental
Authority with respect to the Acquired Corporation which reasonably
could be expected to result in a proposed deficiency for any other
period not so examined, and there are not now in force any waivers or
agreements by the Acquired Corporation for the extension of time for the
assessment of any material Taxes, nor has any such waiver or agreement
been requested by any Governmental Authority. The Acquired Corporation
does not have any liability for any material Taxes of any corporation or
entity other than the Acquired Corporation.
(c) The Acquired Corporation has paid or is withholding and will pay
when due to the proper Governmental Authorities all material withholding
amounts required to be withheld with respect to all Taxes.
3.12 Undisclosed Liabilities. The Acquired Corporation is not subject to
any liabilities of any nature which have had or can reasonably be expected to
have a material adverse effect on its business or financial prospects.
IV. Representations and Warranties of the Parent
The Parent represents and warrants to the Acquired Corporations as
follows, subject only to such exceptions and limitations as are set forth below:
4.1 Organization, Standing and Authority. Each of the Parent and the
Reorganization Corporations is a corporation duly organized, validly existing
and in good standing under the laws of the State of Utah, and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Each of the Parent and the
Reorganization Corporations is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so qualified would not have a material adverse
effect on the Parent and the Reorganization Corporations considered as a whole.
4.2 Capital Structure of the Parent.
(a) As of the Effective Time, (i) the authorized capital stock of
the Parent will consist of Ten Million
12
<PAGE> 13
(10,000,000) shares of common stock ("Parent Common Stock"), and (ii)
2,303,920 shares of Parent Common Stock will be issued and outstanding.
Shares of Parent Common Stock to be issued in the Mergers, when issued
in accordance with this Agreement, will be validly issued, fully paid
and nonassessable.
(b) Except for the Articles of Restatement of the Articles of
Incorporation of the Parent and the Amended and Restated Articles of
Incorporation of the Parent attached thereto (collectively, the "Parent
Recapitalization Documents"), there are no options, warrants, calls,
rights, commitments or agreements of any character to which the Parent
or any of the Reorganization Corporations is a party or by which it is
bound obligating the Parent or any of the Reorganization Corporations to
issue, deliver or sell, or cause to be issued, delivered or sold, shares
of capital stock or obligating the Parent or any of the Reorganization
Corporations to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement.
(c) Except for that certain Clyde Companies, Inc. Stock Redemption
Plan, adopted as of November 12, 1997 by the Board of Directors of the
Parent and the Parent Recapitalization Documents, there are no
outstanding contractual obligations of the Parent or any of the
Reorganization Corporations, to repurchase, redeem or otherwise acquire
any shares of capital stock of the Parent or any of the Reorganization
Corporations.
(d) Except for the Parent Recapitalization Documents, the Parent has
not (i) made or agreed to make any stock split or stock dividend, or
issued or permitted to be issued any shares of capital stock or
securities exercisable for or convertible into shares of capital stock
of the Parent or any of the Reorganization Corporations.
(e) All of the outstanding shares of capital stock of each
Reorganization Corporation (i) are validly issued, fully paid and
nonassessable and free of any preemptive rights, and (ii) are directly
owned by the Parent, free and clear of all liens, claims, pledges,
agreements, voting or other restrictions, charges or other encumbrances,
with the result that the Parent directly owns the entire equity interest
in each of the Reorganization Corporations.
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<PAGE> 14
4.3 The Parent has all requisite corporate power and corporate
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Parent.
4.4 Execution and Delivery. This Agreement has been duly executed and
delivered by the Parent and constitutes a valid and binding obligation of the
Parent, enforceable against the Parent in accordance with its terms but subject
to (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
and equitable principles, and (ii) statutes, rules or procedures and applicable
case law limiting the availability of or prescribing the procedural requirements
for the exercise of remedies.
4.5 No Violations. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not, (a)
result in any Violation of any provision of the Articles of Incorporation or
Bylaws of the Parent, or (b) result in any Violation of (i) any loan or credit
agreement, note, mortgage, indenture, lease or other agreement, obligation,
instrument, permit, concession, franchise, license, statute, law, ordinance,
rule or regulation applicable to the Parent or its properties or assets (except
for such Violations as would not, singly or in the aggregate, have a material
adverse effect on the Parent), or (ii) any judgment, order or decree applicable
to the Parent or its properties or assets.
4.6 Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority is required
by or with respect to the Parent in connection with the execution and delivery
of this Agreement by the Parent, or the consummation by the Parent of the
transactions contemplated hereby, except for (a) the filing with the SEC of the
Registration Statement (including the Proxy Statement as a part thereof), (b)
the filing of the Articles of Merger with the Utah Division of Corporations and
appropriate documents with the relevant authorities of other states in which the
Parent is qualified to do business, (c) notices and other filings as may be
required under the HSR Act, (d) filings as may be required under state
securities laws and (e) such filings, authorizations, orders and approvals as
may be required under foreign laws.
4.7 Information Supplied. None of the information supplied or to be
supplied by the Parent for inclusion or incorporation by reference in the Proxy
Statement, at the date of mailing to the Acquired Corporation's shareholders and
at the time of the Special Meeting, will contain any untrue statement of
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a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. All documents that the
Parent is responsible for filing with any Governmental Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable law. Without limiting any of the
representations and warranties contained herein, no representation or warranty
by the Parent as of the date thereof contains any untrue statement of material
fact, or omits a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which such statements are
or will be made, not misleading.
4.8 The financial statements of the Parent (including any balance
sheets and statements of income, changes in stockholders' equity and cash flow,
together with any reports thereon of independent certified public accountants)
provided by the Parent in connection with the preparation of the Registration
Statement, fairly present the financial condition and the results of operations,
changes in stockholders' equity and cash flow of the Parent as at the respective
dates of and for the periods referred to in such financial statements, all in
accordance with GAAP. The financial statements referred to in this Section 4.8
reflect the consistent application of accounting principles throughout the
periods involved, except as otherwise disclosed in the notes to such financial
statements.
4.9 Litigation. There are no Proceedings commenced by or against the
Parent or any of the Reorganization Corporations (or that otherwise relate to or
may affect the business or the assets of the Parent or any of the Reorganization
Corporations) that either (a) challenge or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of transactions
specified in this Agreement, or (b) would reasonably be expected to have a
material adverse effect on the Parent and the Reorganization Corporations
considered as a whole. To the knowledge of the Parent, (a) no such Proceeding
has been threatened, and (b) no event has occurred or circumstance exists that
may give rise to or serve as a basis for the commencement of any such
Proceeding.
4.10 Undisclosed Liabilities. The Parent is not subject to any
liabilities of any nature which have had or can reasonably be expected to have a
material adverse effect on its business or financial prospects.
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V. Conditions to Closing
5.1 Conditions to the Corporations' Obligations. The respective
obligations of each of the Corporations to consummate the Mergers shall be
subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions:
(a) This Agreement shall have been approved by (i) the shareholders
of each of the Reorganization Corporations and the Acquired Corporations
in accordance with the URBCA, and (ii) a majority of the shareholders of
the Parent in accordance with resolutions duly adopted by the Board of
Directors of the Parent.
(b) The total number of Dissenting Shares, if converted into shares
of Parent Common Stock in accordance with Section 2.1 above, would be
less than or equal to 346,935 shares of Parent Common Stock (which
number of shares of Parent Common Stock is equal to five percent (5%) of
the total number of shares of Parent Common Stock that would be
outstanding immediately after the Mergers if there were no Dissenting
Shares and all of the shares of the common stock of the Acquired
Companies were converted into Parent Common Stock in accordance with
Section 2.1 above).
(c) The Parent and the Acquired Corporations shall have received the
opinion of Grant Thorton LLP that the Mergers constitute tax-free
transfers in accordance with Section 351 of the Code or tax-free
reorganizations in accordance with Section 368(a)(1)(B) of the Code.
(d) No Governmental Authority shall have issued any order, and there
shall not be any statute, rule, decree or regulation restraining,
prohibiting or making illegal the consummation of the Merger.
(e) Any waiting period applicable to the consummation of the Mergers
under the HSR Act shall have expired or been terminated.
5.2 Conditions to the Obligations of the Acquired Corporations. The
obligation of the Acquired Corporations to effect the Mergers is further subject
to the satisfaction or waiver, on or prior to the Closing Date, of each of the
following conditions:
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(a) The representations and warranties of the Parent contained in
this Agreement shall be true and correct in all material respects when
made and as of the Closing Date (except for matters which specifically
address a particular date which need only be true and correct as of such
date).
(b) The Parent shall have performed in all material respects all of
the obligations to be performed by it under this Agreement prior to the
Closing Date.
(c) A responsible officer of the Parent shall have provided the
Acquired Corporations with a certificate dated the Closing Date which
provides (i) that the matters referred to in subsections (a) and (b) of
this Section 5.2 are accurate and complete, (ii) that the Parent is
prepared in all material respects to perform, and shall perform, all of
the obligations to be performed by it under this Agreement up to the
Effective Time, and (iii) for statements of fact with respect to such
other matters as the Acquired Corporations may reasonably request.
5.3 Conditions to the Obligations of the Parent. The obligation of the
Parent to effect the Mergers is further subject to the satisfaction or waiver,
on or prior to the Closing Date, of each of the following conditions:
(a) The representations and warranties of each of the Acquired
Corporations contained in this Agreement shall be true and correct in
all material respects when made and as of the Closing Date (except for
matters which specifically address a particular date which need only be
true and correct as of such date).
(b) Each of the Acquired Corporations shall have performed in all
material respects all of the obligations to be performed by it under
this Agreement prior to the Closing Date.
(c) A responsible officer of each of the Acquired Corporations shall
have provided the Parent with a certificate dated the Closing Date which
provides (i) that the matters referred to in subsections (a) and (b) of
this Section 5.3 are accurate and complete, (ii) that the Acquired
Corporation is prepared in all material respects to perform, and shall
perform, all of the obligations to be performed by it under this
Agreement up to the Effective Time, and (iii) for
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statements of fact with respect to such other matters as the Parent may
reasonably request.
VI. Termination
6.1 Right to Terminate. Notwithstanding any other provision of this
Agreement to the contrary, this Agreement may be terminated and the Mergers may
be abandoned at any time prior to the Effective Time, whether before or after
shareholder approval, in accordance with Sections 6.2 through 6.4 below.
6.2 Automatic Termination. Unless otherwise agreed in writing by each of
the Corporations, this Agreement shall be automatically terminated, without any
further actions by any of the Corporations (except as may be otherwise required
by the URBCA), if (a) any Governmental Authority shall have issued a statute,
order, decree or regulation or taken any other action permanently restraining or
enjoining or otherwise materially restricting the consummation of the
transactions contemplated by this Agreement and such statute, order, decree,
regulation or other action shall have become final and non-appealable, or (b)
the Mergers have not been consummated on or before June 30, 1998.
6.3 Termination by the Acquired Corporations. This Agreement may be
terminated by the Boards of Directors of the Acquired Corporations, acting
jointly, if the Parent breaches or fails in any material respect to perform or
comply with any of its covenants and agreements contained herein or breaches its
representations and warranties in any material respect; provided, however, that
if any such breach is curable by the breaching party through the exercise of the
breaching party's reasonable best efforts and for so long as such breaching
party shall be so attempting to cure such breach for a period not to exceed 20
days, the Acquired Corporations may not terminate this Agreement pursuant to
this Section 6.3.
6.4 Termination by the Parent. This Agreement may be terminated by the
Board of Directors of the Parent if any of the Acquired Corporations breaches or
fails in any material respect to perform or comply with any of its covenants and
agreements contained herein or breaches its representations and warranties in
any material respect; provided, however, that if any such breach is curable by
the Acquired Corporation through the exercise of the Acquired Corporation's
reasonable best efforts and for so long as the Acquired Corporations shall be so
attempting to cure such breach for a period not to exceed 20 days, the Parent
may not terminate this Agreement pursuant to this Section 6.4.
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6.5 Notice of Termination. In the event of the termination of this
Agreement as provided in Sections 6.3 or 6.4 above, written notice thereof shall
forthwith be given to the other party and such written notice shall specify the
provision of this Agreement pursuant to which such termination is made.
6.6 Effect of Termination. Upon the termination of this Agreement
pursuant to any of Sections 6.2, 6.3 or 6.4 above, this Agreement shall
thereupon become null and void and there shall be no liability on the part of
any of the Corporations to the other (or to any other person). Without limiting
the generality of the foregoing, the Corporations expressly agree (a) that the
sole remedy for any breach of this Agreement shall be the termination rights
contained in Sections 6.3 or 6.4 above, and (b) that in the event of any breach
of this Agreement, the breaching party shall have no liability to any person
whatsoever (including, without limitation, liability for actual, consequential,
punitive, exemplary or special damages).
VII. General Provisions
7.1 Approval. This Agreement has been approved by the Board of Directors
and the shareholders of each of the Corporations as required by the URBCA.
7.2 Actions Prior to Closing. Between the date of this Agreement and the
Effective Time, (a) the Acquired Corporations shall each operate their
respective businesses in accordance with sound business practices and shall not
engage in any transactions other than in the ordinary course of business, and
(b) neither the Parent nor any of the Acquired Corporations shall issue any
additional shares of its capital stock (except, the Parent shall issue shares of
Parent Common Stock in accordance with the Parent Recapitalization Documents).
7.3 Taxation of Transaction. The Corporations intend that the
transactions contemplated by this Agreement shall constitute tax-free transfers
and/or reorganizations pursuant to Sections 351 and 368 of the Code. Therefore,
all of the terms and provisions of this Agreement shall be interpreted so that
such terms and provisions are in accordance with Sections 351 and 368 of the
Code.
7.4 Additional Actions. The officers of the Corporations shall execute
all such other documents and shall take all such other actions as may be
necessary or advisable to make this Agreement and the Mergers effective.
7.5. Subject to applicable law, this Agreement may be amended, modified
or supplemented at
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any time prior to the Closing Date by the written agreement of each of the
Corporations and the Parent.
7.6 Waiver of Compliance. Except as otherwise provided in this
Agreement, any failure of any of the Corporations to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
7.7 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, by overnight express
courier service or by facsimile transmission (in each case, as of the date of a
written receipt obtained by the party giving such notice), to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Clyde, to:
1375 N. Main Street
Springville, Utah 84663
Facsimile: (801) 489-7653
(b) if to Geneva Rock, to:
302 West 5400 South
Suite 200
Murray, Utah 84107
Facsimile: (801) 765-7830
(c) if to the Utah Service, to:
35 East 400 South
Springville, Utah 84663
Facsimile: (801) 489-8978
(d) if to the Beehive Insurance, to:
302 West 5400 South
Suite 109
Murray, Utah 84107
Facsimile: (801) 685-2899
(e) if to the Parent, to:
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1423 Devonshire Drive
Salt Lake City, Utah 84108
Facsimile: (801) ___-____
Copies of any notices should be provided to counsel as follows:
Van Cott, Bagley, Cornwall & McCarthy
50 South Main Street, Suite 1600
Salt Lake City, Utah 84144
Attention: David E. Salisbury, Esq.
Facsimile: (801) 534-0058
7.8 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the Corporations and their respective
successors and assigns.
7.9 Third Party Rights. This Agreement is not intended to confer upon
any other person except the Corporations any rights or remedies hereunder.
7.10 Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. All words used in this Agreement shall be construed to be of
such gender or number as the circumstances require.
7.11 Entire Agreement. This Agreement, including any certificates and
instruments referred to herein, embody the entire agreement and understanding of
the Corporations in respect of the transactions contemplated by this Agreement.
There are no restrictions, promises, representations, warranties, covenants or
undertakings, other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between the
Corporations with respect to such transactions.
7.12 Expenses. If the Mergers are consummated in accordance with this
Agreement, the Parent shall pay all of the expenses incurred by the Corporations
in connection with transactions contemplated by this Agreement. If this
Agreement is terminated, (a) each Corporation shall pay its pro rata share
(based upon the valuation of each of the Corporations as set forth in the HVA
Appraisals) of the expenses incurred by all of the Corporations in connection
with transactions contemplated by this Agreement, and (b) the officers of each
of the Corporations shall, in good faith, take all of the actions which may be
necessary or advisable to cause such expenses to be paid in accordance with
clause (a) above.
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7.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.14 Governing Law. This Agreement shall be governed by the laws of the
State of Utah (regardless of the laws that might otherwise govern under
applicable principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and remedies.
[signature page follows]
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IN WITNESS WHEREOF, this Agreement has been executed by the duly
authorized officers of the Corporations as of the date first written above.
Acquired
Corporations: W.W. Clyde & Co., a Utah corporation
By: ____________________________
Its: ___________________________
Geneva Rock Products, Inc., a Utah corporation
By: ____________________________
Its: ___________________________
Utah Service Inc., a Utah corporation
By: ____________________________
Its: ___________________________
Beehive Insurance Agency, Inc., a Utah corporation
By: ____________________________
Its: ___________________________
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Reorganization
Corporations: W.W. Clyde Reorganization
Corporation, a Utah corporation
Geneva Rock Reorganization
Corporation, a Utah corporation
Utah Service Reorganization
Corporation, a Utah corporation
Beehive Insurance Reorganization
Corporation, a Utah corporation
By: ____________________________
Their: _________________________
The Parent: Clyde Companies, Inc.,
a Utah corporation
By: ____________________________
Its: ___________________________
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[EXHIBIT 10.10A]
REAL PROPERTY PURCHASE AGREEMENT
THIS REAL PROPERTY PURCHASE AGREEMENT ("Agreement") is made and entered
into as of the 2nd day of September, 1997 by and between ORTON RANCH &
DEVELOPMENT, INC., a Utah corporation (hereinafter sometimes referred to as the
"Seller"), as seller, and GENEVA ROCK PRODUCTS, INC., a Utah corporation
(hereinafter sometimes referred to as the "Buyer"), as buyer.
RECITALS:
A. The Seller is the owner of certain real property (hereinafter sometimes
referred to as the "Property") consisting of approximately 57 acres of land
situated in Box Elder and Weber Counties, State of Utah, more particularly
described in Exhibit A attached hereto and by this reference made a part hereof.
B. The Buyer desires to purchase all of the Property for the purchase
price and on the terms and conditions set forth in this Agreement, and the
Seller is willing to sell the Property to the Buyer on the terms, provisions,
and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, promises,
obligations, and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties hereto agree as follows:
1. Property. The definition of the term "Property" used in this Agreement
as set forth in paragraph A of the Recitals above, is by this reference
incorporated herein and made a part of this Agreement. The Property shall
include, without limitation, the described real property, any improvements
constructed thereon (excluding underground storage tanks, if any), and all
appurtenant rights or hereditaments, including all easements, water, water
rights, shares of stock in water companies, and mineral rights.
2. Purchase Price. The purchase price for the Property shall be Forty
Thousand and No/100 Dollars ($40,000.00) per acre, determined in accordance with
the survey (hereinafter the "Survey"), as defined in Section 3 hereof, for each
acre of real property or fraction thereof, conveyed by the Seller to the Buyer.
The purchase price shall be determined by multiplying the net acreage of
property conveyed by the Seller to the Buyer by $40,000.00. Such purchase price
shall be payable as follows:
(a) Concurrently with the execution of this Agreement, the Buyer
shall pay to the Seller the sum of Twenty Thousand and No/100 Dollars
($20,000.00) as an earnest money deposit. Said earnest money deposit shall
be nonrefundable, except as provided in Sections 4, 7, and 10 hereof.
(b) The balance of the purchase price, in current and immediately
available funds, shall be paid to the Seller, through escrow at closing
(hereinafter the "Closing") provided for in Section 9.1 hereof.
3. ALTA/ACSM Survey. Within fifteen (15) days after the execution of this
Agreement, the Seller shall, at its cost and expense, procure and deliver to the
Buyer and First American Title Company of Utah (the "Title Company") an
ALTA/ACSM land title survey of the Property, containing legal descriptions and
area calculations of the Property (the "Survey"). The Survey shall be conducted
by a Utah registered land surveyor chosen by the Seller, and reasonably
acceptable to the Buyer, and shall be certified to the Buyer, its successors and
assigns, their lenders and the Title Company, and shall be dated not earlier
than thirty (30) days prior to the date of delivery, shall be prepared in
accordance with the
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"minimum standard detail requirements for ALTA/ACSM land title surveys," jointly
established and adopted by ALTA and ACSM in 1992, shall meet the current
ALTA/ACSM accuracy requirements of an urban survey, and shall otherwise be
sufficient to meet the title insurer's requirements for issuance of the owner's
title policy specified in Section 9.2 hereof. Additionally, the certificate of
the surveyor on the Survey shall contain such additional certifications set
forth on Table A of the minimum standard detail requirements for ALTA/ACSM land
title surveys as the Buyer may reasonably require. The Buyer agrees to pay
$1,000.00 toward the cost of the Survey; provided, however, any portion of the
earnest money deposit retained by the Seller shall be credit first to
satisfaction of this obligation of the Buyer.
4. Title Commitment. Within fifteen (15) days after the execution of this
Agreement by the Seller and the Buyer, the Seller shall obtain and deliver to
the Buyer, at the Seller's cost and expense, a current Commitment for Title
Insurance covering the Property, together with legible copies of all instruments
and agreements referenced therein (hereinafter the "Commitment"), issued by the
Title Company. The Buyer shall, within fifteen (15) days after the Buyer
receives the Survey, the Commitment, and legible copies of all instruments and
agreements referenced in the Commitment, give written notice to the Seller
specifying any and each title exception contained in the Commitment or matters
which are revealed or located by the Survey which is objectionable to the Buyer
(hereinafter a "Title Defect"), and the Seller shall use its best efforts to
cause such Title Defect(s) to be removed or cured prior to the Closing;
provided, however, that if any such Title Defect(s) cannot be so removed or
cured prior to the Closing Date, then the Buyer shall elect either to: (a) waive
each objection to a Title Defect(s) and to proceed with the Buyer's purchase of
the Property and accept the Title Defect(s) as a Permitted Encumbrance, as
provided in Section 5 hereof; or (b) terminate this Agreement and receive an
immediate refund from the Seller of the earnest money deposit paid by the Buyer
pursuant to Section 2(a) hereof. Notwithstanding the foregoing, any monetary
lien against the Property which may be discharged or removed by the disbursement
of any portion of the purchase price by the Seller at the Closing, shall be so
cured, removed, and discharged by the Seller at the Closing.
5. Permitted Encumbrances. As used in this Agreement, the term "Permitted
Encumbrances" shall mean only: (a) Real property taxes for the year in which the
Closing occurs (subject to proration at Closing as provided in Section 9.1(c)
hereof); (b) all covenants, conditions, restrictions, easements, rights-of-way,
encroachments, encumbrances, title exceptions, and other matters disclosed in
the Commitment, except for such Title Defect(s) as to which the Buyer timely
objects in writing, as provided in Section 4 hereof and does not thereafter
waive such objection; and (c) such matters affecting title as are revealed by
the Survey and approved by the Buyer.
6. Buyer's Due Diligence. At all times prior to the Closing, the Buyer and
its representatives shall be provided with access to the Property for the
purpose of conducting the Buyer's due diligence. The Buyer's investigation of
the Property may include, but not be limited to, (1) a Phase I environmental
report and, at the Buyer's option, a Phase II environmental investigation if
recommended by the Phase I report; and (2) core samples, digging trenches, and
other tests or examinations related to the determination of the existence,
quantities, composition, and location of sand, gravel, rock, and other mineable
materials upon the Property. In the event this Agreement is terminated for any
reason other than the default or breach of warranty by the Seller, the Buyer
shall deliver to the Seller any reports or analysis of the Property generated by
the Buyer's independent contractors. The Seller acknowledges and agrees that any
reports or analysis of the Buyer made available to the Seller pursuant to this
Section 6 is without warranty or assurance of the Buyer. The Seller shall use
such information at its own risk and indemnify the Buyer against claims of
persons receiving such reports.
7. Conditions to Buyer's Obligations. The obligations of the Buyer under
this Agreement to purchase the Property are subject to the fulfillment, prior to
or at the Closing, of the following conditions:
(a) Within sixty (60) days after the execution of this Agreement,
the Buyer and/or the Buyer's agents or representatives shall (if the Buyer
elects to do so) have conducted and approved such tests, examinations,
studies, assessments, inspections, and analyses of the Property pertaining
to environmental issues or the quantities or quality of
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sand and gravel upon the Property as the Buyer determines necessary or
advisable and approved, in the Buyer's sole discretion, the results of
such tests, examinations, studies, assessments, inspections, analyses.
Unless the Buyer notifies the Seller in writing within sixty (60) days
after the execution of the Agreement that the buyer has not conducted and
approved its desired tests, examinations, and inspections of environmental
conditions upon the Property and the quantities and quality of sand and
gravel upon the Property, the Buyer shall be deemed to have waived this
condition 7(a).
(b) Within fifteen (15) days after the Buyer's receipt of the
Commitment (including legible copies of all instruments and agreements
referenced therein) and the Survey, the Buyer shall have reviewed and
approved, in the Buyer's sole discretion, the Survey, which review and
approval shall include without limitation the review and approval of the
size, location, and configuration of the Property. Unless the Buyer
notifies the Seller in writing within fifteen (15) days after the Buyer's
receipt of the Commitment (including legible copies of all instruments and
agreements referenced therein) and the Survey that the Buyer has not
reviewed and approved the Survey, the Buyer shall be deemed to have waived
this condition 7(b).
(c) Concurrently with the Buyer's closing on its purchase of the
Property from the Seller, the Buyer shall close on its purchase of
approximately 170 acres of real property owned by the Raymond Jones family
and situated east of and adjacent to the Property (hereinafter the
"Adjacent Property"), on terms and conditions acceptable to the Buyer in
the Buyer's sole discretion.
(d) On or before the Closing, the Buyer shall have determined, in
the Buyer's sole discretion, that there are no constraints imposed upon
the Property or the Adjacent Property, including zoning or other
governmental regulations, covenants, conditions, or restrictions which
would prohibit or interfere with the Buyer's use of the Property and/or
the Adjacent Property for sand, gravel, and rock excavation and processing
and concrete and asphalt batch plants, and the Buyer shall have obtained
such licenses, permits, approvals, and authorizations as the Buyer
determines to be necessary or advisable for the Buyer to conduct its
intended sand, gravel, rock, ready mix concrete, and asphalt businesses
upon the Property and the Adjacent Property. Unless the Buyer notifies the
Seller in writing on or before the Closing that the Buyer has not approved
the matters addressed in this Section 7(d) or has not obtained all
licenses, permits, approvals, and authorizations contemplated by this
Section 7(d), the Buyer shall be deemed to have waived this condition
7(d).
(e) Within fifteen (15) days after the execution of this Agreement,
the Buyer's Board of Directors shall have approved the execution,
delivery, and performance by the Buyer of the Buyer's obligations under
this Agreement. Unless the Buyer notifies the Seller in writing within
fifteen (15) days after execution of this Agreement that the Buyer's Board
of Directors has failed, for any reason, to approve the Buyer's execution,
delivery, and performance under this Agreement, the Buyer shall be deemed
to have waived this condition 7(e).
(f) Each of the representations and warranties of the Seller set
forth herein shall be true and correct as of the date hereof and as of the
date of the Closing.
In the event that each of such conditions shall not have been satisfied at
or prior to the Closing, or waived by the Buyer, then the Buyer shall have the
right, at the Buyer's option, to terminate this Agreement by giving written
notice of such termination to the Seller, in which event the Title Company or
the Seller, as the case may be, shall immediately refund to the Buyer the
earnest money deposit paid pursuant to Section 2 hereof, or portion thereof as
provided below, and the Buyer and the Seller each shall be released
automatically from all further obligations and liabilities hereunder. In the
event this
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Agreement is terminated by the Buyer by reason of the failure of the conditions
set forth in Sections 7(b) and/or 7(f) the Seller shall promptly refund to the
Buyer the entire $20,000.00 earnest money deposit. In the event this Agreement
is terminated by the Buyer by reason of the failure of the conditions set forth
in Section 7(a) due to undesirable environmental conditions upon the property
not expressly disclosed in Exhibit B attached hereto, the Seller shall promptly
refund to the Buyer the entire $20,000.00 earnest money deposit. In the event
this Agreement is terminated by the Buyer by reason of any other circumstance or
state of facts covered by the conditions set forth in Section 7(a), or by reason
of the failure of the conditions set forth in Sections 7(c) and/or 7(d), the
Seller shall promptly refund to the Buyer the sum of $10,000.00, and the Seller
shall return the balance of the earnest money deposit in payment of costs and
expenses incurred by the Seller. In the event this Agreement is terminated by
reason of the failure of the condition set forth in Section 7(e), the Seller
shall promptly refund to the Buyer the sum of $18,000.00, and the Seller shall
retain the balance of the earnest money deposit in payment of costs and expenses
incurred by the Seller.
8. Seller's Warranties. The Seller hereby represents and warrants to the
Buyer for the purpose of inducing the Buyer to purchase the Property, and
acknowledges that such representations and warranties are material to the
Buyer's decision to purchase the Property, as of the date hereof and as of the
Closing Date, as follows:
(a) The Seller has good, marketable, and insurable fee simple record
title to the Property.
(b) The Seller has all legal right, power, and authority to enter
into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Seller and
consummation by the Seller of the transactions contemplated hereby have
been duly and validly authorized by all necessary governmental action on
behalf of the Seller. This Agreement has been duly executed and delivered
by the Seller and it and all instruments and documents executed and
delivered by the Seller at the Closing, constitute and will constitute
legal, valid, and binding agreements of the Seller, enforceable in
accordance with their respective terms, except that: (i) Enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium, or other
similar laws now or hereafter in effect relating to creditors' rights
generally; and (ii) the remedies of specific performance and injunctive
relief and other forms of equitable relief may be subject to equitable
defenses and other discretion of the court before which any proceedings
therefor may be brought.
(c) Without in any way limiting the generality of the above, neither
the Property nor the Seller is the subject of any pending or, to the best
of the Seller's knowledge, threatened investigation or inquiry by any
Governmental Authority, or are subject to any response or remedial
obligations or lien under any Environmental Requirements and this
representation and warranty would continue to be true and correct
following disclosure to any applicable Governmental Authority of all
relevant facts, conditions, and circumstances known to the Seller and
pertaining to the Property and/or the Seller.
(d) Except as expressly disclosed by the Seller in Exhibit B
attached hereto, neither the Seller nor, to the best knowledge of the
Seller, any previous owner, tenant, occupant, or user of the Property, or
any other person, has engaged in or permitted any operations or activities
upon, or any use or occupancy of the Property, or any portion thereof, for
the purpose of or in any way involving the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining,
dumping, or disposal of any "Hazardous Material" (hereinafter "Hazardous
Material"), as defined below (whether legal or illegal, accidental or
intentional), on, under, in, or about the Property, or transported any
Hazardous Materials to, from, or across the Property, nor are any
Hazardous Materials presently constructed, deposited, stored, or otherwise
located on,
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<PAGE> 5
under, in, or about the Property, nor have any Hazardous Materials
migrated from the Property upon or beneath other properties, nor have any
Hazardous Materials migrated or threatened to migrate from other
properties upon, about or beneath the Property. There is not constructed,
placed, deposited, stored, disposed of, or located on the Property any
asbestos or material containing asbestos, nor insulating material
containing urea formaldehyde, nor any polychlorinated biphenyls (PCBs),
nor transformers, capacitors, ballasts, or other equipment containing or
contaminated by PCBs.
"Hazardous Material" shall mean any substance: (i) The presence of
which requires investigation or remediation under any federal, state or
local statute, regulation, ordinance, order, action, policy, or common
law; or (ii) which is presently defined as a "hazardous waste," "hazardous
substance," pollutant or contaminant under any federal, state, or local
statute, regulation, rule, or ordinance or amendments thereto including,
without limitation, the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. section 9601 et seq.), as amended, and/or the
Resource Conservation and Recovery Act (42 U.S.C. section 6901 et seq.),
as amended; and comparable statutes of the State of Utah; or (iii) which
is toxic, explosive, corrosive, ignitable, reactive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous
and is regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, the
State of Utah or any political subdivision thereof; or (iv) the presence
of which on the Property causes or threatens to cause a nuisance upon the
Property or to adjacent properties or poses or threatens to pose a hazard
to the health or safety of persons on or about the Property; or (v) the
presence of which on adjacent properties could constitute a trespass by
the Seller; or (vi) without limitation which contains gasoline, diesel
fuel, or other petroleum hydrocarbons; or (vii) without limitation which
contains polychlorinated biphenyls (PCBs), asbestos, or urea formaldehyde
foam insulation; or (viii) without limitation radon gas.
(e) Except for underground pipelines disclosed on the Survey, no
underground improvements, including but not limited to treatment or
storage tanks, septic systems or drain fields, sumps, or water, gas, oil,
or underground injection wells are or have ever been located upon the
Property.
(f) Except for contracts approved by the Buyer pursuant to Section
12 hereof, there are no gravel removal or sale contracts, leases, or other
contracts or agreements of any nature relating to the Property which will
be in effect at the Closing Date.
(g) There is no pending or threatened litigation or pending or
contemplated condemnation proceedings which affect the Property or any
part thereof.
(h) There are no municipal or other government assessments against
the Property other than current real property taxes and the Seller has not
entered into any understanding or agreement with any taxing or assessing
authority with respect to the imposition or deferment of any taxes or
assessment relating to the Property, except as disclosed in the
Commitment.
The above representations and warranties of the Seller shall survive the
expiration or termination of this Agreement, the discharge of all other
obligations owed by the parties to each other, and the Closing and transfer of
title to the Property to the Buyer, and shall not be affected by any
investigation by or on behalf of the Buyer, or by any information which the
Buyer may have or obtain with respect thereto.
9. Closing and Post Closing.
9.1. Closing. The Closing on the Buyer's purchase of the Property
(hereinafter referred to as the "Closing") shall be held at the offices of First
American Title Company of Utah, 205 26th Street,
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<PAGE> 6
Ogden, Utah 84401, on the later date of: (i) the fifteenth (15th) day after the
Buyer's receipt of all governmental approvals, licenses, permits, and
authorizations as are necessary for the Buyer's operation on the Property and
the Adjacent Property of its sand, gravel, and rock excavating and processing
businesses and its concrete and asphalt batch plant businesses, or if such day
is a weekend day or a legal holiday, on the next business day after the
fifteenth (15th) day following such approvals and permits, or (ii) the date of
the Buyer's closing on its purchase of the Adjacent Property; provided, however,
that if such events have not occurred by February 12, 1998 and if the Buyer has
not terminated this Agreement by reason of failure of its conditions to closing,
the Closing Date shall be February 28, 1998, or at such other time and place as
may be agreed to in writing by both the Buyer and the Seller. The Closing may be
accomplished on such date through an escrow established with the Title Company,
or another escrow agent approved in writing by the Seller and the Buyer. The
date on which the Closing actually takes place, or if more than one day is
required to complete the Closing, the date on which the Closing is actually
accomplished is herein referred to and designated as the "Closing Date." At the
Closing, the following shall occur, each action being considered a condition
precedent to the others and all being considered as taking place simultaneously,
and (subject to the terms and conditions hereof) each party covenanting to
perform or cause to be performed each such action to be performed on its part:
(a) The Buyer shall pay to the Seller current and immediately
available funds in the amount of that portion of the purchase price
payable pursuant to Section 2(a) hereof.
(b) The Seller shall execute, acknowledge, and deliver to the Buyer
a Warranty Deed, conveying and warranting to the Buyer fee simple title to
the Property, as described in the Survey, subject only to the Permitted
Encumbrances referred to in Section 5 hereof.
(c) All reasonable and customary prorations shall be made as of the
Closing Date and appropriate credits shall be given for real property
taxes, assessments, rents, deposits, and other matters the nature of which
properly requires such treatment.
(d) The Seller shall pay in full the premiums for the ALTA Owner's
Policy of Title Insurance referred to in Section 9.2 hereof.
(e) The Seller shall pay the costs of recording the Warranty Deed
and the costs of recording any releases or reconveyances of monetary liens
required pursuant to this Agreement.
(f) The Buyer and the Seller each shall pay one-half (-1/2) of the
costs of the escrow established in conjunction with the Closing.
(g) The Seller shall deliver to the Buyer possession of the
Property, subject only to the Permitted Encumbrances referred to in
Section 5 hereof.
(h) The Seller and the Buyer shall execute and deliver to each other
closing statements reflecting the adjustments, payments, and credits
described in this Section 9.1.
(i) Each party shall execute, acknowledge, and deliver such other
documents and instruments and take such other action as the other party or
its legal counsel may reasonably require in order to document and carry
out the transactions contemplated in this Agreement.
9.2. Owner's Title Insurance. In conjunction with the Closing, the Seller
shall, at the Seller's cost and expense, cause the Title Company to issue and
deliver to the Buyer (as the named insured), an ALTA Owner's Policy of Title
Insurance, providing for extended coverage, in the amount of the purchase price
of the Property, insuring that fee simple title to the Property, as described in
the Survey, is vested
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<PAGE> 7
in the Buyer subject only to the Permitted Encumbrances referred to in Section 5
hereof. The Buyer shall pay the additional cost of any special endorsements or
so-called "extended coverage" that the Buyer may desire.
10. Default and Remedies.
10.1. Default by Seller. In the event of a default by the Seller in the
performance of its obligations hereunder, the Buyer shall give written notice to
the Seller designating such default. The Seller shall have a period of ten (10)
days following the effective date of said notice within which to correct, or in
the case of a default which is of a nature that cannot reasonably be corrected
within such ten (10) day period, within which to commence action to correct, the
default of which the Seller has received notice. In the event that the Seller
shall fail to correct such default within said ten (10) day period or, if
applicable, to commence action to correct such default within said ten (10) day
period and thereafter diligently to pursue the same to completion, the Buyer
shall have the right, at the Buyer's election: (a) If such default occurs prior
to the Closing Date, to terminate this Agreement and all rights, duties, and
obligations of the parties hereunder by giving written notice thereof to the
Seller and to receive an immediate refund of the earnest money deposit paid
pursuant to Section 2 hereof; or (b) by legal action to compel performance by
the Seller of its obligations hereunder and/or to recover damages from the
Seller resulting from said default.
10.2. Default by Buyer. In the event of a default by the Buyer in the
performance of its obligations hereunder, the Seller shall give written notice
to the Buyer designating such default. The Buyer shall have a period of ten (10)
days following the effective date of said notice within which to correct, or in
the case of a default which is of a nature that cannot reasonably be corrected
within such ten (10) day period, within which to commence action to correct, the
default of which the Buyer has received notice. In the event that the Buyer
shall fail to correct such default within said ten (10) day period or, if
applicable, to commence action to correct such default within said ten (10) day
period and thereafter diligently to pursue the same to completion, the Seller
shall have the right to terminate this Agreement and all rights, duties, and
obligations of the parties hereunder by giving written notice thereof to the
Buyer and to retain the earnest money deposit paid pursuant to Section 2 hereof
as liquidated and stipulated damages.
10.3. Remedies. The rights and remedies of the Buyer shall not be mutually
exclusive, and the exercise of one or more of the provisions of this Agreement
shall not preclude the exercise of any other provisions. The Seller confirms
that damages at law may be an inadequate remedy for the Buyer for a breach or
threatened breach by the Seller of any provisions hereof. The Buyer's rights and
the Seller's obligations hereunder shall be enforceable by specific performance,
injunction, or other equitable remedy, but nothing herein contained is intended
to or shall limit or affect any rights at law or by statute or otherwise of the
Buyer against the Seller for a breach or threatened breach of any provisions
hereof. It is the intention of the parties by this provision to make clear the
agreement of the parties that the Buyer's rights and the Seller's obligations
hereunder shall be enforceable in equity as well as at law or otherwise.
11. General Provisions.
11.1. Real Estate Commissions. The Seller represents and warrants to the
Buyer, and the Buyer represents and warrants to the Seller, that no broker or
finder has been engaged by the respective party in connection with this
Agreement or any of the transactions contemplated by this Agreement, is in any
way connected with this Agreement or any of such transactions, or is entitled to
any fee or commission as a result of this Agreement or any of the transactions
contemplated hereby. In the event of a claim for a broker's or finder's fee or
commission in connection with this Agreement or any of the transactions
contemplated hereby and except as otherwise provided above: The Buyer shall
indemnify, save harmless, and defend the Seller from and against such claim if
it is based upon any statement, representation, or agreement alleged to have
been made by the Buyer; and the Seller shall indemnify, save harmless, and
defend the Buyer from and against such claim if it is based upon any statement,
representation, or
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<PAGE> 8
agreement alleged to have been made by the Seller. The provisions of this
Section 17.1 shall survive the Closing or any termination of this Agreement.
11.2. Notices. All notices and other communications provided for in this
Agreement shall be in writing and shall be sufficient for all purposes if
personally delivered or if mailed by certified or registered U.S. mail, return
receipt requested, postage prepaid, and addressed to the respective party at the
address set forth below or at such other address as such party may hereafter
designate by written notice to the other party as herein provided.
To Seller: To Buyer:
Orton Ranch & Development, Inc. Geneva Rock Products, Inc.
4225 West 1700 North 1565 West 400 North
Ogden, Utah 84404 Orem, Utah 84057
Attn: Mr. Bradley L. Orton Attn: Mr. Albert T. Schellenberg
If personally delivered, notices and other communications under this Agreement
shall be deemed to have been given and received and shall be effective when
personally delivered. If sent by mail in the form specified in this section,
notices and other communications under this Agreement shall be deemed to have
been given and received and shall be effective when deposited in the U.S. mail.
11.3. Costs. Except as otherwise specifically provided in this Agreement,
the Seller and the Buyer each shall pay their own costs and expenses incurred in
preparation and execution of and performance under this Agreement.
11.4. Interpretation. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Utah. Whenever the context
requires, the singular shall include the plural, the plural shall include the
singular, the whole shall include any part thereof, any gender shall include
both other genders, and the term "person" shall include an individual,
partnership (general or limited), corporation, limited liability company, trust,
or other entity or association, or any combination thereof. The word "including"
shall be interpreted to mean "including without limitation." The term "Buyer"
shall mean the Buyer named herein or any assignee of the Buyer. The section
headings contained in this Agreement are for purposes of reference only and
shall not limit, expand, or otherwise affect the construction of any provisions
of this Agreement. This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns. The provisions of
this Agreement shall be construed both as covenants and conditions in the same
manner as though the words importing such covenants and conditions were used in
each separate provision hereof. The exhibit referred to in this Agreement shall
be incorporated into and shall be considered a part hereof. The provisions of
this Agreement and the exhibit hereto shall, when possible, be construed
together in determining the intent of the parties.
11.5. Assignment. Either party shall have the right to assign all of its
right, title, and interest under this Agreement, provided that any such assignee
agrees in writing with the other party hereto to assume and be responsible for
the performance of each and every obligation of the assigning party.
Notwithstanding the assignment of either party's interest hereunder, each party
shall remain primarily responsible to the other party hereto for the performance
of each and every obligation of such party under this Agreement.
11.6. Short Form of Agreement. The Seller agrees, upon the Buyer's
execution of this Agreement or at any time thereafter during the effectiveness
hereof upon the request of the Buyer, to execute a Short Form of Agreement, in
the form and content reasonably requested by the Buyer, and to deliver such
Short Form of Agreement to the Buyer so that the Buyer might, at its election,
record such Short Form of Agreement with the County Recorder for Weber County,
State of Utah.
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<PAGE> 9
11.7. Consultation with Attorney. Each party represents that such party
had opportunity to consult with legal counsel of that party's choice concerning
this Agreement prior to execution hereof.
11.8. Entire Agreement. This Agreement and the documents referenced herein
contain the entire understanding of the parties hereto with respect to the
transactions contemplated hereby. All prior representations, negotiations,
agreements, and understandings of the parties are merged into this Agreement. No
change or modification to this Agreement shall be valid unless it is in a
writing signed by the party against whom enforcement is sought.
11.9. No Waiver. Acceptance by either party of any performance less than
required hereby shall not be deemed to be a waiver of the rights of such party
to enforce all of the terms and conditions hereof. No waiver of any such right
hereunder shall be binding unless reduced to writing and signed by the party to
be charged therewith.
11.10. Invalidity of Provision. If any provisions of this Agreement as
applied to any party or to any circumstance shall be adjudged by a court of
competent jurisdiction to be void or unenforceable for any reason, the same
shall in no way affect (to the maximum extent permitted by applicable law) any
other provision of this Agreement, the application of any such provision under
circumstances different from those adjudicated by the court, or the validity or
enforceability of the Agreement as a whole.
11.11. Attorney's Fees. If any action is brought because of any breach of
or to enforce or interpret any of the provisions of this Agreement, the party
prevailing in such action shall be entitled to recover from the other party
reasonable attorney's fees and court costs incurred in connection with such
action, the amount of which shall be fixed by the court and made a part of any
judgment rendered.
11.12. Time of the Essence. As concerns all matters of notice and
performance agreed upon hereunder, it is covenanted by the parties that time is
strictly of the essence of this Agreement.
11.13 Seller Exchange Transaction. The Buyer acknowledges that the Seller
intends to acquire another property with the proceeds from the Seller's sale of
the Property to the Buyer in accordance with Internal Revenue Code Section 1031,
as a deferred like-kind exchange. The Buyer agrees to cooperate with the Seller
in consummating this transaction as an exchange by the Seller of like-kind
properties under Internal Revenue Code Section 1031 at no additional cost or
expense or other adverse consequence to the Buyer and with no delay in the
Closing, except as provided in this Agreement. The Seller may assign the
Seller's rights and obligations under this Agreement, without the Buyer's
consent and at any time on or prior to the Closing, to the Seller's designated
intermediary with written notice of assignment to the Buyer. The designated
intermediary may, but need not, act as the agent of the Seller in the
performance of any of the Seller's obligations under this Agreement. The Buyer
agrees to accept performance of the Seller's obligations under this Agreement
from the designated intermediary and to render performance of the Buyer's
obligations under this Agreement to the designated intermediary if and when
requested to do so by the Seller in writing. The Buyer further agrees that any
and all liabilities and obligations of the Buyer to the Seller under this
Agreement shall not be released or discharged by the Seller's assignment of its
rights hereunder to the designated intermediary, and that such liabilities and
obligations may be enforced by the Seller notwithstanding such assignment to the
designated intermediary. The Seller agrees that any and all liabilities and
obligations of the Seller under this Agreement shall not be released or
discharged by the Seller's assignment of its rights hereunder to the designated
intermediary, and that such liabilities and obligations may be enforced by the
Buyer against the Seller notwithstanding such assignment to the designated
intermediary.
12. Gravel and Rock contracts. Prior to entering into contracts for the
sale of gravel or rock products from the Property for periods after December 31,
1997, the Seller shall submit all such contracts to the Buyer (in accordance
with the notice provisions of Section 11.2 hereof) for review and approval.
Unless the Buyer notifies the Seller within ten (10) business days of the
Buyer's receipt of such contract (in accordance with the notice provisions of
Section 11.2 hereof) that such contract(s) is/are not acceptable to the Buyer,
the Buyer shall be deemed to have approved such contract and agreed to perform
the obligations
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<PAGE> 10
of the Seller arising thereunder from and after the Closing Date. Any contract
objected to by the Buyer must terminate prior to the Closing Date. Contracts
approved by the Buyer and remaining in effect after the Closing Date shall be
assigned to the Buyer at the Closing. Such assignment shall contain an agreement
by the Buyer to perform the Seller's obligations thereunder from and after the
Closing Date and warranties of the Seller to the buyer of the complete and
timely performance of the Seller's obligations under such contract through the
Closing Date.
Within ten (10) days after the execution of this Agreement, the Seller
shall deliver to the Buyer copies of any contracts for the sale of gravel or
rock products from the Property. If the Buyer objects to any such contracts
within ten (10) business days after the Buyer's receipt of such contracts
(pursuant to Section 11.2 hereof), the Closing Date shall be extended to the
later of January 3, 1998 or the date for Closing set forth in Section 9.1
hereof. Any such contracts approved by the Buyer shall be assigned to the Buyer
as provided in the preceding paragraph of this Section 12.
IN WITNESS WHEREOF, the Seller and the Buyer have executed this Agreement
as of the day and year first above written.
SELLER: BUYER:
ORTON RANCH & DEVELOPMENT, INC., GENEVA ROCK PRODUCTS, INC., a Utah
a Utah corporation, corporation,
By By
------------------------------- ---------------------------------------
Gary C. Orton Albert T. Schellenberg
President Vice President
STATE OF UTAH )
: ss.
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me this ____ day of
September, 1997 by GARY C. ORTON, the President of ORTON RANCH & DEVELOPMENT,
INC., a Utah corporation.
--------------------------------------
Notary Signature and Seal
STATE OF UTAH )
: ss.
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me this ____ day of
September, 1997 by ALBERT T. SCHELLENBERG, the Vice President of GENEVA ROCK
PRODUCTS, INC., a Utah corporation.
--------------------------------------
Notary Signature and Seal
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EXHIBIT A
(Attached to and forming a part of the Real Property Purchase Agreement,
dated September 3, 1997, between Orton Ranch & Development, Inc.,
as Seller, and Geneva Rock Products, Inc., as Buyer)
LEGAL DESCRIPTION OF THE PROPERTY
Real property located in Weber County, State of Utah, more particularly
described as follows:
Parcel 1
Part of the Southeast quarter of Section 14, Township 7 north, Range 2 west,
Salt Lake Meridian, U.S. Survey: Beginning at intersection of east line of
said quarter section and north limits of Pleasant View town; thence west to a
point west 262 feet; north 4 feet, and north 7 deg. 20 min. east from
southeast corner of said quarter section; thence north 7 deg. 20 min. east to
a point 262 feet west; 4 feet north, and north 7 deg. 20 min. east 450.14
feet from the southeast corner of said section 14; thence north 81 deg. 15
min. west 392.34 feet, more or less, to Rohn Crabtree property, thence north
7 deg. 10 min. 37 sec. East 330.44 feet, thence north 40 deg. 38 min. 30 sec.
West 323.70 feet, more or less, to county line, thence northeasterly along
county line 1265.01 feet to east line of said section, thence south 1730 feet
to beginning. Except 1.18 acres in Utah Power and Light Company (707-496).
Real property located in Box Elder County, State of Utah, more
particularly described as follows:
Parcel 3
Part of the Southeast quarter of Section 14, Township 7 north, Range 2 west,
Salt Lake Base and Meridian, beginning at the intersection of the county line
between Box Elder and Weber counties as recorded in the Box Elder County
recorder's office, Recorder's no. 34422, and the east line of said section
14, said point of beginning being 255.67 feet south 0 deg. 55 min. 35 sec.
West from east -1/4 corner of said section 14, thence south 37 deg. 01 min.
43 sec. West 1373.95 feet along said county line, to the easterly property
line of the Rohn Crabtree property thence northerly along said line the
following three courses, north 40 deg. 38 min. 30 sec. West 13.78 feet, north
42 deg. 35 min. 12 sec. West 80.30 feet, north 80 deg. 18 min. 34 sec. West
420.51 feet to the east line of SR89, thence northwesterly along said line to
an existing fence line being 140 feet more or less south from the north line
of the southeast -1/4 of said section 14, thence east along said fence line
to the east line of said section 14, thence south 0 deg. 55 min. 35 sec. West
along said east line to the point of beginning.
Together with all water rights as may be appurtenant to all of said parcels.
Subject to easements, restrictions and rights of way of record.
<PAGE> 12
EXHIBIT B
SELLER'S DISCLOSURE STATEMENT
This Seller's Disclosure Statement is an addendum to the Real Property
Purchase Agreement made and entered into as of the 2nd day of September, 1997,
by and between Orton Ranch & Development, Inc., a Utah corporation (hereinafter
sometimes referred to as "Seller"), as seller, and Geneva Rock Products, inc., a
Utah corporation (hereinafter sometimes referred to as the "Buyer"), as buyer.
Seller makes the following disclosures as to the condition of the
property:
1. There is no current access to potable water on the property.
2. There exists approximately 100 discarded automobile tires on the
property, some of which may be covered with earth.
3. There exists a septic holding tank on the property which has been
used for disposal of human waste.
4. Dynamite and similar explosives have been used in the course of
Seller's operations on the property.
5. Heavy machinery has been operated on the property from which
small amounts of motor fluids may have discharged onto the property.
6. There exists discarded debris on the property, including wood,
scrap metal, concrete, asphalt, ceramics and plastic.
7. The property may exist in an earthquake zone, or be located on or
near an earthquake fault.
The Real Property Purchase Agreement attached hereto does not include the
sale of any equipment which is now located on the property, or which in the
future may be located on the property prior to Closing.
ORTON RANCH & DEVELOPMENT, INC., a
Utah corporation
By:
-------------------------------------
Gary C. Orton
President
<PAGE> 1
[EXHIBIT 10.10B]
JACOBSEN OKLAND JOINT VENTURE
3131 West 2210 South
Post Office Box 27608 BILLING ADDRESS:
Salt Lake City, Utah 84127-0608 P.O. Box 27608
(801) 973-0500 Fax (801) 973-7496 Salt Lake City, Utah 84127-0608
- --------------------------------------------------------------------------------
PURCHASE ORDER P.O. NO. 0246
- --------------------------------------------------------------------------------
SUPPLIER: Geneva Rock Products, Inc. JOB NO.: 3333-03 CODE: 03108G
ADDRESS: P.O. Box 538, Orem, Utah 84059
PROJECT: Little America
Grand Hotel
CONTACT: Mell Wolsey
PHONE: (801) 741-7900
FAX: (801) 741-7930 DATE: 5/29/97
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PLEASE FURNISH THE FOLLOWING:
- --------------------------------------------------------------------------------
DESCRIPTION DELIVERED PRICE
- --------------------------------------------------------------------------------
<S> <C> <C>
UNIT PRICES (SALES TAX IS INCLUDED)
01) CONCRETE PUMP SLURRY $75.00/CY
02) 3000 PSI/AIR $51.39/CY
03) 3000 PSI/ AIR/ H.R.W.R. $57.29/CY
04) 3000 PSI/ AIR/ MICRO/ D.C.I. $83.58/CY
05) 3000 PSI/ AIR/ MICRO/ D.C.I./ H.R.W.R. $88.89/CY
06) 4000 PSI/ MASS MAT FOOTINGS $48.42/CY
07) 4000 PSI/ REGULAR FOOTINGS $52.57/CY
08) 4000 PSI/ CITY MIX $58.41/CY
09) 5000 PSI/ AIR/ H.R.W.R $63.40/CY
10) 5000 PSI/ AIR/ MICRO/ D.C.I./ H.R.W.R. $101.42/CY
11) 7000 PSI/ AIR MICRO/ H.R.W.R. $85.70/CY
12) 7000 PSI/ AIR/ MICRO/ D.C.I./ H.R.W.R. $109.07/CY
13) 3000 PSI/ LIGHTWEIGHT $78.27/CY
14) NON-CHLORIDE ADDITIVE 1% $4.25/CY
15) WINTER CONCRETE (HOT WATER) $2.00/CY
16) FIBERMESH (PER LB.) $4.25/CY
17) H.R.W.R. $5.31/CY
18) RETARDER $2.13/CY
19) NO ADDITIONAL CHARGE FOR PART LOADS
20) NO ADDITIONAL CHARGE FOR DELAYED UNLOADING TIME
21) NO OVERTIME CHARGES ON MAT FOOTINGS
22) 4000 PSI/ AIR/ D.C.I./ H.R.W.R./ MICRO $94.20
23) 4000 PSI/ AIR (PERIMETER FND. WALLS) $53.65
</TABLE>
PRICES ARE GOOD FOR THE DURATION OF THE PROJECT
1 All of the above per plans and specification Section(s) 03000
(Cast-In-Place Concrete) as prepared by Smallwood, Reynolds,
Stewart, Stewart and Associates, Inc.
1
<PAGE> 2
and as modified by addenda 1 through and including __________
2 Ship F.O.B. Jobsite via _____________________
3 Timely delivery of these materials is essential. The current project
schedule indicates these materials are required on site no later
than Approximately July 3, 1997
4 The date may be changed by Buyer with reasonable notice to Seller to
reflect updated project requirements.
5 Complete shop drawings, catalog cuts, samples, etc., shall be 7
submitted in 4 copies with 1 sepia of shop drawings to Jacobsen
Okland Joint Venture,75 East 600 South, Salt Lake City, Utah 84111
no later than ___________________
6 Retainage of ________ will be held by the Buyer until all materials
furnished under this order have been installed No retainage - we are
a supplier
6 Satisfactory evidence of insurance coverage noted on the second page
of this order will be required.
7. Prompt payment discount: ____________________
CLARIFICATION. JACOBSEN OKLAND JOINT VENTURE, is hereinafter referred to as
"Buyer", "Lessee" or "Contractor", and Geneva Rock Products, Inc., is
hereinafter referred to as "Lessor" or "Seller".
SHOP DRAWINGS, CATALOG DATA AND SAMPLES. If Buyer so directs, Seller shall
promptly provide, without charge, a sufficient number of shop drawings and/or
catalog data and/or samples to the Buyer for submittal and approval, if
required.
SPECIAL REQUIREMENTS. Seller warrants and agrees that all materials supplied
hereunder shall be manufactured and produced in compliance with the laws,
regulations, codes, terms, standards and/or requirements of Underwriters
Laboratories, all federal, state and local authorities, and any and all other
agencies and authorities having jurisdiction, and that performance of this order
shall be in accordance with said laws, regulations, codes, terms, standards,
and/or requirements, and agrees upon request to furnish Buyer a certificate of
compliance therewith in such form as Buyer may reasonably require.
Seller agrees to be bound by all terms, conditions (including General and
Special Conditions), drawings, addenda, and specifications to which the Buyer is
subject under its contract covering the project (hereinafter the Prime Contract
Documents). Copies of said documents are available for Seller's review at
Buyer's office. Seller warrants materials supplied hereunder to conform to all
project plans, drawings, specifications, and addenda; to be fit and suitable for
purpose intended; merchantable; of highest quality and workmanship; and free
from defects. Seller will indemnify and hold Buyer and project Owner harmless
against all liquidated and actual damages and/or costs, and all liabilities for
damages or injuries incurred by Buyer or Owner or third parties as a result of
defective materials or workmanship in the items supplied hereunder. During the
guarantee period in the Prime Contract Documents, and if no such period be
therein stipulated then for a period of one (1) year from the date of project
completion, Seller agrees to make good, solely at its expense, all defects due
to defective workmanship and/or materials and also all damage to other work
resulting therefrom. Seller further agrees to execute, in writing, any
guarantees, maintenance agreements or other documents related to the work above
described required by the terms of the Prime Contract Documents. Seller's
responsibility for latent defects shall extend beyond the guarantee period to
the maximum extent applicable statutes permit. Seller will reimburse Buyer, or
Buyer may offset sums otherwise due Seller, for Buyer's costs, including but not
limited to labor and/or materials, incurred in returning, remedying, removing
and reinstalling, or repairing any materials furnished by Seller which fail to
conform to project plans, drawings, and specifications.
Time is of the essence of this order. Seller will credit Buyer, or Buyer
may offset sums otherwise due Seller, for Buyer's costs and damages (including
liquidated damages) resulting from excessive down time of Seller's equipment
and/or Seller's failure to make delivery of the materials specified herein
within the time set out hereon or in the Buyer's project schedule - a copy of
which may be obtained from Buyer.
SHIPPING: Each package shipped under this order shall be labeled indicating
Buyer's purchase order number and the contents of the package, and shall be
properly packed for shipment. Each shipment shall be accompanied by an itemized
packing list. In the event materials furnished under this order are damaged in
transit, it shall be the Seller's responsibility (unless shipped F.O.B. factory)
2
<PAGE> 3
to initiate and secure the remedies necessary to constitute delivery of the
materials in completely satisfactory condition.
PRICE, INVOICING AND PAYMENTS. Unless otherwise expressly specified on the face
hereof, the prices noted hereon include all costs and charges of any and every
nature, including but not limited to costs and charges for shipment to jobsite,
packing, crating, freight, express and/or cartage, and sales tax. Seller agrees
to hold prices indicated on this order for the duration of the project. Invoices
to Buyer shall be rendered with the purchase order number noted thereon. If
invoice is subject to prompt payment discount, the discount period will be
calculated from the date the invoice, whichever is later. Buyer has the right to
refuse to make payment on any invoice unless and until presented by Seller with
a receipt, signed by Buyer, covering the invoiced material. Buyer's payment for
any material shall not constitute acceptance of the material nor a waiver of any
of the Buyer's rights or requirements. Seller will save and keep the project
referred to in this order and the lands upon which it is situated free from all
liens and encumbrances, including, but not limited to materialmen's liens
arising out of its providing the materials noted hereon. If Seller fails to
remove any lien, by bonding or otherwise, Buyer may retain sufficient funds out
of the money due or thereafter to become due to Seller to pay the same and all
costs incurred by reason thereof and may pay said lien or liens and costs out of
any funds at any time in the hands of Buyer owing to Seller. Seller agrees to
complete Buyer's monthly lien release and supplier affidavit forms prior to
receiving payments under this order. Buyer may offset against any sums due
Seller hereunder the amount of any liquidated obligations of Seller to Buyer, or
others, whether or not arising out of this order. Buyer is hereby authorized to
issue joint checks whenever Buyer reasonably so elects.
INSURANCE. Seller shall furnish Buyer a certificate of insurance evidencing that
Seller has, and will keep, in force comprehensive general liability insurance
(including contractual liability and products and/or completed operations
coverage) with not less than $500,000 combined single limit per occurrence as
respects bodily injury and property damage; provided, if the Prime Contract
Documents requires a higher limit than that listed above, then such higher limit
shall be obtained by Seller. Payments otherwise due per this order will not be
made by Buyer until proper evidence of insurance is provided to Buyer.
MISCELLANEOUS TERMS. No modification or waiver of any nature of any of the terms
or conditions of this order shall be valid unless stated in writing and signed
by Buyer and Seller. It is expressly understood that no negotiation concerning
approval, prices, discounts, release, shipments, deliveries, etc. shall be
carried out by the Seller, or its representative, with any party other than
Buyer without Buyer's prior written permission. All verbal or written terms,
conditions, proposals, representations, negotiations and agreements made prior
to the date of this order are hereby expressly voided. This order is the sole
agreement between the parties. This order shall be considered to have been made
in and shall be interpreted under the laws of the State of Utah. In the event it
becomes necessary for either party to enforce the provisions of this order or to
obtain redress for the violation of any provision hereof, whether by litigation,
arbitration, or otherwise, the prevailing party shall be entitled to recover
from the other party all costs and expenses associated with such action,
including reasonable attorney fees.
Jacobsen Okland Joint Venture is an Equal Employment Opportunity firm. All
suppliers must comply with EEO Affirmative Action Clauses 41 CFR 60-1.4, 41 CFR
60-250.4 and 41 CFR 60-741.4 as revised, amended or superseded.
GENEVA ROCK PRODUCTS, INC. JACOBSEN OKLAND JOINT VENTURE
Seller Buyer
By: By:
John O. Cockrell, Project Manager
3
<PAGE> 1
[EXHIBIT 10.10C]
MATERIAL CONTRACT
[ ] DBE [ ] WBE [ ] Minority Requirement N/A
Taxpayer Account No. 87-0222611 Job No. 264-002
Project I-15 Corridor Material Contract No. MC-0022
THIS AGREEMENT, made this 12th day of September, 1997, by and between
WASATCH CONSTRUCTORS, A JOINT VENTURE, 480 North 2200 West, Salt Lake City, Utah
84116, (801) 594-6400, hereinafter called the "Contractor", and GENEVA ROCK
PRODUCTS, INC., Address: 1565 West 400 North (P.O. Box 538); Orem, Utah 84057,
Phone: (801) 765-7800, hereinafter called the "Seller".
WITNESSETH:
SECTION 1. THE WORK. The Seller agrees to furnish all material set forth
in "Section 2" hereof necessary in the construction of the I-15 Corridor
Reconstruction Project for the Utah Department of Transportation, hereinafter
called the "Owner", for the design construction and maintenance of approximately
twenty six kilometers of the I-15 Corridor from 10800 South to 600 North,
including interchanges, additional lanes and other related work in the Salt Lake
City area, together with certain equipment and systems related thereto, in
accordance with the terms and provisions of the Prime Contract between the Owner
and the Contractor, dated April 15, 1997, and the Seller agrees to be bound to
the Contractor by the terms and provisions thereof.
(a) The term "Prime Contract" as used herein refers to all the general,
supplementary and special conditions, drawings, specifications, amendments,
modifications and all other documents forming or by reference made a part of the
contract between Contractor and Owner.
(b) Seller, by signing this Contract, acknowledges that it has
independently assured itself that all of the Prime Contract documents have been
available to it, and confirms that it has examined all such documents and agrees
that all of the aforesaid Prime Contract documents shall be considered a part of
this Contract by reference thereto. Seller agrees to be bound to Contractor and
Owner by the terms and provisions thereof so far as they apply to the work
hereinafter described, unless otherwise provided herein.
(c) In the event Contractor is a joint venture/partnership of two or more
entities, the term "Contractor" as used throughout this Contract shall include
the joint venture/partnership and each of the entities comprising the joint
venture/partnership.
1
<PAGE> 2
SECTION 2. MATERIAL TO BE PROVIDED. It is agreed that Seller shall furnish
the following material, together with all work, supplies and facilities (the
"Work") necessary for complete performance and acceptance in exact accord with
the Prime Contract:
SEE ATTACHMENT A
SECTION 3. PAYMENT. (a) Contractor agrees to pay Seller the sum of, TEN
MILLION TWO HUNDRED SIXTY-FIVE THOUSAND TWO HUNDRED FIFTY AND 00/100** Dollars
($10,265,250.00), subject to adjustments as required by differences between any
approximate and actual quantities for unit price items, and any additions and
deletions for changes as provided in Section 4. Unless otherwise provided for
herein, such sum shall include all taxes and freight, with delivery to be F.O.B.
jobsite with freight prepaid to jobsite.
(b) Partial payments will be made to Seller each month in an amount equal
to 95 percent of the value of materials delivered to the site, computed on the
basis of the prices set forth above, of the quantity as estimated by Contractor,
less the aggregate of previous payments made hereunder, but such partial
payments shall not become due to Seller until 7 days after Contractor receives
payment for such materials from Owner. If Contractor receives payment from Owner
for less than the full value of materials delivered to the site but not yet
incorporated into the work, the amount due to Seller on account of such
materials delivered to the site shall be proportionately reduced. No partial
payment to Seller shall operate as approval or acceptance of the materials by
Owner, Contractor will make final payment to Seller of the balance due him under
this Contract 30 days after full payment for such materials has been received by
Contractor from Owner.
(c) Contractor may deduct from any amounts due or to become due to Seller
any sum or sums owed by Seller or Seller's affiliated entities to Contractor or
Contractor's affiliated entities, and in the event of any breach by Seller of
any provision or obligation of this Contract, or in the event of the assertion
by other parties of any claim or lien, including but not limited to third party
claims, levies or garnishments against Contractor or the premises arising out of
Seller's performance of this Contract, Contractor shall have the right to retain
out of any payments due or to become due to Seller an amount sufficient to
completely protect Contractor from any and all loss, damage or expense
therefrom, until the situation has been satisfactorily remedied or adjusted by
Seller.
SECTION 4. CHANGES. Contractor may at any time by written order of
Contractor's authorized representative, and without notice to Seller's sureties,
make changes in, additions to and deletions from the materials to be furnished
under this Contract, and Seller shall promptly proceed with the performance of
this Contract as so changed.
(a) For changes in the Prime Contract that have been initiated by Owner,
for acts or omissions of Owner and for defects in the Prime Contract, Seller
shall submit any claims it may have, including notice thereof, for adjustment in
the price, schedule or other provisions of the Contract to Contractor in writing
in sufficient time and form to allow Contractor to process such claims within
the time and in the manner provided for and in accordance with the applicable
2
<PAGE> 3
provisions of the Prime Contract. Seller agrees that it will accept such
adjustment, if any, received by Contractor from Owner as full satisfaction and
discharge of such claim.
(b) For changes directed by Contractor which are not provided for under
Section 4(a) above, Seller shall be entitled to an adjustment in the Contract
price, provided Seller gives Contractor written notice of its intent to claim
such an adjustment prior to performing such changes. Failure to provide such
notice shall be deemed to prejudice Contractor and to constitute a waiver of
such claims by Seller.
SECTION 5. PROSECUTION OF THE WORK. (a) Seller shall prosecute the Work
undertaken in a prompt, efficient and workmanlike manner so as to promote the
general progress of the entire construction, and shall not, by delay or
otherwise, interfere with or hinder the Work of Contractor or any other seller.
The time of performance of the Work by Seller is of the essence and Seller
agrees to reimburse Contractor for any and all liquidated and/or actual damages
that may be assessed by Owner against Contractor which are attributable to or
caused by Seller's failure to perform the Work required by this Contract within
the time fixed or in the manner provided for herein. Seller also agrees to pay
to Contractor any increased costs or other damages Contractor may sustain by
reason of such delay by Seller, whether or not liquidated or actual damages are
assessed by Owner. The payment of such damages shall not release Seller from its
obligations to fully perform this Contract.
(b) In the event Seller fails to comply with the provisions herein and the
failure is not corrected within forty-eight (48) hours after written request by
Contractor to Seller, Contractor may, without prejudice to any other right or
remedy, including the right to terminate this Contract for default, furnish or
secure elsewhere the necessary materials to remedy the situation, at the expense
of Seller, including attorneys' fees. Acceptance of Seller's work shall not act
as a waiver of Contractor's right to recovery hereunder for any non-conforming
or faulty work or materials of Seller.
(c) If the Prime Contract is terminated for the convenience of Owner, the
termination settlement under this Contract shall be as provided in the Prime
Contract. Seller shall not be entitled to receive any greater amount than
Contractor may on behalf of Seller recover from Owner for such termination.
(d) In no event shall Contractor be liable to Seller for consequential
damages.
SECTION 6. DELAYS. (a) In the event Seller's Performance of this Contract
is significantly delayed or interfered with by acts of Owner, Contractor or
other subcontractors, it may request an extension of the time for the
performance of same, as hereinafter provided, but shall not be entitled to any
increase in the Contract price or to damages or additional compensation as a
consequence of such delays or interference, except to the extent that the Prime
Contract entitles Contractor to compensation for such delays, and then only to
the extent of any amounts that Contractor may, on behalf of Seller, recover from
Owner for such delays.
(b) No allowance for an extension of time for any cause whatsoever shall
be claimed by, or granted to, Seller unless Seller shall have made written
request upon Contractor for such extension within forty-eight (48) hours after
the event giving rise to such request or, if the Prime Contract provides for a
shorter period, within sufficient time to permit Contractor to give notice to
Owner within the time allowed by the Prime Contract for such notice.
3
<PAGE> 4
(c) No allowance of an extension of time shall, in any event, be made to
Seller, for delay by Seller in preparing his drawings, or in securing approval
of Owner thereto when such drawings are not properly prepared for approval of
Owner, or when Seller by the exercise of reasonable diligence or good business
judgment could have anticipated and avoided the delay. All drawings of Seller
must be submitted for approval of Owner through the Contractor's office.
SECTION 7. INSURANCE. Seller shall maintain at all times the following
minimum insurance: (a) Worker's Compensation - Statutory limits, and Employers'
Liability - limit of $1,000,000 each occurrence; (b) Automobile Liability -
combined bodily injury and property damage limit of $1,000,000 each accident;
(c) Commercial General Liability (including contractual coverages) - combined
bodily injury and property damage limit of $1,000,000 each occurrence. When
requested, Seller shall furnish evidence satisfactory to Contractor that such
insurances are in effect. Coverage outlined above shall protect Seller,
Contractor and Owner and all coverages shall contain a waiver of subrogation in
favor of Contractor and Owner. Any such insurance shall be regarded as primary
insurance underlying any other applicable insurance maintained by Contractor
and/or Owner.
SECTION 8. INDEMNITY. To the fullest extent permitted by law, Seller
further specifically obligates itself to Contractor, Owner and any other party
required to be indemnified under the Prime Contract, jointly and severally, in
the following respects, to-wit:
(a) to release, defend, and indemnify them against and save them harmless
from any and all claims, suits, liability, expense or damage for any alleged or
actual infringement or violation of any patent or patented right, arising in
connection with this Contract and anything done thereunder;
(b) to release, defend, and indemnify them against and save them harmless
from any and all claims, suits or liability for damages to property including
loss of use thereof, injuries to persons, including death, and from any other
claims, suits or liability on account of acts or omissions of Seller, or any of
its subcontractors, suppliers, officers, agents, employees or servants, whether
or not caused in part by the active or passive negligence or other fault of a
party indemnified hereunder; provided however, Seller duty hereunder shall not
arise to the extent such claims, suits or liability, injuries or death or other
claims or suits are caused by the negligence of a party indemnified hereunder
unless otherwise provided in the Prime Contract. Seller's obligation hereunder
shall not be limited by the provisions of any Workers' Compensation act or
similar statute.
(c) to pay for all materials furnished and Work and labor performed under
this Contract, and to satisfy Contractor thereupon whenever demand is made, and
to defend and indemnify Contractor, Owner and other indemnified parties against
and save them and the premises harmless from any and all claims, suits or liens
therefor by others than Seller.
To the fullest extent permitted by law, Seller shall defend and indemnify
Contractor, Owner and other indemnified parties against, and save them harmless
from, any and all loss, damage, costs, expenses and attorneys' fees suffered or
incurred on account of any breach of any other provision or covenant of this
Contract. Notwithstanding the above, Contractor at its discretion, reserves the
right to defend any one or all of the indemnified parties and itself. Such
4
<PAGE> 5
election to defend by Contractor shall not in any way limit Seller's
responsibility to indemnify and hold harmless as provided herein.
In the event that the Contractor is obligated to indemnify the Owner
pursuant to a contract, the Seller is further responsible for damages
apportioned to Owner in cases of comparative negligence or fault, where any
portion of such damage is also apportioned to the Seller or anyone directly or
indirectly employed by Seller or anyone for whose acts or omissions that Seller
may be liable. In such circumstances, Seller shall be obligated to the Owner for
a pro rate share of the damages, losses, and expenses attributable to the Owner
on the proportional share of fault of each of the parties found to be at fault
for the claim, damage, loss, or expense so long as the parties found to be at
fault are acting as a construction manager, general contractor, subcontractor,
sub-subcontractor, or supplier with respect to the Work and so long as the
claim, damage, loss, or expense did not arise at the time and during the phase
of the work when the Owner was operating as a construction manger, general
contractor, subcontractor, sub-subcontractor, or supplier all as required by
Utah Code Ann. Section 13-8-1, et seq.
SECTION 9. COMPLIANCE. Seller must obtain and pay for all permits,
licenses, tests and official inspections necessary to his performance under this
Contract, and shall comply with all laws, ordinances and regulations, including,
but not limited to, all applicable provisions required by the Prime Contract and
all local regulations and building codes, bearing on the production of Seller's
material and the delivery thereof.
SECTION 10. DISPUTES. (a) In case of any disputes between Seller and
Contractor, Seller agrees to be bound to Contractor to the same extent that
Contractor is bound to Owner both by the terms of the Prime Contract and by any
and all decisions or determinations made thereunder by the party or board as
authorized in the Prime Contract.
(b) Any dispute between Contractor and Seller which cannot be brought
under Section 10(a) shall be decided by Contractor whose decision thereon shall
be final and conclusive. Seller shall proceed diligently with the Work, pending
final determination pursuant to this or any other Disputes clause or pursuant to
any other action taken with respect to a claim or claims. In the event any
dispute leads to litigation or arbitration, the prevailing party shall be
entitled to all costs, expenses and attorneys' fees.
SECTION 11. ASSIGNMENT. Seller shall not assign this contract or any part
thereof without the written consent of Contractor.
SECTION 12. WARRANTIES. Seller warrants to Contractor that the materials
shall be free from all defects, shall be of the quality specified, shall be fit
and appropriate for the purpose intended and shall conform to the provisions,
specifications, performance standards, drawings, samples or other descriptions
contained herein or in the Prime Contract, and agrees to make good, at its own
expense, any defect in materials which may occur or develop prior to
Contractor's release from responsibility to Owner. Seller's warranty shall in
all respects meet the terms of the warranty requirements of the Prime Contract
for the materials and services ordered, for one year or longer as otherwise
required.
5
<PAGE> 6
SECTION 13. BONDING. Seller shall furnish a Supply Bond in an amount equal
to the full Contract price. Such bond shall be on a form furnished by, and with
a surety satisfactory to, Contractor. Premium for such bond shall be paid by
Seller unless otherwise agreed upon in writing by the parties hereto.
SECTION 14. COMPLETE AGREEMENT. This Contract sets forth the entire
agreement of the parties. Contractor assumes no responsibility for any
understanding or representation made by any of its officers or agents prior to
the execution of this Contract, unless such understanding or representation by
Contractor is expressly stated in this Contract. Unless specifically referenced
herein and attached hereto, no proposals or terms of any nature submitted by
Seller shall be of any effect.
SECTION 15. ADDITIONAL PROVISIONS. The attached "Section 15 - Additional
Provisions" are hereby specifically included as part of this Material Contract.
IN WITNESS WHEREOF, the parties hereto have executed this Contract by
their proper officers or other authorized representatives.
WASATCH CONSTRUCTORS GENEVA ROCK PRODUCTS, INC.
A JOINT VENTURE
BY: BY:
--------------------------------- -----------------------------------
(Contractor) (Seller)
W.H. (Bill) Murphy
6
<PAGE> 7
I-15 Corridor Reconstruction Project SELLER: _____________________________
Job No. 264-0002 MATERIAL CONTRACT NO.: ______________
MATERIAL CONTRACT DATE: ______________
ATTACHMENT "A"
SCOPE OF WORK
<TABLE>
<CAPTION>
EST. UNIT APPROX.
ITEM # DESCRIPTION QTY UNIT PRICE TOTAL
- ------ ----------- ------- ---- ------ --------------
<S> <C> <C> <C> <C> <C>
1 3000 PSI CLASS A(AE) 10,000 CY $57.60 $ 576,000.00
2 4000 PSI CLASS AA(AE) 130,000 CY $59.60 $ 7,748,000.00
3 4000 PSI 5% SILICA 20,000 CY $76,50 $ 1,530,000.00
4 4000 PSI 5% SILICA/HRWR 5,000 CY $82.25 $ 411,250.00
------- ------ --------------
APPROXIMATE TOTAL $10,265,250.00
==============
</TABLE>
ESCALATION
The Contract unit prices will be escalated as follows:
<TABLE>
<CAPTION>
ESCALATION
(COMPOUNDED
PERIOD ANNUALLY)
-------------------------------- -----------
<S> <C>
Current to April 1, 1998 None
April 1, 1998 to April 1999 2.0%
April 1, 1999 to April 1, 2000 2.5%
April 1, 2000 to April 1, 2001 2.5%
April 1, 2001 to April 1, 2002 3.0%
</TABLE>
WASATCH CONSTRUCTORS GENEVA ROCK PRODUCTS, INC.
A JOINT VENTURE
BY: BY:
-------------------------------- -------------------------------------
(Contractor) (Seller)
W.H. (Bill) Murphy
<PAGE> 1
[EXHIBIT 23.1]
CONSENT OF HOULIHAN VALUATION ADVISORS
CONSENT
To the Board of Directors of
Clyde Companies, Inc.
Gentlemen:
We hereby consent to the references to our firm which appear in the
Registration Statement of Clyde Companies, Inc., on Form S-4 and the Proxy
Statement/Prospectus. We also consent to the following reports prepared by our
firm being filed as annexes to the Proxy Statement/Prospectus:
1. Valuation of W.W. Clyde & Co. dated October 23, 1997.
2. Valuation of Geneva Rock Products, Inc. dated October 23, 1997.
3. Valuation of Utah Service, Inc. dated October 23, 1997.
4. Valuation of Beehive Insurance Agency, Inc. dated October 23, 1997.
HOULIHAN VALUATION ADVISORS
By: /s/ David Dorton
-------------------------------
David Dorton
Salt Lake City, Utah
Date: January 21, 1998
<PAGE> 1
[EXHIBIT 23.3]
CONSENTS OF GRANT THORNTON LLP
CONSENT
We have issued our report dated October 14, 1997, except for Note D for which
the date is November 13, 1997, accompanying the financial statements of Clyde
Companies, Inc., contained in the Registration Statement and Prospectus. We
consent to the use of the aforementioned report in the Registration Statement
and Prospectus and to the use of our name as it relates to the above Company
appearing under the captions "Selected Financial Information,"
Summary Historical Financial Information" and "Experts."
/s/ Grant Thornton LLP
-----------------------------------------
Grant Thornton LLP
Provo, Utah
January 23, 1998
<PAGE> 2
CONSENT
We have issued our report dated October 14, 1997, accompanying the financial
statements of Utah Service, Inc., contained in the Registration Statement and
Prospectus. We consent to the use of the aforementioned report in the
Registration Statement and Prospectus and to the use of our name as it relates
to the above Company appearing under the captions "Selected Financial
Information," Summary Historical Financial Information" and "Experts."
/s/ Grant Thornton LLP
-----------------------------------------
Grant Thornton LLP
Provo, Utah
January 23, 1998
<PAGE> 3
CONSENT
We have issued our report dated February 27, 1997, accompanying the financial
statements of W.W. Clyde & Co., contained in the Registration Statement and
Prospectus. We consent to the use of the aforementioned report in the
Registration Statement and Prospectus and to the use of our name as it relates
to the above Company appearing under the captions "Selected Financial
Information," Summary Historical Financial Information" and "Experts."
/s/ Grant Thornton LLP
-----------------------------------------
Grant Thornton LLP
Provo, Utah
January 23, 1998
<PAGE> 1
[EXHIBIT 23.4]
CONSENT OF DAINES ASSOCIATES LLC
CONSENT
We have issued our report dated October 21, 1997 accompanying the
financial statements of Beehive Insurance Agency, Inc., contained in the
Registration Statement on Form S-4 of Clyde Companies, Inc., and the Proxy
Statement/Prospectus. We consent to the use of the aforementioned report in the
Registration Statement and the Proxy Statement/Prospectus and to the use of our
name as it appears in the Registration Statement and the Proxy Statement/
Prospectus.
/s/ Daines Associates LLC
-----------------------------------------
Salt Lake City, Utah
January 21, 1998
<PAGE> 1
[EXHIBIT 23.5]
CONSENT OF SQUIRE & COMPANY, PC
CONSENT
We have issued our report dated February 15, 1997,
accompanying the consolidated financial statements of Geneva Rock Products,
Inc., contained in the Registration Statement on Form S-4 of Clyde Companies,
Inc., and the Proxy Statement/Prospectus. We consent to the use of the
aforementioned report in the Registration Statement and the Proxy
Statement/Prospectus and to the use of our name as it appears in the
Registration Statement and the Proxy Statement/Prospectus.
/s/ Squire & Company, PC
----------------------------------------
Orem, Utah
January 21, 1998
<PAGE> 1
[EXHIBIT 99.6]
FORM OF LETTER OF TRANSMITTAL
LETTER OF TRANSMITTAL
(IMPORTANT: See Instructions on Reverse Side)
TO: Clyde Companies, Inc.
1423 Devonshire Drive
Salt Lake City, UT 84108
Telephone: (801) 582-2783
............................., 1998
(please date)
NOTE: If the name and address shown
at left are not correct, please make
any changes necessary. (See
Instructions 2 and 3)
Dear Sir or Madam:
The undersigned surrenders herewith the following certificate(s) representing
shares of common stock, par value $10 per share ("Clyde Common Stock"), of W.W.
Clyde & Co. ("Clyde"), common stock, par value $10 per share ("Geneva Rock
Common Stock"), of Geneva Rock Products, Inc. ("Geneva Rock"), common stock, par
value $10 per share ("Utah Service Common Stock"), of Utah Service, Inc. ("Utah
Service"), and/or common stock, par value $1 per share ("Beehive Insurance
Common Stock"), of Beehive Insurance Agency, Inc. ("Beehive Insurance"), in
exchange for a certificate for the number of whole shares of common stock, no
par value ("CCI Common Stock"), of Clyde Companies, Inc., ("CCI") to which the
undersigned is entitled to pursuant to the Agreement and Plan of Merger, dated
as of November 13, 1997. Pursuant to the Agreement and Plan of Merger, each
share of Clyde Common Stock, Geneva Rock Common Stock, Utah Service Common Stock
and Beehive Insurance Common Stock will be converted into, respectively, 33.93,
239.27, 43.43 and 4.33 shares of CCI Common Stock.
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Company Name Certificate Numbers Number of Shares
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Please issue the certificate(s) of CCI Common Stock, to which the undersigned is
entitled in the name appearing above, subject to the following instructions:
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Fill in ONLY if new certificate(s) are to be issued in a name OTHER
than that of the owner whose name appears ABOVE or if delivery
is to be made OTHER than to such owner.
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(Please Print)
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<PAGE> 2
Issue Certificate(s) to Mail or Deliver to
Name .....................................................................
.....................................................................
Address .....................................................................
.....................................................................
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INSERT SOCIAL SECURITY OR TAX
IDENTIFICATION NO. SIGNATURE(S)....................................
# ....................................
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INSTRUCTIONS
1. This Letter of Transmittal should be filled in, dated, signed and mailed
to Clyde Companies, Inc., 1423 Devonshire Drive, Salt Lake City, Utah
84108 accompanied by all stock certificates representing Clyde Common
Stock, Geneva Rock Common Stock, Utah Service Common Stock, or Beehive
Insurance Common Stock presently held by you. The delivery of such
certificate(s) shall be effected, and risk of loss and title shall pass,
only upon proper delivery to CCI, so the method of transmitting or
delivering such certificate(s) is at the risk of the owner. If such
certificate(s) are sent by mail, certified or registered mail, return
receipt requested, is recommended (an addressed envelope is enclosed).
2. If the new and corrected certificate(s) of CCI Common Stock are to be
issued in a name other than that appearing on the face of the
certificate(s) surrendered, the certificate(s) surrendered must be
assigned to such transferee and the signature thereto must be guaranteed,
in the usual form, by a commercial bank or trust company, or by a member
firm of a major stock exchange. All endorsements or separate stock powers
executed by officers of corporations, partnerships, administrators,
executors, trustees, guardians, attorneys-in-fact or others acting in a
fiduciary or representative capacity must be accompanied by proper
documentary evidence of such person's appointment and authority to act. In
all cases involving a change of ownership, the appropriate state transfer
tax stamps or funds to cover the purchase of such stamps must be attached.
3. If any certificates surrendered are incorrectly registered (that is, the
name of the registered holder is misspelled, etc.), or if any of the
certificates surrendered have varying name registrations and the new
certificates are to be issued to the same person in a corrected name,
which is not exactly the same registration as that shown on the face of
all the certificate(s) surrendered, then the certificate(s) surrendered
should be endorsed in blank with the correct name (that is, first name,
middle initial, if any, and last name) and below the signature of
endorsement please write "incorrectly described as (insert the name
exactly as it appears on the face of the certificate(s) surrendered)." The
signature to each such endorsement should then be guaranteed in the manner
outlined in Instruction 2, above.
4. Fractional shares of CCI Common Stock will not be issued. In lieu of
fractional shares, shareholders of Clyde, Geneva Rock, Utah Service and
Beehive Insurance will receive cash equal to the product of (i) such
fraction multiplied by (ii) $14.52.
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