SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
U.S. CONCRETE, INC.
(Name of Issuer)
COMMON STOCK, $0.001 PAR VALUE PER SHARE
(Title of Class of Securities)
90333L 10 2
(CUSIP Number)
Jerry Sklar, Esq.
50 North Front Street, Suite 1300
Memphis, Tennessee 38103
(901) 543-8000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 28, 1999
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
(Continued on following pages)
Page 1 of 4 Pages
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SCHEDULE 13D
CUSIP No. 90333L 10 2 Page 2 of 4 Pages
(1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Neil Vannucci
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
(3) SEC USE ONLY
(4) SOURCE OF FUNDS
OO
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e)
/ /
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
Number of (7) SOLE VOTING POWER
Shares 897,667 Shares
Beneficially (8) SHARED VOTING POWER
Owned By None
Each (9) SOLE DISPOSITIVE POWER
Reporting 897,667 Shares
Person With (10) SHARED DISPOSITIVE POWER
None
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
897,667 Shares
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
/ /
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.5%
(14) TYPE OF REPORTING PERSON
IN
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Schedule 13D relates to the common stock, $0.001 par value per share, of
U.S. Concrete, Inc., a Delaware corporation. The principal executive offices of
the issuer are located at 1360 Post Oak Boulevard, Suite 800, Houston, Texas
77056.
ITEM 2. IDENTITY AND BACKGROUND.
(a) The reporting person is Neil Vannucci.
(b) Mr. Vannucci's business address is 150 South Linden Avenue, South San
Francisco, California 94080.
(c) Mr. Vannucci's principal occupation is employment as an executive
officer of Bay Cities Building Materials Co., Inc., a maker of concrete ready
mix and a wholly-owned subsidiary of U.S. Concrete, Inc. The principal address
of the employer is 150 South Linden Avenue, South San Francisco, California
94080.
(d) Mr. Vannucci has not been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) during the last 5 years.
(e) During the last 5 years, Mr. Vannucci has not been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction which
resulted in his having been or being subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, Federal or State securities laws or finding any violation with
respect to such laws.
(f) Neil Vannucci is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS.
On March 22, 1999, Bay Cities Building Materials Co., Inc. ("Bay Cities") and
its shareholders, including Mr. Vannucci, entered into an Agreement and Plan of
Reorganization (attached hereto as Exhibit 1) pursuant to which U.S. Concrete,
Inc. would acquire all the outstanding stock of Bay Cities for cash and U.S.
Concrete, Inc. common stock. Upon the closing of the transactions contemplated
by the Agreement, Mr. Vannucci received the shares of U.S. Concrete, Inc. common
stock he now owns.
ITEM 4. PURPOSE OF TRANSACTION.
Concurrently with entering into the Bay Cities Reorganization Agreement
discussed in Item 3, U.S. Concrete, Inc. entered into similar agreements with
several other entities with the objective of effecting an initial public
offering. Neil Vannucci participated in this roll-up transaction and obtained
his U.S. Concrete, Inc. common stock for investment purposes. As an individual,
Mr. Vannucci has no present intentions or arrangements to effect any of the
transactions listed in Item 4(a)-(j) of Schedule 13D, including any additional
purchases by him of U.S. Concrete, Inc. shares. Mr. Vannucci, however, reserves
the right to make additional purchases from time to time. Any decision to make
such additional purchases will depend on various factors, including without
limitation the price of the common stock, stock market conditions and the
business prospects of U.S. Concrete, Inc.
In his professional capacity, Mr. Vannucci is a director of U.S. Concrete, Inc.
and president of one of its wholly-owned subsidiaries. Mr. Vannucci's duties as
an executive officer include locating prospective acquirees for U.S. Concrete,
Inc. These transactions generally result in the acquiree receiving both cash and
U.S. Concrete, Inc. stock.
<PAGE>
ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER.
(a) The aggregate number of shares of Common Stock beneficially owned by the
Neil Vannucci is 897,667, which constitutes 5.5% of the issued and outstanding
Common Stock.
(b) The power to vote and dispose of the shares owned by Mr. Vannucci rests
solely with him.
(c) None.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ETC. WITH RESPECT TO SECURITIES OF THE ISSUER.
Pursuant to the agreement by which Mr. Vannucci acquired his U.S. Concrete, Inc.
Common Stock (attached hereto as an exhibit), Mr. Vannucci may not transfer,
encumber, or otherwise dispose of his shares prior to May 25, 2000.
ITEM 7. MATERIAL TO BE FILED AS EXHIBIT.
1. Agreement and Plan of Reorganization dated as of March 22, 1999, by
and among U.S. Concrete, Inc., Bay Cities Acquisition, Inc., Bay Cities Building
Materials Co., Inc. and Stockholders.
SIGNATURE
After reasonable inquiry and to the best of the knowledge and belief of
the undersigned, I certify that the information set forth in this statement is
true, complete and correct.
Date: /s/ Neil Vannucci
---------------------- -----------------
Print Name: Neil Vannucci
<PAGE>
EXHIBIT 1
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF MARCH 22, 1999
BY AND AMONG
U.S. CONCRETE, INC.,
BAY CITIES ACQUISITION INC.,
BAY CITIES BUILDING MATERIALS CO., INC.
AND
THE STOCKHOLDERS NAMED HEREIN
Reverse Triangular Merger; Non-Delaware Company; Multiple Stockholders; Company
Financial Statements
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of
March 22, 1999 by and among U.S. Concrete, Inc., a Delaware corporation ("USC"),
Bay Cities Acquisition Inc., a Delaware corporation and a wholly owned
subsidiary of USC ("USC Sub"), BAY CITIES BUILDING MATERIALS CO., INC., a
California corporation (the "Company"), and the persons listed on the signature
page hereof under the caption "Stockholders" (collectively, the "Stockholders,"
and each of those persons, individually, a "Stockholder").
PRELIMINARY STATEMENT
The parties to this Agreement have determined it is in their best long-term
interests to effect a business combination pursuant to which:
(a) USC Sub will merge into the Company on the terms and subject to
the conditions set forth herein (that merger being the "Merger");
(b) USC will acquire the stock of all or some of the entities listed
in the accompanying Addendum 1 (each, other than the Company, an "Other
Founding Company" and, collectively with the Company, the "Founding
Companies") pursuant to agreements that are (i) similar to this Agreement
and (ii) entered into among those entities and their equity owners, USC and
subsidiaries of USC (collectively, the "Other Agreements"); and
(c) USC will effect a public offering of shares of its common stock
and issue and sell those shares.
The respective boards of directors of USC, USC Sub and the Company have
approved and adopted this Agreement to effect a transaction subject to Section
351 of the Code.
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
representations and undertakings this Agreement contains, the parties hereto
hereby agree as follows:
Paragraph 1 CERTAIN DEFINED TERMS. The following terms this Agreement uses
have the meanings this Paragraph 1 specifies. Capitalized terms this Agreement
uses, but this Paragraph 1 does not define, have the meanings the preamble to
this Agreement, the Preliminary Statement above or Article IX of the Uniform
Provisions, as the case may be, specifies.
"Acquired Business" means the Company.
"Acquisition" means the Merger.
"Acquisition Consideration" has the meaning Paragraph 2 specifies.
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"Additional Cash Consideration" means the product of (i) the quotient
obtained from dividing (A) the sum of (i) $5,302,046 and (ii) the 1998
Permitted Restricted Payment by (B) $8.50 multiplied by (ii) the amount, if
any, by which (A) the IPO Price exceeds (B) $8.50.
"BCBM" means BCBM Transport, Inc., a California corporation, and
wholly owned subsidiary of the Company.
"Ceiling Amount" means the sum of (i) $24,508,185, (ii) the Additional
Cash Consideration, if any, (iii) the Positive Net Adjustment, if any, and
(iv) the Negative Net Adjustment, if any; provided, however, that, for
purposes of Sections 6.06(b) and 7.06(b), the Ceiling Amount is
$15,906,139.
"CGCL" means the General Corporation Law of the State of California.
"Closing" has the meaning Paragraph 3 specifies.
"Closing Date" means the IPO Pricing Date.
"Company Capital Stock" means the Common Stock, no par value, of the
Company.
"Company Financial Statements" means the audited balance sheets of the
Company as of December 31, 1997 and December 31, 1998 and the related
audited statements of operations, cash flows and shareholders' equity for
each of the years in the three-year period ended December 31, 1998,
together with the related audit report of the Independent Accountants.
"Counsel for the Company and the Stockholders" means Ferrari, Olsen,
Ottoboni & Bebb, LLP.
"Counsel for USC and USC Sub" means Baker & Botts, L.L.P.
"Current Balance Sheet" means the audited balance sheet of the Company
as of December 31, 1998.
"Current Balance Sheet Date" means December 31, 1998.
"Current Balance Sheet Date Working Capital" means ($666,000).
"Effective Date" means the IPO Closing Date.
"Executive Employment Agreement" means the Employment Agreement
entered into effective as of the IPO Closing Date between the Company and
Neil J. Vannucci.
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<PAGE>
"Initial Financial Statements" means the Company Financial Statements.
"Minimum Cash Balance" means $500,000.
"Pro Rata Share" of a Stockholder means: (i) 47.97% in the case of
Neil J. Vannucci; (ii) 47.97% in the case of Gloria Satterfield; (iii)
2.03% in the case of Nino Campagna; and (iv) 2.03% in the case of William
Monlux.
"Responsible Officer" means Neil J. Vannucci.
"Surviving Corporation" means the Company, which the Certificate of
Merger will designate as the surviving corporation of the Merger.
"Termination Date" means May 31, 1999; provided, however, that if (i)
USC has filed the Registration Statement with the SEC prior to that date
and (ii) the Stockholders would not be entitled to terminate this Agreement
on that date otherwise than pursuant to Section 11.01(a)(ii), "Termination
Date" means September 30, 1999.
"Uniform Provisions" has the meaning Paragraph 4 specifies.
"USC Award Agreements" means the award agreements, each in the form of
Exhibit 1-A, pursuant to which USC, on the Closing Date, will grant to
certain key employees of the Company Neil J. Vannucci has designated by
written notice to USC and USC has approved by written notice to the
Responsible Officer (which approval USC will not unreasonably withhold)
prior to the Closing Date, pursuant to the U.S. Concrete, Inc. 1999
Employee Incentive Plan, or other similar stock option plan, options to
purchase an aggregate not to exceed 115,418 shares of USC Common Stock at a
per share exercise price equal to the IPO Price.
"USC Sub Common Stock" means the Common Stock, par value $1.00 per
share, of USC Sub.
"1998 Permitted Restricted Payment" means $0.
Paragraph 2 (A) CERTIFICATE OF MERGER. Subject to the terms and conditions
hereof, the Company will cause the Certificate of Merger to be duly executed and
delivered on or promptly after the Closing Date and filed with the Secretary of
State of the State of California and the Secretary of State of the State of
Delaware.
(B) THE EFFECTIVE TIME. The effective time of the Merger (the "Effective
Time") will be the time on the Effective Date which the Certificate of Merger
specifies or, if the Certificate of Merger does not specify another time, 8:00
a.m., Houston, Texas time, on the Effective Date.
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<PAGE>
(C) CERTAIN EFFECTS OF THE MERGER. At and as of the Effective Time, (1) USC
Sub will be merged with and into the Company in accordance with the provisions
of the CGCL and the DGCL, (2) USC Sub will cease to exist as a separate legal
entity, (3) the articles of incorporation of the Company will be amended to
change the Company's authorized shares of capital stock to 1,000 shares, par
value $1.00 per share, of Common Stock, (4) the Company will be the Surviving
Corporation and, as such, will, all with the effect provided by the CGCL and the
DGCL, (a) possess all the properties and rights, and be subject to all the
restrictions and duties, of the Company and USC Sub and (b) be governed by the
laws of the State of California, (5) the Charter Documents of the Company then
in effect (after giving effect to the amendment to the Company's articles of
incorporation specified in clause (3) of this sentence) will become and
thereafter remain (until changed in accordance with (a) applicable law (in the
case of the articles of incorporation) or (b) their terms (in the case of the
bylaws)) the Charter Documents of the Surviving Corporation, (6) the initial
board of directors of the Surviving Corporation will be the persons Schedule
2(C) names as such, and those persons will hold the office of director of the
Surviving Corporation, subject to the provisions of the applicable laws of the
State of California and the Charter Documents of the Surviving Corporation, and
(7) the initial officers of the Surviving Corporation will be as Schedule 2(C)
sets forth, and each of those persons will serve in each office Schedule 2(C)
specifies for that person, subject to the provisions of the Charter Documents of
the Surviving Corporation, until that person's successor is duly elected to,
and, if necessary, qualified for, that office.
(D) EFFECT OF THE MERGER ON CAPITAL STOCK. As of the Effective Time, as a
result of the Merger and without any action on the part of any holder thereof:
(1) the shares of Company Capital Stock issued and outstanding
immediately prior to the Effective Time will (a) convert into the right to
receive, subject to the provisions of Paragraph 2(E), without interest, on
surrender of the certificates evidencing those shares, the amount of cash
and the number of whole and fractional shares of USC Common Stock Schedule
2(D) sets forth and, if any, the Additional Cash Consideration (the
"Acquisition Consideration"), (b) cease to be outstanding and to exist and
(c) be canceled and retired;
(2) each share of Company Capital Stock held in the treasury of the
Company or any Company Subsidiary will (a) cease to be outstanding and to
exist and (b) be canceled and retired; and
(3) each share of USC Sub Common Stock issued and outstanding
immediately prior to the Effective Time will convert into one share of
Common Stock, par value $1.00 per share, of the Surviving Corporation and
the shares of Common Stock of the Surviving Corporation issued on that
conversion will constitute all the issued and outstanding shares of Capital
Stock of the Surviving Corporation.
Each holder of a certificate representing shares of Company Capital Stock
immediately prior to the Effective Time will, as of the Effective Time and
thereafter, cease to have any rights respecting those shares other than the
right to receive, subject to the provisions of Paragraph 2(E), without interest,
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<PAGE>
the Acquisition Consideration and the additional cash, if any, owing with
respect to those shares as provided in Paragraph 2(F).
(E) DELIVERY, EXCHANGE AND PAYMENT. (1) At or after the Effective Time: (a)
the Stockholders, as holders of certificates representing shares of Company
Capital Stock, will, on surrender of those certificates to USC (or any agent
that USC may appoint for purposes of this Paragraph 2(E)), receive, subject to
the provisions of this Paragraph 2(E) and Paragraph 2(F), the Acquisition
Consideration; and (b) until any certificate representing Company Capital Stock
has been surrendered and replaced pursuant to this Paragraph 2(E), that
certificate will, for all purposes, be deemed to evidence ownership of the
number of whole shares of USC Common Stock included in the Acquisition
Consideration payable in respect of that certificate pursuant to Paragraph 2(D).
All shares of USC Common Stock issuable in the Merger will be deemed for all
purposes to have been issued by USC at the Effective Time.
(2) Each Stockholder will deliver to USC (or any agent that USC may
appoint for purposes of this Paragraph 2(E)) on or before the IPO Closing
Date the certificates representing all the Company Capital Stock owned by
that Stockholder, duly endorsed in blank, or accompanied by stock powers in
blank duly executed, by that Person, and with all necessary transfer tax
and other revenue stamps, acquired at that Person's expense, affixed and
canceled. Each Stockholder will cure any deficiencies in the endorsement of
the certificates or other documents of conveyance respecting, or in the
stock powers accompanying, the certificates representing Company Capital
Stock that Person delivers.
(3) No dividends (or interest) or other distributions declared or
earned after the Effective Time with respect to USC Common Stock and
payable to the holders of record thereof after the Effective Time will be
paid to the holder of any unsurrendered certificates representing shares of
Company Capital Stock for which whole shares of USC Common Stock have been
issued in the Merger until those certificates are surrendered as provided
herein, but (a) on that surrender USC will cause to be paid, to the Person
in whose name the certificates representing those whole shares of USC
Common Stock will then be issued, the amount of dividends or other
distributions previously paid with respect to those whole shares of USC
Common Stock with a record date, or which have accrued, subsequent to the
Effective Time, but prior to that surrender, and the amount of any cash
payable to that Person for and in lieu of fractional shares pursuant to
Paragraph 2(F) and (b) at the appropriate payment date or as soon as
practicable thereafter, USC will cause to be paid to that Person the amount
of dividends or other distributions with a record date, or which have been
accrued, subsequent to the Effective Time, but which are not payable until
a date subsequent to surrender, which are payable with respect to those
whole shares of USC Common Stock, subject in all cases to any applicable
escheat laws. No interest will be payable with respect to the payment of
those dividends or other distributions or cash for and in lieu of
fractional shares on surrender of outstanding certificates.
(F) Notwithstanding any other provision herein, USC will not issue any
fractional shares of USC Common Stock, and if any Stockholder would be entitled
hereunder to receive a
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<PAGE>
fractional share of USC Common Stock but for this Paragraph 2(F), that
Stockholder will be entitled hereunder to receive a cash payment for and in lieu
thereof in the amount (rounded upward to the nearest whole cent) equal to that
Stockholder's fractional interest in a share of USC Common Stock multiplied by
the IPO Price.
Paragraph 3 THE CLOSING. On or before the Closing Date, the parties hereto
will take all actions necessary to (A) effect the Acquisition (including, as
permitted by the CGCL and the DGCL, (i) the execution of a Certificate of Merger
(a) meeting the requirements of the CGCL and the DGCL and (b) providing that the
Merger will become effective on the Effective Date and (ii) the transmitting for
filing of that Certificate of Merger with the Secretary of State of the State of
California and the Secretary of State of the State of Delaware), (B) verify the
existence and ownership of the certificates evidencing the Company Capital Stock
to be exchanged for the Acquisition Consideration pursuant to Paragraph 2(E) and
(C) satisfy the document delivery requirements on which the obligations of the
parties to effect the Acquisition and the other transactions contemplated hereby
are conditioned by the provisions of Article V (all those actions collectively
being the "Closing"). The Closing will take place at the offices of Baker &
Botts, L.L.P., 30th Floor, 910 Louisiana, Houston, Texas at 10:00 a.m., Houston
time, on the Closing Date, or at such later time on the Closing Date as USC
specifies by written notice to the Responsible Officer. The actions taken at the
Closing will not include the delivery of the Company Capital Stock to USC or the
payment of the Acquisition Consideration to the Stockholders. Instead, on the
IPO Closing Date, the Company Capital Stock will be surrendered in exchange for
the Acquisition Consideration (with the cash portion of the Acquisition
Consideration being paid by wire transfer pursuant to instructions the
Stockholders deliver to USC prior to Closing or, in the absence of those
instructions, a USC check), and all transactions contemplated by this Agreement
to be closed or completed on or before the IPO Closing Date will be closed and
completed, as the case may be.
Paragraph 4 INCORPORATION OF UNIFORM PROVISIONS. (A) The U.S. Concrete,
Inc. Uniform Provisions for the Acquisition of Founding Companies attached
hereto as Annex 1 (the "Uniform Provisions") hereby are incorporated in this
Agreement by this reference and constitute a part of this Agreement with the
same force and effect as if set forth at length herein.
(B) Section 2.23(vi) is hereby amended by replacing "$25,000" with
"$50,000."
(C) The provisions of Article VIII will not prohibit Neil J. Vannucci
from developing, owning and operating a cement and/or aggregates import
terminal in the San Francisco Bay Area, provided that (i) USC (or any one
or more of its Subsidiaries it designates) has the contractual right to
purchase at least 90% of the cement and aggregates that terminal imports
each year at prices equal to or less than then prevailing market prices,
(ii) USC (or any one or more of its Subsidiaries it designates) has the
contractual right to operate any ready-mixed concrete operation at the
terminal location for its own benefit and (iii) USC is granted an option to
purchase the terminal facility, exercisable at any time from the start-up
of the terminal's operations to the 10th anniversary of that date at a
purchase price determined by an appraisal firm USC selects which is
reasonably acceptable to Mr. Vannucci.
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(D) Notwithstanding the provisions of Section 10.07, Article VIII and
the rights and obligations thereunder of the parties thereto will be
governed by and construed in accordance with the substantive laws of the
State of California without regard to the conflicts of law provisions
thereof.
Paragraph 5 CERTAIN CONDITIONS TO CLOSING AND CONSUMMATION. (A) The
obligations of the Stockholders with respect to the actions to be taken on the
IPO Closing Date are subject to the satisfaction of the following condition in
addition to those set forth or referred to in Section 5.02(b): (i) the Executive
Employment Agreement then will be in full force and effect and (ii) USC shall
have tendered the USC Award Agreements to the respective recipients thereof,
duly signed on its behalf by an authorized officer of USC.
(B) The obligations of USC and USC Sub with respect to the actions to
be taken on the IPO Closing Date are subject to the satisfaction of the
following condition in addition to those set forth or referred to in
Section 5.03(b): the Executive Employment Agreement then will be in full
force and effect.
Paragraph 6 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be an original, but all of which together will
constitute one and the same agreement.
Paragraph 7 NOTICES. For purposes of Section 10.06, notices will be
initially addressed to the Stockholders and the Company, as follows:
(A) if to a Stockholder, addressed to him or her at:
Neil J. Vannucci
1981 Eucalyptus Ave.
San Carlos, California 94070
or
Gloria Satterfield
2811 Crestmoor Dr.
San Bruno, California 94066
or
Nino Campagna
934 Larkspur Dr.
Millbrae, California 94030
or
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<PAGE>
William Monlux
5128 Brophy Dr.
Fremont, California 94536
; and
(B) if to the Company, addressed to it at:
BAY CITIES BUILDING MATERIALS CO., INC.
150 So. Linden Avenue
So. San Francisco, California 94080
Fax No.: (650) 871-5745
Attn: Neil J. Vannucci
with copies (which will not constitute notice for purposes of this
Agreement) to:
Ferrari, Olsen, Ottoboni & Bebb, LLP
333 West Santa Clara Street, Suite 700
San Jose, California 95113
Fax No.: (408) 280-0151
Attn: Richard S. Bebb
Paragraph 8 ABANDONMENT OF MERGER. If this Agreement is terminated pursuant
to Section 11.01, the Merger will be deemed for all purposes to have been
abandoned and of no force or effect and, if the Certificate of Merger has been
filed with the Secretary of State of the Company's Organization State prior to
that termination, each of the Company and USC Sub is authorized to execute and
file with the Secretary of State of the Company's Organization State a
certificate of that termination pursuant to Section 110 of the CGCL.
[Signatures on following page]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
U.S. CONCRETE, INC.
By:________________________________________
Eugene P. Martineau
President and Chief Executive Officer
BAY CITIES ACQUISITION INC.
By:________________________________________
Eugene P. Martineau
President
BAY CITIES BUILDING MATERIALS CO., INC.
By:________________________________________
Neil J. Vannucci
President
Stockholders:
--------------------------------------------
Neil J. Vannucci
--------------------------------------------
Gloria Satterfield
--------------------------------------------
Nino Campagna
--------------------------------------------
William Monlux
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<PAGE>
THE UNDERSIGNED, being the spouse of Neil J. Vannucci, hereby joins in the
execution of this Agreement to reflect the undersigned's understanding and
agreement to the terms herein contained, and to consent to the Merger and the
conversion of the entire interest of that Stockholder in the shares of Company
Capital Stock (including any community interest the undersigned may have in
those shares) into that Stockholder's Pro Rata Share of the Acquisition
Consideration on the terms and for the consideration herein expressed.
--------------------------------------------
Margaret Ann Vannucci
THE UNDERSIGNED, being the spouse of Gloria L. Satterfield, hereby joins in
the execution of this Agreement to reflect the undersigned's understanding and
agreement to the terms herein contained, and to consent to the Merger and the
conversion of the entire interest of that Stockholder in the shares of Company
Capital Stock (including any community interest the undersigned may have in
those shares) into that Stockholder's Pro Rata Share of the Acquisition
Consideration on the terms and for the consideration herein expressed.
--------------------------------------------
Curtis H. Satterfield
THE UNDERSIGNED, being the spouse of Nino Campagna, hereby joins in the
execution of this Agreement to reflect the undersigned's understanding and
agreement to the terms herein contained, and to consent to the Merger and the
conversion of the entire interest of that Stockholder in the shares of Company
Capital Stock (including any community interest the undersigned may have in
those shares) into that Stockholder's Pro Rata Share of the Acquisition
Consideration on the terms and for the consideration herein expressed.
--------------------------------------------
Millie Campagna
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<PAGE>
ADDENDUM 1
to the
Agreement and Plan of Reorganization
to which
U.S. Concrete, Inc.
and
BAY CITIES BUILDING MATERIALS CO., INC
are parties
A. Capitalized terms this Addendum uses, but does not define, have the
meanings the captioned Agreement specifies.
B. The Founding Companies are:
Baer Concrete, Incorporated
Bay Cities Building Materials Co., Inc.
Central Concrete Supply Co., Inc.
Opportunity Concrete Corporation
R.G. Evans/Associates d/b/a Santa Rosa Cast Products Co.
Walker's Concrete, Inc.
<PAGE>
SCHEDULE 2(C)
to the
Agreement and Plan of Reorganization
to which
U.S. Concrete, Inc.
and
BAY CITIES BUILDING MATERIALS CO., INC
are parties
A. Capitalized terms this Schedule uses, but does not define, have the
meanings the captioned Agreement specifies.
B. The directors of the Surviving Corporation and BCBM immediately after
the Effective Time are as follows: Eugene P. Martineau and Michael W. Harlan.
C. The officers of the Surviving Corporation and BCBM immediately after the
Effective Time are as follows:
President.................................. Neil J. Vannucci
Senior Vice President...................... Eugene P. Martineau
Vice President, Treasurer and Secretary.... Michael W. Harlan
End of Schedule
<PAGE>
SCHEDULE 2(D)
to the
Agreement and Plan of Reorganization
to which
U.S. Concrete, Inc.
and
BAY CITIES BUILDING MATERIALS CO., INC
are parties
A. Capitalized terms this Schedule uses, but does not define, have the
meanings the captioned Agreement specifies.
B. Subject to increase by the amount of the Positive Net Adjustment, if
any, and to decrease by the amount of the Negative Net Adjustment, if any, the
aggregate Acquisition Consideration will be comprised of (1) $8,602,046 in cash,
(2) 1,871,310 shares of USC Common Stock and (3) the Additional Cash
Consideration.
C. Each Stockholder will be entitled to receive his Pro Rata Share of the
Acquisition Consideration pursuant to Paragraph 2(D), subject to the provisions
of Paragraphs 2(E) and 2(F).
<PAGE>
ANNEX 1
U.S. CONCRETE, INC.
UNIFORM PROVISIONS
FOR
THE ACQUISITION OF FOUNDING COMPANIES
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I REPRESENTATIONS AND WARRANTIES OF EACH
STOCKHOLDER...............1
Section 1.01 Ownership and Status of Company Capital Stock....................1
Section 1.02 Power of the Stockholder; Approval of the Acquisition............1
Section 1.03 No Conflicts or Litigation.......................................2
Section 1.04 No Brokers.......................................................2
Section 1.05 Preemptive and Other Rights; Waiver; No Commitments..............2
Section 1.06 Control of Related Businesses....................................2
Section 1.07 Accredited Investor Status; Sophistication; Review of Private
Placement Memorandum............................................3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
STOCKHOLDERS....................................................3
Section 2.01 Organization.....................................................3
Section 2.02 Qualification....................................................4
Section 2.03 Authorization; Enforceability; Absence of Conflicts;
Required Consents...............................................4
Section 2.04 Charter Documents and Records; No Violation......................5
Section 2.05 No Defaults......................................................5
Section 2.06 Company Subsidiaries.............................................5
Section 2.07 Controlling Affiliates...........................................6
Section 2.08 Capital Stock of the Company and the Company Subsidiaries........6
Section 2.09 Transactions in Capital Stock....................................6
Section 2.10 No Bonus Shares..................................................6
Section 2.11 Predecessor Status; etc..........................................6
Section 2.12 Related Party Agreements.........................................6
Section 2.13 Litigation.......................................................7
Section 2.14 Financial Statements; Disclosure.................................7
Section 2.15 Compliance With Laws.............................................8
Section 2.16 Certain Environmental Matters....................................9
Section 2.17 Liabilities and Obligations......................................9
Section 2.18 Receivables.....................................................10
Section 2.19 Real Properties.................................................10
Section 2.20 Other Tangible Assets...........................................11
Section 2.21 Proprietary Rights..............................................11
Section 2.22 Relations With Governments, etc.................................11
Section 2.23 Commitments.....................................................12
Section 2.24 Capital Expenditures............................................13
Section 2.25 Inventories.....................................................13
Section 2.26 Insurance.......................................................13
Section 2.27 Employee Matters................................................14
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Section 2.28 Compliance With ERISA...........................................17
Section 2.29 Taxes...........................................................19
Section 2.30 Government Contracts............................................20
Section 2.31 Absence of Changes..............................................20
Section 2.32 Bank Relations; Powers of Attorney..............................22
ARTICLE III REPRESENTATIONS AND WARRANTIES OF USC...........................23
Section 3.01 Organization; Power.............................................23
Section 3.02 Authorization; Enforceability; Absence of Conflicts;
Required Consents..............................................23
Section 3.03 Charter Documents...............................................24
Section 3.04 Capital Stock of USC and USC Sub................................24
Section 3.05 Subsidiaries....................................................25
Section 3.06 Compliance With Laws; No Litigation.............................25
Section 3.07 Conduct of Operations to Date; Absence of Undisclosed
Liabilities....................................................25
Section 3.08 Capitalization of USC...........................................25
Section 3.09 No Brokers......................................................25
Section 3.10 Private Placement Memorandum....................................26
ARTICLE IV COVENANTS EXTENDING TO THE EFFECTIVE TIME.......................26
Section 4.01 Access and Cooperation; Due Diligence...........................26
Section 4.02 Conduct of Business Pending the Effective Time..................27
Section 4.03 Prohibited Activities...........................................28
Section 4.04 No Shop.........................................................29
Section 4.05 Notice to Bargaining Agents.....................................30
Section 4.06 Notification of Certain Matters.................................30
Section 4.07 Supplemental Information........................................30
Section 4.08 Cooperation in Connection With the IPO..........................31
Section 4.09 Additional Financial Statements.................................31
Section 4.10 Termination of Plans............................................32
Section 4.11 Disposition of Unwanted Assets..................................32
Section 4.12 HSR Act Matters.................................................32
ARTICLE V THE CLOSING AND CONDITIONS TO CLOSING AND
CONSUMMATION..........32
Section 5.01 Conditions to the Obligations of Each Party.....................32
Section 5.02 Conditions to the Obligations of the Company and the
Stockholders.......34
Section 5.03 Conditions to the Obligations of USC and USC Sub................35
ARTICLE VI COVENANTS FOLLOWING THE EFFECTIVE TIME..........................36
Section 6.01 Disclosure......................................................36
Section 6.02 Preparation and Filing of Tax Returns...........................37
Section 6.03 Directors.......................................................37
Section 6.04 Removal of Guaranties...........................................37
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Section 6.05 Survival of Representations and Warranties...............37
Section 6.06 Limitations on Damage Claims.............................38
Section 6.07 Working Capital Adjustment...............................39
ARTICLE VII INDEMNIFICATION..........................................41
Section 7.01 In Respect of Representations and Warranties.............41
Section 7.02 Indemnification of USC Indemnified Parties...............41
Section 7.03 Indemnification of Stockholder Indemnified Parties.......42
Section 7.04 Conditions of Indemnification............................42
Section 7.05 Remedies Not Exclusive...................................45
Section 7.06 Limitations on Indemnification...........................45
ARTICLE VIII LIMITATIONS ON COMPETITION...............................46
Section 8.01 Prohibited Activities....................................46
Section 8.02 Damages..................................................47
Section 8.03 Reasonable Restraint.....................................47
Section 8.04 Severability; Reformation................................47
Section 8.05 Independent Covenant.....................................48
Section 8.06 Materiality..............................................48
ARTICLE IX ADDITIONAL DEFINITIONS AND DEFINITIONAL
PROVISIONS.......48
Section 9.01 Defined Terms............................................48
Section 9.02 Other Defined Terms......................................63
Section 9.03 Other Definitional Provisions............................63
Section 9.04 Captions.................................................63
ARTICLE X GENERAL PROVISIONS.......................................64
Section 10.01 Treatment of Confidential Information...................64
Section 10.02 Brokers and Agents......................................65
Section 10.03 Assignment; No Third Party Beneficiaries................65
Section 10.04 Entire Agreement; Amendment; Waivers....................65
Section 10.05 Expenses................................................66
Section 10.06 Notices.................................................66
Section 10.07 Governing Law...........................................67
Section 10.08 Exercise of Rights and Remedies.........................67
Section 10.09 Time....................................................67
Section 10.10 Reformation and Severability............................67
Section 10.11 Remedies Cumulative.....................................67
Section 10.12 Release.................................................67
Section 10.13 Respecting the IPO......................................68
Section 10.14 Restrictions on Transfer of USC Common Stock............69
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ARTICLE XI TERMINATION.............................................70
Section 11.01 Termination of This Agreement...........................70
Section 11.02 Liabilities in the Event of Termination.................71
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ARTICLE I
REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Each of the Stockholders represents and warrants to USC that, as applied
solely to himself, all the following representations and warranties in this
Article I are as of the date of this Agreement, and will be, as amended or
supplemented pursuant to Section 4.07, on the Closing Date and immediately prior
to the Effective Time, true and correct:
Section 1.01 OWNERSHIP AND STATUS OF COMPANY CAPITAL STOCK. The Stockholder
is the record and beneficial owner (or, if the Stockholder is a trust or the
estate of a deceased natural person, the legal owner) of the number of shares of
Company Capital Stock Schedule 1.01 sets forth opposite the Stockholder's name,
by each class, and by each series in each class, thereof, free and clear of all
Liens, except for the Liens that Schedule sets forth, all of which will be
released on or before the Closing Date.
Section 1.02 POWER OF THE STOCKHOLDER; APPROVAL OF THE
ACQUISITION. (a) The Stockholder has the full power, legal capacity and
authority to execute and deliver this Agreement and each other Transaction
Document to which the Stockholder is a party and to perform the Stockholder's
obligations in this Agreement and in all other Transaction Documents to which
the Stockholder is a party. This Agreement constitutes, and each such other
Transaction Document, when executed in the Stockholder's individual capacity and
delivered by the Stockholder, will constitute, the legal, valid and binding
obligation of the Stockholder, enforceable against the Stockholder in accordance
with its terms, except as that enforceability may be (i) limited by any
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally or any applicable law that limits rights to indemnification and (ii)
subject to general principles of equity (regardless of whether that
enforceability is considered in a proceeding in equity or at law). If the
Stockholder is an Entity, the Stockholder has obtained, in accordance with all
applicable Governmental Requirements and its Charter Documents, all approvals
and the taking of all actions necessary for the authorization, execution,
delivery and performance by the Stockholder of this Agreement and the other
Transaction Documents to which the Stockholder is a party. If the Stockholder is
acting otherwise than in his individual capacity (whether as an executor or a
guardian or in any other fiduciary or representative capacity), all actions on
the part of the Stockholder and all other Persons (including any court)
necessary for the authorization, execution, delivery and performance by the
Stockholder of this Agreement and the other Transaction Documents to which the
Stockholder is a party have been duly taken.
(b) The Stockholder, acting in each capacity in which he is entitled,
by reason of the Company's Charter Documents or the Governmental
Requirements of the Company's Organization State or for any other reason,
to vote to approve or disapprove the consummation of the Acquisition, has
voted all the shares of Company Capital Stock owned by him and entitled to
a vote or votes on that matter, in any one or more of the manners
prescribed or permitted by the
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Company's Charter Documents or the Governmental Requirements of the Company's
Organization State, whichever are controlling, to approve this Agreement and the
consummation of the Acquisition and the other transactions contemplated hereby.
Section 1.03 NO CONFLICTS OR LITIGATION. The Stockholder's execution,
delivery and performance in accordance with their respective terms of this
Agreement and the other Transaction Documents to which the Stockholder is a
party do not and will not (i) violate or conflict with any Governmental
Requirement, (ii) breach or constitute a default under any agreement or
instrument to which the Stockholder is a party or by which the Stockholder or
any shares of Company Capital Stock the Stockholder owns is bound, (iii) result
in the creation or imposition of, or afford any Person the right to obtain, any
Lien upon any shares of Company Capital Stock the Stockholder owns (or upon any
revenues, income or profits of the Stockholder therefrom) or (iv) if the
Stockholder is an Entity, violate the Stockholder's Charter Documents. No
Litigation is pending or, to the knowledge of the Stockholder, threatened to
which the Stockholder is or may become a party which (i) questions or involves
the validity or enforceability of any of the Stockholder's obligations under any
Transaction Document or (ii) seeks (or reasonably may be expected to seek) (A)
to prevent or delay the consummation by the Stockholder of the transactions this
Agreement contemplates the Stockholder will consummate or (B) damages in
connection with any such consummation.
Section 1.04 NO BROKERS. Except as Schedule 1.04 sets forth, the
Stockholder has not, directly or indirectly, in connection with this Agreement
or the transactions contemplated hereby (i) employed any broker, finder or agent
or (ii) agreed to pay or incurred any obligation to pay any broker's or finder's
fee, any sales commission or any similar form of compensation.
Section 1.05 PREEMPTIVE AND OTHER RIGHTS; WAIVER; NO COMMITMENTS. Except
for the right of the Stockholder to receive shares of USC Common Stock as a
result of the Acquisition, the Stockholder either (i) does not own or otherwise
have any statutory or contractual preemptive or other right of any kind
(including any right of first offer or refusal) to acquire any shares of Company
Capital Stock or USC Common Stock or (ii) hereby irrevocably waives each right
of that type the Stockholder does own or otherwise has. The Stockholder does not
have any binding commitment to sell, exchange or otherwise dispose of the USC
Common Stock the Stockholder will receive as part of the Acquisition
Consideration, and the representation and warranty in this sentence is for the
benefit of each other Stockholder and each owner of each Other Founding Company.
Section 1.06 CONTROL OF RELATED BUSINESSES. Except as Schedule 1.06 sets
forth, the Stockholder is not, alone or with one or more other Persons, the
controlling Affiliate of any Entity, business or trade (other than the Acquired
Business or any Entity the Acquired Business includes, if the Stockholder is an
Affiliate of any thereof) that (i) is engaged in any line of business which is
the same as or similar to any line of business in which the Acquired Business or
any Entity the Acquired Business includes is engaged or (ii) is, or has within
the three-year period ending on the date of this Agreement, engaged in any
transaction with any Entity the Acquired Business includes, except for
transactions in the ordinary course of business of that Entity.
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Section 1.07 ACCREDITED INVESTOR STATUS; SOPHISTICATION; REVIEW OF PRIVATE
PLACEMENT MEMORANDUM. The Stockholder (i) will be acquiring the shares of USC
Common Stock to be issued to him pursuant to Paragraph 2 solely for his account,
for investment purposes only and with no current intention or plan to
distribute, sell or otherwise dispose of any of those shares in connection with
any distribution and (ii) is not a party to any agreement or other arrangement
for the disposition of any shares of USC Common Stock other than this Agreement
and the Registration Rights Agreement. Schedule 1.07 correctly states (i)
whether he is, or is not, an "accredited investor" as defined in Securities Act
Rule 501(a) and, if he is not such an investor, (ii) the name and address of his
"purchaser representative" (as defined in Securities Act Rule 501(h)). The
Stockholder (i) is able to bear the economic risk of an investment in the USC
Common Stock acquired pursuant to this Agreement, (ii) can afford to sustain a
total loss of that investment, (iii) has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of the proposed investment in the USC Common Stock, (iv) his purchaser
representative, if any, has received and reviewed a copy of the Private
Placement Memorandum and had an adequate opportunity to ask questions and
receive answers from the officers of USC concerning any and all matters relating
to the transactions contemplated hereby and thereby, including the background
and experience of the current and proposed officers and directors of USC, the
plans for the business and operations of USC, the business, operations and
financial condition of the Other Founding Companies and any plans of USC for
additional acquisitions, and (v) or his purchaser representative, if any, has
asked all questions of the nature described in preceding clause (iv) and all
those questions have been answered to his satisfaction and the satisfaction of
his purchaser representative, if any.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF
THE COMPANY AND THE STOCKHOLDERS
The Company and each Stockholder jointly and severally represent and
warrant to, and agree with, USC that all the following representations and
warranties in this Article II are as of the date of this Agreement, and will be,
as amended or supplemented pursuant to Section 4.07, on the Closing Date and
immediately prior to the Effective Time, true and correct:
Section 2.01 ORGANIZATION. Schedule 2.01 sets forth the Organization State
of each of the Company and the Company Subsidiaries. Each of the Company and the
Company Subsidiaries (i) is a corporation duly organized, validly existing and
in good standing under the laws of its Organization State, (ii) has all
requisite corporate power and authority under those laws and its Charter
Documents to own or lease and to operate its properties and to carry on its
business as now conducted and (iii) is duly qualified and in good standing as a
foreign corporation in all jurisdictions in which it owns or leases property or
in which the carrying on of its business as now conducted so requires, except
where the failure to be so qualified, singly or in the aggregate, would not have
a Material Adverse Effect.
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Section 2.02 QUALIFICATION. Schedule 2.02 lists all the jurisdictions in
which each of the Company and the Company Subsidiaries is authorized or
qualified to own or lease and to operate its properties or to carry on its
business as now conducted, and neither the Company nor any Company Subsidiary
owns, leases or operates any properties, or carries on any business, that is
Material to the Acquired Business in any jurisdiction that Schedule does not
list.
Section 2.03 AUTHORIZATION; ENFORCEABILITY; ABSENCE OF CONFLICTS; REQUIRED
CONSENTS. (a) The execution, delivery and performance by the Company of this
Agreement and each other Transaction Document to which it is a party, and the
effectuation of the Acquisition and the other transactions contemplated hereby
and thereby, are within its corporate or other power under its Charter Documents
and the applicable Governmental Requirements of its Organization State and have
been duly authorized by all proceedings, including actions permitted to be taken
in lieu of proceedings, required under its Charter Documents and those
Governmental Requirements.
(b) This Agreement has been, and each of the other Transaction
Documents to which the Company is a party, when executed and delivered by
the parties thereto will have been, duly executed and delivered by the
Company and is, or when so executed and delivered will be, the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as that enforceability may be (i) limited
by any applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally or any applicable law that limits rights to
indemnification and (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law).
(c) The execution, delivery and performance in accordance with their
respective terms by the Company of the Transaction Documents to which it is
a party have not and will not (i) violate, breach or constitute a default
under (A) the Charter Documents of any of the Company and the Company
Subsidiaries, (B) any Governmental Requirement applicable to any of the
Company and the Company Subsidiaries or (C) any Material Agreement of the
Company (except as Schedule 2.03 sets forth), (ii) result in the
acceleration or mandatory prepayment of any Indebtedness, or any Guaranty
not constituting Indebtedness, of any of the Company and the Company
Subsidiaries or afford any holder of any of that Indebtedness, or any
beneficiary of any of those Guaranties, the right to require any of the
Company and the Company Subsidiaries to redeem, purchase or otherwise
acquire, reacquire or repay any of that Indebtedness, or to perform any of
those Guaranties (except as Schedule 2.03 sets forth), (iii) cause or
result in the imposition of, or afford any Person the right to obtain, any
Lien upon any property or assets of any of the Company and the Company
Subsidiaries (or upon any revenues, income or profits of any of the Company
and the Company Subsidiaries therefrom) or (iv) except as Schedule 2.03
sets forth, result in the revocation, cancellation, suspension or material
modification, in any single case or in the aggregate, of any Governmental
Approval possessed by any of the Company and the Company Subsidiaries at
the date hereof and necessary for the ownership or lease or the operation
of its properties or the carrying on of its business as now conducted,
including any necessary Governmental Approval under each applicable
Environmental Law and Industry Law.
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(d) Except for (i) the filing of the Certificates of Merger, if any,
with the applicable Governmental Authorities , (ii) filings of the
Registration Statement under the Securities Act and the SEC order declaring
the Registration Statement effective under the Securities Act and (iii) as
may be required by the HSR Act or the applicable state securities or blue
sky laws, no Governmental Approvals are required to be obtained, and no
reports or notices to or filings with any Governmental Authority are
required to be made, by any of the Company and the Company Subsidiaries for
the execution, delivery or performance by the Company of the Transaction
Documents to which it is a party, the enforcement against the Company of
its obligations thereunder or the effectuation of the Acquisition and the
other transactions contemplated thereby.
Section 2.04 CHARTER DOCUMENTS AND RECORDS; NO VIOLATION. Except as
Schedule 2.04 sets forth, the Company has caused true, complete and correct
copies of the Charter Documents, each as in effect on the date hereof, and the
minute books and similar corporate or other Entity records of each of the
Company and the Company Subsidiaries to be delivered to USC. No breach or
violation of any Charter Document of any of the Company and the Company
Subsidiaries has occurred and is continuing.
Section 2.05 NO DEFAULTS. Except as Schedule 2.05 sets forth, no condition
or state of facts exists, or, with the giving of notice or the lapse of time or
both, would exist, which (i) entitles any holder of any outstanding
Indebtedness, or any Guaranty not constituting Indebtedness, of any of the
Company and the Company Subsidiaries, or a representative of that holder, to
accelerate the maturity, or require a mandatory prepayment, of that Indebtedness
or Guaranty, or affords that holder or its representative, or any beneficiary of
that Guaranty, the right to require any of the Company and the Company
Subsidiaries to redeem, purchase or otherwise acquire, reacquire or repay any of
that Indebtedness, or to perform that Guaranty in whole or in part, (ii)
entitles any Person to obtain any Lien (other than a Permitted Lien) on any
properties or assets constituting any part of the Acquired Business (or upon any
revenues, income or profits of any of the Company and the Company Subsidiaries
therefrom) or (iii) constitutes a violation or breach of, or a default under,
any Material Agreement of the Company (including this Agreement) by any of the
Company and the Company Subsidiaries.
Section 2.06 COMPANY SUBSIDIARIES. Schedule 2.01 either (i) sets forth the
form of organization, legal name, each assumed name and Organization State of
each Company Subsidiary or (ii) correctly states no Entity is a Company
Subsidiary. Except as Schedule 2.06 sets forth, each Company Subsidiary is a
Wholly Owned Subsidiary. In the case of any Company Subsidiary that is not a
Wholly Owned Subsidiary, Schedule 2.06 sets forth, by each class and each series
within each class, (i) the number of outstanding shares (or other percentage
ownership interests) of Capital Stock of the Company Subsidiary, (ii) the
Company's aggregate direct and indirect ownership of those shares (or interests)
and (iii) the name and address of record and percentage ownership of those
shares (or interests) of each holder of record thereof other than the Company or
a Company Subsidiary. No Lien exists upon any outstanding share (or other
percentage ownership interests) of Capital Stock of any Company Subsidiary which
the Company directly or indirectly owns other than (i) the Liens, if any,
Schedule 2.06 describes, all of which will be released at or before the
Effective
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Time, and (ii) Permitted Liens. Except as Schedule 2.06 sets forth, the Company
does not own, of record or beneficially, directly or indirectly through any
Person, and does not control, directly or indirectly through any Person or
otherwise, any Capital Stock or Derivative Securities of any Entity other than a
Company Subsidiary.
Section 2.07 CONTROLLING AFFILIATES. Schedule 2.07 sets forth the name of
each Person who at the time the Acquisition was submitted for vote or consent to
the Stockholders, is, was or will be an Affiliate of the Company by reason of
that Person's control of the Company.
Section 2.08 CAPITAL STOCK OF THE COMPANY AND THE COMPANY SUBSIDIARIES.
Schedule 2.08 sets forth, by each class and by each series within each class,
the total number of shares of authorized Company Capital Stock and the total
number of such shares that have been issued and are now outstanding. Except as
Schedule 2.08 sets forth: (i) no shares of Company Capital Stock are held by the
Company or any Company Subsidiary as treasury shares; and (ii) no outstanding
options, warrants or rights to acquire Capital Stock of the Company or any
Company Subsidiary exist. All the issued and outstanding shares of Capital Stock
of each of the Company and the Company Subsidiaries (i) have been duly
authorized and validly issued in accordance with the applicable Governmental
Requirements of their issuer's Organization State and Charter Documents and (ii)
are fully paid and nonassessable. Neither the Company nor any Company Subsidiary
has issued or sold any shares of its outstanding Capital Stock in breach or
violation of (i) any applicable statutory or contractual preemptive rights, or
any other rights of any kind (including any rights of first offer or refusal),
of any Person or (ii) the terms of any of its Derivative Securities which then
were outstanding. No Person has, otherwise than solely by reason of that
Person's right, if any, to vote shares of the Capital Stock of the Company or
any Company Subsidiary it holds (to the extent those shares afford the holder
thereof any voting rights) any right to vote on any matter with the holders of
Capital Stock of the Company or any Company Subsidiary.
Section 2.09 TRANSACTIONS IN CAPITAL STOCK. Except as Schedule 2.09 sets
forth: (i) the Company has no obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire or reacquire any of its equity securities or any
interests therein or to pay any dividend or make any distribution in respect
thereof; and (ii) no transaction has been effected, and no action in
contemplation of the transactions described in this Agreement has been taken,
respecting the equity ownership of either the Company or any Company Subsidiary.
Section 2.10 NO BONUS SHARES. Except as Schedule 2.10 sets forth, no
outstanding share of Capital Stock of the Company was issued for less than the
fair market value thereof at the time of issuance or was issued in exchange for
any consideration other than cash.
Section 2.11 PREDECESSOR STATUS; ETC. Except as Schedule 2.11 sets forth,
the Company has not been a Subsidiary or division of another Entity during the
past five years.
Section 2.12 RELATED PARTY AGREEMENTS. Schedule 2.12 sets forth all Related
Party Agreements in effect on the date hereof. Except for those Related Party
Agreements that Schedule
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specifically refers to as "Retained Related Party Agreements" (the "Retained
Related Party Agreements"), each Related Party Agreement in effect on the date
hereof will have been terminated, and all Indebtedness of each Related Person
and its Affiliates owed to any of the Company and the Company Subsidiaries will
have been paid in full, prior to the Effective Time, and no Related Party
Agreement then will exist. The terms and conditions of each of the Retained
Related Party Agreements are no less favorable to the Company than the Company
reasonably could have expected to obtain in an arm's-length transaction with a
Person other than an Affiliate of the Company, the rentals provided for in the
Retained Related Party Agreements constituting leases of property to the
Acquired Business (other than the leases, if any, that this Agreement defines as
a Facilities Lease Agreement, as to which no representation is made pursuant to
this Section 2.12) do not and will not exceed fair market rentals of the
properties being rented or leased under those Retained Related Party Agreements
and the payments provided to be made by the Company or any Company Subsidiary in
the Retained Related Party Agreements do not exceed the fair market value of the
goods or other property provided to or the services performed for the Acquired
Business.
Section 2.13 LITIGATION. Except as Schedule 2.13 sets forth, no Litigation
is pending or, to the knowledge of the Company or any Stockholder, threatened to
which the Company or any Company Subsidiary is or may become a party.
Section 2.14 FINANCIAL STATEMENTS; DISCLOSURE. (a) FINANCIAL STATEMENTS.
(i) The Financial Statements (including in each case the related schedules and
notes) delivered to USC present fairly, in all material respects, the financial
position of the Acquired Business at the respective dates of the balance sheets
included therein and the results of operations, cash flows and stockholders' or
other owners' equity of the Acquired Business for the respective periods set
forth therein and have been prepared in accordance with GAAP, except, with
respect to any financial statements of the Acquired Business delivered to USC
pursuant to the provisions of Section 4.09, for the provision of applicable
footnotes and adjustments customarily made at year end. As of the date of any
balance sheet included in those Financial Statements, neither the Company nor
any Company Subsidiary then had any outstanding Indebtedness to any Person or
any liabilities of any kind (including contingent obligations, tax assessments
or unusual forward or long-term commitments), or any unrealized or anticipated
loss, which in the aggregate then were Material to the Acquired Business and
required to be reflected in those Financial Statements or in the notes related
thereto in accordance with GAAP which were not so reflected.
(ii) Since the Current Balance Sheet Date, no change has occurred in
the business, operations, properties or assets, liabilities, condition
(financial or other) or results of operations of the Acquired Business that
could reasonably be expected, either alone or together with all other such
changes, to have a Material Adverse Effect.
(b) DISCLOSURE. (i) As of the date hereof, all Information that has
been made available to USC by or on behalf of the Company prior to the date
of this Agreement in connection with the transactions contemplated hereby
(other than financial budgets and projections) is, taken together, true and
correct in all material respects and does not contain any untrue statement
of a
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material fact or omit to state a material fact necessary in order to make
the statements contained therein not materially misleading in light of the
circumstances under which those statements were made.
(ii) All Information that is furnished to USC after the date hereof
from time to time prior to the Effective Time by or on behalf of the
Company in connection with or pursuant to this Agreement, any other
Transaction Document or the transactions contemplated hereby or thereby
(other than financial budgets and projections) will be, when made available
and taken together, true and correct in all material respects and will not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein not
materially misleading in light of the circumstances under which those
statements are made.
(iii) Schedule 2.14 sets forth a complete list of all financial
budgets and projections respecting the Acquired Business that, as of the
date of this Agreement, the Company, or any of its Representatives have
made available to USC in connection with this Agreement or the transactions
contemplated hereby. All those financial budgets and projections and any
other financial budgets or projections respecting the Acquired Business
that the Company or any of its Representatives hereafter provide to USC in
writing prior to the Effective Time pursuant to or in connection with this
Agreement, any other Transaction Document or the transactions contemplated
hereby or thereby have been and will be prepared and furnished to USC in
good faith and were and will be based on facts and assumptions that are
believed by the management of the Company to be reasonable in light of the
then current and foreseeable business conditions of the Company and the
Company Subsidiaries and represented and will represent that management's
good faith estimate of the consolidated projected financial performance of
the Company and the Company Subsidiaries based on the information available
to the Responsible Officer at the time so furnished.
Section 2.15 COMPLIANCE WITH LAWS. (a) Except as Schedule 2.15 sets forth:
(i) each of the Company and the Company Subsidiaries possesses, or, if required
by the applicable Environmental Laws and Industry Laws (including those relating
to hazardous air pollutants or Solid Wastes, Hazardous Wastes or Hazardous
Substances), one or more of its employees as required by those Environmental
Laws and Industry Laws possesses, all necessary certifications and licenses and
similar Governmental Approvals required for the conduct of its business; and
(ii) each of the Company and the Company Subsidiaries and such one or more of
its employees are in compliance in all material respects with the terms and
conditions of all Governmental Approvals necessary for the ownership or lease
and the operation of its properties (including all the facilities and sites it
owns or holds under any lease) and the carrying on of its business as now
conducted. The Company has provided USC with a complete written list of all the
Governmental Approvals so possessed. All the Governmental Approvals so listed
are valid and in full force and effect, and, except as Schedule 2.15 sets forth,
neither the Company nor any Company Subsidiary has received, nor to the
knowledge of any Stockholder has any employee of either received, any notice
from any Governmental Authority of its intention to cancel, terminate or not
renew any of those Governmental Approvals.
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(b) Except as Schedule 2.15 sets forth, each of the Company and the
Company Subsidiaries: (i) has been and continues to be in compliance in all
material respects with all Governmental Requirements applicable to it or
any of its presently or previously owned or operated properties (including
all the facilities and sites now or previously owned or held by it under
any lease), businesses or operations, including all applicable Governmental
Requirements under ERISA, Environmental Laws and Industry Laws; and (ii)(A)
neither the Company nor any Company Subsidiary has received, nor to the
knowledge of the Company has any employee of either received, any notice
from any Governmental Authority which asserts, or raises the possibility of
assertion of, any noncompliance with any of those Governmental Requirements
and, to the knowledge of each of the Company, the Company Subsidiaries and
the Stockholders, (B) no condition or state of facts exists which would
provide a valid basis for any such assertion.
Section 2.16 CERTAIN ENVIRONMENTAL MATTERS. Except as Schedule 2.16 sets
forth: (i) the Company and each Company Subsidiary have complied, and remain in
compliance, with the provisions of all Environmental Laws applicable to any of
them or any of their respective presently owned or operated facilities, sites or
other properties, businesses and operations and which relate to the reporting by
the Company and each Company Subsidiary of all sites presently owned or operated
by any of them where Solid Wastes, Hazardous Wastes or Hazardous Substances have
been treated, stored, disposed of or otherwise handled; (ii) no release (as
defined in those Environmental Laws) at, from, in or on any site owned or
operated by the Company or any Company Subsidiary has occurred which, if all
relevant facts were known to the relevant Governmental Authorities, reasonably
could be expected to require remediation to avoid deed record notices,
restrictions, liabilities or other consequences that would not be applicable if
that release had not occurred; (iii) neither the Company nor any Company
Subsidiary (or any agent or contractor of either) has transported or arranged
for the transportation of any Solid Wastes, Hazardous Wastes or Hazardous
Substances to, or disposed or arranged for the disposition of any Solid Wastes,
Hazardous Wastes or Hazardous Substances at, any off-site location that could
lead to any claim against the Company, any Company Subsidiary, the Acquired
Business, any Other Founding Company or any of its Subsidiaries, USC or any
Subsidiary of USC, as a potentially responsible party or otherwise, for any
clean-up costs, remedial work, damage to natural resources, personal injury or
property damage, including any claim under CERCLA; and (iv) no storage tanks
exist on or under any of the properties owned or operated by the Company or any
Company Subsidiary from which any Solid Wastes, Hazardous Wastes or Hazardous
Substances have been released into the surrounding environment. The Company has
provided USC with copies (or, if not available, accurate written summaries) of
all environmental investigations, studies, audits, reviews and other analyses
conducted by or on behalf, or which otherwise are in the possession, of the
Company or any Company Subsidiary respecting any facility, site or other
property the Company or any Company Subsidiary presently owns or operates.
Section 2.17 LIABILITIES AND OBLIGATIONS. Schedule 2.17 lists or describes
all present liabilities, of every kind, character and description and whether
accrued, absolute, fixed, contingent or otherwise, of each of the Company and
the Company Subsidiaries which (i) exceed or reasonably could be expected to
exceed $10,000 and (ii) (A) had been incurred prior to the Current Balance
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Sheet Date, but are not reflected on the Current Balance Sheet, or (B) were
incurred after the Current Balance Sheet Date otherwise than in the ordinary
course of business, and consistent with the past practice, of that Entity. That
Schedule also lists and describes, for each of the Company and the Company
Subsidiaries: (i) each of its outstanding secured and unsecured Guaranties not
constituting its Indebtedness and, for each of those Guaranties, whether any
Stockholder or Related Person or Affiliate of any Stockholder is a Person whose
obligation is covered by that Guaranty, and (ii ) for each of the items listed
under clause (i) of this sentence, (A) if that item is secured by any property
or asset of the Company or any Company Subsidiary, the nature of that security,
and (B) if that item is covered in whole or in part by a Guaranty of any
Stockholder or any Related Person or Affiliate of any Stockholder, the name of
the guarantor.
Section 2.18 RECEIVABLES. Except as Schedule 2.18 sets forth, all the
accounts and notes or other advances receivable of the Company and the Company
Subsidiaries reflected on the Current Balance Sheet were collected, or are valid
and enforceable claims arising in the ordinary course of business and, in the
good faith belief of the Company's management, collectible, in the aggregate
respective amounts so reflected, net of the reserves, if any, reflected in the
Current Balance Sheet.
Section 2.19 REAL PROPERTIES. (a) Schedule 2.19 lists and correctly
describes in all material respects: (i) all real properties owned by any of the
Company and the Company Subsidiaries and, for each of those properties, the
address thereof, the type and approximate square footage of each structure
located thereon and the use thereof in the business of the Company and the
Company Subsidiaries; (ii) all real properties of which any of the Company and
the Company Subsidiaries is the lessee and, for each of those properties, the
address thereof, the type and approximate square footage of each structure
located thereon the Company or a Company Subsidiary is leasing and the
expiration date of its lease and the use thereof in the business of the Company
and the Company Subsidiaries; and (iii) in the case of each real property listed
as being owned, whether it was previously owned, and in the case of each real
property listed as being leased, whether it is presently owned, by any
Stockholder or any of his Related Persons or Affiliates (other than the Company
and the Company Subsidiaries, any other Entity included in the Acquired
Business, if the Stockholder is an Affiliate of the Company or any other Entity
included in the Acquired Business).
(b) The Company has provided USC with true, complete and correct
copies of all title reports and insurance policies the Company or its
Stockholders possess relating to any of the real properties Schedule 2.19
lists as being owned or leased. Except as that Schedule sets forth, and
except for Permitted Liens, the Company or a Company Subsidiary owns in
fee, and has good, valid and marketable title to, free and clear of all
Liens, each property that Schedule lists as being owned.
(c) The Company has provided USC with true, correct and complete
copies of all leases under which the Company or a Company Subsidiary is
leasing each of the properties Schedule 2.19 lists as being leased and,
except as that Schedule sets forth, (i) each of those leases is, to the
knowledge of the Company, valid and binding on the lessor party thereto and
(ii) the lessee
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party thereto has not sublet any of the leased space to any Person other
than the Company, a Company Subsidiary or any other Entity included in the
Acquired Business.
(d) The fixed assets of each of the Company and the Company
Subsidiaries are affixed only to one or more of the real properties
Schedule 2.19 lists and, except as that Schedule sets forth, are maintained
in accordance with ordinary industry practices and adequate for the
purposes for which they presently are being used or held for use, ordinary
wear and tear excepted.
Section 2.20 OTHER TANGIBLE ASSETS. (a) Schedule 2.20 discloses all leases,
including capital leases, that are Material to the Company under which the
Company or a Company Subsidiary is leasing its property, plant and equipment and
other tangible assets other than real properties. Except as that Schedule sets
forth, (i) each of those leases is, to the knowledge of the Company, valid and
binding on the lessor party thereto and (ii) the lessee party thereto has not
sublet any of the leased property to any Person other than the Company, a
Company Subsidiary or any other Entity included in the Acquired Business.
(b) Except as Schedule 2.20 sets forth, all the property, plant and
equipment of the Company and the Company Subsidiaries are in satisfactory
condition and in a commercially satisfactory state of repair given the use
to which they are put, ordinary wear and tear excepted, and adequate for
the purposes for which they presently are being used or held for use.
(c) In each case, free and clear of all Liens except for Permitted
Liens and as Schedule 2.20 sets forth, the Acquired Business has good and
valid title to, or holds under a lease valid and binding on the lessor
party thereto, all its tangible personal properties and assets that
individually or in the aggregate are Material to the Acquired Business.
Section 2.21 PROPRIETARY RIGHTS. Except as Schedule 2.21 sets forth, each
of the Company and the Company Subsidiaries owns, free and clear of all Liens
other than Permitted Liens, or has the legal right to use, all Proprietary
Rights that are necessary to the conduct of its business as now conducted, in
each case free of any claims or infringements known to the Company or any
Stockholder. Schedule 2.21 (i) lists those Proprietary Rights and (ii) indicates
those owned by the Company or any Company Subsidiary and, for those not listed
as so owned, the agreement or other arrangement pursuant to which they are
possessed. Except as that Schedule sets forth, (i) no consent of any Person will
be required for the use of any of these Proprietary Rights by USC or any
Subsidiary of USC following the Effective Time and (ii) no governmental
registration of any of these Proprietary Rights has lapsed or expired or been
canceled, abandoned, opposed or the subject of any reexamination request.
Section 2.22 RELATIONS WITH GOVERNMENTS, ETC. Neither the Company nor any
Company Subsidiary has made, offered or agreed to offer anything of value to any
governmental official, political party or candidate for government office which
would cause the Company or any Company Subsidiary to be in violation of the
Foreign Corrupt Practices Act of 1977 or any Governmental Requirement to a
similar effect.
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Section 2.23 COMMITMENTS. (a) Schedule 2.23 sets forth a complete list of
each of the following (each a "Company Commitment") to which any of the Company
and the Company Subsidiaries is a party or by which any of its properties is
bound and which presently remains executory in whole or in any part:
(i) each partnership, joint venture or cost sharing agreement;
(ii) each guaranty or suretyship, indemnification or contribution
agreement or performance bond;
(iii)each instrument, agreement or other obligation evidencing or
relating to Indebtedness of any of the Company and the Company
Subsidiaries involving more than $10,000;
(iv) each contract to purchase or sell real property;
(v) each agreement with sales or commission agents, public relations
or advertising agencies, accountants or attorneys (other than in
connection with this Agreement and the transactions contemplated
hereby) involving total payments within any 12-month period in
excess of $10,000 and which is not terminable without penalty and
on no more than 30 days' prior notice;
(vi) each agreement for the acquisition or provision of services,
supplies, equipment, inventory, fixtures or other property
involving more than $25,000 in the aggregate;
(vii)each Related Party Agreement involving total payments within any
12-month period in excess of $10,000 and which is not terminable
without penalty on no more than 30 days' prior notice;
(viii) each contract containing any noncompetition agreement, covenant
or undertaking;
(ix) each agreement providing for the purchase from a supplier of all
or substantially all the requirements of the Company or any
Company Subsidiary of a particular product or service; or
(x) each other agreement or commitment not made in the ordinary
course of business which is Material to the Acquired Business.
True, correct and complete copies of all written Company Commitments, and true,
correct and complete written descriptions of all oral Company Commitments, have
heretofore been delivered to USC Except as Schedule 2.23 sets forth: (i) there
are no existing or asserted defaults, events of
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default or events, occurrences, acts or omissions that, with the giving of
notice or lapse of time or both, would constitute defaults or events of default
under any Company Commitment Material to the Acquired Business by any of the
Company and the Company Subsidiaries or, to the knowledge of the Company, any
other party thereto; and (ii) no penalties have been incurred, nor are
amendments pending, with respect to the Company Commitments Material to the
Acquired Business. The Company Commitments are in full force and effect and are
valid and enforceable obligations of the Company or the Company Subsidiaries
parties thereto and, to the knowledge of the Company, the other parties thereto
in accordance with their respective terms, except as that enforceability may be
(i) limited by any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally and
(ii) subject to general principles of equity (regardless of whether that
enforceability is considered in a proceeding in equity or at law), and no
defenses, off-sets or counterclaims have been asserted or, to the knowledge of
the Company, may be made by any party thereto (other than by the Company or a
Company Subsidiary), nor has the Company or a Company Subsidiary, as the case
may be, waived any rights thereunder, except as Schedule 2.23 sets forth.
(b) Except as Schedule 2.23 sets forth or as contemplated hereby or by
any other Transaction Document to which the Company or any Company
Subsidiary or Stockholder is a party, neither the Company nor any Company
Subsidiary or Stockholder has knowledge of any plan or intention of any
other party to any Company Commitment that is Material to the Acquired
Business to exercise any right to cancel or terminate that Company
Commitment, and neither the Company nor that Company Subsidiary or any
Stockholder has knowledge of any condition or state of facts which would
justify the exercise of such a right.
Section 2.24 CAPITAL EXPENDITURES. Schedule 2.24 sets forth the total
amount of capital expenditures currently budgeted to be incurred by the Acquired
Business in excess of $25,000 in the aggregate during the balance of the
Company's current fiscal year.
Section 2.25 INVENTORIES. Except as Schedule 2.25 sets forth: (i) all
inventories, net of reserves determined in accordance with GAAP, of the Acquired
Business which are classified as such on the Current Balance Sheet are, to the
knowledge of the Company, merchantable and salable or usable in the ordinary
course of business of the Acquired Business; and (ii) the Acquired Business does
not depend on any single vendor for its inventories the loss of which could have
a Material Adverse Effect or during the past five years has sustained a
difficulty Material to the Acquired Business in obtaining its inventories.
Section 2.26 INSURANCE. Except as Schedule 2.26 sets forth: (i) the Company
has provided USC with: (A) a list as of the Current Balance Sheet Date of all
insurance policies then carried by each of the Company and the Company
Subsidiaries; (B) a list of all insurance loss runs and worker's compensation
claims received for the most recently ended three policy years; and (C) true,
complete and correct copies of all insurance policies carried by each of the
Company and the Company Subsidiaries which are in effect, all of which (1) have
been issued by insurers of recognized responsibility and (2) currently are, and
will remain without interruption through the
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Closing Date, in full force and effect; (ii) no insurance carried by the Company
or any Company Subsidiary has been canceled by the insurer during the past five
years, and neither the Company nor any Company Subsidiary has ever been denied
coverage; and (iii) neither the Company nor any Company Subsidiary or
Stockholder has received any notice or other communication from any issuer of
any such insurance policy of any material increase in any deductibles, retained
amounts or the premiums payable thereunder, and, to the knowledge of the Company
or any Stockholder, no such increase in deductibles, retainages or premiums is
threatened.
Section 2.27 EMPLOYEE MATTERS. (a) CASH COMPENSATION. The Company has
provided USC with a complete written list of the names, titles and rates of
annual Cash Compensation, at the Current Balance Sheet Date (and the portions
thereof attributable to salary or the equivalent, fixed bonuses, discretionary
bonuses and other Cash Compensation, respectively) of the key employees
(including all employees who are officers or directors), nonemployee officers,
nonemployee directors and key consultants and independent contractors of each of
the Company and the Company Subsidiaries.
(b) EMPLOYMENT AGREEMENTS. Schedule 2.27 lists all Employment
Agreements remaining executory in whole or in part on the date hereof, and
the Company has provided USC with true, complete and correct copies of all
those Employment Agreements. Neither the Company nor any Company Subsidiary
is a party to any oral Employment Agreement, other than with respect to
employment at-will arrangements that are terminable by either party thereto
without liability on the part of either party thereto (except for earned
but unpaid salaries or wages).
(c) OTHER COMPENSATION PLANS. Schedule 2.27 lists all Other
Compensation Plans either remaining executory at the date hereof or to
become effective after the date hereof. The Company has provided USC with a
true, correct and complete copy of each of those Other Compensation Plans
that is in writing and an accurate written description of each of those
Other Compensation Plans that is not written. Except as Schedule 2.27 sets
forth, each of the Other Compensation Plans, including each that is a
Welfare Plan, may be unilaterally amended or terminated by the Company or
any Company Subsidiary without liability to any of them, except as to
benefits accrued thereunder prior to that amendment or termination.
(d) ERISA BENEFIT PLANS. Schedule 2.27 (i) lists (A) each ERISA
Pension Benefit Plan (1) the funding requirements of which (under Section
301 of ERISA or Section 412 of the Code) are, or at any time during the
six-year period ending on the date hereof were, in whole or in part, the
responsibility of the Company or any Company Subsidiary or (2) respecting
which the Company or any Company Subsidiary is, or at any time during that
period was, a "contributing sponsor" or an "employer" as defined in
Sections 4001(a)(13) and 3(5), respectively, of ERISA (each plan described
in this clause (A) being a "Company ERISA Pension Plan"), (B) each other
ERISA Pension Benefit Plan respecting which an ERISA Affiliate is, or at
any time during that period was, such a "contributing sponsor" or
"employer" (each plan described in this clause (B) being an "ERISA
Affiliate Pension Plan") and (C) each other ERISA Employee Benefit Plan
that is being, or at any time during that period was, sponsored, maintained
or contributed to by the Company or
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any Company Subsidiary (each plan described in this clause (C) and each
Company ERISA Pension Plan being a "Company ERISA Benefit Plan"), (ii)
states the termination date of each Company ERISA Benefit Plan and ERISA
Affiliate Pension Plan that has been terminated and (iii) identifies for
each ERISA Affiliate Pension Plan the relevant ERISA Affiliates. The
Company has provided USC with true, complete and correct copies of (i) each
Company ERISA Benefit Plan and ERISA Affiliate Pension Plan, (ii) each
trust agreement related thereto (if any) and (iii) all amendments to those
plans and trust agreements. Except as Schedule 2.27 sets forth, (i) neither
the Company nor any Company Subsidiary is, or at any time during the
six-year period ended on the date hereof was, a member of any ERISA Group
that currently includes, or included when the Company or a Company
Subsidiary was a member, among its members any Person other than the
Company and the Company Subsidiaries and (ii) no Person is an ERISA
Affiliate of the Company or any Company Subsidiary (other than the Company
or any Company Subsidiary in the case of any other Company Subsidiary or
any Company Subsidiary in the case of the Company, if the Company and the
Company Subsidiaries comprise an ERISA Group).
(e) EMPLOYEE POLICIES AND PROCEDURES. Schedule 2.27 lists all Employee
Policies and Procedures. The Company has provided USC with a copy of all
written Employee Policies and Procedures and a written description of all
unwritten Employee Policies and Procedures that in the aggregate are
Material to the Company.
(f) UNWRITTEN AMENDMENTS. Except as Schedule 2.27 sets forth, no
unwritten amendments have been made, whether by oral communication, pattern
of conduct or otherwise, with respect to any of the Employment Agreements,
Other Compensation Plans or Employee Policies and Procedures which in the
aggregate are Material to the Company.
(g) LABOR COMPLIANCE. Except as Schedule 2.27 sets forth, each of the
Company and the Company Subsidiaries has been and is in compliance in all
material respects with all applicable Governmental Requirements respecting
employment and employment practices, terms and conditions of employment,
wages and hours and workplace health and safety in concrete mixing
facilities and other work areas, and neither the Company nor any Company
Subsidiary is liable for any arrears of wages or penalties for failure to
comply with any of the foregoing. Neither the Company nor any Company
Subsidiary has engaged in any unfair labor practice or discriminated on the
basis of race, color, religion, sex, national origin, age, disability or
handicap in its employment conditions or practices. Except as Schedule 2.27
sets forth, there are no (i) unfair labor practice charges or complaints or
racial, color, religious, sex, national origin, age, disability or handicap
discrimination charges or complaints pending or, to the knowledge of the
Company, threatened against the Company or any of the Company Subsidiaries
before any Governmental Authority (nor, to the knowledge of the Company,
does any valid basis therefor exist) or (ii) existing or, to the knowledge
of the Company, threatened labor strikes, disputes, grievances or
controversies affecting the Company or any of the Company Subsidiaries
(nor, to the knowledge of the Company, does any valid basis therefor
exist). Each of the Company and the Company Subsidiaries has complied, and
remains in compliance in all material respects with, all federal and state
Governmental
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Requirements mandating the provision of programs offering hazard
recognition training to its employees and employees of its customers.
(h) UNIONS. Except as Schedule 2.27 sets forth, (i) neither the
Company nor any Company Subsidiary or ERISA Affiliate has ever been a party
to any agreement with any union, labor organization or collective
bargaining unit, (ii) no employees of the Company and the Company
Subsidiaries are represented by any union, labor organization or collective
bargaining unit and (iii) to the knowledge of the Company, none of the
employees of the Company and the Company Subsidiaries has threatened to
organize or join a union, labor organization or collective bargaining unit
with respect to their employment by the Company or any Company Subsidiary.
(i) ALIENS. Except as Schedule 2.27 sets forth, all employees of each
of the Company and the Company Subsidiaries are, to the knowledge of the
Company (including any constructive knowledge the IRCA may deem the Company
to have), (i) citizens of the United States or (ii) not citizens of the
United States, but, in accordance with the IRCA and other applicable
federal Governmental Requirements, are either (A) immigrants authorized to
work in the United States or (B) nonimmigrants authorized to work in the
United States for the Company or a Company Subsidiary in their specific
jobs. Except as Schedule 2.27 sets forth: neither the Company nor any
Company Subsidiary has since November 6, 1986 (i) hired (or by reason of
any contract, subcontract or exchange is considered for purposes of the
IRCA to have hired) an alien in the United States to perform labor or
services with knowledge (as determined in accordance with the IRCA) that
the alien is an unauthorized alien with respect to performing that labor or
those services, (ii) continued the employment of any employee hired after
November 6, 1986 with knowledge (as determined in accordance with the IRCA)
that the employee is or has become an unauthorized alien with respect to
that employment or (iii) directly or indirectly in violation of the IRCA
required any individual it has hired to post a bond or security or provide
any other financial assurance to it against any potential liability under
the IRCA as a result of that hire. The Company has provided USC with a
true, complete list of all current alien employees of the Company who (i)
are authorized to work in the United States as immigrants or (ii) hold
H-1B, H-2B or other nonimmigrant visas. The Company has provided USC with
respect to each current employee of the Company or any Company Subsidiary
who has an H-1B or H-2B visa, true, complete copies of the Department of
Labor File and Public Access File the Company or a Company Subsidiary has
maintained with respect to that employee. The Company also has provided USC
with true, complete copies of all Forms I-9 the Company and the Company
Subsidiaries possess with respect to their (i) current employees, (ii)
former employees whose employment was terminated within 12 months of the
date hereof and who were employed for more than 36 months and (iii) former
employees whose employment was terminated within 36 months of the date
hereof and who were employed for less than 36 months. The Company also has
provided USC with a list of all people employed by the Company or Company
Subsidiaries within the last 36 months and their hire dates and termination
dates (if any). Except as Schedule 2.27 sets forth, each of the Company and
the Company Subsidiaries has obtained, completed and maintained Form I-9s
in accordance with, and has otherwise complied with the record-keeping
requirements of, the IRCA.
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(j) CHANGE OF CONTROL BENEFITS. Except as Schedule 2.27 sets forth,
neither the Company nor any of the Company Subsidiaries is a party to any
agreement, or has established any plan, policy, practice or program,
requiring it to make a payment or provide any other form of compensation or
benefit or vesting rights to any person performing services for the Company
or any of the Company Subsidiaries which would not be payable or provided
in the absence of this Agreement or the consummation of the transactions
this Agreement contemplates, including any parachute payment under Section
280G of the Code.
(k) RETIREES. Except as Schedule 2.27 sets forth, neither the Company
nor any of the Company Subsidiaries has any obligation or commitment to
provide medical, dental or life insurance benefits to or on behalf of any
of its employees who may retire or any of its former employees who have
retired except as the continuation of coverage provisions of Section 4980B
of the Code and the applicable parallel provisions of ERISA may require.
Section 2.28 COMPLIANCE WITH ERISA. (a) COMPLIANCE. Each of the Company
ERISA Benefit Plans and Other Compensation Plans (each, a "Plan") (i) is in
substantial compliance with all applicable provisions of ERISA, as well as with
all other applicable Governmental Requirements, and (ii) has been administered,
operated and managed in accordance with its governing documents.
(b) QUALIFICATION. All Plans that are intended to qualify under
Section 401(a) of the Code (the "Qualified Plans") are so qualified and
have been determined by the IRS to be so qualified (or application for
determination letters have been timely submitted to the IRS). The Company
has provided USC with true, complete and correct copies of the current plan
determination letters, most recent actuarial valuation reports, if any,
most recent Form 5500, or, as applicable, Form 5500-C/R, filed with respect
to each such Qualified Plan and most recent trustee or custodian report. To
the extent that any Qualified Plans have not been amended to comply with
applicable Governmental Requirements, the remedial amendment period
permitting retroactive amendment of these Qualified Plans has not expired
and will not expire within 120 days after the Effective Time. All reports
and other documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including annual
reports, summary annual reports, actuarial reports, PBGC-1 Forms, audits or
Returns) have been timely filed or distributed, except for any failures to
timely file or distribute such reports and other documents as would not,
singly or in the aggregate, result in a material liability for any Tax.
(c) NO PROHIBITED TRANSACTIONS. None of the Stockholders, any Plan or
the Company or any Company Subsidiary has engaged in any Prohibited
Transaction. No Plan has incurred an accumulated funding deficiency, as
defined in Section 412(a) of the Code and Section 302(a) of ERISA, and no
circumstances exist as a result of which the Company or any Company
Subsidiary could have any direct or indirect material liability whatsoever
(including being subject to any statutory Lien to secure payment of any
such liability), to the PBGC under Title IV of ERISA or to the IRS for any
excise tax or penalty with respect to any Plan now or hereafter maintained
or contributed to by the Company or any of its ERISA Affiliates. Further:
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(i) there have been no terminations, partial terminations or
discontinuances of contributions to any Qualified Plan without a
determination by the IRS that such action does not adversely affect
the tax-qualified status of that plan;
(ii) no Termination Event has occurred;
(iii)no Reportable Event has occurred with respect to any Plan
which was not properly reported;
(iv) the valuation of assets of any Qualified Plan, as of the
Effective Time, will equal or exceed the actuarial present value of
all "benefit liabilities" (within the meaning of Section 4001(a)(16)
of ERISA) under that plan in accordance with the assumptions the
regulations of the PBGC governing the funding of terminated defined
benefit plans contain;
(v) with respect to Plans qualifying as "group health plans"
under Section 4980B of the Code or Section 607(l) or 609 of ERISA
(relating to the benefit continuation rights imposed by "COBRA" or
qualified medical child support orders), the Company, each Company
Subsidiary and each Stockholder have complied (and at the Effective
Time will have complied) in all material respects with all reporting,
disclosure, notice, election and other benefit continuation and
coverage requirements imposed thereunder as and when applicable to
those plans, and neither the Company nor any Company Subsidiary has
incurred (or will incur) any direct or indirect liability or is (or
will be) subject to any loss, assessment, excise tax penalty, loss of
federal income tax deduction or other sanction, arising on account of
or in respect of any direct or indirect failure by the Company, any
Company Subsidiary or any Stockholder, at any time prior to the
Effective Time, to comply with any such federal or state benefit
continuation or coverage requirement, which is capable of being
assessed or asserted before or after the Effective Time directly or
indirectly against the Company, any Company Subsidiary, any
Stockholder, USC or any Subsidiary of USC with respect to any of those
group health plans;
(vi) the Financial Statements as of the Current Balance Sheet
Date reflect the approximate total pension, medical and other benefit
liability for all Plans, and no material funding changes or
irregularities are reflected therein which would cause those Financial
Statements to be not representative of prior periods; and
(vii)neither the Company nor any Company Subsidiary has incurred
liability under Section 4062 of ERISA.
(d) MULTIEMPLOYER PLANS. Except as Schedule 2.28 sets forth, neither
the Company nor any Company Subsidiary, and no ERISA Affiliate of any of
them, is, or at any time during the six-year period ended on the date
hereof was, obligated to contribute to a Multiemployer Plan. Neither the
Company nor any Company Subsidiary, and no ERISA Affiliate of any of them,
has made a complete or partial withdrawal from a Multiemployer Plan so as
to incur withdrawal
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liability as defined in Section 4201 of ERISA. Schedule 2.28 states for
each Multiemployer Plan it lists or should list the Company's best estimate
of the amount of withdrawal liability that would be incurred if the Company
and each of the its ERISA Affiliates were to make a complete withdrawal
from that Multiemployer Plan as of the Closing Date. Except as that
Schedule sets forth, the aggregate amount of that withdrawal liability if
the Company and each of its ERISA Affiliates were to make a complete
withdrawal from each such Multiemployer Plan would not exceed $25,000.
(e) CLAIMS AND LITIGATION. Except as Schedule 2.28 sets forth, no
Litigation or claims (other than routine claims for benefits) are pending
or, to the knowledge of the Company, threatened against, or with respect
to, any of the Plans or with respect to any fiduciary, administrator,
party-in-interest or sponsor thereof (in their capacities as such).
(f) EXCISE TAXES, DAMAGES AND PENALTIES. No act, omission or
transaction has occurred which would result in the imposition on the
Company or any Company Subsidiary with respect to any Plan of (i) a
material breach of fiduciary duty liability damages under Section 409 of
ERISA, (ii) a material civil penalty assessed pursuant to subsection (c),
(i) or (l) of Section 502 of ERISA or (iii) any material excise tax under
applicable provisions of the Code.
(g) WELFARE TRUSTS. Any trust funding a Plan, which is intended to be
exempt from federal income taxation pursuant to Section 501(c)(9) of the
Code, satisfies the requirements of that Section and has received a
favorable determination letter from the IRS regarding that exempt status
and has not, since receipt of the most recent favorable determination
letter, been amended or operated in a way that would adversely affect that
exempt status.
Section 2.29 TAXES. (a) Each of the following representations and
warranties in this Section 2.29 is qualified to the extent Schedule 2.29 sets
forth.
(b) All Returns required to be filed with respect to any Tax for which
any of the Company and the Company Subsidiaries is liable have been duly
and timely filed with the appropriate Taxing Authority, each such Return is
true, correct and complete in all respects Material to the Acquired
Business (and, in the case of a Return filed by a Company Subsidiary, the
Company Subsidiary), each Tax shown to be payable on each such Return has
been paid, each Tax payable by the Company or a Company Subsidiary by
assessment has been timely paid in the amount assessed and adequate
reserves have been established on the consolidated books of the Acquired
Business for all Taxes for which any of the Company and the Company
Subsidiaries is liable, but the payment of which is not yet due. Neither
the Company nor any Company Subsidiary is, or ever has been, liable for any
Tax payable by reason of the income or property of a Person other than the
Company or a Company Subsidiary. Each of the Company and the Company
Subsidiaries has timely filed true, correct and complete declarations of
estimated Tax in each jurisdiction in which any such declaration is
required to be filed by it. No Liens for Taxes exist upon the assets of the
Company or any Company Subsidiary except Liens for Taxes which are not yet
due. Neither the Company nor any Company Subsidiary is, or ever has been,
subject to Tax in any jurisdiction outside of the United
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States. No Litigation with respect to any Tax for which the Company or any
Company Subsidiary is asserted to be liable is pending or, to the knowledge
of the Company or any Stockholder, threatened and no basis which the
Company or any Stockholder believes to be valid exists on which any claim
for any such Tax can be asserted against the Company or any Company
Subsidiary. No requests for rulings or determinations in respect of any
Taxes are pending between the Company or any Company Subsidiary and any
Taxing Authority. No extension of any period during which any Tax may be
assessed or collected and for which the Company or any Company Subsidiary
is or may be liable has been granted to any Taxing Authority. Neither the
Company nor any Company Subsidiary is or has been a party to any tax
allocation or sharing agreement. All amounts required to be withheld by any
of the Company and the Company Subsidiaries and paid to governmental
agencies for income, social security, unemployment insurance, sales,
excise, use and other Taxes have been collected or withheld and paid to the
proper Taxing Authority. The Company and each Company Subsidiary have made
all deposits required by law to be made with respect to employees'
withholding and other employment taxes.
(c) None of the Company, any Company Subsidiary or any Stockholder is
a "foreign person," as Section 1445(f)(3) of the Code refers to that term.
(d) The Company has not filed a consent pursuant to Section 341(f) of
the Code or any comparable provision of any other tax statute and has not
agreed to the application of Section 341(f)(2) of the Code or any
comparable provision of any other tax statute to any disposition of an
asset. The Company has not made, is not obligated to make and is not a
party to any agreement that could require it to make any payment that is
not deductible under Section 280G of the Code. No asset of the Acquired
Business is subject to any provision of applicable law which eliminates or
reduces the allowance for depreciation or amortization in respect of that
asset below the allowance generally available to an asset of its type. No
accounting method changes of the Acquired Business exist or are proposed or
threatened which could give rise to an adjustment under Section 481 of the
Code. If the Company or any predecessor corporation at any time has filed
an election to be an S corporation, within the meaning of Section
1361(a)(1) of the Code or any predecessor provision or comparable
provisions of state laws, the Company and any such predecessor corporation
have at all times met all requirements for that election, and that election
has at all times been and is presently valid and in full force and effect.
Section 2.30 GOVERNMENT CONTRACTS. Except as Schedule 2.30 sets forth,
neither the Company nor any Company Subsidiary is a party to any governmental
contract subject to price redetermination or renegotiation.
Section 2.31 ABSENCE OF CHANGES. Since the Current Balance Sheet Date,
except as Schedule 2.31 sets forth, none of the following has occurred with
respect to the Company or any Company Subsidiary:
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(i) any circumstance, condition, event or state of facts (either
singly or in the aggregate), other than conditions generally affecting
the Industry, which has caused, is causing or will cause a Material
Adverse Effect;
(ii) any change in its authorized Capital Stock or in any of its
outstanding Capital Stock or Derivative Securities;
(iii)any Restricted Payment, except any declaration or payment of
dividends by any Company Subsidiary solely to the Company and any
Restricted Payment that Section 4.03 permits;
(iv) any increase in, or any commitment or promise to increase,
the rates of Cash Compensation as of the date hereof, or the amounts
or other benefits paid or payable under any Company ERISA Pension Plan
or Other Compensation Plan, except for ordinary and customary bonuses
and salary increases for employees (other than the Stockholders or
their Immediate Family Members) at the times and in the amounts
consistent with its past practice;
(v) any work interruptions, labor grievances or claims filed, or
any similar event or condition of any character, that will have a
Material Adverse Effect following the Effective Time;
(vi) any distribution, sale or transfer of, or any Company
Commitment to distribute, sell or transfer, any of its assets or
properties of any kind which singly is or in the aggregate are
Material to the Acquired Business, other than distributions, sales or
transfers in the ordinary course of its business and consistent with
its past practices to Persons other than the Stockholders and their
Immediate Family Members and Affiliates;
(vii)any cancellation, or agreement to cancel, any Indebtedness,
obligation or other liability owing to it, including any Indebtedness,
obligation or other liability of any Stockholder or any Related Person
or Affiliate thereof, provided that it may negotiate and adjust bills
in the course of good faith disputes with customers in a manner
consistent with past practice, if all those adjustments are included
in the Supplemental Information provided USC pursuant to Section 4.07;
(viii) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of its
assets, property or rights or requiring consent of any Person to the
transfer and assignment of any such assets, property or rights;
(ix) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of its business consistent with its
past practices;
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(x) any waiver of any of its rights or claims that singly is or
in the aggregate are Material to the Acquired Business;
(xi) any transaction by it outside the ordinary course of its
business or not consistent with its past practices;
(xii)any incurrence by it of any Indebtedness (other than
Indebtedness, if any, that Section 4.03 permits to be paid as
Restricted Payments) or any Guaranty not constituting its
Indebtedness, or any Company Commitment to incur any Indebtedness or
any such Guaranty;
(xiii) any investment in the Capital Stock, Derivative Securities
or Indebtedness of any Person other than a Permitted Investment;
(xiv)except in accordance with the consolidated capital
expenditure budget of the Acquired Business for the Company's current
fiscal year, any capital expenditure or series of related capital
expenditures by the Acquired Business in excess of $25,000, or
commitments by the Acquired Business to make capital expenditures
totaling in excess of $25,000;
(xv) any prepayment of any Indebtedness, obligation or other
liability owing by it to any Person which this Agreement contemplates
the Stockholders, or any one or more of them, will assume prior to the
Effective Time;
(xvi)any change in the terms of payment by its customers for any
services it performs or products it sells the effect of which is to
enable the Acquired Business to recognize revenues in its statement of
operations for any period ending on or before the date of the Final
Balance Sheet which, but for that change, the Acquired Business would
not so recognize before a period beginning after the date of the Final
Balance Sheet; or
(xvii) any cancellation or termination of a Material Agreement of
the Acquired Business.
Section 2.32 BANK RELATIONS; POWERS OF ATTORNEY. Schedule 2.32 sets forth:
(i) the name of each financial institution in which any Entity
the Acquired Business includes has borrowing or investment
arrangements, deposit or checking accounts or safe deposit boxes;
(ii) the types of those arrangements and accounts, including, as
applicable, names in which accounts or boxes are held, the account or
box numbers and the name of each Person authorized to draw thereon or
have access thereto; and
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(iii)the name of each Person holding a general or special power
of attorney from any Entity the Acquired Business includes and a
description of the terms of each such power.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF USC
USC represents and warrants to, and agrees with, the Company and each
Stockholder that all the following representations and warranties in this
Article III are as of the date of this Agreement, and will be on the Closing
Date and immediately prior to the Effective Time, true and correct:
Section 3.01 ORGANIZATION; POWER. Each of USC and USC Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and each of USC and USC Sub has all requisite corporate power
and authority under the laws of the State of Delaware and its Charter Documents
to own or lease and to operate its properties presently and following the
Effective Time and to carry on its business as now conducted and as proposed to
be conducted following the Effective Time.
Section 3.02 AUTHORIZATION; ENFORCEABILITY; ABSENCE OF CONFLICTS; REQUIRED
CONSENTS. (a) The execution, delivery and performance by each of USC and USC Sub
of this Agreement and each other Transaction Document to which it is a party,
and the effectuation of the Acquisition and the other transactions contemplated
hereby and thereby, are within its corporate power under its Charter Documents
and the applicable Governmental Requirements of the State of Delaware and have
been duly authorized by all proceedings, including actions permitted to be taken
in lieu of proceedings, required under its Charter Documents and the applicable
Governmental Requirements of the State of Delaware.
(b) This Agreement has been, and each of the other Transaction
Documents to which either of USC or USC Sub is a party, when executed and
delivered by the parties thereto, will have been, duly executed and
delivered by it and is, or when so executed and delivered will be, its
legal, valid and binding obligation, enforceable against it in accordance
with its terms, except as that enforceability may be (i) limited by any
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally or any applicable law that limits rights to indemnification and
(ii) subject to general principles of equity (regardless of whether that
enforceability is considered in a proceeding in equity or at law).
(c) The execution, delivery and performance in accordance with their
respective terms by each of USC and USC Sub of the Transaction Documents to
which it is a party have not and will not (i) violate, breach or constitute
a default under (A) the Charter Documents of USC or USC Sub, (B) any
Governmental Requirement applicable to USC or USC Sub or (C) any Material
Agreement of USC or USC Sub, (ii) result in the acceleration or mandatory
prepayment of any Indebtedness, or any Guaranty not constituting
Indebtedness, of USC or USC Sub or afford any
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holder of any of that Indebtedness, or any beneficiary of any of those
Guaranties, the right to require USC or USC Sub to redeem, purchase or
otherwise acquire, reacquire or repay any of that Indebtedness, or to
perform any of those Guaranties, (iii) cause or result in the imposition
of, or afford any Person the right to obtain, any Lien upon any property or
assets of USC or USC Sub (or upon any revenues, income or profits of either
USC or USC Sub therefrom), other than (A) Liens that may secure
Indebtedness of USC to its commercial lenders and (B) negative pledge
covenants of USC respecting its assets, or (iv) result in the revocation,
cancellation, suspension or material modification, in any single case or in
the aggregate, of any Governmental Approval possessed by USC or USC Sub at
the date hereof and necessary for the ownership or lease and the operation
of its properties or the carrying on of its business as now conducted,
including any necessary Governmental Approval under each applicable
Environmental Law and Industry Law.
(d) Except for (i) the filing of the Certificates of Merger, if any,
with the applicable Governmental Authorities , (ii) filings of the
Registration Statement under the Securities Act and the SEC order declaring
the Registration Statement effective under the Securities Act and (iii) as
may be required by the HSR Act or the applicable state securities or blue
sky laws, no Governmental Approvals are required to be obtained, and no
reports or notices to or filings with any Governmental Authority are
required to be made, by USC or USC Sub for the execution, delivery or
performance by USC or USC Sub of the Transaction Documents to which it is a
party, the enforcement against USC or USC Sub, as the case may be, of its
obligations thereunder or the effectuation of the Acquisition and the other
transactions contemplated thereby.
Section 3.03 CHARTER DOCUMENTS. USC has delivered to the Company true,
complete and correct copies of the Charter Documents of USC No breach or
violation of any Charter Document of USC has occurred and is continuing.
Section 3.04 CAPITAL STOCK OF USC AND USC SUB. (a) Immediately prior to the
Effective Time, (i) the authorized Capital Stock of USC will be comprised of (A)
40,000,000 shares of USC Common Stock, (B) one share of class A stock, par value
$.001 per share, and (C) 5,000,000 shares of preferred stock, par value $.001
per share, (ii) before giving effect to the Merger and the merger or other
acquisition transactions the Other Agreements contemplate, (A) the number of
shares of USC Common Stock then issued and outstanding will be as set forth in
the Registration Statement when it becomes effective under the Securities Act,
(B) no shares of the USC preferred stock then will be issued or outstanding and
(C) USC will have reserved for issuance pursuant to compensation plans or the
exercise of Derivative Securities the number of shares of USC Common Stock set
forth in the Registration Statement when it becomes effective under the
Securities Act.
(b) The authorized Capital Stock of USC Sub is comprised of 1,000
shares of USC Sub Common Stock, all of which shares are issued, outstanding
and owned, of record and beneficially, by USC free and clear of all Liens,
except for any liens USC may grant in favor of its lenders in connection
with its financing arrangements. No Derivative Securities of USC Sub exist.
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(c) All shares of USC Common Stock and USC Sub Common Stock
outstanding immediately prior to the Effective Time, and all shares of USC
Common Stock to be issued pursuant to Paragraph 2, when issued, (i) will
have been duly authorized and validly issued in accordance with the general
corporation laws of the State of Delaware and the issuer's Charter
Documents and (ii) will be fully paid and nonassessable. None of the shares
of USC Common Stock to be issued pursuant to Paragraph 2 will, when issued,
have been issued in breach or violation of (i) any applicable statutory or
contractual preemptive rights, or any other rights of any kind (including
any rights of first offer or refusal), of any Person or (ii) the terms of
any of its Derivative Securities then outstanding.
Section 3.05 SUBSIDIARIES. Immediately prior to the Closing Date, (i) USC
will have no Subsidiaries other than those Exhibit 21 to the Registration
Statement lists, (ii) USC Sub will have no Subsidiaries and (iii) neither USC
nor USC Sub will own, of record or beneficially, directly or indirectly through
any Person or otherwise (except pursuant hereto or to the Other Agreements), any
Capital Stock or Derivative Securities of any Entity not described in this
Section 3.05 as a Subsidiary of USC (in the case of USC) or any Entity (in the
case of USC Sub).
Section 3.06 COMPLIANCE WITH LAWS; NO LITIGATION. Each of USC and USC Sub
is in compliance with all Governmental Requirements applicable to it,and no
Litigation is pending or, to the knowledge of USC, threatened to which USC or
USC Sub is or may become a party which (i) questions or involves the validity or
enforceability of any obligation of USC or USC Sub under any Transaction
Document, (ii) seeks (or reasonably may be expected to seek) (A) to prevent or
delay consummation by USC or USC Sub of the transactions contemplated by this
Agreement to be consummated by USC or USC Sub, as the case may be, or (B)
damages from USC or USC Sub in connection with any such consummation.
Section 3.07 CONDUCT OF OPERATIONS TO DATE; ABSENCE OF UNDISCLOSED
LIABILITIES. Except for its activities in connection with the proposed
acquisitions of the Founding Companies and other acquisition candidates and the
IPO, USC has conducted no significant operations during the period from its
inception to the date of this Agreement, and, except for expenses it has
incurred in connection with those activities, as of the date of this Agreement
USC has no material liabilities that the Private Placement Memorandum does not
disclose.
Section 3.08 CAPITALIZATION OF USC. The authorized and outstanding Capital
Stock of USC as of the date of this Agreement is as set forth in the Private
Placement Memorandum. Except as the Private Placement Memorandum discloses,
there will be no outstanding Capital Stock of USC, and no options, warrants or
other rights to acquire Capital Stock of USC, outstanding as of the IPO Closing
Date.
Section 3.09 NO BROKERS. Except as the Private Placement Memorandum sets
forth, USC has not, directly or indirectly, in connection with this Agreement or
the transactions contemplated hereby (i) employed any broker, finder or agent or
(ii) agreed to pay or incurred any
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obligation to pay any broker's or finder's fee, any sales commission or any
similar form of compensation.
Section 3.10 PRIVATE PLACEMENT MEMORANDUM. At the date hereof the Private
Placement Memorandum (other than the historical financial statements and the
notes thereto of the Company and the historical information it contains
respecting the Acquired Business and the Stockholders, to which this Section
3.10 does not apply) does not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements it does
contain not materially misleading in the light of the circumstances under which
those statements were made.
ARTICLE IV
COVENANTS EXTENDING TO THE EFFECTIVE TIME
Section 4.01 ACCESS AND COOPERATION; DUE DILIGENCE. (a) From the date
hereof and until the Effective Time, the Company will (i) afford to the
Representatives of USC and each Other Founding Company reasonable access, during
normal business hours and with reasonable prior notice, to all the key
employees, sites, properties, books and records of each of the Company and the
Company Subsidiaries, provided that such access does not unreasonably interfere
with the Company's business and operations, (ii) provide USC with such
additional financial and operating data and other information relating to the
business and properties of each of the Company and the Company Subsidiaries as
USC or any Other Founding Company may from time to time reasonably request and
(iii) cooperate with USC and each Other Founding Company and their respective
Representatives in the preparation of any documents or other material that may
be required in connection with any Transaction Documents or any Other
Transaction Documents. Each Stockholder and the Company will treat, and will
cause the Company's Representatives to treat, all Confidential Information
obtained by them in connection with the negotiation and performance of this
Agreement or the due diligence investigations conducted with respect to each
Other Founding Company as confidential in accordance with the provisions of
Section 10.01. USC will cause each Other Founding Company to enter into a
provision substantially identical to this Section 4.01 in order to require each
Other Founding Company and its owners and Representatives to keep confidential
any Confidential Information respecting any of the Company and the Company
Subsidiaries that Other Founding Company or any of its Representatives obtains.
Prior to the Effective Time, USC and the Other Founding Companies may provide
Confidential Information respecting the Company and the Company Subsidiaries to
(i) the Other Founding Companies and prospective Other Founding Companies and
their respective Representatives, (ii) USC's actual and prospective financing
sources and their respective Representatives, (iii) the Underwriter and its
Representatives, (iv) prospective investors in the IPO, (v) USC's prospective
insurance brokers and software or other information technology vendors and (vi)
USC's Representatives, but otherwise will keep that Confidential Information
confidential in accordance with the provisions of Section 10.01.
(b) Each of the Company and the Stockholders will use its commercially
reasonable best efforts to secure, as soon as practicable after the date
hereof, all approvals or
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consents of third Persons as may be necessary to enable them to consummate
the transactions contemplated hereby. USC will use its best efforts to
secure, as soon as practicable after the date hereof, all approvals or
consents of third Persons as may be necessary to enable USC and USC Sub to
consummate the transactions contemplated hereby.
(c) From the date hereof and until the Effective Time, USC will (i)
afford to the Representatives of the Company and the Stockholders access to
all sites, properties, books and records of USC and USC Sub, (ii) provide
the Company with such additional financial and operating data and other
information relating to the business and properties of USC and USC Sub as
the Company or any Stockholder may from time to time reasonably request and
(iii) cooperate with the Company and the Stockholders and their respective
Representatives in the preparation of any documents or other material which
may be required in connection with any Transaction Documents.
(d) If this Agreement is terminated pursuant to Section 11.01, USC
promptly will (i) return all written Confidential Information of the
Company it and USC Sub then possess to the Company and (ii) use
commercially reasonable efforts to facilitate the return to the Company of
all Confidential Information of the Company that USC or any of its
Representatives has provided to any Other Founding Company.
Section 4.02 CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME. From the date
hereof and until the Effective Time, the Company will, and will cause each
Company Subsidiary to, except as and only to the extent set forth in Schedule
4.02:
(i) carry on its businesses in substantially the same manner as
it has heretofore and not introduce any new methods of management,
operation or accounting that in the aggregate are Material to the
Acquired Business;
(ii) maintain its properties and facilities, including those held
under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
(iii) perform all its obligations under agreements relating to or
affecting its assets, properties and other rights;
(iv) keep in full force and effect without interruption all its
present insurance policies or other comparable insurance coverage;
(v) use reasonable commercial efforts to (A) maintain and
preserve its business organization intact, (B) retain its present
employees and (C) maintain its relationships with suppliers, customers
and others having business relations with it;
(vi) comply with all applicable Governmental Requirements that in
the aggregate are Material to the Acquired Business; and
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(vii) except as this Agreement requires or expressly permits,
maintain the instruments and agreements governing its outstanding
Indebtedness and leases on their present terms and not enter into new
or amended Indebtedness or lease instruments or agreements involving
amounts over $10,000 in any single case or $100,000 in the aggregate,
without the prior written consent of USC (which consent will not be
unreasonably withheld).
Section 4.03 PROHIBITED ACTIVITIES. From the date hereof and until the
Effective Time, without the prior written consent of USC or unless as this
Agreement requires or expressly permits, the Company will not, and will not
permit any Company Subsidiary to, except as and only to the extent Schedule 4.03
sets forth:
(i) make any change in its Charter Documents;
(ii) issue any of its Capital Stock or issue or otherwise create
any of its Derivative Securities;
(iii) make any Restricted Payment;
(iv) make any investments (other than Permitted Investments) in
the Capital Stock, Derivative Securities or Indebtedness of any
Person;
(v) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures in a single
transaction or a series of related transactions involving an aggregate
amount of more than $10,000 otherwise than in the ordinary course of
its business and consistent with its past practice;
(vi) increase or commit or promise to increase the Cash
Compensation payable or to become payable to any officer, director,
stockholder, employee or agent, consultant or independent contractor
of any of the Company and the Company Subsidiaries or make any
discretionary bonus or management fee payment to any such Person,
except bonuses or salary increases to employees (other than the
Stockholders or their Immediate Family Members) at the times and in
the amounts consistent with its past practice;
(vii) create, assume or permit to be created or imposed any Liens
(other than Permitted Liens) upon any of its assets or properties,
whether now owned or hereafter acquired, except for purchase money
Liens incurred in connection with the acquisition of equipment with an
aggregate cost not in excess of $10,000 and necessary or desirable for
the conduct of the business of any of the Company and the Company
Subsidiaries;
(viii) (A) adopt, establish, amend or terminate any ERISA
Employee Benefit Plan, or any Other Compensation Plan or Employee
Policies and Procedures or (B) take any discretionary action, or omit
to take any contractually required action, if that action or
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omission could either (1) deplete the assets of any ERISA Employee
Benefit Plan or any Other Compensation Plan or (2) increase the
liabilities or obligations under any such plan;
(ix) sell, assign, lease or otherwise transfer or dispose of any
of its owned or leased property or equipment otherwise than in the
ordinary course of its business and consistent with its past practice;
(x) negotiate for the acquisition of any business or the start-up
of any new business;
(xi) merge, consolidate or effect a share exchange with, or agree
to merge, consolidate or effect a share exchange with, any other
Entity;
(xii) waive any of its rights or claims that in the aggregate are
Material to the Acquired Business, provided that it may negotiate and
adjust bills in the course of good faith disputes with customers in a
manner consistent with past practice, but such adjustments will not be
deemed to be included in Schedule 4.03 unless the Supplemental
Information lists them;
(xiii) commit breaches that in the aggregate are Material to the
Acquired Business or amend or terminate any Material Agreement of the
Acquired Business or any of its Governmental Approvals; or
(xiv) enter into any other transaction (i) outside the ordinary
course of its business and consistent with its past practice or (ii)
prohibited hereby.
Section 4.04 NO SHOP. Each of the Company and the Stockholders agrees that,
from the date hereof and until the first to occur of the Effective Time or the
termination of this Agreement in accordance with Article XI, neither the Company
nor any Stockholder, nor any of their respective officers and directors will,
and the Company and each Stockholder will direct and use their reasonable best
efforts to cause each of their respective Representatives not to, initiate,
solicit, encourage or respond to, directly or indirectly, any inquiries or the
making or implementation of any proposal or offer (including any proposal or
offer to the Stockholders) with respect to a merger, acquisition, consolidation
or similar transaction involving, or any purchase of all or any significant
portion of the assets or any equity securities of, the Company (any such
proposal or offer being an "Acquisition Proposal") or engage in any activities,
discussions or negotiations concerning, or provide any Confidential Information
respecting, the Acquired Business, any Other Founding Company or USC to, or have
any discussions with, any Person relating to an Acquisition Proposal or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal. The Company and each Stockholder will: (i) immediately cease and cause
to be terminated any existing activities, discussions or negotiations with any
Persons conducted heretofore with respect to any of the foregoing, and each will
take the steps necessary to inform the Persons referred to in the first sentence
of this Section 4.04 of the obligations undertaken in this Section 4.04; and
(ii) notify USC
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immediately if any such inquiries or proposals are received by, any such
information is requested from or any such discussions or negotiations are sought
to be initiated or continued with the Company or any Stockholder.
Section 4.05 NOTICE TO BARGAINING AGENTS. Prior to the Closing Date, the
Company will (i) satisfy any requirement for notice of the transactions
contemplated by this Agreement under applicable collective bargaining agreements
and (ii) provide USC with proof that any required notice has been sent.
Section 4.06 NOTIFICATION OF CERTAIN MATTERS. The Stockholders and the
Company will give prompt notice to USC of (i) the existence or occurrence of
each condition or state of facts of which any of them become aware that will or
reasonably could be expected to cause any representation or warranty of the
Company or any Stockholder contained herein to be untrue or incorrect in any
material respect at or prior to the Closing or on the IPO Closing Date and (ii)
any material failure of any Stockholder or the Company to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by that
Person hereunder. USC will give prompt notice to the Company of (i) the
existence or occurrence of each condition or state of facts of which USC becomes
aware that will or reasonably could be expected to cause any representation or
warranty of USC or USC Sub contained herein to be untrue or inaccurate at or
prior to the Closing or on the IPO Closing Date and (ii) any material failure of
USC or USC Sub to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder. The delivery of any notice
pursuant to this Section 4.06 will not be deemed to (i) modify the
representations or warranties herein of the party delivering that notice, or any
other party, which modification may be made only pursuant to Section 4.07, (ii)
modify the conditions set forth or referred to in Article V or (iii) limit or
otherwise affect the remedies available hereunder to the party receiving that
notice.
Section 4.07 SUPPLEMENTAL INFORMATION. Each of the Company and
the Stockholders agrees that, with respect to the representations and warranties
of that party contained in this Agreement, that party will have the continuing
obligation (except to the extent Section 4.03 or 4.06 otherwise provides) until
the Closing to provide USC promptly with such additional supplemental
Information (collectively, the "Supplemental Information"), in the form of (i)
amendments to then existing Schedules or (ii) additional Schedules, as would be
necessary, in the light of the circumstances, conditions, events and states of
facts then known to the Company or any Stockholder, to make each of those
representations and warranties true and correct as of the Closing and on the IPO
Closing Date. For purposes only of determining whether the conditions to the
obligations of USC and USC Sub which are specified in Section 5.03 have been
satisfied, the Schedules as of the Closing Date will be deemed to be the
Schedules as of the date hereof as amended or supplemented by the Supplemental
Information provided to USC prior to the Closing pursuant to this Section 4.07;
provided, however, that if the Supplemental Information so provided discloses
the existence of circumstances, conditions, events or states of facts which, in
any combination thereof, (i) have had a Material Adverse Effect that was not
reflected in the determination of the Ceiling Amount or, in the sole judgment of
USC (which will be conclusive for
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purposes of this Section 4.07 and Article XI, but not for any purpose of Section
6.05 or Article VII), (ii) are having or will have a Material Adverse Effect,
USC will be entitled to terminate this Agreement pursuant to Section 11.01(iv);
and provided, further, that if USC is entitled to terminate this Agreement
pursuant to Section 11.01(iv), but elects not to do so, it will be entitled to
treat as USC Indemnified Losses or USC Unindemnified Losses (which treatment
will not prejudice the right of any Stockholder under Section 6.05 or Article
VII, as applicable, to contest Damage Claims made by USC in respect of those USC
Indemnified Losses or USC Unindemnified Losses), as applicable, all Damages to
the Acquired Business which are attributable to the circumstances, conditions,
events and states of facts first disclosed herein after the date hereof in the
Supplemental Information. USC will provide the Company with copies of the
Registration Statement, including all pre-effective amendments thereto, promptly
after the filing thereof with the SEC under the Securities Act.
Section 4.08 COOPERATION IN CONNECTION WITH THE IPO. The Company and the
Stockholders will (i) provide USC, the Underwriter and their respective
Representatives with all the Information concerning the Company or any of the
Stockholders which is reasonably requested by USC, the Underwriter or their
respective Representatives from time to time in connection with effecting the
IPO and (ii) cooperate with USC and the Underwriter and their respective
Representatives in the preparation and amendment of the Registration Statement
(including the Financial Statements) and in responding to the comments of the
SEC staff, if any, with respect thereto. The Company and each Stockholder agree
promptly to (i) advise USC and their legal counsel if, at any time during the
period in which a prospectus relating to the IPO is required to be delivered
under the Securities Act, any information contained in the then current
Registration Statement prospectus concerning the Company or the Stockholders
becomes incorrect or incomplete in any material respect and (ii) provide USC and
their legal counsel with the information needed to correct or complete that
information. Prior to the time the Registration Statement or any post-effective
amendment thereto becomes effective under the Securities Act, USC will provide
an opportunity to review and comment with respect to that document to one
counsel selected by a majority in number of the Founding Companies and
reasonably satisfactory to USC.
Section 4.09 ADDITIONAL FINANCIAL STATEMENTS. The Company will furnish to
USC:
(i) as soon as available and in any event within 30 days after
the end of each of the Company's fiscal quarters which ends prior to
the IPO Pricing Date, an unaudited balance sheet of the Acquired
Business as of the end of that fiscal quarter and the related
statements of income or operations, cash flows and stockholders' or
other owners' equity for that fiscal quarter and for the period of the
Acquired Business' fiscal year ended with that quarter, in each case
(A) setting forth in comparative form the figures for the
corresponding portion of the Acquired Business' previous fiscal year
and (B) prepared on the same combined, consolidated or other basis on
which the Initial Financial Statements were prepared in accordance
with GAAP applied on basis consistent (1) throughout the periods
indicated (excepting footnotes) and (2) with the basis on which the
Initial Financial Statements including the Current Balance Sheet were
prepared; and
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(ii) if requested by USC in connection with any amendment of the
Registration Statement and promptly following any such request, such
summary combined, consolidated or other operating or other financial
information of the Acquired Business as of the end of either the first
or second fiscal month in any of the Acquired Business' fiscal
quarters as USC may request.
Section 4.10 TERMINATION OF PLANS. If requested by USC, the Company will,
or will cause the applicable Company Subsidiary to, if permitted by all
applicable Governmental Requirements to do so, terminate each Plan Schedule 2.27
identifies as a "Plan To Be Terminated" prior to the Effective Time.
Section 4.11 DISPOSITION OF UNWANTED ASSETS. At or prior to the Closing,
the Company will make all arrangements and take all such actions as are
necessary and satisfactory to USC to dispose, prior to the Effective Time, of
those assets of it or of one or more of the Company Subsidiaries which Schedule
4.11 lists as unwanted assets.
Section 4.12 HSR ACT MATTERS. If USC determines that filings pursuant to
and under the HSR Act are necessary or appropriate in connection with the
effectuation of the Acquisition or the consummation of the acquisitions
contemplated by the Other Agreements, and advises the Company in writing of that
determination, the Company promptly will compile and file (or will cause its
"ultimate parent entity" (as determined for purposes of the HSR Act) to file)
under the HSR Act such information respecting it as the HSR Act requires of an
Entity to be acquired, and the expiration or termination of the applicable
waiting period and any extension thereof under the HSR Act will be deemed a
condition precedent Section 5.01(b) sets forth. USC will assist the Company in
its preparation of that information, if any.
ARTICLE V
THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION
Section 5.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. (a) The
obligation of each party hereto to take the actions contemplated to be taken by
that party at the Closing is subject to the satisfaction on or before the
Closing Date, or written waiver pursuant to Section 10.04, of each of the
following conditions:
(i) NO LITIGATION. No Litigation shall be pending on the Closing
Date to restrain, prohibit or otherwise interfere with, or to obtain
material damages or other relief from USC, any Subsidiary of USC, the
Company or any Company Subsidiary in connection with, the consummation
of the Acquisition or the IPO;
(ii) GOVERNMENTAL APPROVALS. All Governmental Approvals (other
than the acceptance for filing of the Certificates of Merger) required
to be obtained by any of the
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Company, USC and USC Sub in connection with the consummation of the
Acquisition and the IPO shall have been obtained; and
(iii) THE REGISTRATION STATEMENT. (A) The Registration Statement,
as amended to cover the offering, issuance and sale by USC of such
number of shares of USC Common Stock at the IPO Price (which need not
be set forth in the Registration Statement when it becomes effective
under the Securities Act) as shall yield aggregate cash proceeds to
USC from that sale (net of the Underwriter's discount or commissions)
in at least the amount (the "Minimum Cash Amount") that is sufficient,
when added to the funds, if any, available from other sources (if any,
and as set forth in the Registration Statement when it becomes
effective under the Securities Act) (the "Other Financing Sources") to
enable USC to pay or otherwise deliver on the IPO Closing Date (1) the
total cash portion of the Acquisition Consideration then to be
delivered pursuant to Paragraph 2, (2) the total cash portion of the
acquisition consideration then to be delivered pursuant to the Other
Agreements as a result of the consummation of the acquisition
transactions contemplated thereby and (3) the total amount of
Indebtedness of the Founding Companies and USC which the Registration
Statement discloses at the time it becomes effective under the
Securities Act will be repaid with proceeds received by USC from the
IPO and the Other Financing Sources, shall have been declared
effective under the Securities Act by the SEC; (B) no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC, and the SEC shall not have initiated or
threatened to initiate Litigation for that purpose; and (C) the
Underwriter shall have agreed in writing (the "Underwriting
Agreement," which term includes the related pricing agreement, if any)
to purchase from USC on a firm commitment basis for resale to the
public initially at the IPO Price, subject to the conditions set forth
in the Underwriting Agreement, such number of shares of USC Common
Stock covered by the Registration Statement as, when multiplied by the
price per share of USC Common Stock to be paid by the Underwriter to
USC pursuant to the Underwriting Agreement, equals at least the
Minimum Cash Amount.
(b) The obligation of each party hereto with respect to the actions to
be taken on the IPO Closing Date is subject to the satisfaction on that
date of each of the following conditions:
(i) NO LITIGATION. No Litigation shall be pending on the IPO
Closing Date to restrain, prohibit or otherwise interfere with, or to
obtain material damages or other relief from USC or any Subsidiary of
USC in connection with, the consummation of the Acquisition or the
IPO;
(ii) GOVERNMENTAL APPROVALS. All Governmental Approvals required
to be obtained by the Company, USC and USC Sub in connection with the
consummation of the Acquisition and the IPO shall have been obtained;
and
(iii) CLOSING OF THE IPO. USC shall have issued and sold shares
of USC Common Stock to the Underwriter in accordance with the
Underwriting Agreement for initial resale
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at the IPO Price and received payment therefor in an amount at least
equal to the amount by which (A) the Minimum Cash Amount exceeds (B)
the aggregate amount of funds actually received on the IPO Closing
Date, if any, from any one or more of the Other Financing Sources.
Section 5.02 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE
STOCKHOLDERS. (a) The obligations of the Company and each Stockholder with
respect to actions to be taken by them at or before the Closing are subject to
the satisfaction on or before the Closing Date, or the written waiver by the
Company on behalf of itself and each Stockholder pursuant to Section 10.04, of
(i) all the conditions Paragraph 5 and Section 5.01(a) set forth and (ii) all
the following conditions:
(A) REPRESENTATIONS AND WARRANTIES. All the representations and
warranties of USC in this Agreement shall be true and correct as of the
Closing as though made at that time;
(B) PERFORMANCE OF COVENANTS. USC and USC Sub shall have complied with
all their respective covenants in Article IV;
(C) DELIVERY OF DOCUMENTS. USC shall have delivered to the Company,
with copies for each Stockholder:
(1) a USC officer's certificate respecting the representations
and warranties of USC in this Agreement and compliance with the
covenants of USC and USC Sub in Article IV and in the form thereof
attached as an exhibit to the Closing Memorandum;
(2) an opinion dated the Closing Date and addressed to the
Company and the Stockholders from Counsel for USC and USC Sub
substantially in the form thereof attached as an exhibit to the
Closing Memorandum;
(3) a certificate of the secretary or any assistant secretary of
USC in the form thereof (without attachments thereto) attached as an
exhibit to the Closing Memorandum and respecting, and to which is
attached: (a) the Charter Documents of each of USC and USC Sub
(certified by the Secretary of State of the State of Delaware in the
case of its certificate of incorporation included therein); (b) the
resolutions of the boards of directors of USC and USC Sub respecting
the Transaction Documents and the transactions contemplated thereby;
(c) a certificate respecting the incumbency and true signatures of the
USC and USC Sub officers who execute the Transaction Documents on
behalf of USC and USC Sub, respectively; and (d) a specimen
certificate evidencing shares of USC Common Stock;
(4) the Registration Rights Agreement duly executed and delivered
by USC; and
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(5) for USC, a certificate, dated as of a Current Date, duly
issued by the appropriate Governmental Authorities in the State of
Delaware showing it to be in existence or good standing and authorized
to do business in that State; and
(D) INCENTIVE PLAN. The Incentive Plan the Private Placement
Memorandum describes shall be in full force and effect.
(b) The obligations of the Company and each Stockholder with
respect to the actions to be taken on the IPO Closing Date are subject
to the satisfaction on that date of (i) all the conditions Section
5.01(b) sets forth, (ii) the condition that all the representations
and warranties of USC in this Agreement shall be true and correct as
of the IPO Closing Date as though made on that date, (iii) the
condition that USC and USC Sub shall have complied with all their
respective covenants in Article IV, (iv) the condition Section
5.02(a)(ii)(D) sets forth, (v) the condition that USC shall have
delivered to the Company and each Stockholder a copy of (A) an opinion
from Counsel for USC and USC Sub dated the IPO Closing Date and
addressed to USC and providing the Stockholders may rely thereon,
respecting Section 351 of the Code and substantially in the form
thereof attached as an exhibit to the Closing Memorandum, and (B) a
certificate of USC in substantially the form thereof attached to the
form of opinion to which subclause (A) of this clause (v) refers and
(vi) all the conditions Paragraph 5 sets forth, if any.
Section 5.03 CONDITIONS TO THE OBLIGATIONS OF USC AND USC SUB. (a) The
obligations of USC and USC Sub with respect to actions to be taken by them at or
before the Closing are subject to the satisfaction on or before the Closing
Date, or the written waiver by USC pursuant to Section 10.04, of (i) all the
conditions Paragraph 5 and Section 5.01(a) set forth and (ii) all the following
conditions:
(A) REPRESENTATIONS AND WARRANTIES. All the representations and
warranties of the Stockholders and the Company in this Agreement shall
be true and correct as of the Closing as though made at that time;
(B) PERFORMANCE OF COVENANTS. The Company and the Stockholders
shall have complied with all their respective covenants in Article IV;
(C) DELIVERY OF DOCUMENTS. The Stockholders and the Company shall
have delivered to USC:
(1) a Company officer's certificate, signed by a Responsible
Officer, respecting the representations and warranties of the
Stockholders and the Company in this Agreement and compliance
with the covenants of the Stockholders and the Company in Article
IV and in the form thereof attached as an exhibit to the Closing
Memorandum;
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(2) an opinion dated the Closing Date and addressed to USC
from Counsel for the Company and the Stockholders substantially
in the form thereof attached as an exhibit to the Closing
Memorandum;
(3) a certificate of the secretary or any assistant
secretary of the Company in the form thereof (without attachments
thereto) attached as an exhibit to the Closing Memorandum and
respecting, and to which is attached, (a) the Charter Documents
of the Company; (b) the resolutions of the board of directors of
the Company respecting the Transaction Documents and the
transactions contemplated thereby; and (c) a certificate
respecting the incumbency and true signatures of the Responsible
Officers who execute the Transaction Documents on behalf of the
Company;
(4) from each Stockholder, a certificate to the effect that
no withholding is required under Section 1445 of the Code and in
the form thereof attached as an exhibit to the Closing
Memorandum, with the blanks appropriately filled, duly executed
and delivered by that Stockholder;
(5) From each officer and director of the Company and each
Company Subsidiary, if any, a notice of resignation in the form
thereof attached as an exhibit to the Closing Memorandum; and
(6) for each of the Company and the Company Subsidiaries, a
certificate, dated as of a Current Date, duly issued by the
appropriate Governmental Authorities in its Organization State
and, in each other jurisdiction Schedule 2.02 lists for it,
showing it to be in good standing and authorized to do business
in its Organization State and those other jurisdictions and that
all state franchise and/or income tax returns and taxes due by it
in its Organization State and those other jurisdictions for all
periods prior to the Closing have been filed and paid.
(b) The obligations of USC and USC Sub with respect to the actions to
be taken on the IPO Closing Date are subject to the satisfaction on that
date of (i) all the conditions Section 5.01(b) sets forth, (ii) the
condition that all the representations and warranties of the Stockholders
and the Company in this Agreement shall be true and correct as of the IPO
Closing Date as though made on that date, (iii) the condition that the
Company and the Stockholders shall have complied with all their respective
covenants in Article IV and (iv) the conditions Paragraph 5 sets forth, if
any.
ARTICLE VI
COVENANTS FOLLOWING THE EFFECTIVE TIME
Section 6.01 DISCLOSURE. If, subsequent to the IPO Pricing Date and prior
to the 25th day after the date of the Final Prospectus, any Stockholder becomes
aware of any fact or
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circumstance which would change (or, if after the Effective Time, would have
changed) in any material respect a representation or warranty of the Company or
any Stockholder in this Agreement or would affect any document delivered
pursuant hereto in any material respect, that Stockholder will promptly give
notice of that fact or circumstance to USC.
Section 6.02 PREPARATION AND FILING OF TAX RETURNS. After the Effective
Time, each party hereto will, and will cause its Affiliates to, provide to each
of the other parties hereto such cooperation and information as any of them
reasonably may request in filing any Return, amended Return or claim for refund,
determining a liability for Taxes or a right to refund of Taxes or in conducting
any audit or other proceeding in respect of Taxes. Subject to the last sentence
of this Section 6.02, this cooperation will be at the expense of the requesting
party. This cooperation and information shall include providing copies of all
relevant portions of the relevant Returns, together with such accompanying
schedules and work papers, documents relating to rulings or other determinations
by Taxing Authorities and records concerning the ownership and Tax bases of
property as are relevant which a party possesses. Each party will make its
employees, if any, reasonably available on a mutually convenient basis at its
cost to provide an explanation of any documents or information so provided.
Subject to the preceding sentence, each party required to file Returns pursuant
to this Agreement will bear all costs attributable to the preparation and filing
of those Returns. USC will not, directly or indirectly, take any action after
the Effective Time that would disqualify the Merger as an exchange under Section
351 of the Code.
Section 6.03 DIRECTORS. Effective on the IPO Closing Date, USC will cause
such corporate proceedings as on its part will be necessary to cause each of the
persons who are named in the Private Placement Memorandum as persons who will
become members of the board of directors of USC following the Effective Time
(other than any such person who, after the date of the Private Placement
Memorandum, declines to become a member of that board) to be initially appointed
to that board when the Private Placement Memorandum so provides.
Section 6.04 REMOVAL OF GUARANTIES. USC will use its reasonable efforts to
ensure that, within 90 days after the Effective Time, either (i) the Stockholder
Guaranties, if any, Schedule 6.04 lists are terminated or (ii) the Indebtedness
to which those Guaranties relate is retired; provided, however, that if USC is
unable to effect the termination of any of those Guaranties or the retirement of
any of that Indebtedness, USC will indemnify and hold harmless each Stockholder
from and against any liabilities, claims, demands, judgments, losses, costs,
damages or expenses whatsoever (including reasonable attorneys' fees) that
Stockholder may sustain, suffer or incur and result from or arise out of or
relate to that Guaranty or that Indebtedness, as the case may be.
Section 6.05 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. (a)
Notwithstanding any investigation at any time made by or on behalf of any party
hereto, the representations and warranties set forth in Articles I, II and III
and in any certificate delivered in connection herewith with respect to any of
those representations and warranties will survive the closing and the Effective
Time until the day that is two years from the Effective Time, whereupon they
will terminate and expire, except as follows: (i) the representations and
warranties of the Stockholders which relate expressly or by
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necessary implication to Taxes, ERISA or the Governmental Requirements referred
to in clause (iii) of Section 7.02(a) will survive until the expiration of the
applicable statutes of limitations (including all periods of extension and
tolling); (ii) the representations and warranties of the Stockholders which
relate expressly or by necessary implication to the environment or Environmental
Laws will survive for a period of four years from the Effective Time; and (iii)
the representations and warranties of the Company will terminate and expire at
the Effective Time.
(b) After a representation and warranty has expired, as Section
6.05(a) provides, no Damage Claim constituting a USC Indemnified Loss will
or may be made or prosecuted through Litigation or otherwise by any Person
who would have been entitled to Damages on the basis of that representation
and warranty prior to its termination and expiration, provided that: (i)
the amount of that claim, if against any Stockholder, will be taken into
account in determining whether the aggregate amount of all claims against
that Stockholder has exceeded that Stockholder's Pro Rata Share of the
Threshold Amount for purposes of Section 6.06; and (ii) in the case of each
representation and warranty that will terminate and expire as this Section
6.05 provides, no Damage Claim presented in writing for Damages to the
Person or Persons from which or whom those damages are sought on the basis
of that representation and warranty prior to its termination and expiration
will be affected in any way by that termination and expiration.
Section 6.06 LIMITATIONS ON DAMAGE CLAIMS. (a) If USC should have any
Damage Claim hereunder following the Effective Time against any Stockholder
which does not involve a USC Indemnified Loss (each such Damage Claim not
involving a USC Indemnified Loss being an "USC Unindemnified Loss"), that
Stockholder will not be liable to USC on account of that USC Unindemnified Loss
unless the liability of that Stockholder in respect of that USC Unindemnified
Loss, when aggregated with the liability of all Stockholders in respect of the
sum of (i) all USC Unindemnified Losses and (ii) all USC Indemnified Losses
under Section 7.02(a), exceeds, and only to the extent the aggregate amount of
all those USC Unindemnified Losses and USC Indemnified Losses does exceed, the
Threshold Amount. In no event will (i) the aggregate joint and several liability
of the Stockholders under this Agreement, including Section 7.02(a), exceed the
Ceiling Amount or (ii) the aggregate liability of each Stockholder under this
Agreement, including Sections 7.02(a) and 7.02(b), exceed that Stockholder's Pro
Rata Share of the Ceiling Amount. For purposes of determining the amount of USC
Unindemnified Losses and USC Indemnified Losses, no effect will be given to any
resulting Tax benefit to USC or any other USC Indemnified Party.
(b) If any Stockholder should have any Damage Claim hereunder
following the Effective Time against USC which does not involve a
Stockholder Indemnified Loss (each such Damage Claim not involving a
Stockholder Indemnified Loss being a "Stockholder Unindemnified Loss"), USC
will not be liable to that Stockholder on account of that Stockholder
Unindemnified Loss unless the liability of USC on account of that
Stockholder Unindemnified Loss, when aggregated with the liability of USC
in respect of the sum of (i) all Stockholder Unindemnified Losses for which
it has become liable and (ii) all Stockholder Indemnified Losses for which
it has become liable, exceeds, and only to the extent the aggregate amount
of all those Stockholder Unindemnified Losses and Stockholder Indemnified
Losses does exceed, the Threshold Amount.
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In no event will USC be liable under this Agreement, including Section
7.03, for any amount in excess of the Ceiling Amount. For purposes of
determining the amount of Stockholder Unindemnified Losses and Stockholder
Indemnified Losses, no effect will be given to any resulting Tax benefit to
any Stockholder Indemnified Party.
(c) Neither any USC Unindemnified Loss nor any Stockholder
Unindemnified Loss will include any consequential, exemplary, punitive or
treble damage (including any loss of earnings or profits), and USC hereby
releases each Stockholder, and each Stockholder hereby releases USC, in
each case to the fullest extent applicable law permits, from liability for
any such excluded Damage.
Section 6.07 WORKING CAPITAL ADJUSTMENT. (a) This Section 6.07 uses the
following terms with the meanings it assigns to them below:
"Adjustment Determination Date" means the date that is 30 days
following delivery by USC of the Post-closing Statement to the
Stockholders, unless the Independent Accountants determine any
Computed Amount pursuant to Section 6.07(b), in which event the
Adjustment Determination Date is the date the Independent Accountants
deliver each determination in writing to USC.
"Current Balance Sheet Date Adjusted Working Capital" means the
amount by which (i) the Current Balance Sheet Date Working Capital
exceeds (ii) the sum of (A) the Current Balance Sheet Excess Cash and
(B) the 1998 Restricted Payment Amount.
"Current Balance Sheet Excess Cash" means, as determined from the
Current Balance Sheet, the amount by which (i) the total amount that
is included and classified as current assets comprised of unrestricted
cash and cash equivalents on that balance sheet exceeds (ii) the
Minimum Cash Balance.
"Computed Amount" means any of the following: (i) the Cash
Balance; (ii) the Final Cash Balance; (iii) the Final Working Capital;
(iv) the 1999 Permitted Restricted Payment Amount; (v) the Negative
Net Adjustment; and (vi) the Positive Net Adjustment.
"Final Balance Sheet" means a balance sheet of the Acquired
Business as of the effective date USC uses to record the Acquisition
in accordance with GAAP and which is prepared in accordance with GAAP
on the same basis on which the Current Balance Sheet was prepared.
"Final Cash Balance" means, as determined from the Final Balance
Sheet, the total amount that is included and classified as current
assets comprised of unrestricted cash and cash equivalents on that
balance sheet.
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"Final Excess Cash" means the lesser of (i) the Current Balance
Sheet Excess Cash or (ii) the amount, if any, by which the Final Cash
Balance exceeds the Minimum Cash Balance.
"Final Working Capital" means, as determined from the Final
Balance Sheet, the amount by which (i) the sum, without duplication of
amounts, of all amounts that are included and classified as current
assets on that balance sheet exceeds, or is exceeded by, (ii) the sum,
without duplication of amounts, of all amounts that are included and
classified as liabilities or as mandatorily redeemable Capital Stock
on that balance sheet; provided, that if the Independent Accountants
make the determination of any Computed Amount pursuant to Section
6.07(b), the amount equal to 50% of their fees and expenses which are
attributable to their audit of the Final Balance Sheet and their
making of that determination will be deemed a liability of the
Acquired Business for the purpose of determining its Final Working
Capital; and provided, further, that if at any time those current
assets are exceeded by those liabilities and that Capital Stock, Final
Working Capital will be expressed as a negative amount
"Negative Net Adjustment" means: (i) if the Current Balance Sheet
Date Adjusted Working Capital is a positive amount, the amount, if
any, by which the Current Balance Sheet Date Adjusted Working Capital
exceeds the Final Working Capital; and (ii) if the Current Balance
Sheet Date Adjusted Working Capital is a negative amount, the amount,
if any, by which the Final Working Capital is more negative than the
Current Balance Sheet Date Adjusted Working Capital.
"1999 Restricted Payment Amount" means, if the Company is subject
to Subchapter S of the Code, the amount equal to the amount the
Company records as income for the period beginning on January 1, 1999
and ending on the day preceding the IPO Closing Date in its
accumulated adjustments account in accordance with the applicable
provisions of the Code.
"Positive Net Adjustment" means, if the Current Balance Sheet
Date Adjusted Working Capital is (i) a positive amount and the Final
Working Capital is the same as or greater than that positive amount or
(ii) a negative amount and the Final Working Capital is the same as or
less negative than that negative amount, the lesser of the Current
Balance Sheet Excess Cash or the Final Excess Cash.
(b) As soon as practicable and in any event within 75 days after the
Effective Date, USC will cause to be prepared in writing and delivered to
the Stockholders (i) the Final Balance Sheet and (ii) a statement (the
"Post-closing Statement") setting forth each Computed Amount. The Final
Balance Sheet and the Post-closing Statement will be final and binding on
USC and the Stockholders unless, within 30 days following the delivery of
the Post-closing Statement, any Stockholder notifies USC in writing that
that Stockholder does not accept as correct one or more of the Computed
Amounts the Post-closing Statement sets forth. If any Stockholder timely
delivers
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that notice respecting the Post-closing Statement, the Independent
Accountants will audit the Final Balance Sheet and determine each Computed
Amount from that audited balance sheet within 30 days after the delivery to
USC of that notice, and these determinations will be final and binding on
USC and each Stockholder. If a Negative Net Adjustment is determined with
finality pursuant to this Section 6.07(b), each Stockholder will, no later
than 10 Houston, Texas business days after USC makes a written request
therefor, pay in cash that Stockholder's Pro Rata Share of that Negative
Net Adjustment, and if a Positive Net Adjustment is determined with
finality pursuant to this Section 6.07(b), USC will, no later than 10
Houston, Texas business days after that determination, pay in cash to each
Stockholder that Stockholder's Pro Rata Share of that Positive Net
Adjustment, together, in the case of any amount payable by the Stockholders
or USC pursuant to this Section 6.07(b), with interest on that sum at 8%
per annum from (and including) the Effective Date to (but excluding) the
Adjustment Determination Date.
ARTICLE VII
INDEMNIFICATION
Section 7.01 IN RESPECT OF REPRESENTATIONS AND WARRANTIES. After a
representation and warranty has terminated and expired as Section 6.05 provides,
no indemnification will or may be sought pursuant to this Article VII on the
basis of that representation and warranty by any Person who would have been
entitled pursuant to this Article VII to indemnification on the basis of that
representation and warranty prior to its termination and expiration, provided
that, in the case of each representation and warranty that will terminate and
expire as Section 6.05 provides, no claim presented in writing for
indemnification pursuant to this Article VII on the basis of that representation
and warranty prior to its termination and expiration will be affected in any way
by that termination and expiration.
Section 7.02 INDEMNIFICATION OF USC INDEMNIFIED PARTIES. (a) Subject to the
applicable provisions of Sections 7.01 and 7.06, the Stockholders covenant and
agree that they, jointly and severally, will indemnify each USC Indemnified
Party against, and hold each USC Indemnified Party harmless from and in respect
of, all Third Party Claims that arise from, are based on or relate or otherwise
are attributable to (i) any breach of the representations and warranties of the
Stockholders or the Company set forth herein (other than in Article I) or in
certificates delivered in connection herewith (other than in respect of
certificates relating only to the representations and warranties in Article I),
(ii) any nonfulfillment of any covenant or agreement on the part of the
Stockholders or the Company under this Agreement or (iii) any liability under
the Securities Act, the Exchange Act or other applicable Governmental
Requirement which arises out of or is based on (A) any untrue statement or
alleged untrue statement of a material fact relating to the Company and the
Company Subsidiaries, or any of them, which is both (1) provided to USC or its
counsel by the Company or the Stockholders in writing and (2) contained in any
preliminary prospectus relating to the IPO, the Registration Statement or any
prospectus forming a part thereof, or any amendment thereof or supplement
thereto, or (B) any omission or alleged omission to state therein a material
fact relating to the Company and the Company Subsidiaries, or any of them,
required to be stated therein
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or necessary to make the statements therein not misleading, and not provided to
USC or its counsel by the Company or the Stockholders in writing (each such
Third Party Claim and each Third Party Claim Section 7.02(b) describes being an
"USC Indemnified Loss").
(b) Each Stockholder, severally and not jointly with any other Person,
covenants and agrees that he will indemnify each USC Indemnified Party
against, and hold each USC Indemnified Party harmless from and in respect
of, all Third Party Claims that arise from, are based on or relate or
otherwise are attributable to (i) any breach of the representations and
warranties of that Stockholder solely as to that Stockholder set forth in
Article I or in certificates delivered by that Stockholder and relating to
those representations and warranties, (ii) any nonfulfillment of any
several, and not joint and several, agreement on the part of that
Stockholder under this Agreement or (iii) any liability under the
Securities Act, the Exchange Act or other applicable Governmental
Requirement which arises out of or is based on (A) any untrue statement or
alleged untrue statement of a material fact relating solely to that
Stockholder which is both (1) provided to USC or its counsel by that
Stockholder in writing and (2) contained in any preliminary prospectus
relating to the IPO, the Registration Statement or any prospectus forming a
part thereof, or any amendment thereof or supplement thereto, or (B) any
omission or alleged omission to state therein a material fact relating
solely to that Stockholder required to be stated therein or necessary to
make the statements therein not misleading, and not provided to USC or its
counsel by that Stockholder in writing.
Section 7.03 INDEMNIFICATION OF STOCKHOLDER INDEMNIFIED PARTIES. USC
covenants and agrees that it will indemnify each Stockholder Indemnified Party
against, and hold each Stockholder Indemnified Party harmless from and in
respect of, all Third Party Claims that arise from, are based on or relate or
otherwise are attributable to (i) any breach by USC of its representations and
warranties set forth herein or in its certificates delivered to the Company or
the Stockholders in connection herewith, (ii) any nonfulfillment of any covenant
or agreement on the part of USC or USC Sub under this Agreement or (iii) any
liability under the Securities Act, the Exchange Act or other applicable
Governmental Requirement which arises out of or is based on (A) any untrue
statement or alleged untrue statement of a material fact relating to USC or any
Subsidiary of USC contained in any preliminary prospectus relating to the IPO,
the Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or (B) any omission or alleged omission
to state therein a material fact relating to USC or any Subsidiary of USC
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made (each
such Third Party Claim being a "Stockholder Indemnified Loss").
Section 7.04 CONDITIONS OF INDEMNIFICATION. (a) All claims for
indemnification under this Agreement shall be asserted and resolved as this
Section 7.04 provides.
(b) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the party from whom
indemnification is sought (the "Indemnifying Party") of any Third Party
Claim asserted against the Indemnified Party which could give rise to a
right of indemnification under this Agreement and (ii) transmit to the
Indemnifying Party a written
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notice (a "Claim Notice") describing in reasonable detail the nature of the
Third Party Claim, a copy of all papers served with respect to that claim
(if any), an estimate of the amount of damages attributable to that claim
to the extent feasible (which estimate will not be conclusive of the final
amount of that claim) and the basis for the Indemnified Party's request for
indemnification under this Agreement. Except as Section 7.01 sets forth,
the failure to promptly deliver a Claim Notice will not relieve the
Indemnifying Party of its obligations to the Indemnified Party with respect
to the related Third Party Claim except to the extent that the resulting
delay is materially prejudicial to the defense of that claim. Within 30
days after receipt of any Claim Notice (the "Election Period"), the
Indemnifying Party must notify the Indemnified Party (i) whether the
Indemnifying Party disputes its potential liability to the Indemnified
Party under this Article VII with respect to that Third Party Claim and
(ii) if the Indemnifying Party does not dispute its potential liability to
the Indemnified Party with respect to that Third Party Claim, whether the
Indemnifying Party desires, at the sole cost and expense of the
Indemnifying Party, to defend the Indemnified Party against that Third
Party Claim.
(c) If the Indemnifying Party does not dispute its potential liability
to the Indemnified Party and notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of
the Third Party Claim, then the Indemnifying Party will have the right to
defend, at its sole cost and expense, that Third Party Claim by all
appropriate proceedings, which proceedings the Indemnifying Party must
prosecute diligently to a final conclusion or settle at its discretion in
accordance with this Section 7.04(c), and the Indemnified Party will
furnish the Indemnifying Party with all information in its possession with
respect to that Third Party Claim and otherwise cooperate with the
Indemnifying Party in the defense of that Third Party Claim; provided,
however, that the Indemnifying Party will not enter into any settlement
with respect to any Third Party Claim that purports to limit the activities
of, or otherwise restrict in any way, any Indemnified Party or any
Affiliate of any Indemnified Party without the prior consent of that
Indemnified Party (which consent may be withheld in the reasonable
discretion of that Indemnified Party). The Indemnified Party is hereby
authorized, at the sole cost and expense of the Indemnifying Party, to
file, during the Election Period, any motion, answer or other pleadings
that the Indemnified Party deems necessary or appropriate to protect its
interests or those of the Indemnifying Party. The Indemnified Party may
participate in, but not control, any defense or settlement of any Third
Party Claim the Indemnifying Party controls pursuant to this Section
7.04(c) and will bear its own costs and expenses with respect to that
participation; provided, however, that if the named parties to any such
action (including any impleaded parties) include both the Indemnifying
Party and the Indemnified Party, and the Indemnified Party has been advised
by counsel that there may be one or more legal defenses available to it
which are different from or additional to those available to the
Indemnifying Party, then the Indemnified Party may employ separate counsel
at the expense of the Indemnifying Party, and, on its written notification
of that employment, the Indemnifying Party will not have the right to
assume or continue the defense of that action on behalf of the Indemnified
Party.
(d) If the Indemnifying Party (i) within the Election Period (A)
disputes its potential liability to the Indemnified Party under this
Article VII, (B) elects not to defend the
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Indemnified Party pursuant to Section 7.04(c) or (C) fails to notify
the Indemnified Party that the Indemnifying Party elects to defend the
Indemnified Party pursuant to Section 7.04(c) or (ii) elects to defend the
Indemnified Party pursuant to Section 7.04(c), but fails diligently and
promptly to prosecute or settle the Third Party Claim, then the Indemnified
Party will have the right to defend, at the sole cost and expense of the
Indemnifying Party (if the Indemnified Party is entitled to indemnification
hereunder), the Third Party Claim by all appropriate proceedings, which
proceedings the Indemnified Party must promptly and vigorously prosecute to
a final conclusion or settlement, provided that the Indemnified Party will
not enter into any such settlement without the prior consent of the
Indemnifying Party (which consent may not be unreasonably withheld)
(provided that the Indemnifying Party shall be deemed to have consented to
that settlement if the Indemnifying Party has not objected within five
Houston, Texas business days after the Indemnified Party has provided the
Indemnifying Party with a written notice setting forth the proposed terms
of the settlement in reasonable detail). The Indemnified Party will have
full control of such defense and proceedings. Notwithstanding the
foregoing, if the Indemnifying Party has delivered a written notice to the
Indemnified Party to the effect that the Indemnifying Party disputes its
potential liability to the Indemnified Party under this Article VII and if
that dispute is resolved in favor of the Indemnifying Party, the
Indemnifying Party will not be required to bear the costs and expenses of
the Indemnified Party's defense pursuant to this Section 7.04 or of the
Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party will reimburse the Indemnifying Party in
full for all reasonable costs and expenses of that litigation. The
Indemnifying Party may participate in, but not control, any defense or
settlement the Indemnified Party controls pursuant to this Section 7.04(d),
and the Indemnifying Party will bear its own costs and expenses with
respect to that participation.
(e) Payments of all amounts owing by an Indemnifying Party pursuant to
this Article VII relating to a Third Party Claim will be made within 30
days after the latest of (i) the settlement of that Third Party Claim, (ii)
the expiration of the period for appeal of a final adjudication of that
Third Party Claim or (iii) the expiration of the period for appeal of a
final adjudication of the Indemnifying Party's liability to the Indemnified
Party under this Agreement in respect of that Third Party Claim.
(f) If any Stockholder has any indemnification obligation to USC that
becomes payable under Section 7.04(e) during the Restricted Period, that
Stockholder may, with the written consent of USC (which shall not be
unreasonably withheld) and within the payment period Section 7.04(e)
prescribes, satisfy that obligation by transferring to USC such number of
shares of USC Common Stock owned by that Stockholder as have an aggregate
fair market value that most nearly approximates, but does not exceed, the
amount of that obligation, provided that each of the following conditions
is satisfied:
(i) USC shall receive good, valid and marketable title to all the
shares so transferred free of all Liens;
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(ii) that Stockholder shall have made such representations and
warranties as to the title to the shares so transferred and the
absence of Liens thereon as USC shall have reasonably requested;
(iii) the certificate or certificates representing USC Common
Stock delivered by that Stockholder in satisfaction of his obligation
shall be duly endorsed in blank, or shall be accompanied by stock
powers in blank duly executed, by that Stockholder and shall have all
necessary transfer tax and other revenue stamps, acquired at that
Stockholder's expense, affixed and cancelled; and
(iv) the other terms and conditions of that transfer, including
any accounting, legal or tax consequences, shall be reasonably
satisfactory to USC.
For purposes of this Section 7.04(f), the fair market value of a share of USC
Common Stock will be the IPO Price (as adjusted, as appropriate, to give effect
to each of the following effected after the IPO Closing Date: any subdivision or
combination of outstanding shares of USC Common Stock, declaration by USC of a
dividend payable in shares of USC Common Stock or capital reorganization or
reclassification or other transaction involving an increase or reduction in the
number of outstanding shares of USC Common Stock).
Section 7.05 REMEDIES NOT EXCLUSIVE. The remedies this Agreement provides
will not be exclusive of any other rights or remedies available to one party
against any other party, either at law or in equity.
Section 7.06 LIMITATIONS ON INDEMNIFICATION. (a) Notwithstanding the
provisions of Section 7.02(a), no Stockholder will be required to indemnify or
hold harmless any of the USC Indemnified Parties on account of any USC
Indemnified Loss under Section 7.02(a) unless the liability of the Company and
the Stockholders in respect of that USC Indemnified Loss, when aggregated with
the liability of all Stockholders in respect of the sum of (i) all USC
Unindemnified Losses and (ii) all USC Indemnified Losses under Section 7.02(a),
exceeds, and only to the extent the aggregate amount of all those USC
Unindemnified Losses and USC Indemnified Losses does exceed, the Threshold
Amount. In no event will (i) the aggregate joint and several liability of the
Stockholders under this Agreement, including Section 7.02(a), exceed the Ceiling
Amount or (ii) the aggregate liability of each Stockholder under this Agreement,
including Sections 7.02(a) and 7.02(b), at any time exceed the amount by which
(A) that Stockholder's Pro Rata Share of the Ceiling Amount exceeds (B) that
Stockholder's Accrued Tax Liability at that time. "Accrued Tax Liability" means,
with respect to any Stockholder at any time, the total federal income tax
liability of that Stockholder which is attributable to the capital gain income
that Stockholder previously has recognized, or will recognize in the taxable
period including that time, in respect of the Acquisition Consideration that
Stockholder has received pursuant to Paragraph 2 and Section 6.07; provided,
that the capital gain attributable to any taxable disposition of any share of
USC Common Stock which that Acquisition Consideration includes will be
determined for purposes of this definition as if that Stockholder had sold that
share at the IPO Price (as adjusted, as appropriate, to give effect to each
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of the following effected after the IPO Closing Date: any subdivision or
combination of outstanding shares of USC Common Stock, declaration by USC of a
dividend payable in shares of USC Common Stock or capital reorganization or
reclassification of outstanding shares of USC Common Stock). For purposes of
determining the amount any USC Indemnified Loss, the gross amount thereof will
be reduced by (i) any correlative Tax benefit the applicable USC Indemnified
Party actually realizes in the Tax year in which that determination is made, as
reflected in any Return that USC Indemnified Party files with respect to that
year, and (ii) any correlative insurance proceeds the applicable USC Indemnified
Party actually receives, net of any insurance premium (or increase in
premium)that becomes due as a result of the claim that results in the payment of
those proceeds.
(b) Notwithstanding the provisions of Section 7.03, USC will not be
required to indemnify or hold harmless any of the Stockholder Indemnified
Parties on account of any Stockholder Indemnified Loss unless the liability
of USC in respect of that Stockholder Indemnified Loss, when aggregated
with the liability of USC in respect of the sum of (i) all Stockholder
Unindemnified Losses and (ii) all Stockholder Indemnified Losses, exceeds,
and only to the extent the aggregate amount of all those Stockholder
Unindemnified Losses and Stockholder Indemnified Losses does exceed, the
Threshold Amount. In no event will USC be liable under this Agreement,
including Section 7.03, for any amount in excess of the Ceiling Amount. For
purposes of determining the amount any Stockholder Indemnified Loss, the
gross amount thereof will be reduced by (i) any correlative Tax benefit the
applicable Stockholder Indemnified Party actually realizes in the Tax year
in which that determination is made, as reflected in any Return that
Stockholder Indemnified Party files with respect to that year, and (ii) any
correlative insurance proceeds the applicable Stockholder Indemnified Party
actually receives, net of any insurance premium (or increase in premium)
that becomes due as a result of the claim that results in the payment of
those proceeds.
ARTICLE VIII
LIMITATIONS ON COMPETITION
Section 8.01 PROHIBITED ACTIVITIES. Each Stockholder agrees, severally and
not jointly with any other Person, that he will not, during the period beginning
on the date hereof and ending on the fifth anniversary of the IPO Closing Date,
directly or indirectly, for any reason, for his own account or on behalf of or
together with any other Person:
(i) engage as an officer, director or in any other managerial
capacity or as an owner, co-owner or other investor of or in, whether
as an employee, independent contractor, consultant or advisor, or as a
sales representative, dealer or distributor of any kind, in any
business selling any products or providing any services in competition
with the Acquired Business, USC or any Subsidiary of USC (all these
entities collectively being "USC" for purposes of this Article VIII)
within any Territory surrounding any plant or other operating facility
in which the Acquired Business was engaged in business on the date
hereof or immediately prior to the Effective Date (for purposes of
this Article VIII, the "Territory"
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surrounding any plant or other operating facility will be: (A) the
city, town or village in which that plant or facility is located, (B)
the county or parish in which that plant or facility is located, (C)
the counties or parishes contiguous to the county or parish in which
that plant or facility is located, (D) the area located within 50
miles of that plant or facility, (E) the area located within 100 miles
of that plant or facility and (F) the area in which that plant or
facility regularly provides products or services at the locations of
its customers);
(ii) call on or otherwise solicit any natural person who is at
that time employed by USC in any managerial capacity with the purpose
or intent of attracting that person from the employ of USC;
(iii) call on, solicit or perform services for, either directly
or indirectly, any Person that at that time is, or at any time within
two years prior to that time was, a customer of USC within any
Territory, (A) for the purpose of soliciting or selling any product or
service in competition with USC within that Territory and (B) with the
knowledge of that customer relationship; or
(iv) call on or otherwise solicit any USC Acquisition Candidate,
with the knowledge of that Entity's status as a USC Acquisition
Candidate, for the purpose of acquiring that Entity or arranging the
acquisition of that Entity by any Person other than USC.
Notwithstanding the foregoing, any Stockholder may own and hold as a passive
investment up to 5% of the outstanding capital stock of a competing Entity if
that class of capital stock is listed on a national stock exchange or included
in the Nasdaq National Market.
Section 8.02 DAMAGES. Because of (i) the difficulty of measuring economic
losses to USC as a result of any breach by a Stockholder of his covenants in
Section 8.01 and (ii) the immediate and irreparable damage that could be caused
to USC for which it would have no other adequate remedy, each Stockholder agrees
that USC may enforce the provisions of Section 8.01 by injunctions and
restraining orders against that Stockholder if he breaches any of those
provisions.
Section 8.03 REASONABLE RESTRAINT. The parties hereto each agree that
Sections 8.01 and 8.02 impose a reasonable restraint on the Stockholders in
light of the activities and business of USC on the date hereof, the current
business plans of USC and the investment by each Stockholder in USC as a result
of the Acquisition.
Section 8.04 SEVERABILITY; REFORMATION. The covenants in this Article VIII
are severable and separate, and the unenforceability of any specific covenant in
this Article VIII is not intended by any party hereto to, and will not, affect
the provisions of any other covenant in this Article VIII. If any court of
competent jurisdiction determines that the scope, time or territorial
restrictions Section 8.01 sets forth are unreasonable as applied to any
Stockholder, the parties hereto, including that Stockholder, acknowledge their
mutual intention and agreement that those restrictions
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be enforced to the fullest extent the court deems reasonable, and thereby will
be reformed to that extent as applied to that Stockholder and any other
Stockholder similarly situated.
Section 8.05 INDEPENDENT COVENANT. All the covenants in this Article VIII
are intended by each party hereto to, and will, be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of any Stockholder against USC, whether predicated on
this Agreement or otherwise, will not constitute a defense to the enforcement by
USC of any covenant in this Article VIII. It is specifically agreed that the
time period Section 8.01 specifies will be computed in the case of each
Stockholder by excluding from that computation any time during which that
Stockholder is in violation of any provision of Section 8.01. The covenants this
Article VIII contains will not be affected by any breach of any other provision
hereof by any party hereto.
Section 8.06 MATERIALITY. The Company and each Stockholder, severally and
not jointly with any other Person, hereby agree that this Article VIII is a
material and substantial part of the transactions this Agreement contemplates.
ARTICLE IX
ADDITIONAL DEFINITIONS AND DEFINITIONAL PROVISIONS
Section 9.01 DEFINED TERMS. The following terms this Agreement uses have
the meanings this Section 9.01 assigns to them.
"AA Account Balance" means as of any date, if the Company is subject
to the pass-through tax provisions of subchapter S of the Code for any
period ending on or immediately prior to that date, the amount then
recorded in the accumulated adjustments account of the Company in
accordance with the applicable provisions of the Code.
"Acquired Business" has the meaning Paragraph 1 specifies.
"Acquisition" has the meaning Paragraph 1 specifies.
"Acquisition Consideration" has the meaning Paragraph 2 specifies.
"Acquisition Proposal" has the meaning Section 4.04 specifies.
"Adjustment Determination Date" has the meaning Section 6.07
specifies.
"Affiliate" means, as to any specified Person, any other Person that,
directly or indirectly through one or more intermediaries or
otherwise, controls, is controlled by or is under common control with
the specified Person. As used in this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause
the direction of the
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management or policies of a Person (whether through ownership of
Capital Stock of that Person, by contract or otherwise).
"Agreement" means this Agreement, including all attached Schedules,
Annexes, Addenda and Exhibits, as each of the same may be amended,
modified or supplemented from time to time pursuant to the provisions
hereof or thereof.
"Capital Stock" means, with respect to: (i) any corporation, any
share, or any depositary receipt or other certificate representing any
share, of an equity ownership interest in that corporation; and (ii)
any other Entity, any share, membership or other percentage interest,
unit of participation or other equivalent (however designated) of an
equity interest in that Entity.
"Cash Compensation" means, as applied to any employee, nonemployee
director or officer of, or any natural person who performs consulting
or other independent contractor services for, the Company or any
Company Subsidiary, the wages, salaries, bonuses (discretionary and
formula), fees and other cash compensation paid or payable by the
Company and each Company Subsidiary to that employee or other natural
person.
"Ceiling Amount" has the meaning Paragraph 1 specifies.
"Certificate of Merger" means, if USC effects the Acquisition by means
of a Merger, (i) the articles or certificate of merger respecting that
Merger which contains the information required by the laws of
Surviving Corporation's Organization State to effect that Merger and,
if the Organization State of any Entity merged into the Surviving
Corporation in that Merger is not the Organization State of the
Surviving Corporation, (ii) the articles or certificate of merger
respecting that Merger which contains the information required by the
laws of that merged Entity's Organization State to effect that Merger.
"CERCLA" means the Comprehensive Environmental Response, Conservation,
and Liability Act of 1980.
"Charter Documents" means, with respect to any Entity at any time, in
each case as amended, modified and supplemented at that time, (i) the
articles or certificate of formation, incorporation or organization
(or the equivalent organizational documents) of that Entity, (ii) the
bylaws or limited liability company agreement or regulations (or the
equivalent governing documents) of that Entity and (iii) each document
setting forth the designation, amount and relative rights, limitations
and preferences of any class or series of that Entity's Capital Stock
or of any rights in respect of that Entity's Capital Stock.
"Claim Notice" has the meaning Section 7.04 specifies.
"Closing" has the meaning Paragraph 3 specifies.
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"Closing Date" has the meaning Paragraph 1 specifies.
"Closing Memorandum" means the closing memorandum attached as an
Exhibit to this Agreement.
"Code" means the Internal Revenue Code of 1986.
"Company" has the meaning Paragraph 1 specifies.
"Company Capital Stock" has the meaning Paragraph 1 specifies.
"Combined Companies" has the meaning Paragraph 1 specifies.
"Company Commitment" has the meaning Section 2.23 specifies.
"Company ERISA Benefit Plan" has the meaning Section 2.27 specifies.
"Company ERISA Pension Plan" has the meaning Section 2.27 specifies.
"Company Subsidiary" means at any time any Entity that is a Subsidiary
of the Company at that time.
"Confidential Information" means, with respect to any Person, all
trade secrets and other confidential, nonpublic and/or proprietary
information of that Person, including information derived from
reports, investigations, research, work in progress, codes, marketing
and sales programs, capital expenditure projects, cost summaries,
pricing formulae, contract analyses, financial information,
projections, confidential filings with any Governmental Authority and
all other confidential, nonpublic concepts, methods of doing business,
ideas, materials or information prepared or performed for, by or on
behalf of that Person.
"Current Balance Sheet" has the meaning Paragraph 1 specifies.
"Current Balance Sheet Date" has the meaning Paragraph 1 specifies.
"Current Balance Sheet Date Working Capital" has the meaning Paragraph
1 specifies.
"Current Date" means any day during the 20-day period ending on the
Closing Date.
"Damage" to any specified Person means, except as Section 6.06(c)
otherwise provides, any cost, damage (including any consequential,
exemplary, punitive or treble damage) or expense (including reasonable
fees and actual disbursements by attorneys,
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consultants, experts or other Representatives and Litigation costs)
to, any fine of or penalty on or any liability (including loss of
earnings or profits) of any other nature of that Person.
"Damage Claim" means, as asserted (i) against any specified Person,
any claim, demand or Litigation made or pending against the specified
Person for Damages to any other Person, or (ii) by the specified
Person, any claim or demand of the specified Person against any other
Person for Damages to the specified Person.
"DGCL" means the General Corporation Law of the State of Delaware.
"Derivative Securities" of a specified Entity means any Capital Stock,
debt security or other Indebtedness of the specified Entity or any
other Person which is convertible into or exchangeable for, or any
option, warrant or other right to acquire, (i) any unissued Capital
Stock of the specified Entity or (ii) any Capital Stock of the
specified Entity which has been issued and is being held by the Entity
directly or indirectly as treasury Capital Stock.
"Effective Time" has the meaning Paragraph 2 specifies.
"Election Period" has the meaning Section 7.04 specifies.
"Employee Policies and Procedures" means at any time all employee
manuals and all material policies, procedures and work-related rules
that apply at that time to any employee, nonemployee director or
officer of, or any other natural person performing consulting or other
independent contractor services for, the Company or any Company
Subsidiary.
"Employment Agreement" means at any time any (i) agreement to which
the Company or any Company Subsidiary is a party which then relates to
the direct or indirect employment or engagement, or arises from the
past employment or engagement, of any natural person by the Company or
any Company Subsidiary, whether as an employee, a nonemployee officer
or director, a consultant or other independent contractor, a sales
representative or a distributor of any kind, including any employee
leasing or service agreement and any noncompetition agreement, and
(ii) agreement between the Company or any Company Subsidiary and any
Person which arises from the sale of a business by that Person to the
Company or any Company Subsidiary and limits that Person's competition
with the Company or any Company Subsidiary.
"Entity" means any sole proprietorship, corporation, partnership of
any kind having a separate legal status, limited liability company,
business trust, unincorporated organization or association, mutual
company, joint stock company or joint venture.
"Environmental Laws" means any and all Governmental Requirements
relating to the environment or public or worker health or safety,
including ambient air, surface water
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(including water management and runoff), land surface or subsurface
strata, or to emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes (including Solid Wastes, Hazardous
Wastes or Hazardous Substances) or noxious noise or odor into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, recycling, removal,
transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes (including
petroleum, petroleum distillates, asbestos or asbestos-containing
material, volatile organic compounds, pesticides and polychlorinated
biphenyls).
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means, with respect to any specified Person at any
time, any other Person, including an Affiliate of the specified
Person, that is, or at any time within six years of that time was, a
member of any ERISA Group of which the specified Person is or was a
member at the same time.
"ERISA Affiliate Pension Plan" has the meaning Section 2.27 specifies.
"ERISA Employee Benefit Plan" means any "employee benefit plan" as
defined in Section 3(3) of ERISA and includes any ERISA Pension
Benefit Plan.
"ERISA Group" means any "group of organizations" within the meaning of
Section 414(b), (c), (m) or (o) of the Code or any "controlled group"
as defined in Section 4001(a)(14) of ERISA.
"ERISA Pension Benefit Plan" means any "employee pension benefit
plan," as defined in Section 3(2) of ERISA, including any plan that is
covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code (excluding any Multiemployer
Plan).
"Exchange Act" means the Securities Exchange Act of 1934.
"Final Balance Sheet" has the meaning Section 6.07 specifies.
"Final Prospectus" means the prospectus USC first furnishes to the
Underwriter after the Registration Statement becomes effective under
the Securities Act (whether or not Securities Act Rule 424(b) requires
USC to file that prospectus with the SEC).
"Final Working Capital" has the meaning Section 6.07 specifies.
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"Financial Statements" means the Initial Financial Statements and the
other financial statements of the Acquired Business, if any, delivered
to USC pursuant to Section 4.09 prior to the Effective Time.
"Founding Company" has the meaning the Preliminary Statement
specifies.
"GAAP" means, as applied to any of the Financial Statements, generally
accepted accounting principles and practices in the United States as
in effect from time to time which (i) have been concurred in by the
Independent Accountants and (ii) have been or are applied on a basis
consistent (except for changes concurred in by the Independent
Accountants) with the most recent audited Financial Statements
delivered to USC prior to the Effective Time.
"Governmental Approval" means at any time any authorization, consent,
approval, permit, franchise, certificate, license, implementing order
or exemption of, or registration or filing with, any Governmental
Authority, including any certification or licensing of a natural
person to engage in a profession or trade or a specific regulated
activity, at that time.
"Governmental Authority" means (i) any national, state, county,
municipal or other government, domestic or foreign, or any agency,
board, bureau, commission, court, department or other instrumentality
of any such government, or (ii) any Person having the authority under
any applicable Governmental Requirement to assess and collect Taxes
for its own account.
"Governmental Requirement" means at any time (i) any law, statute,
code, ordinance, order, rule, regulation, judgment, decree,
injunction, writ, edict, award, authorization or other requirement of
any Governmental Authority in effect at that time or (ii) any
obligation included in any certificate, certification, franchise,
permit or license issued by any Governmental Authority or resulting
from binding arbitration, including any requirement under common law,
at that time.
"Guaranty" means, for any specified Person, without duplication, any
liability, contingent or otherwise, of that Person guaranteeing or
otherwise becoming liable for any obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and
including any liability of the specified Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or
payment of) that obligation or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of that
obligation, (ii) to purchase property, securities or services for the
purpose of assuring the owner of that obligation of its payment or
(iii) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay that obligation; provided, that the
term "Guaranty" does not include endorsements for collection or
deposit in the ordinary course of the endorser's business.
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"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
"Immediate Family Member" of a Stockholder means at any time: (i) if
that Stockholder is a natural person, any child or grandchild (by
blood or legal adoption) or spouse of that Stockholder at that time,
or any child of that spouse; and (ii) if that Stockholder is an Entity
whose ultimate beneficial owner is a natural person, or a natural
person and his spouse, any child or grandchild (by blood or legal
adoption) or spouse at that time (if not then an ultimate beneficial
owner of that Entity), or any child of that spouse, of the ultimate
beneficial owner or owners.
"Indebtedness" of any Person means, without duplication, (i) any
liability of that Person (A) for borrowed money or arising out of any
extension of credit to or for the account of that Person (including
reimbursement or payment obligations with respect to surety bonds,
letters of credit, bankers' acceptances and similar instruments), for
the deferred purchase price of property or services or arising under
conditional sale or other title retention agreements, other than trade
payables arising in the ordinary course of business, (B) evidenced by
notes, bonds, debentures or similar instruments, (C) in respect of
leases (or other agreements conveying the right to use) property which
GAAP as in effect on the date of this Agreement requires to be
classified and accounted for as capital leases or (D) in respect of
interest rate swap, cap or collar agreements or similar arrangements
providing for the mitigation of that Person's interest rate risks
either generally or under specific contingencies between that Person
and any other Person, (ii) any liability secured by any Lien upon any
property or assets of that Person (or upon any revenues, income or
profits of that Person therefrom), whether or not that Person has
assumed that liability or otherwise become liable for the payment
thereof, (iii) any liability of others of the type described in the
preceding clause (i) or (ii) in respect of which that Person has
incurred, assumed or acquired a liability by means of a Guaranty.
"Indemnified Party" has the meaning Section 7.04 specifies.
"Indemnifying Party" has the meaning Section 7.04 specifies.
"Indemnity Notice" has the meaning Section 7.04 specifies.
"Independent Accountants" means Arthur Andersen LLP.
"Industry" means the industry involving the production and sale of
ready-mixed concrete (including truck-mixed concrete) and other cement
mixtures and pre-cast concrete products and any logical extension of
or business activity reasonably related to any of the foregoing.
"Industry Laws" means any and all Governmental Requirements relating
to the licensing or other regulation of the Industry, including: the
Clean Air Act, 42 USC ss.ss.
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401-7671q; the Clean Water Act, 33 USC ss.ss. 1251- 1387; regulations
of the Environmental Protection Agency, 40 C.F.R. ss.ss.
82.150-82.166; and state statutes governing licensure of facilities
that operate in the Industry.
"Information" means written information, including (i) data,
certificates, reports and statements (excluding Financial Statements)
and (ii) summaries of unwritten agreements, arrangements, contracts,
plans, policies, programs or practices or of unwritten amendments or
modifications of, supplements to or waivers under any of the foregoing
documents.
"IPO" means the first time a registration statement USC has filed
under the Securities Act and respecting a primary underwritten
offering by USC to the public of shares of USC Common Stock becomes
effective under the Securities Act and USC issues and sells any of the
shares registered by that registration statement to the Underwriter.
"IPO Closing Date" means the date on which USC first receives payment
for the shares of USC Common Stock it sells to the Underwriter in the
IPO.
"IPO Price" means the price per share of USC Common Stock which the
cover page of the Final Prospectus sets forth as the "price to
public."
"IPO Pricing Date" means the date, if any, on which USC and the
Underwriter agree in the Underwriting Agreement to the price per share
of USC Common Stock at which the Underwriter, subject to the terms and
conditions of the Underwriting Agreement, will purchase newly issued
shares of USC Common Stock from USC on the IPO Closing Date.
"IRCA" means the Immigration Reform and Control Act of 1986.
"IRS" means the Internal Revenue Service.
"Lien" means, with respect to any property or asset of any Person (or
any revenues, income or profits of that Person therefrom) (in each
case whether the same is consensual or nonconsensual or arises by
contract, operation of law, legal process or otherwise), (i) any
mortgage, lien, security interest, pledge, attachment, levy or other
charge or encumbrance of any kind thereupon or in respect thereof or
(ii) any other arrangement under which the same is transferred,
sequestered or otherwise identified with the intention of subjecting
the same to, or making the same available for, the payment or
performance of any liability in priority to the payment of the
ordinary, unsecured creditors of that Person, including any "adverse
claim" (as Section 8-302(b) of each applicable Uniform Commercial Code
defines that term) in the case of any Capital Stock. For purposes of
this Agreement, a Person will be deemed to own subject to a Lien any
asset that it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease
or other title retention agreement relating to that asset.
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"Litigation" means any action, case, proceeding, claim, grievance,
suit or investigation or other proceeding conducted by or pending
before any Governmental Authority or any arbitration proceeding.
"Material" means, as applied to any Entity or the Acquired Business,
material to the business, operations, property or assets, liabilities,
financial condition or results of operations of that Entity and its
Subsidiaries considered as a whole or the Acquired Business, as the
case may be.
"Material Adverse Effect" means, with respect to the consequences of
any fact or circumstance (including the occurrence or non-occurrence
of any event) to the Acquired Business, that such fact or circumstance
has caused, is causing or will cause, directly, indirectly or
consequentially, singly or in the aggregate with other facts and
circumstances, any Damages in excess of the Threshold Amount; provided
that the foregoing shall not include the consequences of any fact or
circumstance attributable to (i) factors affecting the Industry
generally, (ii) general national, regional or local economic or
financial conditions or (iii) changes in governmental or legislative
laws, rules or regulation.
"Material Agreement" of any Entity means any contract or agreement (i)
to which that Entity or any of its Subsidiaries is a party, or by
which that Entity or any of its Subsidiaries is bound or to which any
property or assets of that Entity or any of its Subsidiaries is
subject and (ii) which is Material to that Entity.
"Merger" has the meaning the Preliminary Statement specifies.
"Minimum Cash Amount" has the meaning Section 5.01 specifies .
"Minimum Cash Balance" has the meaning Paragraph 1 specifies.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, Section 414 of the Code or Section 3(37)
of ERISA.
"Negative Net Adjustment" has the meaning Section 6.07 specifies.
"Organization State" means, as applied to (i) any corporation, its
state or other jurisdiction of incorporation, (ii) any limited
liability company or limited partnership, the state or other
jurisdiction under whose laws it is formed, organized and existing in
that legal form, and (iii) any other Entity, the state or other
jurisdiction whose laws govern that Entity's internal affairs.
"Other Agreements" has the meaning the Preliminary Statement
specifies.
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"Other Compensation Plan" means any compensation arrangement, plan,
policy, practice or program established, maintained or sponsored by
the Company or any Company Subsidiary, or to which the Company or any
Company Subsidiary contributes, on behalf of any of its employees,
nonemployee directors or officers or other natural persons performing
consulting or other independent contractor services for the Company or
any Company Subsidiary, (i) including all such arrangements, plans,
policies, practices or programs providing for severance pay, deferred
compensation, incentive, bonus or performance awards or the actual or
phantom ownership of any Capital Stock or Derivative Securities of the
Company or any Company Subsidiary, but (ii) excluding all Company
ERISA Pension Plans and Employment Agreements.
"Other Financing Sources" has the meaning Section 5.01 specifies.
"Other Founding Company" has the meaning the Preliminary Statement
specifies.
"Other Transaction Documents" means the Other Agreements and the other
written agreements, documents, instruments and certificates at any
time executed pursuant to or in connection with the Other Agreements
(other than the Transaction Documents and the Underwriting Agreement),
all as amended, modified or supplemented from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Investments" means: (i) at the time of purchase or other
acquisition by the Company or any Company Subsidiary, (A) obligations
issued or guaranteed by the United States of America with a remaining
maturity not exceeding one year, (B) commercial paper with maturities
of not more than 270 days and a published rating of not less than A-1
by S&P or P-1 by Moody's and (C) certificates of deposit and bankers'
acceptances having maturities of not more than one year of any
commercial bank or trust company if (1) that bank or trust company has
a combined capital and surplus of at least $500,000,000 and (2) its
unsecured long-term debt obligations, or those of a holding company of
which it is a subsidiary, are rated not less than A- by S&P or A3 by
Moody's; and (ii) other extensions of credit made by the Company or
any Company Subsidiary to its retail customers in the ordinary course
of its business and consistent with its past practices.
"Permitted Liens" means, as applied to the property or assets of any
Person (or any revenues, income or profits of that Person therefrom):
(i) Liens for Taxes if the same are not at the time due and
delinquent; (ii) Liens of carriers, warehousemen, mechanics, laborers
and materialmen for sums not yet due; (iii) Liens incurred in the
ordinary course of that Person's business in connection with worker's
compensation, unemployment insurance and other social security
legislation (other than pursuant to ERISA or Section 412(n) of the
Code); (iv) Liens incurred in the ordinary course of that Person's
business in connection with deposit accounts or to secure the
performance of bids, tenders, trade contracts, statutory obligations,
surety and appeal bonds, performance and return-of-money bonds and
other obligations of
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like nature; (v) easements, rights-of-way, reservations, restrictions
and other similar encumbrances incurred in the ordinary course of that
Person's business or existing on property and not materially
interfering with the ordinary conduct of that Person's business or the
use of that property; (vi) defects or irregularities in that Person's
title to its real properties which do not materially (A) diminish the
value of the surface estate or (B) interfere with the ordinary conduct
of that Person's business or the use of any of such properties; (vii)
any interest or title of a lessor of assets that Person is leasing
pursuant to any capital lease Schedule 2.18 lists or any lease that,
pursuant to GAAP, would be accounted for as an operating lease; and
(viii) Liens securing purchase money Indebtedness Schedule 2.17 or
2.18 lists, so long as those Liens do not attach to any property or
assets other than the properties or assets purchased with the proceeds
of that Indebtedness.
"Person" means any natural person, Entity, estate, trust, union or
employee organization or Governmental Authority or, for the purpose of
the definition of "ERISA Affiliate," any trade or business.
"Plan" has the meaning Section 2.28 specifies.
"Pre-Acquisition Claims" has the meaning Section 10.12 specifies.
"Positive Net Adjustment" has the meaning Section 6.07 specifies.
"Pre-Acquisition Matters" has the meaning Section 10.12 specifies.
"Private Placement Memorandum" means the Private Placement Memorandum
of USC dated March 20, 1999 and relating to the offer of USC Common
Stock in connection with the Acquisition.
"Prohibited Transaction" means any transaction either Section 4975 of
the Code or Section 406 of ERISA prohibits and neither Section 4975 of
the Code nor Section 408 of ERISA exempts.
"Proprietary Rights" means (i) patents, applications for patents and
patent rights, (ii) in each case, whether registered, unregistered or
under pending registration, trademark rights, trade names, trade name
rights, corporate names, business names, trade styles or dress,
service marks and logos and other trade designations and copyrights
and, in the case of the Company or any Company Subsidiary, (iii) all
agreements relating to the technology, know-how or processes used in
any business of the Company or any Company Subsidiary.
"Pro Rata Share" has the meaning Paragraph 1 specifies.
"Qualified Plans" has the meaning Section 2.28 specifies.
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"RCRA" means the Resource Conservation and Recovery Act of 1976.
"Registration Rights Agreement" means the registration rights
agreement to be executed and delivered at the Closing by USC and the
Stockholders electing to be parties thereto in the form thereof
attached as Exhibit 9.01, with the blanks appropriately filled.
"Registration Statement" means the registration statement, including
(i) each preliminary prospectus it contains prior to the date on which
it becomes effective under the Securities Act (including any
prospectus USC files with the SEC pursuant to Securities Act Rule
424(b)), (ii) the Final Prospectus and (iii) any amendments thereof
and all supplements and exhibits thereto, USC files with the SEC to
register shares of USC Common Stock under the Securities Act for
public offering and sale in the IPO.
"Related Party Agreement" means any contract or other agreement,
written or oral, (i) to which the Company or any Company Subsidiary is
a party or is bound or by which any property of the Company or any
Company Subsidiary is bound or may be subject and (ii) (A) to which
any Stockholder or any of that Stockholder's Related Persons or
Affiliates (other than any other Entity included in the Acquired
Business) also is a party, (B) of which any Stockholder or any of that
Stockholder's Related Persons or Affiliates (other than any other
Entity included in the Acquired Business) is a beneficiary or (C) as
to which any transaction contemplated thereby properly would be
characterized (without regard to the amount involved) as a related
party transaction for purposes of applying the disclosure requirements
of GAAP or the SEC applicable to the financial statements of the
Acquired Business which the Registration Statement includes.
"Related Person" of a Stockholder means: (i) if that Stockholder is a
natural person, (A) any Immediate Family Member of that Stockholder,
(B) any Estate of that Stockholder or any Immediate Family Member of
that Stockholder, (C) the trustee of any inter vivos or testamentary
trust of which all the beneficiaries are Related Persons of that
Stockholder and (D) any Entity the entire equity interest in which is
owned by any one or more of that Stockholder and Related Persons of
that Stockholder; and (ii) if that Stockholder is an Entity, Estate or
trust, (A) any Person who owns an equity interest in that Stockholder
on the date hereof, (B) any Person who would be a Related Person under
clause (i) of this definition of a natural person who is an ultimate
beneficial owner of that Stockholder or (C) any other Entity the
entire equity interest in which is owned by any one or more of that
Stockholder and Related Persons of that Stockholder. In this
definition, "Estate" means, as to any natural person who has died or
been adjudicated mentally incompetent by a court of competent
jurisdiction, (i) that person's estate or (ii) the administrator,
conservator, executor, guardian or representative of that estate.
"Reportable Event" means, with respect to any Company ERISA Pension
Plan, (i) the occurrence of any of the events set forth in Section
4043(b) or (c) (other than a Reportable Event as to which the
provision of 30 days' notice to the PBGC is waived under
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applicable regulations), 4062(e) or 4063(a) of ERISA with respect to
that plan, (ii) any event requiring the Company or any ERISA Affiliate
to provide security to that plan under Section 401(a)(29) of the Code
or (iii) any failure to make a payment Section 412(m) of the Code
requires with respect to that plan.
"Representatives" means, with respect to any Person, the directors,
officers, employees, Affiliates, accountants (including independent
certified public accountants), advisors, attorneys, consultants or
other agents of that Person, or any other representatives of that
Person or of any of those directors, officers, employees, Affiliates,
accountants (including independent certified public accountants),
advisors, attorneys, consultants or other agents.
"Restricted Payment" means, with respect to any Entity at any time,
any of the following that Entity effects: (i) any declaration or
payment of any dividend or other distribution, direct or indirect, on
account of any Capital Stock of that Entity or any Affiliate of that
Entity; (ii) any direct or indirect redemption, retirement, purchase
or other acquisition for value of, or any direct or indirect purchase,
payment or sinking fund or similar deposit for the redemption,
retirement, purchase or other acquisition for value of, or to obtain
the surrender of, any then outstanding Capital Stock of that Entity or
any Affiliate of that Entity or any then outstanding warrants, options
or other rights to acquire or subscribe for or purchase unissued or
treasury Capital Stock of that Entity or any Affiliate of that Entity;
or (iii) any payment or distribution of, or any commitment to pay or
distribute, any cash or other property if, for purposes of the Code,
that payment or distribution would (or reasonably could be expected
to) constitute a constructive dividend to any Stockholder.
"Restricted Period" has the meaning Section 10.14 specifies.
"Returns" of a Person means the returns, reports or statements
(including any information returns) any Governmental Requirement
requires that Person to file for purposes of any Tax.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933.
"Solid Wastes, Hazardous Wastes or Hazardous Substances" have the
meanings ascribed to those terms in CERCLA, RCRA or any other
Environmental Law applicable to the business or operations of the
Company or any Company Subsidiary which imparts a broader meaning to
any of those terms than does CERCLA or RCRA.
"S&P" means Standard and Poor's Rating Services.
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"Stockholder Indemnified Party" means (i) each Stockholder and each of
that Stockholder's Affiliates (other than the Company, any of the
other Combined Companies, if any, or any Subsidiary of any of the
Combined Companies, if any, or, following the Effective Time, the
Surviving Corporation or USC or any of its Subsidiaries, if the
Stockholder is an Affiliate of USC), agents and counsel and (ii) prior
to the Effective Time, the Company and each of its officers,
directors, employees, agents and counsel who are not Stockholder
Indemnified Parties within the meaning of clause (i) of this
definition.
"Stockholder Indemnified Loss" has the meaning Section 7.03 specifies.
"Stockholder Unindemnified Loss" has the meaning Section 6.06
specifies.
"Subsidiary" of any specified Person at any time, means any Entity a
majority of the Capital Stock of which is at that time owned or
controlled, directly or indirectly, by the specified Person.
"Supplemental Information" has the meaning Section 4.07 specifies.
"Tax" or "Taxes" means all net or gross income, gross receipts, net
proceeds, sales, use, ad valorem, value added, franchise, bank shares,
withholding, payroll, employment, excise, property, deed, stamp,
alternative or add-on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges or
assessments of any nature whatever imposed by any Governmental
Requirement, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect
thereto.
"Taxing Authority" means any Governmental Authority having or
purporting to exercise jurisdiction with respect to any Tax.
"Termination Date" has the meaning Paragraph 1 specifies.
"Termination Event" means, with respect to any Company ERISA Pension
Plan, (i) any Reportable Event with respect to that plan which is
likely to result in the termination of that plan, (ii) the termination
of, or the filing of a notice of intent to terminate, that plan or the
treatment of any amendment to that plan as a termination under Section
4041(c) of ERISA or (iii) the institution of proceedings to terminate,
or the appointment of a trustee to administer, that plan under Section
4042 of ERISA.
"Third Party Claim" means any claim asserted by any Person that or who
is not a party to this Agreement against any Indemnified Party.
"Threshold Amount" means 1% of the Ceiling Amount.
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"Transaction Document" means this Agreement, the Certificates of
Merger, the Registration Rights Agreement and the other written
agreements, documents, instruments and certificates executed pursuant
to or in connection with this Agreement (other than the Other
Transaction Documents and the Underwriting Agreement), including those
Article V specifies are to be delivered at or before the Closing, all
as amended, modified or supplemented from time to time.
"Transfer Taxes" has the meaning Section 10.05 specifies.
"Underwriter" means collectively (i) the investment banking firms that
prospectively may enter into the Underwriting Agreement and (ii) from
and after the IPO Pricing Date, the investment banking firms parties
to the Underwriting Agreement.
"Underwriting Agreement" has the meaning Section 5.01(a)(iii)
specifies.
"USC Acquisition Candidate" means any Entity (i) which the Acquired
Business or any Entity the Acquired Business includes or USC has
called on in connection with the possible acquisition by any of them
of that Entity or (ii) of which any of them has made an acquisition
analysis, in any case where such Entity is engaged in any aspect of
the Industry.
"USC Common Stock" means the common stock, par value $.001 per share,
of USC.
"USC Indemnified Loss" has the meaning Section 7.02 specifies.
"USC Indemnified Party" means USC and its Affiliates and each of their
respective officers, directors, employees, agents and counsel;
provided, however, that no Person who indemnifies USC Indemnified
Parties in this Agreement in his capacity as a Stockholder will be a
USC Indemnified Party for purposes of this Agreement, notwithstanding
that the Person is a USC Indemnified Party for purposes of one or more
of the Other Agreements.
"USC Sub Common Stock" has the meaning Paragraph 1 specifies.
"USC Unindemnified Loss" has the meaning Section 6.06 specifies.
"Welfare Plan" means an "employee welfare benefit plan" as defined in
Section 3(1) of ERISA.
"Wholly Owned Subsidiary" means any corporation or other Entity all of
whose outstanding Capital Stock on a fully diluted basis the Company
owns and controls, directly or indirectly through another Wholly Owned
Subsidiary.
"Working Capital Adjustment" has the meaning Section 6.07 specifies.
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Section 9.02 OTHER DEFINED TERMs. Words and terms these Uniform Provisions
use which are defined elsewhere in this Agreement are used herein as therein
defined.
Section 9.03 OTHER DEFINITIONAL PROVISIONS. (a) Except as this Agreement
otherwise specifies, all references herein to any Governmental Requirement
defined or referred to herein, including the Code, CERCLA, ERISA, the Exchange
Act, RCRA and the Securities Act, are references to that Governmental
Requirement or any successor Governmental Requirement, as the same may have been
amended or supplemented from time to time, and any rules or regulations
promulgated thereunder.
(b) This Agreement uses the words "herein," "hereof" and "hereunder"
and words of similar import to refer to this Agreement as a whole and not
to any provision of this Agreement, and the words "Article," "Paragraph,"
"Section," "Preliminary Statement," "Annex," "Addendum," "Schedule" and
"Exhibit" refer to Articles, Paragraphs and Sections of, the Preliminary
Statement in, and Annexes, Addenda, Schedules and Exhibits to, this
Agreement unless it otherwise specifies.
(c) Whenever the context so requires, the singular number includes the
plural and vice versa, and a reference to one gender includes the other
gender and the neuter.
(d) The word "including" (and, with correlative meaning, the word
"include") means including, without limiting the generality of any
description preceding such word, and the words "shall" and "will" are used
interchangeably and have the same meaning.
(e) The phrase "to the knowledge of the Company" or phrases with
similar wording, when used in this Agreement to qualify any representation
or warranty Article II contains, means the collective knowledge, after
reasonable investigation, of each Stockholder and each other Person who
holds a management position with the Company as of the date hereof;
provided, however, that if any Governmental Requirement referred to in any
such representation or warranty specifies a different meaning for that
phrase, the meaning that Governmental Requirement specifies will apply for
purposes of that representation and warranty.
Section 9.04 CAPTIONS. This Agreement includes captions to Articles,
Paragraphs, Sections and subsections of, and Annexes, Addenda, Schedules and
Exhibits to, this Agreement or any other Transaction Document for convenience of
reference only, and these captions do not constitute a part of this Agreement or
any other Transaction Document for any other purpose or in any way affect the
meaning or construction of any provision of this Agreement or any other
Transaction Document.
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ARTICLE X
GENERAL PROVISIONS
Section 10.01 TREATMENT OF CONFIDENTIAL INFORMATION. (a) Each of the
Company and the Stockholders, severally and not jointly with any other Person,
acknowledges that it has or may have had in the past, currently has and in the
future may have access to Confidential Information of the Company and the
Company Subsidiaries, the Other Founding Companies and their Subsidiaries and
USC and its Subsidiaries. Each of the Company and the Stockholders, severally
and not jointly with any other Person, agrees that it will keep confidential all
that Confidential Information furnished to it and, except with the specific
prior written consent of USC, will not disclose that Confidential Information to
any Person except (i) Representatives of USC and (ii) its own Representatives,
provided that these Representatives (other than counsel) agree to the
confidentiality provisions of this Section 10.01; provided, however, that, for
purpose of this Section 10.01(a), Confidential Information does not include such
information as (i) becomes known to the public generally through no fault of any
Stockholder, (ii) is required to be disclosed by law or the order of any
Governmental Authority under color of law, provided, that prior to disclosing
any information pursuant to this clause (ii), each Stockholder will give prior
written notice thereof to USC and provide USC with the opportunity to contest
that disclosure, or (iii) the disclosing party reasonably believes is required
to be disclosed in connection with the defense of a lawsuit against the
disclosing party. In the event of a breach or threatened breach by any
Stockholder of the provisions of this Section 10.01 with respect to any
Confidential Information, USC will be entitled to an injunction restraining that
Stockholder from disclosing, in whole or in part, that Confidential Information.
Nothing herein shall be construed as prohibiting USC from pursuing any other
available remedy for such breach or threatened breach, including the recovery of
damages.
(b) Because of (i) the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Section 10.01(a) and
(ii) the immediate and irreparable damage that would be caused to USC for
which it would have no other adequate remedy, each of the Company and the
Stockholders agrees that USC may enforce the provisions of Section 10.01(a)
by injunctions and restraining orders against each of them who breaches any
of those provisions.
(c) USC acknowledges that it has or may have had in the past,
currently has and in the future may have access to Confidential Information
of the Company and the Company Subsidiaries. USC agrees that, until the
Effective Time, it will keep confidential all that Confidential Information
furnished to it and, except with the specific prior written consent of the
Company, will not disclose that Confidential Information to any Person
prior to the Effective Time except as Section 4.01(a) contemplates;
provided, however, that, for purposes of this Section 10.01(c),
Confidential Information does not include such information as (i) becomes
known to the public generally through no fault of USC, (ii) is required to
be disclosed by law or the order of any Governmental Authority under color
of law, provided, that prior to disclosing any information pursuant to this
clause (ii), USC will, if possible, give prior written notice thereof to
the Company and provide the Company with the opportunity to contest that
disclosure, or (iii) USC reasonably
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believes is required to be disclosed in connection with the defense of a
lawsuit against it. In the event of a breach or threatened breach by USC of
the provisions of this Section 10.01 with respect to any Confidential
Information, the Company will be entitled to an injunction restraining USC
from disclosing, in whole or in part, that Confidential Information.
Nothing herein shall be construed as prohibiting the Company from pursuing
any other available remedy for such breach or threatened breach, including
the recovery of damages.
(d) Because of (i) the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Section 10.01(c) and
(ii) the immediate and irreparable damage that would be caused to the
Company for which it would have no other adequate remedy, USC agrees that
the Company may enforce the provisions of Section 10.01(c) by injunctions
and restraining orders against it.
(e) The obligations of the parties under this Section 10.01 will
survive the termination of this Agreement.
Section 10.02 BROKERS AND AGENTS. Except as Schedule 1.04 sets forth, the
Stockholders jointly and severally represent and warrant to USC that the Company
has not directly or indirectly employed or become obligated to pay any broker or
similar agent in connection with the transactions contemplated hereby and agree,
without regard to the Threshold Amount limitations Article VII sets forth, to
indemnify USC against all Damage Claims arising out of claims for any and all
fees and commissions of brokers or similar agents employed or promised payment
by the Company.
Section 10.03 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and
the rights of the parties hereunder may not be assigned (except by operation of
law) and will be binding on and inure to the benefit of the parties hereto, the
successors of USC and the heirs and legal representatives of the Stockholders
(and, in the case of any trust, the successor trustees of that trust). Neither
this Agreement nor any other Transaction Document is intended, or shall be
construed, deemed or interpreted, to confer on any Person not a party hereto or
thereto any rights or remedies hereunder or thereunder, except as the final
sentence of Section 1.05, Article VII and Section 10.12 provide or as otherwise
provided expressly herein or therein.
Section 10.04 ENTIRE AGREEMENT; AMENDMENT; WAIVERS. This Agreement and the
documents delivered pursuant hereto constitute the entire agreement and
understanding among the Stockholders, the Company, USC Sub and USC and supersede
all prior agreements and understandings, both written and oral, relating to the
subject matter of this Agreement. This Agreement may be amended, modified or
supplemented, and any right hereunder may be waived, if, but only if, that
amendment, modification, supplement or waiver is in writing and signed by the
Stockholders entitled to receive at least 80% of the total Acquisition
Consideration, the Company and USC; provided, however, that no such amendment,
modification, supplement or waiver will be effective unless it is signed by each
Stockholder affected thereby to the extent that it (i) changes the several
nature of that Stockholder's representations and warranties (to the extent they
are not already
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joint and several as Article II and Section 10.02 provide), (ii) reduces the
amount, or changes the components, of the Acquisition Consideration that
Stockholder is entitled to receive pursuant to Paragraph 2 or (iii) amends or
waives this sentence. The waiver of any of the terms and conditions hereof shall
not be construed or interpreted as, or deemed to be, a waiver of any other term
or condition hereof.
Section 10.05 EXPENSES. Whether or not the transactions contemplated hereby
are consummated, (i) USC will pay the fees, expenses and disbursements of USC
and its Subsidiaries and their Representatives in connection with the subject
matter of this Agreement and any amendments thereto, including all costs and
expenses incurred in the performance of and compliance with all conditions to be
performed by USC and USC Sub under this Agreement, and (ii) the Stockholders
will pay, from personal funds, and not from funds of the Company or any Company
Subsidiary, all sales, use, transfer and other similar taxes (collectively,
"Transfer Taxes") and fees incurred in connection with the transactions
contemplated hereby, including the fees, expenses and disbursements counsel for
the Company and the Stockholders incur in connection with the subject matter of
this Agreement; provided, however, that the Stockholders may cause the Company
to pay the reasonable and customary fees, expenses and disbursements of counsel
for the Company and the Stockholders incurred in connection with the subject
matter of this Agreement on or before the IPO Closing Date to the extent those
fees, expenses and disbursements have been paid on or prior to the IPO Closing
Date or are recorded as liabilities on the Final Balance Sheet. The Stockholders
will file all necessary documentation and Returns with respect to all Transfer
Taxes. In addition, each Stockholder acknowledges that he, and not the Company
or USC or the Surviving Corporation, will pay all Taxes due on receipt of the
consideration payable to that Stockholder pursuant to the transactions this
Agreement contemplates.
Section 10.06 NOTICES. All notices required or permitted hereunder must be
in writing and will be deemed to be delivered and received (i) if personally
delivered or if delivered by telex, telegram, facsimile or courier service, when
actually received by the party to whom notice is sent or (ii) if delivered by
mail (whether actually received or not), at the close of business on the third
Houston, Texas business day next following the day when placed in the mail,
postage prepaid, certified or registered, addressed to the appropriate party or
parties, at the address of such party or parties set forth below (or at such
other address as such party may designate by written notice to all other parties
in accordance herewith):
(i) if to USC or USC Sub, addressed to it at:
U.S. Concrete, Inc.
1360 Post Oak Boulevard, Suite 800
Houston, Texas 77056
Attn.: Chief Executive Officer
Facsimile: 713-350-6001
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with copies (which will not constitute notice for purposes of this
Agreement) to:
Baker & Botts, L.L.P.
One Shell Plaza
Houston, Texas 77002-4995
Attn: Ted W. Paris, Esq.
Facsimile: 713-229-1522
(ii) if to the Company or any of the Stockholders, addressed to that Person
as Paragraph 7 sets forth.
SECTION 10.07 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE CONFLICTS OF LAW PROVISIONS THEREOF.
Section 10.08 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay or omission in the exercise of any right, power or remedy
accruing to any party hereto as a result of any breach or default hereunder by
any other party hereto will impair any such right, power or remedy, nor will it
be construed, deemed or interpreted as a waiver of or acquiescence in any such
breach or default, or of any similar breach or default occurring later; nor will
any waiver of any single breach or default be construed, deemed or interpreted
as a waiver of any other breach or default hereunder occurring before or after
that waiver.
Section 10.09 TIME. Time is of the essence in the performance of this
Agreement in all respects.
Section 10.10 REFORMATION AND SEVERABILITY. If any provision of this
Agreement is invalid, illegal or unenforceable, that provision will, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties hereto as
expressed herein, and if such a modification is not possible, that provision
will be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement will not in any
way be affected or impaired thereby.
Section 10.11 REMEDIES CUMULATIVE. No right, remedy or election any term of
this Agreement gives will be deemed exclusive, but each will be cumulative with
all other rights, remedies and elections available at law or in equity.
Section 10.12 RELEASE. Notwithstanding any other provision of this
Agreement and subject to the limitations the last sentence of this Section 10.12
sets forth, each Stockholder hereby unconditionally and irrevocably releases and
forever discharges, effective as of and forever after the Effective Time, to the
fullest extent permitted by applicable law, all past, present and future USC
Indemnified Parties (including, after the Effective Time, each of the Company
and the Company
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Subsidiaries which is a Subsidiary of USC immediately after the Effective
Time) (collectively, the "Released Parties") from any and all debts,
liabilities, obligations, claims, demands, actions or causes of action, suits,
judgments or controversies of any kind whatsoever (collectively,
"Pre-Acquisition Claims") against the Company and the Company Subsidiaries, if
any, or any of them that arises out of or is based on any agreement or
understanding or act or failure to act (INCLUDING ANY ACT OR FAILURE TO ACT THAT
CONSTITUTES ORDINARY OR GROSS NEGLIGENCE OR RECKLESS OR WILLFUL, WANTON
MISCONDUCT), misrepresentation, omission, transaction, fact, event or other
matter occurring prior to the Effective Time (whether based on any Governmental
Requirement or right of action, at law or in equity or otherwise, foreseen or
unforeseen, matured or unmatured, known or unknown, accrued or not accrued)
(collectively, "Pre-Acquisition Matters"), including without limitation: (i)
claims by the Stockholder with respect to repayment of loans or indebtedness
(except for promissory notes taken by the Stockholder with respect to the
payment of the 1998 Restricted Payment Amount or the 1999 Restricted Payment
Amount); (ii) any rights, titles and interests in, to or under any agreements,
arrangements or understandings to which the Stockholder is a party; and (iii)
claims by the Stockholder with respect to dividends, violation of preemptive
rights, or payment of salaries or other compensation or in any way arising out
of or in connection with the Stockholder's employment with the Company or any
Company Subsidiary, the cessation of that employment, the Stockholder's status
as an officer, director or stockholder of the Company or otherwise (but
excluding any and all claims in respect of (A) accrued and unpaid amounts owing
to the Stockholder pursuant to each Employment Agreement Schedule 2.27 lists to
which the Stockholder is a party, (B) accrued and unpaid Cash Compensation owing
to the Stockholder at the rates or in the amounts, as the case may be, set forth
in the list Section 2.27 describes, (C) benefits accrued under each Company
ERISA Benefit Plan or Other Compensation Plan, the existence of which Schedule
2.27 discloses and (D) amounts or other obligations owing to the Stockholder,
directly or indirectly, pursuant to each Related Party Agreement, if any, which
Schedule 2.12 discloses and to which the Stockholder, directly or indirectly, is
a party). The Stockholder further agrees not to file or bring any Litigation
before any Governmental Authority on the basis of or respecting any
Pre-Acquisition Claim concerning any Pre-Acquisition Matter against any Released
Party. Each Stockholder (i) acknowledges that he or she fully comprehends and
understands all the terms of this Section 10.12 and their legal effects and (ii)
expressly represents and warrants that (A) he or she is competent to effect the
release made in this Section 10.12 knowingly and voluntarily and without
reliance on any statement or representation of any Released Party or its
Representatives and (B) he or she had the opportunity to consult with an
attorney of his or her choice regarding this Section 10.12. This Section 10.12
will not affect the rights of the Stockholders under this Agreement or any other
Transaction Document.
Section 10.13 RESPECTING THE IPO. Each of the Company and the Stockholders
acknowledges and agrees that: (i) no firm commitment, binding agreement or
promise or other assurance of any kind, whether express or implied, oral or
written, exists at the date hereof that the Registration Statement will become
effective or that the IPO will occur at a particular price or within a
particular range of prices or occur at all; (ii) neither USC or any of its
Representatives nor any prospective underwriters in the IPO will have any
liability to the Company, the Stockholders or any of their respective Affiliates
or associates for any failure of (A) the Registration Statement to become
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effective (provided, however, that USC will use its reasonable best efforts to
cause the Registration Statement to become effective prior to the Termination
Date) or (B) the IPO to occur at a particular price or within a particular range
of prices or to occur at all; and (iii) the decision of Stockholders to enter
into this Agreement, or to vote in favor of or consent to the Merger, has been
or will be made independent of, and without reliance on, any statements,
opinions or other communications of, or due diligence investigations that have
been or will be made or performed by, any prospective underwriter relative to
USC or the IPO. The Underwriter will have no obligation to any of the Company
and the Stockholders with respect to any disclosure contained in the
Registration Statement. Each Stockholder further agrees to execute and deliver
to the investment banking firm acting as the lead managing underwriter for the
IPO (if requested by that firm) a customary lockup agreement pursuant to which
that Stockholder will agree not to sell, transfer or otherwise dispose of any
shares of USC Common Stock during a period of time, not to exceed 180 days,
following the date of the Final Prospectus.
Section 10.14 RESTRICTIONS ON TRANSFER OF USC COMMON STOCK. (a) During the
one-year period ending on the first anniversary of the Closing Date (the
"Restricted Period"), no Stockholder voluntarily will: (i) sell, assign,
exchange, transfer, encumber, pledge, distribute, appoint or otherwise dispose
of (A) any shares of USC Common Stock received by any Stockholder in the Merger
or (B) any interest in (including any option to buy or sell) any of those shares
of USC Common Stock, in whole or in part, and USC will have no obligation to,
and will not, treat any such attempted transfer as effective for any purpose; or
(ii) engage in any transaction, whether or not with respect to any shares of USC
Common Stock or any interest therein, the intent or effect of which is to reduce
the risk of owning the shares of USC Common Stock acquired pursuant to Paragraph
2 (including, for example engaging in put, call, short-sale, straddle or similar
market transactions); provided, however, that this Section 10.14 will not
restrict any transfer of USC Common Stock acquired by a Stockholder pursuant to
Paragraph 2 to any of that Stockholder's Related Persons who agree in writing to
be bound by the provisions of Section 10.01 and this Section 10.14. The
certificates evidencing the USC Common Stock delivered to each Stockholder
pursuant to Paragraph 2 will bear a legend substantially in the form set forth
below and containing such other information as USC may deem necessary or
appropriate:
EXCEPT PURSUANT TO THE TERMS OF THE AGREEMENT AND PLAN OF REORGANIZATION
AMONG THE ISSUER, THE HOLDER OF THIS CERTIFICATE AND THE OTHER PARTIES THERETO,
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE VOLUNTARILY SOLD,
ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR
OTHERWISE DISPOSED OF, AND THE ISSUER WILL NOT BE REQUIRED TO GIVE EFFECT TO ANY
ATTEMPTED VOLUNTARY SALE, ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE,
DISTRIBUTION, APPOINTMENT OR OTHER DISPOSITION OF ANY OF THOSE SHARES, DURING
THE ONE-YEAR PERIOD ENDING ON ____________, 2000 [DATE THAT IS THE FIRST
ANNIVERSARY OF THE IPO CLOSING DATE]. ON THE WRITTEN REQUEST OF THE HOLDER OF
THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY
STOP ORDER PLACED WITH THE TRANSFER AGENT) AFTER THE EXPIRATION OF THE PERIODS
SPECIFIED ABOVE.
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(b) Each Stockholder, severally and not jointly with any other Person,
(i) acknowledges that the shares of USC Common Stock to be delivered to
that Stockholder pursuant to Paragraph 2 (A) have not been and, except
pursuant to the Registration Rights Agreement, if applicable, will not be
registered under the Securities Act and therefore may not be resold by that
Stockholder without compliance with the Securities Act and (B) will, as a
result of the restrictions on their transferability which this Agreement
imposes during the Restricted Period, have a value materially less on the
IPO Closing Date than would be the value of freely tradable shares of USC
Common Stock and (ii) covenants that none of the shares of USC Common Stock
issued to that Stockholder pursuant to Paragraph 2 will be offered, sold,
assigned, pledged, hypothecated, transferred or otherwise disposed of
except after full compliance with all the applicable provisions of the
Securities Act and the rules and regulations of the SEC and applicable
state securities laws and regulations. All certificates evidencing shares
of USC Common Stock issued pursuant to Paragraph 2 will bear the following
legend in addition to the legend Section 10.14(a) prescribes:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED
IF THE HOLDER HEREOF COMPLIES WITH THAT LAW AND OTHER APPLICABLE
SECURITIES LAWS.
In addition, certificates evidencing shares of USC Common Stock issued pursuant
to Paragraph 2 to each Stockholder will bear any legend required by the
securities or blue sky laws of the state in which that Stockholder resides.
Section 10.15 SUBDIVISIONS AND RECOMBINATIONS OF USC COMMON STOCK. Upon the
occurrence of an event prior to the IPO Closing Date by which (i) the USC Common
Stock is subdivided into a greater number of shares or (ii) combined into a
smaller number of shares prior to the IPO Closing Date, the number of shares set
forth in Schedule 2(D) shall be adjusted by either (a) increasing the number of
shares set forth on Schedule 2(D) in proportion to the subdivision of the shares
or (b) decreasing the number of shares set forth on Schedule 2(D) in proportion
to any combination of such shares.
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION OF THIS AGREEMENT. (a) This Agreement may be
terminated at any time prior to the Closing solely:
(i) by the mutual written consent of USC and the Company;
(ii) by the Stockholders or the Company, on the one hand, or by
USC, on the other hand, if the transactions contemplated by this
Agreement to take place at the Closing shall not have been consummated
by the Termination Date, unless the failure of such transactions to be
consummated results from the willful failure of the party (or in the
case
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of the Stockholders and the Company, any of them) seeking to terminate
this Agreement to perform or adhere to any agreement required hereby
to be performed or adhered to by it prior to or at the Closing or
thereafter on the IPO Closing Date;
(iii) by the Stockholders or the Company, on the one hand, or by
USC, on the other hand, if a material breach or default is made by the
other party (or in the case of the Stockholders and the Company, any
of them) in the observance or in the due and timely performance of any
of the covenants, agreements or conditions contained herein;
(iv) by USC if Section 4.07 entitles it to do so; or
(v) by the Stockholders or the Company if any Other Agreement
with an Other Founding Company whose revenues for the year ended
December 31, 1998 exceeded 20% of the pro forma combined revenues of
all the Founding Companies for the year ended December 31, 1998, in
each case as the Private Placement Memorandum reflects, has been
terminated pursuant to its terms.
(b) This Agreement may be terminated after the Closing solely:
(i) by USC or the Company if the Underwriting Agreement is
terminated pursuant to its terms after the Closing and prior to the
consummation of the IPO (in the event of any such termination, USC
will provide the Company and the Stockholders with prompt notice
thereof); or
(ii) automatically and without action on the part of any party
hereto if the IPO is not consummated within 15 New York City business
days after the Closing Date.
Section 11.02 LIABILITIES IN THE EVENT OF TERMINATION. If this Agreement is
terminated pursuant to Section 11.01, there shall be no liability or obligation
on the part of any party hereto except (i) as Section 10.05 provides and (ii) to
the extent that such liability is based on the breach by that party of any of
its representations, warranties or covenants set forth in this Agreement.
