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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of earliest event reported: February 10, 2000
-------------------
U.S. CONCRETE, INC.
-------------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 1-12977 76-0586680
- ----------------------------- -------------------- ------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1300 Post Oak Boulevard, Suite 1220, Houston, TX 77056
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 499-6200
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 10, 2000, U.S. Concrete, Inc. (the "Company") purchased all
of the issued and outstanding capital stock of Beall Industries, Inc. ("Beall-
Texas") from Robert S. Beall and Chase Bank of Texas, National Association, in
its capacity as trustee for Allison Beall 1999 Trust, Logan Beall 1999 Trust,
Allison Beall Descendents' Trust and Logan Beall Descendents' Trust, and in a
separate but related transaction, the Company acquired all of the issued and
outstanding capital stock of Atlas Concrete, Inc., Atlas-Tuck Concrete, Inc.,
Stokes Transit-Mix, Inc. and Beall Trucking, Inc. (collectively, "Beall-
Oklahoma") from Fallis Arch Beall, Robert S. Beall and four other shareholders
of the companies. Beall-Texas and Beall-Oklahoma are engaged primarily in the
business of providing ready-mixed concrete and related products and services to
the construction industry and conduct related trucking operations. The Company
intends to continue such operations as part of its overall strategy of
development and acquisition of ready-mixed concrete businesses. The Beall-Texas
acquisition represents the Company's first operating subsidiary based in the
State of Texas and the Beall-Oklahoma companies represent the Company's first
operations in the State of Oklahoma.
The initial terms of the stock purchase called for the acquisition by
the Company of all of the issued and outstanding capital stock of both
Beall-Texas and R.S. Beall, Inc. ("R.S. Beall"). Prior to the consummation of
the transaction, however, as agreed by the parties, R.S. Beall was merged into
Beall-Texas, with the newly issued Beall-Texas shares related to the R.S. Beall
merger also being acquired by the Company.
The terms of the purchase of all of the issued and outstanding capital
stock of Beall-Texas and Beall-Oklahoma were the result of arms'-length
negotiations. None of the shareholders of Beall-Texas or Beall-Oklahoma were
previously affiliated with the Company. The aggregate consideration for the
capital stock of Beall-Texas and Beall-Oklahoma consisted of approximately $45.6
million in cash, $3.9 million in debt paid at closing and 1,857,143 shares of
the Company's Common Stock, subject to certain post-closing adjustments. The
acquisitions were funded with borrowings under the Company's credit facility,
with Chase Bank of Texas, National Association as lead agent. As the Company had
previously publicly reported, such credit facility was increased to $200
million, effective February 9, 2000.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of businesses acquired.
The financial statements required by this item will be filed by
amendment not later than April 25, 2000.
(b) Pro forma financial information.
The pro forma financial information required by this item will be filed
by amendment not later than April 25, 2000.
(c) Exhibits
EXHIBIT
NUMBER DESCRIPTION
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2.1 Stock Purchase Agreement, dated January 20, 2000, by and among U.S.
Concrete, Inc. and Robert S. Beall, Chase Bank of Texas, National
Association, or its successor in Trust, in its capacity as trustee for
Allison Beall 1999 Trust, Logan Beall 1999 Trust, Allison Beall
Descendents' Trust and Logan Beall Descendents' Trust.*
2.2 Amendment No. 1 To Stock Purchase Agreement, dated January 28, 2000, by
and among U.S. Concrete, Inc. and Robert S. Beall, Chase Bank of Texas,
National Association, or its successor in Trust, in its capacity as
trustee for Allison Beall 1999 Trust, Logan Beall 1999 Trust, Allison
Beall Descendents' Trust and Logan Beall Descendents' Trust.
2.3 Stock Purchase Agreement, dated January 24, 2000, by and among U.S.
Concrete, Inc. and Fallis Arch Beall, Nola Sue Beall, Robert S. Beall,
Leigh Ann Gathright, Doris W. Stokes, and Fallis Arch Beall in his
capacity as Trustee for the R.E. Stokes Trust.*
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* Copies of omitted schedules and exhibits shall be furnished supplementally to
the Commission upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
U.S. CONCRETE, INC.
Date: February 23, 2000 By: /s/ Michael W. Harlan
---------------------
Name: Michael W. Harlan
Title: Senior Vice President--Chief
Financial Officer
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
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Texas Operations
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STOCK PURCHASE AGREEMENT
BY AND AMONG
ROBERT S. BEALL, CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
IN ITS CAPACITY AS TRUSTEE FOR ALLISON BEALL 1999 TRUST,
LOGAN BEALL 1999 TRUST, ALLISON BEALL DESCENDANTS' TRUST
AND LOGAN BEALL DESCENDANTS' TRUST
AND
U.S. CONCRETE, INC.
Dated as of January 20, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I - SALE OF SHARES; CLOSING...............................................................................1
SECTION 1.1 Purchase of Shares.....................................................................1
SECTION 1.2 Share Purchase Price...................................................................2
SECTION 1.3 Closing................................................................................2
SECTION 1.4 Closing Deliveries.....................................................................2
SECTION 1.5 Tax Treatment..........................................................................3
SECTION 1.6 Purchase Price Adjustment..............................................................3
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE SELLER AND TRUSTS..............................................4
SECTION 2.1 Organization and Qualification.........................................................5
SECTION 2.2 The Companies' Capitalization..........................................................5
SECTION 2.3 Authority Relative to the Agreement....................................................6
SECTION 2.4 No Violation...........................................................................6
SECTION 2.5 Consents and Approvals.................................................................7
SECTION 2.6 Financial Statements...................................................................7
SECTION 2.7 Accounts and Notes Receivable..........................................................7
SECTION 2.8 Absence of Changes.....................................................................7
SECTION 2.9 Litigation.............................................................................9
SECTION 2.10 Tax Matters............................................................................9
SECTION 2.11 Employee Benefit Plans................................................................10
SECTION 2.12 Employment Matters....................................................................11
SECTION 2.13 Patents, Trademarks and Copyrights....................................................12
SECTION 2.14 Environmental Matters.................................................................12
SECTION 2.15 Insurance.............................................................................13
SECTION 2.16 Title to Properties; Encumbrances.....................................................13
SECTION 2.17 Permits...............................................................................14
SECTION 2.18 Inventories...........................................................................15
SECTION 2.19 Agreements, Contracts and Commitments.................................................15
SECTION 2.20 Compensation; Employment Agreements...................................................16
SECTION 2.21 Noncompetition, Confidentiality and Nonsolicitation
Agreements; Employee Policies.....................................................16
SECTION 2.22 Accounts with Banks and Brokerages; Powers of Attorney................................17
SECTION 2.23 Absence of Certain Business Practices.................................................17
SECTION 2.24 Competing Lines of Business; Related-Party Transactions...............................17
SECTION 2.25 Capital Expenditures..................................................................17
SECTION 2.26 Product Warranties....................................................................17
SECTION 2.27 Year 2000 Compliance..................................................................17
SECTION 2.28 Disclosure............................................................................17
SECTION 2.29 Disclaimer of Additional and Implied Warranties.......................................18
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ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER....................................................18
SECTION 3.1 Organization and Authority............................................................18
SECTION 3.2 Authority Relative to Agreement.......................................................18
SECTION 3.3 No Violation..........................................................................18
SECTION 3.4 Consents and Approvals................................................................19
SECTION 3.5 Investment Intent.....................................................................19
SECTION 3.6 The Purchaser Common Stock............................................................20
SECTION 3.7 Commission Filings; Financial Statements..............................................20
SECTION 3.8 Financing.............................................................................20
SECTION 3.9 Disclosure............................................................................21
SECTION 3.10 Disclaimer of Additional and Implied Warranties.......................................21
ARTICLE IV - FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON THE PURCHASER COMMON STOCK...................21
SECTION 4.1 Compliance with Law...................................................................21
SECTION 4.2 Economic Risk; Sophistication; Accredited Investors...................................21
SECTION 4.3 Rule 144 Reporting....................................................................22
SECTION 4.4 Lockup Period.........................................................................22
SECTION 4.5 Prospectus Delivery...................................................................23
ARTICLE V - COVENANTS............................................................................................23
SECTION 5.1 Affirmative Covenants of the Companies................................................23
SECTION 5.2 Negative Covenants of the Companies...................................................24
ARTICLE VI - ADDITIONAL AGREEMENTS...............................................................................25
SECTION 6.1 Certain Tax Matters...................................................................25
SECTION 6.2 Repayment of Related Party Indebtedness...............................................26
SECTION 6.3 Stock Options.........................................................................26
SECTION 6.4 Access To, and Information Concerning, Properties and
Records...........................................................................27
SECTION 6.5 Good Faith Efforts to Consummate Transactions.........................................28
SECTION 6.6 Exclusivity...........................................................................28
SECTION 6.7 Release From Indemnity Agreements.....................................................29
SECTION 6.8 Benefit Plans.........................................................................29
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ARTICLE VII - NONCOMPETITION COVENANTS...........................................................................29
SECTION 7.1 Prohibited Activities.................................................................29
SECTION 7.2 Equitable Relief......................................................................31
SECTION 7.3 Reasonable Restraint..................................................................31
SECTION 7.4 Severability; Reformation.............................................................31
SECTION 7.5 Material and Independent Covenant.....................................................31
ARTICLE VIII - CONDITIONS TO CLOSING.............................................................................32
SECTION 8.1 Conditions to Each Party's Obligation Under this Agreement............................32
SECTION 8.2 Conditions to the Obligations of the Purchaser Under this
Agreement.........................................................................32
SECTION 8.3 Conditions to the Obligations of the Seller and the Trusts
Under this Agreement..................................................................33
ARTICLE IX - TERMINATION; AMENDMENT; WAIVER......................................................................34
SECTION 9.1 Termination...........................................................................34
SECTION 9.2 Effect of Termination.................................................................35
SECTION 9.3 Amendment and Modification............................................................35
SECTION 9.4 Extension; Waiver.....................................................................35
ARTICLE X - REMEDIES.............................................................................................35
SECTION 10.1 Remedies for Breach of Representations, Warranties and
Covenants of the Seller Before the Closing Date...................................35
SECTION 10.2 Indemnification by the Seller and the Trusts..........................................36
SECTION 10.3 Indemnification by the Purchaser......................................................37
SECTION 10.4 Notice and Defense of Third Party Claims..............................................38
SECTION 10.5 Limitations of Liability..............................................................39
SECTION 10.6 Exclusive Remedies....................................................................41
SECTION 10.7 Payment of Indemnification Obligation.................................................42
SECTION 10.8 Annual Reports on Form 5500...........................................................42
ARTICLE XI - SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS...............................................42
SECTION 11.1 Survival of Representations and Warranties............................................42
SECTION 11.2 Survival of Covenants.................................................................43
ARTICLE XII - MISCELLANEOUS......................................................................................43
SECTION 12.1 Expenses..............................................................................43
SECTION 12.2 Public Announcements..................................................................43
SECTION 12.3 Brokers and Finders...................................................................43
SECTION 12.4 Entire Agreement; Assignment..........................................................44
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SECTION 12.5 Amendment and Modification............................................................44
SECTION 12.6 Waiver; Consents......................................................................44
SECTION 12.7 Further Assurances....................................................................44
SECTION 12.8 Reformation and Severability..........................................................44
SECTION 12.9 Dispute Resolution....................................................................44
SECTION 12.10 Notices...............................................................................45
SECTION 12.11 Governing Law.........................................................................46
SECTION 12.12 Jurisdiction and Venue................................................................46
SECTION 12.13 Descriptive Headings..................................................................47
SECTION 12.14 Parties in Interest; No Third-Party Beneficiary.......................................47
SECTION 12.15 Counterparts..........................................................................47
SECTION 12.16 Incorporation by Reference............................................................47
SECTION 12.17 Certain Definitions...................................................................47
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EXHIBITS
Exhibit A - List of Companies
Exhibit B - Form of Employment Agreement
Exhibit C - Form of Lease Agreement
SCHEDULES
Schedule 1.1 - Purchase of Shares
Schedule 1.2 - Allocation of Purchase Price
Schedule 1.4(c) - Lease Rental Rates and Terms
Schedule 1.6(d) - Closing Net Working Capital
Schedule 2.1(a) - Qualification
Schedule 2.1(b) - Subsidiaries
Schedule 2.2(a) - Capitalization
Schedule 2.2(b) - Ownership of Shares
Schedule 2.4 - No Violation
Schedule 2.5 - Consents and Approvals
Schedule 2.6 - Financial Statements
Schedule 2.7 - Accounts and Notes Receivable
Schedule 2.8 - Absence of Changes
Schedule 2.9 - Litigation
Schedule 2.11 - Employee Benefit Plans
Schedule 2.12 - Employment Matters
Schedule 2.13 - Patents, Trademarks and Copyrights
Schedule 2.14 - Environmental Matters
Schedule 2.15 - Insurance
Schedule 2.16 - Title to Properties; Encumbrances
Schedule 2.17 - Permits
Schedule 2.18 - Inventories
Schedule 2.19 - Agreements, Contracts and Commitments
Schedule 2.20 - Compensation; Employment Agreements
Schedule 2.21 - Noncompetition, Confidentiality and Non-Solicitation
Agreements; Employee Policies
Schedule 2.22 - Accounts with Banks and Brokerages; Powers of Attorney
Schedule 2.24 - Competing Lines of Business; Related Party Transactions
Schedule 2.25 - Capital Expenditures
Schedule 2.26 - Product Warranties
Schedule 3.7 - Commission Filings
Schedule 6.2 - Repayment of Related Party Indebtedness
Schedule 6.3 - Stock Options
Schedule 6.7 - Indemnity Agreements
Schedule 10.5(b) - Seller Cap
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Schedule 10.5(c) - Seller Basket
Schedule 10.5(d) - Purchaser Cap
Schedule 10.5(e) - Purchaser Basket
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
January 20, 2000, by and among Robert S. Beall, a resident of the State of Texas
(the "Seller"), Chase Bank of Texas, National Association, or its successor in
trust, in its capacity as trustee for Allison Beall 1999 Trust, Logan Beall 1999
Trust, Allison Beall Descendants' Trust and Logan Beall Descendants' Trust (with
all of these trusts being referred to individually as a "Trust" and collectively
as the "Trusts"), and U.S. Concrete, Inc., a Delaware corporation (the
"Purchaser"). (References to a "Trust" and the "Trusts" hereinafter in this
Agreement shall be deemed to refer to the trustee or trustees of the respective
Trust(s) acting in such capacity.)
RECITALS
WHEREAS, the Seller and the Trusts are the owners of all of the issued
and outstanding shares of common stock (the "Common Stock") of the corporations,
set forth on Exhibit A (with all of these corporations being referred to
individually as a "Company" and collectively as the "Companies"), and such
Common Stock constitutes all of the issued and outstanding capital stock (of all
classes) of the Companies; and
WHEREAS, the Purchaser desires to purchase from the Seller and the
Trusts, and the Seller and the Trusts desire to sell to the Purchaser, all such
shares of Common Stock (the "Shares") upon the terms and conditions set forth
herein; and
WHEREAS, the Seller and the Trusts are making certain representations,
warranties, covenants and indemnities herein as an inducement to the Purchaser
to enter into this Agreement, and the Purchaser is making certain
representations, warranties, covenants and indemnities herein as an inducement
to the Seller and the Trusts to enter into this Agreement; and
WHEREAS, capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to them in Section 12.17.
NOW, THEREFORE, in consideration of the recitals and the respective
representations, warranties, covenants and indemnities contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and intending to be legally bound hereby, the parties hereby
agree as follows:
ARTICLE I
SALE OF SHARES; CLOSING
SECTION 1.1 Purchase of Shares. Subject to the terms and conditions of
this Agreement, on the Closing Date (as defined below), the Seller and each
Trust will sell to the Purchaser, and the Purchaser will purchase from the
Seller and each Trust, the Shares set forth opposite the name of the Seller and
each Trust on Schedule 1.1.
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SECTION 1.2 Share Purchase Price. The purchase price for the Shares
shall be $55,000,000 less all outstanding indebtedness (including accrued
interest thereon) under (i) that certain Credit Agreement between Beall
Industries, Inc. and Texas Commerce Bank National Association, now known as
Chase Bank of Texas, National Association, dated December 10, 1996, as amended
(the "Beall Industries Chase Bank Agreement"); (ii) that certain Agreement
between R.S. Beall, Inc. and Bruckners Truck Sales, Inc. ("Bruckners"), which
was assigned by Bruckners to Associates Commercial Corporation, dated May 20,
1997 (the "Associates Commercial Corporation Credit Agreement"); and (iii) that
certain Credit Agreement between R.S. Beall, Inc. and Texas Commerce Bank
National Association, now known as Chase Bank of Texas, National Association,
dated February 28, 1995, as amended (the "R.S. Beall Chase Bank Agreement") and
(iv) any other Interest-Bearing Debt of either of the Companies or their
Subsidiaries on the Closing Date (the "Purchase Price"). The Purchase Price
shall consist of (i) 1,634,286 shares of common stock, par value $.001 per
share, of the Purchaser ("Purchaser Common Stock") and (ii) the delivery of
immediately available funds equal to the difference between (A) the Purchase
Price and (B) $11,440,000. At the Closing, the Purchaser shall pay to the Seller
and each Trust the portion of the Purchase Price set forth opposite the name of
the Seller and each Trust on Schedule 1.2 in immediately available funds and by
the delivery of certificates evidencing Purchaser Common Stock. The Purchase
Price shall be adjusted after the Closing Date in accordance with Section 1.6.
SECTION 1.3 Closing. The purchase and sale of the Shares (the
"Closing") provided for in this Agreement shall take place at the offices of
Chase Bank of Texas, National Association, 201 Main Street, Fort Worth, Texas
76101, or at such other place as may be mutually agreed by the parties to this
Agreement, as soon as reasonably practicable after satisfaction or waiver of the
conditions set forth in Article VIII hereof to the respective obligations of the
Purchaser, the Seller and each Trust hereunder (but in any event not later than
ten business days after such satisfaction or waiver). For purposes of this
Agreement, the date on which the Closing actually occurs shall be the "Closing
Date."
SECTION 1.4 Closing Deliveries. The Purchaser, the Seller and each
Trust will deliver, or cause to be delivered, at the Closing the following
instruments (collectively, the "Transaction Documents") to which they or their
Affiliates are a party:
(a) certificates or other duly executed assignment documents
representing the Shares duly endorsed by the Seller and each Trust for transfer
to the Purchaser;
(b) the Employment Agreement between Beall Industries, Inc. and the
Seller in substantially the form attached hereto as Exhibit B (the "Employment
Agreement");
(c) a Lease Agreement between Beall Industries, Inc. and the Seller or
his Affiliates relating to each business facility of Beall Industries, Inc. in
substantially the form attached hereto as Exhibit C (the "Lease Agreement") (it
being understood and agreed that such facilities shall be leased at the rates
and for the terms set forth on Schedule 1.4(c));
(d) such additional information or documents as the Purchaser, the
Seller and each Trust shall have reasonably required to evidence the
consummation of the transaction contemplated by this Agreement.
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SECTION 1.5 Tax Treatment.
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(a) The Purchaser, the Seller and each Trust shall timely make a joint
election under Section 338(h)(10) of the Internal Revenue Code of 1986, as
amended (the "Code"), and Treas. Reg. ss.1.338(h)(10)-1(d)(1) (and any
corresponding elections under state, local or foreign tax law) (collectively the
"Section 338(h)(10) Election") with respect to the purchase and sale of the
stock of the Companies, both of which are S corporations pursuant to Section
1361 of the Code, such that (i) both of the Companies will be treated as having
sold all of their assets in a single transaction on the Closing Date before
Closing and while an S corporation pursuant to Section 1361 of the Code and (ii)
the Seller and each Trust will recognize no gain or loss with respect to the
sale of the Shares. The Purchaser will prepare the election forms and provide
them to the Seller and each Trust for their review at least five days before the
Closing Date. The Seller and each Trust will execute and return the election
forms to the Purchaser on the Closing Date, and the Purchaser will file such
election forms on or before the respective due dates for each such election
form. The Purchaser and the Seller (on his own behalf and on behalf of each
Trust) shall, on the Closing Date, agree to an allocation of the deemed purchase
price among the assets of both Companies in compliance with Temp. Treas. Reg.
ss. 1.338(b)-2T(b).
(b) The parties each hereby covenant and agree that they will not take
a position with respect to the allocation of the Purchase Price (i) for purposes
of any tax return filed with any governmental agency charged with the collection
of any taxes or, for so long as commercially reasonable, for purposes of any
judicial proceeding, that is in any way inconsistent with the allocation made
under Section 1.5(a) or (ii) for financial reporting or accounting purposes that
is in any way inconsistent with such allocation unless a different allocation
for financial reporting or accounting purposes is required by law, regulation or
court order or decree.
SECTION 1.6 Purchase Price Adjustment.
-------------------------
(a) The Purchase Price shall be adjusted in the amount equal to the
Working Capital Adjustment. For purposes hereof, the "Working Capital
Adjustment" shall equal the difference of (i) the Closing Net Working Capital of
both of the Companies collectively (as defined in Section 1.6(d)) as of the end
of the last day of the month immediately preceding the Closing Date minus (ii)
$1,882,673 (the "Working Capital Threshold"). If the Working Capital Adjustment
is positive (i.e., Closing Net Working Capital is greater than the Working
Capital Threshold), the Purchase Price shall be increased by the amount of the
Working Capital Adjustment. The Purchaser shall pay to the Seller and each Trust
(pro rata in accordance with the percentage allocation of the Purchase Price
among the Seller and each Trust set forth on Schedule 1.2) any such positive
Working Capital Adjustment in cash, plus interest thereon at a rate of 7% per
annum from the Closing Date, within five days of the Determination Date (as
defined below). If the Working Capital Adjustment is negative (i.e., if the
Closing Net Working Capital is less than the Working Capital Threshold), the
Purchase Price shall be decreased by the amount of the Working Capital
Adjustment. The Seller and each Trust (pro rata in accordance with the
percentage allocation of the Purchase price set forth on Schedule 1.2) shall pay
to the Purchaser any such negative Working Capital Adjustment in cash, plus
interest thereon at a rate of 7% per annum from the Closing Date, within five
days of the Determination Date.
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(b) Within 75 days after the Closing Date, the Purchaser will provide
the Seller and Trusts with a reasonably detailed calculation of the Working
Capital Adjustment for their review and approval (the "Calculation"). The
Calculation shall be deemed to be final and conclusive and agreed to by the
Purchaser, the Seller and each Trust, and shall be the basis for the Working
Capital Adjustment provided for in Section 1.6(a), unless the Seller gives
written notice to the Purchaser, within 20 days of the receipt of the
Calculation, that the Seller and Trusts dispute the Calculation. The Purchaser
and the Seller (on his own behalf and on behalf of each Trust) shall attempt,
within 30 days after any such dispute notice is given, to resolve such dispute.
If the parties are unable to resolve such dispute within such 30 days, the
Purchaser and the Seller (on his own behalf and on behalf of each Trust) shall
resolve the dispute in accordance with the procedure set forth in Section
1.6(c).
(c) If the parties do not agree on the amount of the Working Capital
Adjustment within 30 days after a dispute notice is given (as described in
Section 1.6(b)), they shall engage a mutually agreeable nationally-recognized
public accounting firm for the limited purpose of resolving only the
disagreements of the parties with respect to the Calculation, provided that all
determinations made by such accounting firm shall be made in accordance with
this Section 1.6. The determinations of such accounting firm shall be conclusive
and binding on the parties, and the fees and expenses of such accounting firm
shall be divided equally between the Seller and the Trusts, on the one hand, and
the Purchaser, on the other hand. For purposes hereof, "Determination Date"
shall mean the date on which the final determination of the Working Capital
Adjustment is made in accordance with either Section 1.6(b) or Section 1.6(c).
(d) For the purpose of Section 1.6, the Companies' "Closing Net Working
Capital" means the excess of the current assets of both of the Companies over
the current liabilities of both of the Companies (excluding the current portion
of long-term debt and all accrued interest thereon), determined in accordance
with GAAP; provided, however, that the Companies' current liabilities shall not
include any state, local or foreign taxes attributable to the Section 338(h)(10)
Election. An example of the calculation of Closing Net Working Capital as of
September 30, 1999 is set forth on Schedule 1.6(d) hereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND TRUSTS
The Seller and Trusts, jointly and severally, (but subject to the
provisions of Article X) make the representations and warranties set forth in
this Article II to the Purchaser. The Seller has delivered to the Purchaser the
schedules to this Agreement (the "Schedules"), including those referred to in
this Article II, on the date hereof and such Schedules have been reviewed and
accepted by the Purchaser. The Seller shall, from time to time through the
Closing Date, advise the Purchaser and its counsel in writing as to any change,
amendment or supplement to the Schedules which is necessary to reflect material
changes in the subject matter thereof occurring through the Closing Date. The
Purchaser must notify the Seller and its counsel in writing within five business
days after receipt of any material change, amendment or supplement to the
Schedules of its election to terminate this Agreement in accordance with Section
9.1(b). If the Purchaser fails to notify the Seller as required, it shall be
deemed to have waived its right to
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terminate this Agreement based on such change, amendment or supplement to the
Schedules. All matters set forth in the Schedules shall be deemed to be
disclosed not only in connection with the representation and warranty
specifically referenced on a given Schedule, but for purposes of any other
representation or warranty of the Seller set forth in this Article II, so long
as a Schedule includes a specific cross reference to another Schedule.
SECTION 2.1 Organization and Qualification.
------------------------------
(a) Each of the Companies is duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. Each of
the Companies has all requisite corporate power and authority to carry on its
business as it is now being conducted, and to own, lease and operate its
properties and assets, and to perform all its obligations under the agreements
and instruments to which it is a party or by which it is bound. Except as set
forth on Schedule 2.1(a), each of the Companies is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which the properties and assets owned, leased or operated
by it or the nature of the business conducted by it make such qualification
necessary, except in such jurisdictions where the failure to be duly qualified
or in good standing does not and would not result in a Material Adverse Effect;
provided, however, that the representations and warranties contained in this
sentence shall be of no force or effect to the extent that such Material Adverse
Effect can be eliminated by one or both of the Companies becoming qualified in
such jurisdictions. Each such jurisdiction in which any of the Companies is so
qualified is listed on Schedule 2.1(a).
(b) Except as set forth on Schedule 2.1(b), none of the Companies have
Subsidiaries. Schedule 2.1(b) contains a list of all Subsidiaries, indicating in
each case the name, type of entity, jurisdiction of incorporation and other
jurisdictions in which it is authorized to do business. Each Subsidiary is
wholly-owned either directly or indirectly by one or more of the Companies. Each
Subsidiary is duly incorporated, validly existing and in good standing under the
laws of the state of its incorporation and has all requisite corporate power and
authority to carry on its business as it is now being conducted, to own, lease
and operate its properties and assets, and to perform all its obligations under
the agreements and instruments to which it is a party or by which it is bound.
(c) True, complete and correct copies of the Articles of Incorporation
and Bylaws, each as amended, of the Companies and their respective Subsidiaries
have been provided to Purchaser and no breach of such Articles of Incorporation
or Bylaws has occurred and is continuing. True, complete and correct copies of
all stock records and minute books of the Companies and their respective
Subsidiaries have been provided to the Purchaser.
SECTION 2.2 The Companies' Capitalization.
-----------------------------
(a) The authorized and outstanding capital stock of both of the
Companies and their respective Subsidiaries is set forth on Schedule 2.2(a).
Except as set forth on Schedule 2.2(a), there are no outstanding subscriptions,
options, convertible securities, rights, warrants, calls, irrevocable proxies or
other agreements or commitments of any kind directly or indirectly obligating
any of the Companies or any Subsidiary of any of the Companies to issue any
security of or equity interest in any of the Companies or any Subsidiary of any
of the Companies, or
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irrevocable proxies or any agreements restricting the transfer of or otherwise
relating to any security or equity interest in any of the Companies or any
Subsidiary of any of the Companies. All of the Shares (which constitute all
outstanding shares of capital stock of the Companies) and all outstanding shares
of capital stock of each Subsidiary have been duly authorized, validly issued
and are fully paid and non-assessable, and are free of preemptive rights. Except
as set forth on Schedule 2.2(a), all dividends declared prior to the date hereof
have been paid. Except as set forth in Schedule 2.2(a), the Companies own, of
record or beneficially, or control, directly or indirectly, no capital stock,
securities convertible into or exchangeable for capital stock or any other
equity interest in any corporation, association or other business entity
representing in excess of 2% of the voting power of such entity. Except as set
forth in Schedule 2.2(a), the Companies are not, directly or indirectly,
participants in any joint venture, limited liability company, partnership or
other noncorporate entity.
(b) The Seller is and will be on the Closing Date the record and
beneficial owner and holder of, and has, and on the Closing Date will have,
record and beneficial title to, the Shares set forth opposite the Seller's name
on Schedule 2.2(b). Each Trust is and will be on the Closing Date the record
owner and holder of, and has, and on the Closing Date will have, record title
to, the Shares set forth opposite the name of each Trust as set forth on
Schedule 2.2(b). The Seller and each Trust own the Shares set forth opposite his
or its name on Schedule 2.2(b) free and clear of any adverse claim of any other
person, including without limitation any lien, mortgage, pledge, security
interest or other encumbrance.
SECTION 2.3 Authority Relative to the Agreement. The Seller and each
Trust have the requisite legal right, power and authority to enter into this
Agreement and perform the actions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Seller and each Trust, and this
Agreement constitutes the valid and binding obligation of the Seller and each
Trust enforceable against the Seller and each Trust in accordance with its
terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to creditors' rights generally and
general equitable principles.
SECTION 2.4 No Violation. Except as set forth on Schedule 2.4, neither
the execution, delivery nor performance of this Agreement, in its entirety, nor
the consummation of the transactions contemplated hereby, as of the Closing
Date, (i) violates in any material respect any order, writ, judgment,
injunction, award or decree to which the Companies, their respective
Subsidiaries, the Seller or the Trusts are a party or, to the Seller's or
Trusts' knowledge, any law, rule, statute, ordinance or regulation applicable to
either of the Companies, any Subsidiary of either of the Companies, the Seller
or the Trusts, (ii) is in material conflict with, results in a material breach
or termination of any provision of, causes the acceleration of the maturity of
any debt or obligation pursuant to, causes any prepayment penalty with respect
to any debt or obligation pursuant to, constitutes a material default (or gives
rise to any right of termination, cancellation or acceleration) under, or
results in the creation of any security interest, lien, charge or other
encumbrance upon any currently owned property of either of the Companies or any
Subsidiary of either of the Companies pursuant to, any terms, conditions or
provisions of any note, license, instrument, indenture, mortgage, deed of trust,
bond, permit, lease or other agreement or understanding or any other restriction
of any kind or character, to which either of the Companies, any Subsidiary of
either of the Companies, the Seller or the Trusts is a party or by which any
currently owned property of either of the Companies or any Subsidiary of either
of
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the Companies is subject or bound, or (iii) conflicts with or results in any
breach of any provision of the Certificate or Articles of Incorporation or
Bylaws of either of the Companies or any Subsidiary of either of the Companies.
SECTION 2.5 Consents and Approvals. Except as described on Schedule 2.5
hereto, and except for filing a Notification and Report Form pursuant to the
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), no prior consent, approval or authorization
of, or declaration, filing or registration with any person, domestic or foreign,
is required of or by either of the Companies, any Subsidiary of either of the
Companies, the Seller or the Trusts in connection with the execution, delivery
and performance by the Seller and each Trust of this Agreement and the
transactions contemplated hereby.
SECTION 2.6 Financial Statements. Schedule 2.6 contains copies of the
audited combined balance sheet of the Companies as of December 31, 1998, and the
related combined statements of operations, shareholder's equity, and cash flows
for the year ended December 31, 1998, and the Companies have provided the
Purchaser copies of their unaudited combined balance sheet (the "Interim Balance
Sheet") as of September 30, 1999 (the "Balance Sheet Date") and the related
combined statement of operations for the nine month period ended September 30,
1999 (all of the foregoing balance sheets and statements of operations,
shareholder's equity and cash flows of the Companies are collectively referred
to as the "Companies' Financial Statements"). The Companies' Financial
Statements present fairly, in all material respects, the financial position of
the Companies as of the dates indicated and the results of their operations and
their cash flows for the periods indicated in conformity with GAAP, except as
set forth on Schedule 2.6.
SECTION 2.7 Accounts and Notes Receivable. Schedule 2.7 sets forth an
accurate list of the accounts and notes receivable of the Companies as of the
Balance Sheet Date and of the accounts and notes receivable of the Companies as
of the second business day preceding the date hereof, including any such amounts
which are not reflected in the Interim Balance Sheet; such Schedule 2.7 shall be
updated by the Seller and delivered to the Purchaser as of the second business
day preceding the Closing Date. Receivables from and advances to employees, the
Seller or the Trusts and any entities or persons related to or Affiliates of the
Seller or the Trusts are separately identified in Schedule 2.7. Schedule 2.7
also sets forth an accurate aging of all accounts and notes receivable as of the
Balance Sheet Date, showing amounts due in 30-day aging categories. The trade
and other accounts receivable of the Companies, including without limitation
those classified as current assets on the Interim Balance Sheet, are bona fide
receivables, were acquired in the ordinary course of business and are stated in
accordance with GAAP.
SECTION 2.8 Absence of Changes. Except as and to the extent set forth
on Schedule 2.8, since the Balance Sheet Date, none of the Companies nor any
Subsidiary of any of the Companies have, directly or indirectly:
(a) made any amendment to its Articles of Incorporation or Bylaws, or
changed the character of its business in any material manner;
(b) suffered any Material Adverse Effect;
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(c) suffered any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the assets, properties or business
of the Companies;
(d) made any change in the authorized capital stock of the Companies or
any Subsidiary or in their outstanding securities or any change in the Seller's
or the Trusts' ownership interests in the Companies or any grant of any options,
warrants, calls, conversion rights or commitments;
(e) made any declaration or payment of any dividend or distribution in
respect of their capital stock or any direct or indirect redemption, purchase or
other acquisition of any of the capital stock of the Companies;
(f) caused any increase in the compensation payable or to become
payable by the Companies to the Seller or the Trusts or any of their officers,
directors, employees, consultants or agents, except for ordinary and customary
bonuses and salary increases for employees in accordance with past practice,
which bonuses and salary increases are set forth in Schedule 2.8;
(g) suffered any work interruptions, labor grievances or labor claims
filed;
(h) to the Seller's and each Trust's knowledge, been effected by any
proposed law, regulation or event or condition of any character materially and
adversely affecting the assets, properties or business of the Companies;
(i) made or entered into, except for the transactions contemplated by
this Agreement, any sale or transfer, or any agreement to sell or transfer, any
material assets, properties or rights of the Companies to any person or entity,
including, without limitation, the Sellers, the Trusts and their Affiliates;
(j) entered into or agreed to any cancellation, or agreement to cancel,
any indebtedness or other obligation owing to the Company;
(k) caused any increase in the indebtedness of the Companies, other
than accounts payable incurred in the ordinary course of business, consistent
with past practices, or incurred in connection with the transactions
contemplated by this Agreement;
(l) made any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, properties or
rights of the Company or requiring consent of any party to the transfer and
assignment of any such assets, properties or rights;
(m) made any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any assets, properties or rights outside of
the ordinary course of the Companies' business;
(n) made any waiver of any material rights or claims of the Companies;
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(o) caused any material breach, amendment or termination of any Listed
Agreement (as defined herein), Permit (as defined herein) or other right to
which the Companies are a party or any of their property is subject; or
(p) entered into or amended any material agreement, commitment or
transaction, except in the ordinary course of business or except in connection
with the transactions contemplated by this Agreement.
SECTION 2.9 Litigation. Except as set forth on Schedule 2.9, there are
no actions, suits, or other proceedings pending or, to the knowledge of the
Seller and each Trust, threatened against either of the Companies or any
Subsidiary of either of the Companies or involving any of the properties or
assets of either of the Companies or any Subsidiary of either of the Companies,
at law or in equity or before or by any foreign, federal, state, municipal, or
other governmental court, department, commission, board, bureau, agency, or
other instrumentality or person or any board of arbitration or similar entity.
Except as set forth on Schedule 2.9, no written notice of any claim, action,
suit or proceeding, whether pending or threatened, has been received by the
Companies. Based on events that have occurred on or before the date of this
Agreement, the satisfaction of the claim listed on item 1 on Schedule 2.9 will
require the payment of an amount of not more than $65,000, and the satisfaction
of the claim listed as item 2 on Schedule 2.9 will require the payment of an
amount of not more than $50,000.
SECTION 2.10 Tax Matters. The Companies have timely filed all requisite
federal, state, local and other tax returns required to be filed on or before
the date hereof for all fiscal periods ended on or before the date hereof, and
have duly paid in full or made adequate provision in the Companies' Financial
Statements for the payment of all Taxes for all periods ending at or prior to
the Closing Date. The Companies have duly withheld and paid or remitted all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
person or entity that required withholding under any applicable Law, including,
without limitation, any amounts required to be withheld or collected with
respect to social security, unemployment compensation, sales or use taxes or
workers' compensation. There have not been during the past three years nor are
there currently in progress any examinations, audits, proceedings, notices,
waivers, asserted deficiencies or disputed valuations or other claims against
the Companies relating to Taxes for any period or periods prior to and including
the Balance Sheet Date and no written notice of any claim for Taxes, whether
pending or threatened, has been received. The Companies have not granted or been
requested to grant any extension of the limitation period applicable to any
claim for Taxes or assessments with respect to Taxes. The Companies are not a
party to any Tax allocation or sharing agreement and are not otherwise liable or
obligated to indemnify any person or entity with respect to any Taxes. The
amounts shown as accruals for Taxes on the Interim Balance Sheet are sufficient
for the payment of all Taxes for all fiscal periods ended on or before that
date. True and complete copies of (a) any tax examinations or audits, (b)
extensions of statutory limitations and (c) the federal, state and local Tax
returns of the Companies for the last three fiscal years have been previously
provided to the Purchaser. There are no requests for any ruling in respect of
any Taxes pending between the Companies and any Governmental Authority. Both
Companies have been validly electing S corporations within the meaning of
Section 1361 and 1362 of the Internal Revenue code of 1986, as amended (the
"Code") at all times during their existence and will be S corporations up to and
including on the Closing Date. The Companies
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currently utilize the accrual method of accounting for income tax purposes. Such
method of accounting has not changed in the past five years.
SECTION 2.11 Employee Benefit Plans.
----------------------
(a) Both of the Companies have delivered to the Purchaser copies of the
health, dental, life insurance and vacation plans and all other material
employee benefit plans, programs or arrangements providing benefits for
employees, directors or independent contractors of both of the Companies (the
"Benefit Plans"), and except as set forth on Schedule 2.11, the most recent
annual report (Form 5500) filed with the Internal Revenue Service with respect
to each Benefit Plan (if any such report was required). None of the Companies
maintain, contribute to or participate in (nor have either of the Companies ever
maintained, contributed or participated in) any Benefit Plans intended to be
qualified under Section 401(a) of the Code. Except as set forth in Schedule
2.11, each of the Benefit Plans has been administered and maintained in material
compliance with the requirements of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and, if applicable, the Internal Revenue Code of
1986, as amended (the "Code") and all other applicable laws. There are no
pending or, to the knowledge of the Seller and each Trust, threatened claims by
or on behalf of the Benefit Plans, the United States Department of Labor, the
Internal Revenue Service, or by any current or former employee of either of the
Companies of such current or former employee alleging a breach of any fiduciary
duties or a violation of applicable state or federal law which could result in a
material liability on the part of either of the Companies or a Benefit Plan
under ERISA or any other law (other than benefit claims and funding obligations
in the ordinary course of business). Each Benefit Plan may be terminated by the
Companies, or if applicable, by an ERISA Affiliate at any time without any
liability, cost or expense, other than costs and expenses that are customary in
connection with the termination of a Benefit Plan.
(b) Except as set forth in Schedule 2.11, all accrued contribution
obligations of the Companies with respect to any Plan have either been fulfilled
in their entirety or are fully reflected in the Companies' Financial Statements.
(c) Except as set forth in Schedule 2.11, no Benefit Plan has incurred
or to the knowledge of the Companies and each Trust, will incur, and neither the
Companies nor any ERISA Affiliate has incurred or, to the knowledge of the
Companies and each Trust, will incur, with respect to any Benefit Plan, any
liability for any tax or penalty due to the Internal Revenue Service.
(d) Except as set forth in Schedule 2.11 neither the Companies nor any
ERISA Affiliate has made or extended any promises or retirement or other
benefits to employees, except as set forth in the Benefit Plans, and neither the
Companies nor any ERISA Affiliate maintains or has established any Benefit Plan
that is a "welfare benefit plan" within the meaning of Section 3(1) of ERISA
that provides for continuing benefits or coverage for any participant or any
beneficiary of a participant after such participant's termination of employment,
except as may be required by Part 6 of Subtitle B of Title I of ERISA and
Section 4980B of the Code and similar state Law provisions. Except as set forth
in Schedule 2.11, neither the Companies nor any ERISA Affiliate maintains, has
established or has ever participated in a multiple employer welfare benefit
arrangement as described in Section 3(40)(A) of ERISA.
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(e) There are no investigations or audits of any Benefit Plan by any
Governmental Authority currently pending and there have been no such
investigations or audits that have been concluded that resulted in any liability
to the Companies or any ERISA Affiliate that has not been fully discharged.
Neither the Companies nor any ERISA Affiliate has participated in any voluntary
compliance or closing agreement programs relating to the form or operation of a
Benefit Plan.
(f) Except as set forth in Schedule 2.11, neither the Companies nor any
ERISA Affiliate has engaged in any prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code, in connection with any Benefit
Plan for which exemption was not available.
(g) The Companies have no liability, whether actual or contingent,
under Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code.
SECTION 2.12 Employment Matters.
------------------
(a) Except as disclosed on Schedule 2.12, none of the Companies nor any
Subsidiary of either of the Companies is a party to any contracts or agreements
granting benefits or rights to employees or consultants, or any conciliation
agreement with the Department of Labor, the Equal Employment Opportunity
Commission or any federal, state or local agency which requires equal employment
opportunities or affirmative action in employment.
(b) Except as set forth in Schedule 2.12, the Companies are not bound
by or subject to any agreement with any labor union. Except as set forth in
Schedule 2.12, no employees of the Companies are represented by any labor union
or covered by any collective bargaining agreement nor, to the Seller's or each
Trust's knowledge, is any campaign to establish such representation in progress
nor has there been any campaign to establish such representation within the last
three years. There is no pending or, to the Seller's or each Trust's knowledge,
threatened labor dispute involving the Companies and any group of their
employees nor have the Companies experienced any significant labor interruptions
over the past five years.
(c) Except as disclosed on Schedule 2.12, (i) there are no unfair labor
practice complaints pending against either of the Companies or any Subsidiary of
either of the Companies before the National Labor Relations Board and no similar
claims pending before any similar state, local or foreign agency, (ii) no
action, suit, complaint, charge, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority brought by or on behalf of
any employee, prospective employee, former employee, retiree, labor organization
or other representative of the Companies' employees is pending or, to the
Seller's and each Trust's knowledge, threatened against the Companies, (iii) no
grievance is pending or, to the Seller's and each Trust's knowledge, threatened
against the Companies, (iv) the Companies are not a party to, or otherwise bound
by, any consent decree with, or citation by, any Governmental Authority relating
to employees or employment practices, (v) the Companies are in material
compliance with and have complied in all material respects with all applicable
Laws, agreements, contracts and policies relating to employment, employment
practices, wages, hours and terms and conditions of employment, (vi) the
Companies have paid in full to, or accrued in their financial books and records,
all employees of the Companies all wages, salaries, commissions, bonuses,
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benefits and other compensation due to such employees or otherwise arising under
any policy, practice, agreement, plan, program, statute or other law, (vii) the
Companies are in substantial compliance with their obligations pursuant to the
Worker Adjustment and Retraining Notification Act of 1988, and all other
notification and bargaining obligations arising under any collective bargaining
agreement, statute or otherwise.
(d) Except as set forth in Schedule 2.12, all employees of the
Companies have attested to the Companies on U.S. Immigration and Naturalization
Service Form I-9 ("Form I-9"), and have provided the Companies documentation
required by Form I-9 to corroborate, that they are (i) citizens of the United
States or (ii) not citizens of the United States, but, in accordance with the
Immigration Reform and Control Act of 1986 ("IRCA") and other applicable Laws
are either (A) immigrants authorized to work in the United States or (B)
nonimmigrants authorized to work in the United States for the Companies in their
specific jobs.
SECTION 2.13 Patents, Trademarks and Copyrights.
-----------------------------------
(a) Schedule 2.13 sets forth all patents, patent applications,
trademarks and service marks, trademark and service mark applications, and
copyrights (whether registered or unregistered) (collectively, the "Intellectual
Property") required by the Companies and any Subsidiary of either of the
Companies in their businesses and operations. The Companies or the Subsidiaries
of the Companies own or license or otherwise have the right to use the items
listed on Schedule 2.13.
(b) None of the Companies are currently in receipt of any notice of any
violation of, and to the knowledge of the Seller and each Trust, are violating
or infringing upon the intellectual property rights of any other person or
entity in any Intellectual Property. Except as set forth on Schedule 2.13, to
the knowledge of the Seller and each Trust, no other person or entity is
infringing any intellectual property rights of either of the Companies with
respect to the Intellectual Property.
SECTION 2.14 Environmental Matters. Except as set forth in Schedule
2.14, (a) the Companies are in compliance in all material respects with all
applicable Environmental Laws, (b) the Companies have obtained and are in
compliance with all necessary permits, licenses, authorizations and other
approvals necessary to treat, transport, store, dispose of and otherwise handle
Hazardous Substances and have reported, to the extent required by all applicable
Environmental Laws, all past and present sites owned or operated by either of
the Companies where Hazardous Substances have been treated, stored, disposed of
or otherwise handled, (c) except in compliance with applicable Environmental
Laws, or except as would not reasonably be expected to cause the Companies to
incur material liability, there have been no "releases" or threats of "releases"
(as defined in any Environmental Laws) caused by the Companies at, from, in, to,
under or on any property currently or previously owned or operated by the
Companies, (d) there is no on-site or off-site location to which the Companies
have transported or disposed of Hazardous Substances or arranged for the
transportation or disposal of Hazardous Substances which is known by the Seller
to be the subject of any federal, state, local or foreign enforcement action or
any other investigation which could lead to any material claim against the
Purchaser or the Companies for any clean-up cost, remedial work, damage to
natural resources or personal injury, including, but not limited to, any claim
under any Environmental Law and (e) the
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Companies have no material contingent liability in connection with any release
or disposal of any Hazardous Substance into the environment caused by the
Companies, or to the Seller's and each Trust's knowledge, by any other person.
Except as set forth in Schedule 2.14, to Seller's and each Trust's knowledge,
none of the past or present sites owned or operated by the Companies is
currently or has ever been designated as a hazardous waste (as defined pursuant
to the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq.)
treatment, storage and/or disposal facility, nor has any such facility ever
applied for a permit, license, authorization or other approval designating it as
a hazardous waste treatment, storage and/or disposal facility, under any
Environmental Law. The Companies have made available to the Purchaser copies
(or, if not available, accurate written summaries) of all environmental
investigations, studies, audits, reviews and other analyses which are in the
actual possession of the Companies respecting any facility site or other
property presently owned or operated by the Companies.
SECTION 2.15 Insurance. Schedule 2.15 sets forth an accurate list as of
the Balance Sheet Date of (a) all insurance policies carried by the Companies,
(b) all insurance loss runs or workmen's compensation claims received for the
past five policy years, and (c) the following information with respect to all
insurance policies currently carried by the Companies and previously carried by
the Companies within the last five years: (i) insurer, (ii) type of policy,
(iii) coverage period, and (iv) policy limits and amount of deductible or loss
retention. Except as set forth in Schedule 2.15, none of such policies are
"claims made" policies. To the knowledge of the Seller and each Trust the
policies described in Schedule 2.15 for the current policy year are currently in
full force and effect. No termination notices with respect to the policies have
been received by either Company and neither of the Companies has defaulted on
the payment of any premiums with respect to the policies. Except for items
number 1 and 2 on Schedule 2.9 with respect to which no representation or
warranty is made under this Section 2.15, all of the claims listed on Schedule
2.9 are recoverable under such policies, except to the extent of any applicable
deductible or loss retention as set forth on Schedule 2.9 (it being understood
and agreed that this sentence applies only to the claims listed on Schedule 2.9
and no other claims or potential claims).
SECTION 2.16 Title to Properties; Encumbrances. Schedule 2.16 sets
forth an accurate list of all real and personal property included in "property
and equipment" on the Interim Balance Sheet and all other tangible assets of the
Companies with a historical cost in excess of $5,000 (i) owned by the Companies
as of the Balance Sheet Date or (ii) acquired since the Balance Sheet Date.
Schedule 2.16 also sets forth an accurate list of all real and personal property
currently leased by the Companies, and an accurate list of all leases for
significant equipment and for all real property leased by the Companies and
descriptions of all real property (as currently owned or leased by the
Companies) on which plants, buildings, warehouses, workshops, garages and other
structures (collectively, the "Structures") and vehicles used in the operation
of the business of the Companies are situated 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 Companies. Schedule
2.16 indicates which properties and assets used in the operation of the
businesses of the Companies are currently owned by the Seller, Trusts or
Companies or Affiliates of either of the Companies or the Seller or Trusts.
Except as specifically identified in Schedule 2.16, all of the tangible assets,
plants, Structures, vehicles and other significant machinery and equipment owned
or leased by the Companies listed in Schedule 2.16 are in good working order and
condition, ordinary wear and tear
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excepted. Except as set forth on Schedule 2.16, neither the Companies nor the
Seller or Trusts have received any notice nor have any knowledge that any of the
real property owned or leased by either of the Companies is or will be affected
by any special assessments, condemnation, eminent domain, off-site improvements
to be constructed, change in grade of public streets or similar proceedings.
There is ingress and egress to and from each of the real properties owned and
leased by the Companies of record adequate for the use of such properties as
currently operated by the Companies. Except as disclosed in Schedule 2.16,
neither of the Companies has made any off-record agreements affecting the
ownership, use or occupation of any such properties. Except as set forth on
Schedule 2.16, all public utilities, including, without limitation, sewers,
water, electric, gas and telephone, required for the operation of each of the
real properties owned and leased by the Companies as presently operated are
installed and operating, and all installation and connection charges therefor
have been paid in full. Except as set forth on Schedule 2.16, both of the
Companies and each Subsidiary of both of the Companies have good and
indefeasible title to all of the assets reflected in the balance sheets included
among the Companies' Financial Statements and acquired since the Balance Sheet
Date other than any assets therein reflected that have been sold or otherwise
disposed of in the ordinary course of business since the date thereof free and
clear of liens, claims and encumbrances other than (i) liens, mortgages,
pledges, security interests or other encumbrances securing indebtedness shown on
the Companies' Financial Statements, (ii) liens for current taxes, payments of
which are not yet delinquent or that are being contested in good faith by
appropriate proceedings, (iii) liens in respect of pledges or deposits under
workers' compensation laws or similar legislation, or carriers', warehousemen's,
mechanics', laborers' and materialmen's and similar liens, if the obligations
secured by such liens are not then delinquent or are being contested in good
faith by appropriate proceedings, (iv) liens relating to accounts payable
incurred in the ordinary course of business and consistent with past practice,
and (v) such imperfections of title which do not materially detract from the
value of the assets of either of the Companies and any Subsidiary of either of
the Companies (collectively, the "Permitted Liens"). Both of the Companies and
each Subsidiary of both of the Companies hold under valid lease agreements all
real and personal properties that are subject to the leases to which reference
is made on Schedule 2.16 and enjoy peaceful and undisturbed possession of such
properties under such leases, other than any personal property as to which such
leases have terminated in accordance with their terms or in the ordinary course
of business since such date. The leases set forth on Schedule 2.16 are in full
force and effect and constitute valid and binding agreements of the Companies
and, to the Seller's and each Trust's knowledge, the other parties thereto in
accordance with their respective terms, and all amounts currently payable
thereunder have been paid. Schedule 2.16 sets forth a list of all title reports
and title insurance policies received or owned by the Companies with respect to
the real property owned or leased by the Companies. Schedule 2.16 includes a
summary description of all outstanding commitments of the Companies involving
the opening of new operations, expansion of existing operations or the
acquisition of any real property or existing business, to which management of
the Companies has devoted any significant effort or expenditure in the two-year
period prior to the date of this Agreement.
SECTION 2.17 Permits. Seller has provided the Purchaser an accurate
list, summary description and/or copies of all licenses, franchises, permits,
approvals, certificates, transportation authorities and other authorizations
issued by any Governmental Authority held by the Companies that are material to
the conduct of their respective business, including, without limitation,
permits, licenses and operating authorizations, fuel permits, franchises and
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certificates, owned or held by the Companies (collectively, the "Permits"). The
Permits are valid, and neither of the Companies have received any written notice
that any Governmental Authority intends to cancel, terminate or not renew any
such Permit. The Permits are all the material permits, licenses, operating
authorizations, franchises, approvals, certificates, transportation authorities
and other governmental authorizations that are required for the operation of the
businesses of the Companies as conducted as of the date hereof in material
compliance with all applicable Laws. The Companies have conducted and are
conducting their respective businesses in material compliance with the
requirements, standards, criteria and conditions set forth in the Permits, as
well as the applicable orders, approvals and variances related thereto, and are
not in material violation of any of the foregoing. Except as specifically
provided in Schedule 2.17, (i) the transactions contemplated by this Agreement
will not result in a material default under, a material breach or violation of,
a termination of, or materially and adversely affect the rights and benefits
afforded to the Companies by, any Permits and (ii) none of the Permits require
notice to, or the consent or approval of, any Governmental Authority to the
transactions contemplated by this Agreement or to the use of such Permit by the
Companies after the transactions contemplated by this Agreement. SECTION 2.18
Inventories. Except as Schedule 2.18 sets forth: (i) all inventories of the
Companies which are classified as such on the Interim Balance Sheet are
merchantable and salable or usable in the ordinary course of business of the
Companies; and (ii) the Companies do not depend on any single vendor for its
inventories the loss of which could have a material adverse effect on the
business or financial condition of the Companies.
SECTION 2.19 Agreements, Contracts and Commitments.
-------------------------------------
(a) Schedule 2.19 (i) sets forth a list of all customers representing
5% or more of the Companies' revenues for the fiscal year ended December 31,
1998 and the interim period ended on the Balance Sheet Date (the "Material
Customers"), and (ii) sets forth an accurate list and briefly describes the
following contracts to which the Companies are currently a party or by which
either of them or any of their respective properties is bound (the "Listed
Agreements"): (A) all customer contracts, other than purchase orders entered
into by either Company in the ordinary course of business, (B) contracts with
any labor organizations, (C) leases providing for annual rental payments in
excess of $10,000, (D) loan agreements, (E) pledge and security agreements, (F)
financing agreements, (G) indemnity or guaranty agreements or obligations, (H)
bonds, debentures and indentures, (I) notes, (J) mortgages, (K) joint venture,
partnership or cost-sharing agreements, (L) options to purchase real or personal
property, (M) agreements relating to the purchase or sale by the Companies of
assets or securities outside the ordinary course of business for more than
$10,000, (N) agreements, which, by their terms, require the consent of any party
thereto to the consummation of the transactions contemplated hereby, (O) voting
trust agreements or similar stockholders' agreements, (P) agreements providing
for the purchase from a supplier of all or substantially all the requirements of
the Companies of a particular product, material or service and (Q) any other
contracts, warranties, commitments, understandings, instruments and similar
agreements and arrangements which involve aggregate payments in excess of
$10,000 that cannot be canceled in 30 days' or less notice without penalty or
premium or any continuing obligation or liability. Prior to the date hereof, the
Companies have made available to the Purchaser true, complete and correct copies
and complete written descriptions of all the Listed Agreements. Except as set
forth in Schedule 2.19, since December 31, 1998, (i)
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none of the Companies have breached any material provision of, or are in default
in any material respect under the terms of any Listed Agreement and, to the
knowledge of the Seller and the Trusts, no event has occurred and no condition
exists which, after notice or lapse of time or both, would constitute such a
material default under the terms of any such Listed Agreement by any third party
and (ii) no Material Customer has canceled or substantially reduced or, to the
knowledge of the Seller and each Trust, is threatening to cancel or
substantially reduce its purchases of the Companies' products or services. The
Listed Agreements are in full force and effect and constitute valid and binding
agreements of the Companies and, to the knowledge of the Seller and the Trusts,
the other parties thereto in accordance with their respective terms.
(b) Except as set forth in Schedule 2.19, the Companies are not a party
to any contracts that expressly provide for price redetermination or
renegotiation (it being understood and agreed that the foregoing representation
and warranty does not apply to purchase orders entered into in the ordinary
course of business). Except to the extent set forth in Schedule 2.19, the
Companies are not required to provide any bonding or other financial security
arrangements in any material amount in connection with any transactions with any
of its customers or suppliers.
(c) Except as set forth in Schedule 2.19, to the knowledge of the
Seller and the Trusts, neither the Companies, the Seller or the Trusts, nor any
officer, employee, stockholder, director, representative or agent thereof is a
party to any contract, arrangement, commitment or understanding among themselves
or with any of the Companies' customers for the repurchase of products, sharing
of fees, rebating of charges, bribes, kickbacks or other similar arrangements.
(d) Except as set forth in Schedule 2.19, neither the Seller nor the
Trusts have any knowledge of any plan or intention of any other party to any
Listed Agreement to exercise any right to cancel or terminate that Listed
Agreement, and neither the Seller nor the Trusts have any knowledge of any
condition or state of facts which would justify the exercise of such a right.
SECTION 2.20 Compensation; Employment Agreements. Schedule 2.20 sets
forth an accurate schedule of all officers and managerial employees of the
Companies with annual salaries of $50,000 or more, listing the rate of
compensation (and the portions thereof attributable to salary, bonus, benefits
and other compensation, respectively) of each of such persons as of December 31,
1998. Neither the Seller nor the Trusts have any knowledge that any of such
individuals has any present intention of terminating his or her employment or
association with the Company by which he or she is currently employed. Schedule
2.20 sets forth a list of all written employment or consulting agreements.
Except as set forth in Schedule 2.20, neither of the Companies 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 officer, director, stockholder, member or employee of such
Company or other person performing services for such Company which would not be
payable or provided in the absence of this Agreement or the consummation of the
transactions contemplated hereby, including any parachute payment under Section
280G of the Code.
SECTION 2.21 Noncompetition, Confidentiality and Nonsolicitation
Agreements; Employee Policies. Schedule 2.21 sets forth all agreements
containing covenants not to compete
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or solicit employees or to maintain the confidentiality of information to which
either of the Companies is bound or under which either of the Companies has any
rights or obligations.
SECTION 2.22 Accounts with Banks and Brokerages; Powers of Attorney.
Schedule 2.22 sets forth an accurate schedule, as of the date of this Agreement,
of (a) the name of each financial institution or brokerage firm in which either
of the Companies has accounts or safe deposit boxes; (b) the names in which the
accounts or boxes are held; (c) the type of account and (d) the name of each
person authorized to draw thereon or have access thereto. Schedule 2.22 also
sets forth the name of each person, corporation, firm or other entity holding a
general or special power of attorney from either of the Companies and a
description of the terms thereof.
SECTION 2.23 Absence of Certain Business Practices. Neither the
Companies nor the Seller or Trusts nor any of their respective Affiliates has
given or offered to give anything of value to any governmental official,
political party or candidate for government office that was illegal to give or
offer to give nor has it otherwise taken any action which would constitute a
violation of the Foreign Corrupt Practices Act of 1977, as amended, or any
similar Law.
SECTION 2.24 Competing Lines of Business; Related-Party Transactions.
Except as set forth in Schedule 2.24, neither the Seller or Trusts nor any other
Affiliate of the Companies own, directly or indirectly, any interest in, or is
an officer, director, employee or consultant of or otherwise receives
remuneration from, any Competitive Business (as defined in Section 7.1(a)(i)),
lessor, lessee, customer or supplier of either of the Companies. Except as set
forth in Schedule 2.24, no officer or director of either of the Companies nor
the Seller or Trusts have, nor had any interest in any tangible or intangible
assets or real or personal property used in or pertaining to the business of the
Companies.
SECTION 2.25 Capital Expenditures. Schedule 2.25 sets forth the total
amount of the current, legally binding obligations of either of the Companies
with respect to capital expenditures in excess of $25,000.
SECTION 2.26 Product Warranties. Schedule 2.26 sets forth all the terms
and conditions of all express written product or service warranties and
guarantees given by either of the Companies. The aggregate amount of losses and
expenses incurred by reason of allowances, customer dissatisfaction or
liabilities arising under such warranties and guarantees did not exceed an
aggregate of approximately $250,000 during the five years ended December 31,
1998, and there has been no material adverse change in that experience since
said date.
SECTION 2.27 Year 2000 Compliance. Seller and the Trusts represent and
warrant that their responses to Purchaser's Year 2000 Compliance Questionnaire
provided to Purchaser's attorneys on December 20, 1999 are true and correct in
all material respects.
SECTION 2.28 Disclosure. To the knowledge of the Seller and each Trust,
none of the representations or warranties of the Seller and Trusts to the
Purchaser in this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements herein,
in light of the circumstances under which they were made, not misleading.
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SECTION 2.29 Disclaimer of Additional and Implied Warranties. The
Seller is making no representations or warranties, express or implied, of any
nature whatsoever except as specifically set forth in Article II of this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby makes the representations and warranties set forth
in this Article III to the Seller and each of the Trusts.
SECTION 3.1 Organization and Authority.
--------------------------
(a) The Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The Purchaser has all
requisite corporate power and authority to carry on its business as it is now
being conducted, and to own, lease and operate its properties and assets, and to
perform all its obligations under the agreements and instruments to which it is
a party or by which it is bound. The Purchaser is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which the properties and assets owned, leased or operated
by it or the nature of the business conducted by it make such qualification
necessary, except in such jurisdictions where the failure to be duly qualified
or in good standing does not and would not result in a Material Adverse Effect;
provided, however, that the representations and warranties contained in this
sentence shall be of no force and effect to the extent that such Material
Adverse Effect can be eliminated by the Purchaser becoming qualified in such
jurisdictions.
(b) True, correct and complete copies of the Articles of Incorporation
and Bylaws of the Purchaser, with all amendments thereto through the date of
this Agreement, have been delivered by the Purchaser to the Seller.
SECTION 3.2 Authority Relative to Agreement. The Purchaser has full
corporate power and authority to execute and deliver this Agreement, and no
further corporate proceedings on the part of the Purchaser are necessary to
consummate the transactions contemplated hereby, which have been duly and
validly authorized by the Board of Directors of the Purchaser. This Agreement
has been duly and validly executed and delivered by the Purchaser, and this
Agreement constitutes the valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium, or other similar
laws relating to creditors' rights generally and general equitable principles.
SECTION 3.3 No Violation. Neither the execution, delivery nor
performance of this Agreement, in its entirety, nor the consummation of the
transactions contemplated hereby, as of the Closing Date, (i) violates any
order, writ, judgment, injunction, award, decree, or to the Purchaser's
knowledge, law, rule, statute, ordinance or regulation applicable to the
Purchaser, (ii) is in conflict with, results in a breach or termination of any
provision of, causes the acceleration of the maturity of any debt or obligation
pursuant to, constitutes a default (or gives rise to any right of termination,
cancellation or acceleration) under, or results in the creation of any security
interest, lien, charge or other encumbrance upon any currently owned property of
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the Purchaser pursuant to, any terms, conditions or provisions of any note,
license, instrument, indenture, mortgage, deed of trust or other agreement or
understanding or any other restriction of any kind or character, to which the
Purchaser is a party or by which any currently owned property of the Purchaser
is subject or bound, or (iii) conflicts with or results in any breach of any
provision of the Certificate or Articles of Incorporation or Bylaws of the
Purchaser.
SECTION 3.4 Consents and Approvals. Except for filing a Notification
and Report Form pursuant to the applicable requirements of the HSR Act, no prior
consent, approval or authorization of, or declaration, filing or registration
with any person, domestic or foreign, is required of or by the Purchaser in
connection with the execution, delivery and performance by the Purchaser of this
Agreement and the transactions contemplated hereby.
SECTION 3.5 Investment Intent.
-----------------
(a) The Purchaser is acquiring the Shares for its own account for
investment and not with a view toward resale or redistribution in a manner which
would require registration under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, and the Purchaser does
not presently have any reason to anticipate any change in its circumstances or
other particular occasion or event which would cause it to sell the Shares or
any part thereof or interest therein. The Purchaser has not offered or sold the
Shares or any part thereof or interest therein, and has no present intention of
dividing the Shares with others or of reselling or otherwise disposing of the
Shares or any part thereof or interest therein either currently or after the
passage of a fixed or determinable period of time or upon the occurrence or
nonoccurrence of any predetermined event or circumstance.
(b) The Purchaser acknowledges that (i) its investment in each of the
Companies involves a substantial degree of risk and (ii) it understands that the
purchase of the Shares is an illiquid investment.
(c) The Purchaser acknowledges that the Seller has made available, or
caused each of the Companies to make available, to Purchaser the opportunity to
evaluate the merits and risks associated with ownership of the Shares, including
information related to the financial position and results of operations of each
of the Companies. Specifically, the Purchaser acknowledges receipt of the
Companies Financial Statements and the Purchaser has had access to officers of
each of the Companies to make such further inquiry as the Purchaser has deemed
appropriate. The Purchaser further acknowledges that there can be no assurance
that the results of each of the Companies' operations or the operations of any
Subsidiary of any of the Companies will be as contained in any of the
information provided to the Purchaser. The Purchaser represents that it has made
other investments of a similar nature or, by reason of the Purchaser's business
and financial experience and of the business and financial experience of those
persons it has retained to advise it with respect to its purchase and ownership
of the Shares, it is a sophisticated, well-informed investor and has acquired
the capacity to protect its own interest in investments of this nature. In
reaching the conclusion that it desires to acquire the Shares, the Purchaser has
carefully evaluated its financial resources and investment position, and the
risks associated with this investment and acknowledges that it is able to bear
the economic risks of this investment.
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SECTION 3.6 The Purchaser Common Stock. The shares of Purchaser Common
Stock to be issued to the Seller and the Trusts pursuant to this Agreement are
duly authorized and, when issued in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable. The issuance of the
Purchaser Common Stock pursuant to this Agreement will transfer to the Seller
and the Trusts valid title to such shares of the Purchaser Common Stock, free
and clear of all liens, claims, pledges, security interests or other
encumbrances, except for any liens, claims, pledges, security interests or other
encumbrances created by the Seller or the Trusts.
SECTION 3.7 Commission Filings; Financial Statements.
----------------------------------------
(a) Since May 21, 1999, the Purchaser has filed all reports,
registration statements and other filings, together with any amendments required
to be made with respect thereto, that it has been required to file with the SEC
under the Securities Act and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). All reports, registration statements and other filings
filed by the Purchaser with the SEC since May 21, 1999 through the date of this
Agreement, together with any amendments thereto, are listed on Schedule 3.7 and
are sometimes collectively referred to as the "Purchaser Commission Filings".
The Purchaser has heretofore delivered to the Seller and each Trust copies of
the Purchaser Commission Filings. As of the respective dates of their filing
with the SEC, the Purchaser Commission Filings complied, and any reports,
registration statements and other filings filed by the Purchaser with the SEC
after the date of this Agreement through the Closing Date will comply, in all
material respects with the Securities Act, the Exchange Act and the rules and
regulations of the SEC promulgated thereunder, and did not, or will not, as the
case may be, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
(b) All material contracts of the Purchaser and the Purchaser's
Subsidiaries have been included in the Purchaser Commission Filings, except for
those contracts not required to be filed pursuant to the rules and regulations
of the SEC and those contracts entered into in connection with the transactions
contemplated hereby.
(c) Each of the consolidated financial statements (including any
related notes or schedules) included in the Purchaser Commission Filings was
prepared in accordance with GAAP applied on a consistent basis (except as may be
noted therein or in the notes or schedules thereto), and fairly presents in all
material respects the consolidated financial position of the Purchaser and the
Purchaser's Subsidiaries as of the dates thereof and the results of operations,
cash flows and changes in shareholders' equity for the periods then ended
(subject, in the case of the unaudited interim financial statements, to normal
year-end audit adjustments on a basis comparable with past periods). None of
Purchaser's Subsidiaries is subject to the information reporting requirements of
Section 13 of the Exchange Act.
SECTION 3.8 Financing. The Purchaser has sufficient capital resources
to enable Purchaser to pay the Purchase Price in accordance with Section 1.2 and
to effect the other transactions contemplated by this Agreement at the Closing
Date.
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SECTION 3.9 Disclosure. To the knowledge of the Purchaser, none of the
representations or warranties of the Purchaser to the Seller and the Trusts in
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements herein, in light
of the circumstances under which they were made, not misleading.
SECTION 3.10 Disclaimer of Additional and Implied Warranties. The Purchaser is
makIing no representations or warranties, express or implied, of any nature
whatsoever except as specifically set forth in Article III of this Agreement.
ARTICLE IV
FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON THE
PURCHASER COMMON STOCK
SECTION 4.1 Compliance with Law. The Seller and the Trusts acknowledge
the shares of Purchaser Common Stock issued in accordance with the terms of this
Agreement (the "Restricted Shares") will not be registered under the Securities
Act and therefore may not be resold without compliance with the Securities Act.
The Restricted Shares will be acquired by the Seller and the Trusts solely for
their own account, for investment purposes only, and with no present intention
of distributing, selling or otherwise disposing of them in connection with a
distribution requiring registration under the Securities Act. Seller and each
Trust covenants, warrants and represents that none of the Restricted Shares held
by the Seller and each Trust will be, directly or indirectly, offered, sold,
assigned, pledged, hypothecated, transferred or otherwise disposed of except
after full compliance with all of the applicable provisions of the Securities
Act and the rules and regulations of the SEC. Certificates representing the
Restricted Shares shall bear the following legend:
The shares represented by this certificate were not issued in a
transaction registered under the Securities Act of 1933, as amended
("Securities Act"), or any applicable state securities laws. The shares
represented hereby have been acquired for investment and may not be
sold or transferred unless such sale or transfer is covered by an
effective registration statement under the Securities Act and
applicable state securities laws or, in the opinion of counsel to the
issuer, is exempt from the registration requirements of the Securities
Act and such laws.
SECTION 4.2 Economic Risk; Sophistication; Accredited Investors. Seller
and each Trust is able to bear the economic risk of an investment in the
Restricted Shares and can afford to sustain a total loss of such investment.
Seller and each Trust has such knowledge and experience in financial and
business matters that he or it is capable of evaluating the merits and risks of
the proposed investment and therefore has the capacity to protect his or its own
interests in connection with the acquisition of the Restricted Shares pursuant
hereto. Seller and each Trust represents to the Purchaser that he or it is an
"accredited investor," as that term is defined in Regulation D under the
Securities Act. Seller, each Trust or their representatives have had an adequate
opportunity to ask questions of, and receive answers from the appropriate
officers and representatives of the Purchaser concerning, among other matters,
the Purchaser, its management, business, operations and financial condition, its
plans for the operation of its
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business and potential additional acquisitions, and to obtain any additional
information requested by the Seller or such Trust or their representatives
concerning such matters.
SECTION 4.3 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the SEC that may permit the resale
of the Purchaser Common Stock to the public without registration, for a period
of two years after the Closing, the Purchaser agrees to use its commercially
reasonable efforts to:
(a) make and keep public information (as such terms are defined in Rule
144 promulgated under the Securities Act or any successor thereto ("Rule 144"))
regarding the Purchaser available;
(b) file with the SEC in a timely manner all reports and other
documents required of the Purchaser under the Securities Act and the Securities
Exchange Act of 1934, as amended, (the "Exchange Act"); and
(c) furnish to the Seller or a Trust upon written request a written
statement by the Purchaser as to its compliance with the reporting requirements
of Rule 144, the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Purchaser, and such other reports and
documents so filed as the Seller or such Trust may reasonably request in
availing himself or itself of any rule or regulation of the SEC allowing the
Seller or such Trust to sell any such shares without registration.
SECTION 4.4 Lockup Period. The Seller and each Trust severally, and not
jointly, with respect to the Restricted Shares owned by him or it covenant,
warrant and represent that during the two-year period commencing on the Closing
Date (the "Lockup Period") (i) none of the Restricted Shares will be offered,
sold, assigned, pledged, hypothecated, transferred or otherwise disposed of,
directly or indirectly, during the one-year period commencing on the Closing
Date; (ii) following the one-year period described in clause (i) and for the
remainder of the Lockup Period, the Seller and Trusts shall be entitled to sell
23% of the Restricted Shares in accordance with Rule 144; (iii) after the Lockup
Period, the Restricted Shares may be offered, sold, assigned, pledged,
hypothecated, transferred or otherwise disposed of directly or indirectly, only
after full compliance with all of the applicable provisions of the Securities
Act and the rules and regulations of the SEC; (iv) during the one-year period
commencing on the Closing Date, the Seller and each Trust shall not engage in
put, call, short-sale, hedge, straddle, collar or similar transactions with
respect to any of the Restricted Shares intended to reduce his or its risk of
owning such Restricted Shares; and (v) following the one-year period described
in clause (iv) and for the remainder of the Lockup Period, the Seller and Trusts
shall not engage in put, call, short-sale, hedge, straddle, collar or similar
transactions with respect to more than 50% of the Restricted Shares intended to
reduce his or its risk of owning such Restricted Shares. Certificates
representing the Restricted Shares shall bear the following legend, which shall
reflect the Lockup Period, in addition to the legend under Section 4.1:
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The shares represented by this certificate are subject to a contractual
restriction on transfer that expires on February ___, 2002 and may not
be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of except as permitted by such contractual
restriction without the prior written consent of U.S. Concrete, Inc.
SECTION 4.5 Prospectus Delivery. Seller and each Trust represents and
acknowledges that he or it has been provided with the most current prospectus of
the Purchaser, dated May 25, 1999, for informational purposes only (the
Purchaser not having yet been required to file an annual report on Form 10-K) on
November 1, 1999.
ARTICLE V
COVENANTS
SECTION 5.1 Affirmative Covenants of the Companies. For so long as this
Agreement is in effect, the Seller shall (without the Seller, any Trust or
either of the Companies having any obligation to incur any expense outside the
ordinary course of business), from the date of this Agreement to the Closing,
except as specifically contemplated by this Agreement or as otherwise agreed to
by the Purchaser, cause each of the Companies to:
(a) use reasonable efforts to preserve their business organization
intact and to conduct their affairs only in the ordinary course of business;
(b) use reasonable efforts to preserve their existing business
relationships with their customers and others having business relationships with
them and to maintain the goodwill enjoyed by them with such persons;
(c) continue to pay all vendors and suppliers on a timely basis;
(d) use reasonable efforts to keep available the services of their key
employees;
(e) comply with all material contractual obligations applicable to it;
(f) comply in all material respects with all laws, statutes and
regulations applicable to it and the conduct of its business, including the
timely payment of all taxes (except for those being contested in good faith);
(g) maintain all of its assets in good repair, order and condition,
reasonable wear and tear excepted, and maintain its insurance coverages in
effect before the date hereof or obtain comparable insurance coverages from
reputable insurers which, in respect to amounts, types and risks insured, are
consistent with its coverages in effect before the date hereof;
(h) promptly notify the Purchaser upon obtaining knowledge of any
default, event of default or condition which with the passage of time or giving
of notice would constitute a default or event of default under any of the
Companies' contractual obligations;
(i) promptly notify the Purchaser upon obtaining knowledge of any
material pending or threatened litigation against either of the Companies;
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(j) maintain and preserve intact its corporate existence, business
organization, assets, licenses, permits, authorizations and business
opportunities;
(k) maintain good accounting practices;
(l) promptly notify the Purchaser upon the Seller's obtaining knowledge
(i) of any condition or event which constitutes a material breach of any of the
covenants or agreements set forth in this Agreement, specifying the nature and
period of existence of any such condition or event and what action the Company
has taken, is taking or proposes to take with respect thereto or (ii) of any
condition or event which, in the opinion of the Seller, could have a Material
Adverse Effect; and
(m) notify the Purchaser of the declaration or payment of any cash
dividend or distribution in respect of the capital stock of either of the
Companies by the delivery of an updated Schedule 2.8 as of the Closing Date.
SECTION 5.2 Negative Covenants of the Companies. For so long as this
Agreement is in effect, the Seller shall, from the date of this Agreement to the
Closing, except as specifically contemplated by this Agreement, as disclosed in
the Schedules to this Agreement or as otherwise agreed to by the Purchaser,
cause each of the Companies not to:
(a) sell or otherwise dispose of tangible or intangible assets or real
or personal property except in the ordinary course of business;
(b) make any amendments to its Articles or Certificate of Incorporation
or Bylaws;
(c) make any capital expenditures not in the ordinary course of
business;
(d) enter into any contract or transaction with any Affiliate of the
Companies except for (i) contracts and transactions entered into in the ordinary
course of business whereby the monetary or business consideration arising from
such contract or transaction would be substantially as advantageous to the
Companies as the monetary and business consideration which it would obtain in a
comparable arm's length transaction and (ii) the Transaction Documents to which
the Companies are a party and other contracts entered into pursuant to this
Agreement;
(e) except for the transaction bonuses set forth on Schedule 2.20
(which shall be included among the Companies' current liabilities for purposes
of calculating the Working Capital Adjustment), change any compensation or rate
of compensation payable to any officer, director or key employee, other than in
the ordinary course of business;
(f) contract to create any mortgage, pledge, lien, security interest or
encumbrance, restriction, or charge of any kind on its assets (other than liens
existing as of the date hereof, or liens created in the ordinary course of
business);
(g) materially change the terms of any agreement with a customer or
supplier or materially discount any accounts receivable from any customer;
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(h) incur any indebtedness for borrowed money not in the ordinary
course of business;
(i) issue any equity security or redeem, purchase or otherwise acquire
any of the capital stock of the Companies or their respective Subsidiaries; or
(j) enter into any transactions not in the ordinary course of business.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Certain Tax Matters.
-------------------
(a) The Purchaser will pay the first $250,000 of the amount by which
(i) the federal tax incurred by the Seller and the Trusts on the sale of the
Shares attributable to the making of the Section 338(h)(10) Election exceeds
(ii) the federal tax that would have been incurred by the Seller and the Trusts
on the sale of the Shares if the Section 338(h)(10) Election had not been made
(the "Excess Federal Tax"). In the event such Excess Federal Tax attributable to
the making of the Section 338(h)(10) Election exceeds $250,000, the Purchaser
will pay 80% of the excess above $250,000 and the Seller and the Trusts will pay
the remaining 20% of such excess. The Purchaser will indemnify the Seller and
each Trust, and the Seller and each Trust will indemnify the Purchaser, against
any adverse consequences arising out of any failure to pay their respective
shares of the Excess Federal Tax. Notwithstanding anything to the contrary
herein, the maximum amount of Excess Federal Tax that the Purchaser shall be
obligated to pay pursuant to this Section 6.1(a) is $2,500,000, and any Excess
Federal Tax that the Purchaser is not obligated to pay under this Section 6.1(a)
shall be paid by the Seller or the Trusts, as appropriate. The Purchaser will
pay any state, local or foreign tax and will indemnify the Seller and each Trust
against any adverse consequences arising out of any failure to pay such tax
attributable to such an election under state, local or foreign law similar to
the election available under Section 338(g) of the Code (or which results from
the making of an election under Section 338(g) of the Code) with respect to the
purchase and sale of the stock of each of the Companies hereunder, including,
but not limited to, (i) any tax imposed under Section 1374 of the Code; (ii) any
tax imposed under Reg. ss.1.338(h)(10) - 1(e)(5); or (iii) any state, local or
foreign tax imposed on each of the Companies' gain on the deemed asset sale.
(b) Prior to the Closing Date, none of the Companies, the Seller nor
any Trust will revoke the Companies' election to be taxed as S corporations
within the meaning of Sections 1361 and 1362 of the Code. Prior to the Closing
Date, none of the Companies, the Seller nor any Trust will take or allow any
action that would result in the termination of either of the Companies' status
as validly electing S corporations within the meaning of Sections 1361 and 1362
of the Code.
(c) The Seller shall prepare or cause to be prepared and file or cause
to be filed all tax returns for both of the Companies for all periods ending on
or prior to the Closing Date which are filed after the Closing Date. The Seller
shall permit the Purchaser to review and comment on each such tax return
described in the preceding sentence prior to filing. To the extent permitted
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by applicable law, the Seller shall include any income, gain, loss, deduction or
other tax items for such periods on their tax returns in a manner consistent
with the Schedule K-1s prepared by the Seller for such periods. To the extent
the Purchaser is obligated to make any tax payments pursuant to Section 6.1(a)
hereof, the Purchaser shall pay to the Seller the respective amount of each such
tax payment no later than five (5) days prior to the original due date for the
filing of any tax return with respect to which the Purchaser has such payment
obligation.
(d) The Purchaser and the Seller shall cooperate fully (and the
Purchaser shall cause the Companies to cooperate fully), as and to the extent
reasonably requested by the other party, in connection with the filing of tax
returns pursuant to this Section 6.1 and any audit, litigation or other
proceeding with respect to taxes. Such cooperation shall include the retention
and (upon the other party's request) the provision of records and information
which are reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. The
Seller and the Purchaser agree, (and the Purchaser agrees to cause the
Companies) (i) to retain all books and records with respect to tax matters
pertinent to both of the Companies and each Subsidiary of both of the Companies
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by
Purchaser or Seller, any extensions thereof) of the respective taxable periods,
and to abide by all record retention agreements entered into with any taxing
authority, and (ii) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other party so requests, the Seller or the Purchaser shall allow (and the
Purchaser shall cause the Companies to allow), as the case may be, the other
party to take possession of such books and records. The Purchaser and the Seller
further agree, upon request, to use their best efforts to obtain any certificate
or other document from any governmental authority or any other person or entity
as may be necessary to mitigate, reduce or eliminate any tax that could be
imposed (including, but not limited to, with respect to the transactions
contemplated hereby).
(e) Subject to Section 6.1(a) hereof, all transfer, documentary, sales,
use, stamp, registration and such other taxes and fees (including any penalties
and interest) incurred in connection with this Agreement (including any
corporate-level gains tax triggered by the sale of the stock of either of the
Companies), shall be paid by the Purchaser when due, and the Purchaser or either
of the Companies will, at its own expense, file all necessary tax returns and
other documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other taxes and fees, and, if required by applicable
law, the Seller and each Trust will join in the execution of any such tax
returns and other documentation.
SECTION 6.2 Repayment of Related Party Indebtedness. Immediately before
the Closing, (a) the Seller and the Trusts shall repay to the Companies all
amounts outstanding as advances to or receivables from the Seller or the Trusts,
each of which advances or receivables is specifically reflected in Schedule 6.2,
and (b) the Companies shall repay all amounts outstanding under loans to the
Companies from the Seller and the Trusts, each of which loans to the Company is
specifically reflected in Schedule 6.2.
SECTION 6.3 Stock Options. The Purchaser shall grant nonqualified
options to purchase an aggregate of 240,000 shares of Purchaser Common Stock as
of the Closing Date
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under the Purchaser's 1999 Incentive Plan (the "Incentive Plan") to certain key
employees of the Companies, other than the Seller, at an exercise price equal to
the closing price of the Purchaser Common Stock on the Nasdaq National Market as
of the Closing Date. The Seller recommends that such options be allocated as set
forth on Schedule 6.3 (it being understood and agreed that such allocation is
subject to approval of the Purchaser's board of directors or a committee
thereof). Seller shall provide the social security number and home address of
each individual listed on Schedule 6.3 to the Purchaser at or prior to Closing.
Such options shall vest in equal annual increments for four years, commencing on
the first anniversary of the Closing Date. The Purchaser hereby represents and
warrants that the offering of the shares of Purchaser Common Stock that may be
acquired upon exercise of such options under the Incentive Plan has been
registered under the Securities Act on Form S-8.
SECTION 6.4 Access To, and Information Concerning, Properties and
-----------------------------------------------------
Records.
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(a) During the pendency of the transactions contemplated hereby, the
Seller shall cause both of the Companies, to the extent not prohibited by law or
contract, to give to the Purchaser, its legal counsel, accountants and other
representatives full access, upon reasonable request and at reasonable times,
throughout the period prior to the Closing, to all of the Companies' properties,
books, contracts, commitments and records, permit the Purchaser and such
representatives to make such inspections (including, without limitation, with
regard to currently owned properties and certain properties leased by either of
the Companies or any Subsidiary of either of the Companies (collectively, the
"Real Property"), physical inspection of the surface and subsurface thereof) as
they may reasonably require and furnish to the Purchaser and such
representatives during such period all such information concerning both of the
Companies and their affairs as Purchaser may reasonably request.
(b) Notwithstanding any other provision of this Agreement to the
contrary, neither the Purchaser nor any of its respective agents or
representatives shall perform any investigation or study of the Real Property
which may involve the intrusive or destructive sampling or analysis or chemical
testing of any portion of such property or its improvements, including without
limitation, of any soil, water or groundwater on, under or about such Real
Property ("Phase II Investigation"), without first (a) submitting to both of the
Companies and the Seller a detailed description of (i) the work to be performed
as part of the Phase II Investigation, (ii) the persons to undertake such Phase
II Investigation, and (iii) the types and amounts of insurance coverage
maintained by such persons, and (b) obtaining the prior written consent of the
Seller as to such matters, which shall not be unreasonably withheld. The Seller
may grant such consent subject to such terms, conditions or restrictions as the
Seller may reasonably require. In all events, the Seller or its representatives
shall have the right, but not the obligation, to observe any and all activities
associated with performance of any agreed Phase II Investigation, and may obtain
half of any samples which the Purchaser or its representatives may collect
during the Phase II Investigation. In the event the Purchaser or its
representatives conduct a Phase II Investigation, the Purchaser shall cause, at
its expense, (x) any investigation-derived waste generated or created in
connection with performance of the Phase II Investigation (including without
limitation, drill cuttings, purged or developed water, or sample remnants) to be
removed from the property, (y) any wells installed during the Phase II
Investigation to be plugged and abandoned, and (z) the restoration of the
property to substantially the same physical condition which existed before
commencement of the Phase II Investigation, all within seven days after
completion of the field
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activities related to the Phase II Investigation, and in compliance with
applicable laws and regulations. The Purchaser shall be responsible for
executing on its own behalf any and all manifests, shipping documents, plugging
and abandoning reports and similar documents in connection with its obligations
under this subsection. The Purchaser agrees to indemnify and hold each of the
Companies, the Seller and each of their Affiliates harmless from and against any
and all claims, liabilities, damages and causes of action arising out of the
Purchaser's inspections of the Real Property, including, without limitation, any
Phase II Investigation. All test results associated with any such physical or
environmental inspection shall be held in strictest confidence by the Purchaser
and shall not be disclosed to any third party.
(c) All information disclosed by any of the parties hereto (the
"Disclosing Party") to another party hereto (the "Recipient") shall be held
strictly confidential by the Recipient and its representatives, shall be used
solely for purposes of evaluating the transactions contemplated hereby, and
shall not be disclosed to any third party. In the event this Agreement is
terminated pursuant to the provisions of Article IX, upon the written request of
the Disclosing Party, the Recipient agrees to return to the Disclosing Party all
copies of such confidential information, together with all extracts or other
reproductions thereof in the possession of the Recipient or its representatives.
It is understood that confidential information shall not include the following:
(i) information that is or becomes generally available to the
public other than as a result of a disclosure by the Recipient , its
representatives or its agents;
(ii) information that was in the possession of the Recipient
or its representatives prior to disclosure by the Recipient, its
representatives or its agents; or
(iii) information that becomes available to the Recipient or
its representatives on a non-confidential basis from a source other
than the Disclosing Party, its representatives or agents.
SECTION 6.5 Good Faith Efforts to Consummate Transactions. Subject to
the terms and conditions of this Agreement, the Purchaser and the Seller agree
to use reasonable good faith efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper, or advisable under
this Agreement and applicable laws and regulations, to consummate and make
effective, as soon as practicable after the date hereof, the transactions
contemplated by this Agreement, including, without limitation, securing all
third-party or regulatory approvals necessary to consummate the transactions
provided herein and to satisfy the other conditions to Closing contained herein
as soon as reasonably practicable. Each party agrees to make copies of its
respective regulatory filings and related correspondence to regulatory agencies
available to the other party.
SECTION 6.6 Exclusivity. The Seller will not, and the Seller will cause
each of the Companies and any Subsidiary of each of the Companies not to (i)
directly or indirectly, solicit or initiate any proposals or offers from any
person relating to any acquisition or purchase of assets outside the ordinary
course of business of, or any securities of, or any merger, consolidation or
business combination with, any of the Companies or any Subsidiary of any of the
Companies, or (ii) participate in any negotiations regarding, or furnish to any
other person
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any information with respect to, or otherwise cooperate in any way with, any
effort or attempt by any other person to do or seek any of the foregoing.
SECTION 6.7 Release From Indemnity Agreements. The Purchaser shall use
its commercially reasonable efforts to have the Seller and Shelley A. Beall
released from all of their respective obligations under the indemnity agreements
identified in Schedule 6.7 within 90 days after the Closing Date. The Purchaser
hereby agrees to indemnify and defend the Seller and Shelley A. Beall and hold
the Seller and Shelly A. Beall harmless for any amounts that the Seller or
Shelley A. Beall is required to pay in connection with the enforcement of any
obligations under such indemnity agreements after the Closing, including without
limitation any reasonable attorneys' fees and expenses incurred in connection
therewith.
SECTION 6.8 Benefit Plans. Effective no later than 30 days after the
Closing, the Purchaser shall cause the Companies to terminate the Benefit Plans
referenced on Schedule 2.11. Effective as of the date such Benefit Plans are
terminated, the Purchaser shall establish a health plan for the Companies which
is substantially similar to such Plans referenced on Schedule 2.11 and shall
grant credit thereunder for prior service with the Companies.
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION 7.1 Prohibited Activities.
----------------------
(a) For no additional consideration, Seller and each Trust will not for
the five years following the Closing Date (and, in the case of the Seller, if
longer, one year following the Seller's termination of employment with the
Companies or their Affiliates) (with the applicable period being herein referred
to as the "Noncompete Term"), directly or indirectly, for himself or itself or
on behalf of or in conjunction with any other person, company, partnership,
corporation or business or other entity of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
investor, partner, joint venturer, or in a managerial or advisory
capacity, whether as an employee, independent contractor, consultant or
advisor, or as a sales representative, dealer or distributor, in any
business conducted by the Companies on the Closing Date, including,
without limitation, any business that involves the production and sale
of ready-mixed concrete (including truck-mixed concrete) and other
cement mixtures and pre-cast concrete products (a "Competitive
Business") within any Territory surrounding any plant or other
operating facility from which either of the Companies was engaged in
business on the date immediately prior to the Closing Date (for
purposes of this Article VII, the "Territory" surrounding any such
plant or other operating facility will be: (A) the city, town or
village in which such plant or facility is located, (B) the county in
which such plant or facility is located, (C) the counties contiguous to
the county in which such plant or facility is located, (D) the area
located within 100 miles of such plant or facility, and (E) the area in
which such plant or facility regularly provides products or services at
the locations of its customers;
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(ii) call upon or otherwise solicit any person, who is, at
that time, an employee or consultant of the Purchaser or the Companies
or any of their respective subsidiaries, for the purpose or with the
intent or effect of enticing such employee or consultant away from or
out of the employ or contract with the Purchaser or the Companies or
any of their respective subsidiaries;
(iii) call upon or otherwise solicit any person or entity
which is, at that time, or which has been, within two years prior to
that time, a customer of the Companies or the Purchaser or any of the
subsidiaries of such parties within the Territory for the purpose of
soliciting or selling services or products in a Competitive Business
within the Territory; or
(iv) call upon or otherwise solicit any entity engaged in a
Competitive Business which the Companies or the Purchaser has called on
in connection with the possible acquisition by either of them of such
entity or of which either of them has made an acquisition analysis,
with the knowledge of that entity's status as an acquisition candidate
of the Purchaser, for the purpose of acquiring that entity or arranging
the acquisition of that entity by any person or entity other than the
Purchaser.
(b) Notwithstanding the above, Section 7.1(a) shall not be deemed to
prohibit the Seller, any Trust or their Affiliates from any of the following:
(i) acquiring, as a passive investor with no involvement in
the operations of the business, not more than two and one-half percent
of the capital stock of a Competitive Business whose stock is publicly
traded on a national securities exchange, the Nasdaq National Market or
over-the-counter;
(ii) engaging in a business that is not a Competitive Business
or selling products or services to, purchasing products or services
from or otherwise doing business with a Competitive Business;
(iii) with respect to United States Lime & Minerals, Inc., a
Texas corporation ("USLM") (A) acquiring and owning any amount of the
capital stock of USLM without limitation or (B) serving as a director,
officer or consultant of USLM or in any similar capacity; provided,
however, that if during the Noncompete Term USLM engages in a
Competitive Business, then (1) the Seller shall resign from his
position as a director, officer, consultant or similar position with
USLM as soon as reasonably practicable, and he shall not serve in any
such capacity for so long as USLM engages in a Competitive Business
during the Noncompete Term and (2) the Seller shall divest his
ownership of any equity securities of USLM as soon as reasonably
practicable so that Seller is in compliance with clause (i) of this
Section 7.1(b); provided, further, however, that in no event shall the
Seller's obligations under this clause (2) require the Seller to (y)
sell any equity securities of USLM at less than the original price paid
by the Seller for such equity securities or (z) sell any equity
securities of USLM in violation of applicable federal or state
securities laws or contractual restrictions on transfer; or
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(iv) continuing to own the limestone quarry in Parker County,
Texas currently owned by the Seller (the "Limestone Quarry"), granting
to third parties the right to produce limestone and/or other aggregates
there and receiving royalties in connection therewith; provided,
however, that upon expiration or termination of the Seller's current
lease with Allied Aggregates (including any extension or modification
thereof) relating to the Limestone Quarry; if, and only if, the Seller
determines to lease the Limestone Quarry to a third party, then the
Seller shall, during the Noncompete Term but not thereafter, first
offer to lease the Limestone Quarry to the Purchaser on terms mutually
acceptable to the Seller and the Purchaser, provided that such terms
shall be no less favorable to the Seller than those offered by any
other third party in a proposed arms-length transaction, and if the
Purchaser is unwilling to lease the Limestone Quarry on such terms
within 10 days after receipt of written notice thereof, then the Seller
shall have the right to lease the Limestone Quarry on the more
favorable terms to a third party other than the Purchaser; and
provided, further, that during any period during which the Seller does
not lease the Limestone Quarry to a third party, the Seller shall have
the unrestricted right to operate the Limestone Quarry directly for his
own benefit whether during or after the Noncompete Term.
SECTION 7.2 Equitable Relief. Because of the difficulty of measuring
economic losses to the Purchaser or the Companies as a result of a breach of the
covenants in Section 7.1(a) of this Article, because a breach of such covenants
would diminish the value of the assets, properties and business of the Companies
being sold pursuant to this Agreement, and because of the immediate and
irreparable damage that could be caused to the Purchaser and the Companies for
which it would have no other adequate remedy, Seller and each Trust agree that
the foregoing covenant may be enforced against such persons by injunctions,
restraining orders and other equitable actions.
SECTION 7.3 Reasonable Restraint. It is agreed by the parties hereto
that the foregoing covenants in this Article VII are necessary in terms of time,
activity and territory to protect the Purchaser's and the Companies' interest in
the assets, properties and business being acquired pursuant to the terms of this
Agreement and imposes a reasonable restraint on the Seller and the Trusts in
light of the activities and businesses of the Purchaser on the date of the
execution of this Agreement and the current plans of the Purchaser.
SECTION 7.4 Severability; Reformation. The covenants in this Article
VII are severable and separate, and the unenforceability of any specific
covenant shall not affect the continuing validity and enforceability of any
other covenant. In the event any court of competent jurisdiction shall determine
that the scope, time or territorial restrictions set forth in this Article VII
are unreasonable and therefore unenforceable, then it is the intention of the
parties that such restrictions be enforced to the fullest extent which the court
deems reasonable and this Agreement shall thereby be reformed.
SECTION 7.5 Material and Independent Covenant. The Seller and the
Trusts acknowledge that their agreements and the covenants set forth in this
Article VII are material conditions to the Purchaser's agreements to execute and
deliver this Agreement and to consummate the transactions contemplated hereby
and that the Purchaser would not have entered into this Agreement without such
covenants. All of the covenants in this Article VII shall be
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construed as an agreement independent of any other provision in this Agreement.
The existence of any claim or cause of action by the Seller or any Trust against
the Purchaser, whether predicated on this Agreement or otherwise, will not
constitute a defense to the enforcement by the Purchaser of any of the covenants
of this Article VII. It is specifically agreed that the time period Section 7.1
specifies will be computed in the case of the Seller and each Trust by excluding
from that computation any time during which the Seller or that Trust is in
violation of any provision of Section 7.1. The covenants this Article VII
contains will not be affected by any breach of any other provision hereof by any
party hereto.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.1 Conditions to Each Party's Obligation Under this Agreement.
The respective obligations of (i) the Purchaser to purchase and pay for the
Shares and (ii) the Seller and each Trust to sell their respective Shares, at
the Closing are subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) the receipt of regulatory approvals required by applicable law for
the consummation of the transactions contemplated by this Agreement and the
expiration or termination of any applicable waiting period with respect thereto;
and
(b) there shall not have been instituted, pending or threatened any
action or proceeding by any Governmental Authority before any Governmental
Authority or court of competent jurisdiction, nor shall there be in effect any
judgment, decree, order, or injunction of any Governmental Authority or court of
competent jurisdiction, or any other legal restraint preventing or seeking to
prevent consummation of the transactions contemplated by this Agreement.
SECTION 8.2 Conditions to the Obligations of the Purchaser Under this
Agreement. The obligations of the Purchaser to purchase and pay for the Shares
at the Closing are subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) all representations and warranties of the Seller and the Trusts
shall be true and correct as of the date hereof (subject to the Seller's and
Trusts' right to cure any inaccuracy or breach of any representation or warranty
set forth herein) and at and as of the Closing (provided that the text of any
representation or warranty that refers to a specific date (including the date of
this Agreement) shall be deemed to continue to refer to such date), with the
same force and effect as though made on and as of the Closing, except when any
failure of a representation or warranty to be true and correct would not result
in a Material Adverse Effect;
(b) the Seller and the Trusts shall have performed all obligations and
agreements and complied with all covenants and conditions contained in this
Agreement to be performed or complied with by it prior to the Closing Date,
except when any failure to so perform or comply would not result in a Material
Adverse Effect;
(c) all consents, approvals and waivers from third parties and
governmental authorities required to be obtained to consummate the transactions
contemplated by this
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Agreement shall have been obtained, except to the extent that failure to obtain
such consents, approvals and waivers would not result in a Material Adverse
Effect;
(d) the Purchaser in the course of its due diligence investigation of
the Companies shall have discovered no condition or event which would result in
a Material Adverse Effect; provided, however, that the foregoing shall be a
condition to the Purchaser's obligations to purchase and pay for the Shares, if,
and only if, the Seller receives from the Purchaser written notice not later
than January 31, 2000 that Purchaser has discovered such a condition or event;
provided further, that for purposes of determining whether such a condition or
event exists, neither any environmental matter nor any financial matter shall be
deemed to constitute a condition or event which would result in a Material
Adverse Effect; and, provided further, that for purposes of determining whether
such a condition or event exists, any matter disclosed in this Agreement or in
the Schedules to this Agreement shall be deemed to not constitute a condition or
event which would result in a Material Adverse Effect;
(e) the Purchaser, Beall Industries, Inc. and the Seller shall have
entered into the Employment Agreement;
(f) Beall Industries, Inc. and the Seller shall have entered into a
Lease Agreement with respect to each business facility of Beall Industries,
Inc.;
(g) the receipt at Closing by the Purchaser of a satisfactory legal
opinion from counsel to the Seller and the Trusts; and
(h) the Purchaser shall have received the duly endorsed certificate(s)
or other assignment documents representing the Shares contemplated by Section
1.4.
SECTION 8.3 Conditions to the Obligations of the Seller and the Trusts
Under this Agreement. The obligations of the Seller and each Trust to sell their
respective Shares at the Closing are subject to the satisfaction or waiver of
the following conditions on or prior to the Closing Date:
(a) all representations and warranties of the Purchaser contained
herein shall be true and correct as of the date hereof (subject to the
Purchaser's right to cure any inaccuracy or breach of any representation or
warranty set forth herein) and at and as of the Closing, with the same force and
effect as though made on and as of the Closing, except when any failure of a
representation or warranty to be true and correct would not result in a Material
Adverse Effect;
(b) the Purchaser shall have performed all obligations and agreements
and complied with all covenants contained in this Agreement to be performed or
complied with by it prior to the Closing Date, except when any failure to so
perform or comply would not result in a Material Adverse Effect;
(c) all consents, approvals and waivers from third parties and
governmental authorities required to be obtained to consummate the transactions
contemplated by this Agreement shall have been obtained, except to the extent
that failure to obtain such consents, approvals and waivers would not result in
a Material Adverse Effect;
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(d) the transactions contemplated by a Stock Purchase Agreement to be
entered into among Purchaser, Seller, Fallis Arch Beall, Nola Sue Beall, Leigh
Ann Gathright, Doris W. Stokes and Fallis Arch Beall in his capacity as trustee
for the R.E. Stokes Trust shall have been consummated concurrent with the
Closing effectuating the acquisition by Purchaser of Atlas Concrete, Inc.,
Atlas-Tuck Concrete, Inc., Stokes Transit-Mix, Inc. and Beall Trucking, Inc.;
(e) the Seller, each Trust, and their Affiliates (other than the
Companies) shall have been unconditionally released from all obligations under
any guaranty, security agreement or other instrument that secures any
indebtedness of either of the Companies or either of the Companies' Affiliates;
(f) the Purchaser, Beall Industries, Inc. and the Seller shall have
entered into the Employment Agreement;
(g) Beall Industries, Inc. and the Seller shall have entered into a
Lease Agreement with respect to each business facility of Beall Industries,
Inc.;
(h) the receipt at Closing by the Seller and the Trusts of a
satisfactory legal opinion from counsel to the Purchaser; and
(i) the Seller and each Trust shall have received the Purchase Price
payable by the Purchaser in accordance with Section 1.2.
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
SECTION 9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date:
(a) by mutual written consent executed by the parties and duly
authorized by the Board of Directors of the Purchaser;
(b) by the Purchaser if there is an inaccuracy or breach of any
representation, warranty or covenant of the Seller or a Trust set forth in this
Agreement which breach has not been cured within 30 days following receipt by
the Seller or a Trust of written notice of such breach and which breach results
in or can reasonably be anticipated to result in a Material Adverse Effect;
provided, however, that the Purchaser's right to terminate this Agreement in
accordance with this Section 9.1(b) is subject to the notice requirement set
forth in the first paragraph of Article II;
(c) by the Seller and Trusts if there is an inaccuracy or breach of any
representation, warranty or covenant of the Purchaser set forth in this
Agreement which breach has not been cured within 30 days following receipt by
the Purchaser of written notice of such breach and which breach results in or
can reasonably be anticipated to result in a Material Adverse Effect;
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(d) (i) by the Purchaser upon written notice to Seller and Trusts if
any of the conditions in Section 8.1 and Section 8.2 have not been satisfied
within 60 days of the date hereof, or such later date agreed to in writing by
the Purchaser, the Seller and Trusts, (other than through the failure of the
Purchaser to comply with its obligations under this Agreement) and the Purchaser
has not waived such condition in writing on or before the expiration of such
60-day period (or such later date agreed to in writing by the Purchaser and the
Seller); or (ii) by the Seller and Trusts upon written notice to the Purchaser
if any of the conditions in Section 8.1 and Section 8.3 have not been satisfied
within 60 days of the date hereof, or such later date agreed to in writing by
the Purchaser, the Seller and Trusts, (other than through the failure of the
Seller to comply with its obligations under this Agreement) and the Seller and
Trusts have not waived such condition in writing on or before the expiration of
such 60-day period (or such later date agreed to in writing by the Purchaser,
the Seller and Trusts); provided, however, that such 60-day period (or such
later date agreed to in writing by the Purchaser, the Seller and Trusts) shall
automatically be extended for a period of 60 days, if the delay in the Closing
Date relates to the Notification and Report Form filed pursuant to the HSR Act;
or
(e) by the Purchaser or the Seller and Trusts if any court of competent
jurisdiction in the United States of America or other (federal or state)
governmental body shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have been final and nonappealable.
SECTION 9.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.1 hereof, this Agreement
shall thereafter become null and void and have no effect, without any liability
on the part of any party or its directors, officers or shareholders, other than
the provisions of this Section 9.2, Section 6.4, Article X and Article XII;
provided, however, that nothing contained in this Section 9.2 shall relieve any
party from liability for any breach or violation of this Agreement, subject to
Article X hereof.
SECTION 9.3 Amendment and Modification. This Agreement may be amended,
modified, terminated, rescinded, or supplemented only by written agreement of
all of the parties hereto.
SECTION 9.4 Extension; Waiver. At any time prior to the Closing Date,
the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (ii) waive any inaccuracies
in the representations and warranties contained herein or in any document,
certificate or writing delivered pursuant hereto, or (iii) waive compliance with
any of the agreements or conditions contained herein. Any agreement on the part
of any party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed by or on behalf of such party.
ARTICLE X
REMEDIES
SECTION 10.1 Remedies for Breach of Representations, Warranties and
Covenants of the Seller Before the Closing Date. Upon execution of this
Agreement through and including the
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Closing, the exclusive remedy for any material inaccuracy or breach of any
representation, warranty or covenant in this Agreement by the Seller or any
Trust shall be termination of this Agreement by the Purchaser in accordance with
and subject to Article X. This Section 10.1 shall not apply to any breach by the
Seller of his obligations under Section 6.6 of this Agreement.
SECTION 10.2 Indemnification by the Seller and the Trusts. Except as
otherwise expressly provided in this Article X and subject to the limitations
stated in this Article X, beginning immediately after the Closing and continuing
for the periods specified by the notice periods and survival periods set forth
in Section 10.5(a), Section 11.1 and Section 11.2, respectively, the Seller and
each Trust agree to and shall defend, indemnify and hold harmless the Purchaser
from and against, and shall reimburse the Purchaser for, each and every claim,
action, demand, cost, expense, liability, penalty and other damage incurred by
the Purchaser, including, without limitation, reasonable attorney's fees
(collectively, a "Loss"), relating to, resulting from or arising out of, or any
allegation by any third party of, the following:
(a) any inaccuracy in any representation or warranty of the Seller and
the Trusts set forth in this Agreement, the Schedules, any Transaction Document,
or any certificate, agreement or document delivered by the Seller or any Trust
under this Agreement (it being understood and agreed that any such inaccuracy
shall be determined without regard to any materiality qualification contained in
any representation or warranty, provided that the materiality qualifications set
forth in Section 2.6 (Financial Statements) shall apply to the representations
and warranties set forth therein); provided, however, that (ii) any inaccuracy
in any representation or warranty of the Seller and the Trusts set forth in
Section 2.11 (Employee Benefit Plans) and the related Schedule 2.11 shall be
governed by Section 10.2(c) and Section 10.8 and (ii) any inaccuracy in any
representation or warranty of the Seller and the Trusts set forth in Section
2.14 (Environmental Matters) shall be governed by Section 10.2(d); or
(b) any breach or nonfulfillment of any covenant, agreement or other
obligation of the Seller set forth in this Agreement, any Transaction Document
or any other agreement or document delivered by the Seller pursuant to this
Agreement; or
(c) any inaccuracy in any representation or warranty of the Seller and
the Trusts set forth in Section 2.11 of this Agreement, it being understood and
agreed that any such inaccuracy shall be determined without regard to item 3 and
item 4 of Schedule 2.11; provided, however, that the failure to file annual
reports (Form 5500) with the Internal Revenue Service with respect to the
Benefit Plans shall be governed by Section 10.8; and provided further, that this
Section 10.2(c) shall be null and void and neither the Seller nor any Trust
shall have any liability under this Section 10.2(c) in the event that any such
Loss relates to, results from or arises out of any voluntary action caused or
initiated by the Purchaser, including, without limitation, the filing of IRS
Form 5330 (but excluding any action of the Purchaser relating to, resulting from
or arising out of the initiation of any audit or investigation by any
governmental agency without any such prior voluntary action by Purchaser); or
(d) any inaccuracy in any representation or warranty of the Seller and
the Trusts set forth in Section 2.14 of this Agreement, it being understood and
agreed that any such inaccuracy shall be determined without regard to Item 3 on
Schedule 2.14 or the remediation obligations of Beall Concrete, Inc. under that
certain Contract of Sale dated January 7, 1998, by and between
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Tri-Gas, Inc., and Beall Concrete, Inc.; provided, however, that Purchaser shall
be solely responsible for, and shall not be entitled to indemnification from the
Seller or the Trusts for, or application towards the Seller Basket for, costs
and expenses associated with (1) preparing and implementing any Spill Prevention
Control and Countermeasure Plan for any of the Companies' sites or facilities
(but the limitation in this clause (1) shall not apply to any penalty or
liability related to the applicable Company's prior failure to take any such
action), (2) evaluating the necessity for, applying for, renewing, and/or
complying with, Permits for the discharge of storm water or emission of air
pollutants associated with any of the Companies' sites or operations (but the
limitation in this clause (2) shall not apply to any penalty or liability
related to the applicable Company's prior failure to take any such action), (3)
modifying or relocating any wash area at any of the Companies' sites, and (4)
performing work, response activities, repairs, investigations, or modifications,
or acquiring or installing improvements, equipment or property to address or
respond to conditions, matters, events, circumstances, violations, or
liabilities existing or occurring on or prior to Closing, except to the extent
required by applicable Laws.
With respect to matters not involving any judicial, administrative, arbitration,
or investigatory proceeding or other proceeding, claim or controversy
(collectively, a "Proceeding") brought or asserted by third parties, within ten
days after notification from the Purchaser supported by reasonable documentation
setting forth the nature of the circumstances entitling the Purchaser to
indemnity hereunder, the Seller or any Trust, at no cost or expense to the
Purchaser, shall diligently commence resolution of such matters in a manner
reasonably acceptable to the Purchaser and shall diligently and timely prosecute
such resolution to completion. With respect to those claims that may be
satisfied by payment of a liquidated sum of money, including, without
limitation, claims for reimbursement of expenses incurred in connection with any
circumstances entitling the Purchaser to indemnity hereunder, the Seller or any
Trust shall pay the full amount so claimed to the extent supported by reasonable
documentation within 15 days of such resolution. If the Seller and the Trusts
dispute their liability in connection with such claim, the Seller or any Trust
shall pay any undisputed part of such liability, and the Purchaser, the Seller
and the Trusts shall have 30 days to resolve any remaining dispute. If the
Purchaser, the Seller and the Trusts are unable to resolve such dispute within
30 days, they shall resolve such dispute in accordance with Section 12.9. If
litigation or any other Proceeding is commenced or threatened by any third party
for which the Purchaser is entitled to indemnification under this Section 10.2,
the provisions of Section 10.4 shall control.
SECTION 10.3 Indemnification by the Purchaser. In addition to
Purchaser's indemnification of Seller and each Trust for certain taxes resulting
from the Section 338(h)(10) election pursuant to Section 6.1, and except as
otherwise expressly provided in this Article X, the Purchaser agrees to and
shall defend, indemnify and hold harmless the Seller and each Trust from and
against, and shall reimburse the Seller and each Trust for, each and every Loss,
relating to, resulting from or arising out of, or any allegation by any third
party of, the following:
(a) any inaccuracy in any representation or warranty of the Purchaser
set forth in this Agreement, any Transaction Document or any certificate,
agreement or other document delivered by the Purchaser under this Agreement (it
being understood and agreed that any such inaccuracy shall be determined without
regard to any materiality qualification contained in any representation or
warranty, provided that the materiality qualifications set forth in Section 3.7
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(Commission Filings; Financial Statements) shall apply to the representations
and warranties set forth therein);
(b) any breach or nonfulfillment of any covenant, agreement or other
obligation of the Purchaser set forth in this Agreement, any Transaction
Document or any other agreement or document delivered by the Purchaser pursuant
to this Agreement; or
(c) any Proceeding relating to events, conditions, operations, facts,
circumstances or acts of the Purchaser, either of the Companies or any of their
respective Affiliates which shall occur subsequent to the Closing Date.
With respect to matters not involving Proceedings brought or asserted by third
parties, within ten days after notification from the Seller or any Trust
supported by reasonable documentation setting forth the nature of the
circumstances entitling such party to indemnity hereunder, the Purchaser, at no
cost or expense to such party shall diligently commence resolution of such
matters in a manner reasonably acceptable to such party and shall diligently and
timely prosecute such resolution to completion. With respect to those claims
that may be satisfied by payment of a liquidated sum of money, the Purchaser
shall pay the amount so claimed to the extent supported by reasonable
documentation within 15 days of such resolution. If the Purchaser disputes its
liability in connection with such claim, it shall pay any undisputed part of
such liability, and the Purchaser and the party seeking indemnity shall have 30
days to resolve any remaining dispute. If the Purchaser and such party are
unable to resolve such dispute within 30 days, they shall resolve such dispute
in accordance with Section 12.9 If litigation or any other Proceeding is
commenced or threatened by any third party for which the Seller or any Trust is
entitled to indemnification under this Section 10.3, the provisions of Section
10.4 shall control.
SECTION 10.4 Notice and Defense of Third Party Claims. If any
Proceeding shall be brought or asserted by a third party under this Article
against an indemnified party or any successor thereto (the "Indemnified Person")
in respect of which indemnity may be sought under this Article from an
indemnifying person or any successor thereto (the "Indemnifying Person")
pursuant to any Proceeding, the Indemnified Person shall give prompt written
notice of such Proceeding to the Indemnifying Person who shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Person and the payment of all reasonable expenses; provided,
that any delay or failure so to notify the Indemnifying Person shall relieve the
Indemnifying Person of its obligations hereunder only to the extent, if at all,
that it is prejudiced by reason of such delay or failure. In no event shall any
Indemnified Person be required to make any expenditure or bring any cause of
action to enforce the Indemnifying Person's obligations and liability under and
pursuant to the indemnifications set forth in this Article. The Indemnified
Person shall have the right to employ separate counsel in any of the foregoing
Proceedings and to participate in the defense thereof, but the reasonable fees
and expenses of such counsel shall be at the expense of the Indemnified Person
unless the Indemnified Person shall in good faith determine that there exist
actual or potential conflicts of interest which make representation by the same
counsel inappropriate. The Indemnified Person's right to participate in the
defense or response to any Proceeding should not be deemed to limit or otherwise
modify its obligations under this Article. In the event that the Indemnifying
Person, within 20 days after notice of any such Proceeding, fails to assume the
defense thereof, the Indemnified Person shall have the right to undertake the
defense, compromise or settlement
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of such Proceeding for the account of and at the expense of the Indemnifying
Person, subject to the right of the Indemnifying Person to assume the defense of
such Proceeding with counsel reasonably satisfactory to the Indemnified Person
at any time prior to the settlement, compromise or final determination thereof.
Notwithstanding anything in this Article to the contrary, the Indemnifying
Person shall not, without the Indemnified Person's prior written consent (which
consent shall not be unreasonably withheld or delayed), settle or compromise any
Proceeding or consent to the entry of any judgment with respect to any
Proceeding.
SECTION 10.5 Limitations of Liability.
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(a) An Indemnifying Person shall have no liability for any inaccuracy
in any representation or warranty made under this Agreement unless written
notice of a claim for indemnity, or written notice of specific facts as to which
an indemnifiable Loss is expected to be incurred, shall have been given prior to
the expiration of two years after the Closing Date; provided, however, that (i)
the sole remedy for any breach or inaccuracy of the representations and
warranties contained in Section 2.6 (Financial Statements) (insofar as Section
2.6 relates to Accounts and Notes Receivable and Inventory), Section 2.7
(Accounts and Notes Receivable) or Section 2.18 (Inventories) shall be the
determination of the Working Capital Adjustment under Section 1.6; (ii) with
respect to the representations and warranties contained in Section 2.14
(Environmental Matters), written notice of a claim for indemnity, or written
notice of facts as to which an indemnifiable Loss is expected to be incurred,
shall have been given within five years after the Closing Date; (iii) with
respect to the representations and warranties contained in Section 2.2 (the
Companies' Capitalization), Section 2.10 (Tax Matters) and Section 2.11
(Employee Benefit Plans), written notice of a claim for indemnity, or written
notice of facts as to which an indemnifiable Loss is expected to be incurred,
shall have been given within five days after the expiration of the statute of
limitations applicable to such matter; and (iv) with respect to acts of fraud or
willful misrepresentation by the party making any representation or warranty,
written notice of a claim for indemnity, or written notice of facts as to which
an indemnifiable loss is expected to be incurred, may be given at any time.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the aggregate liability of the Seller and the Trusts for all events or
occurrences giving rise to the Seller and the Trusts being required to indemnify
the Purchaser under Section 10.2 shall not exceed the amount set forth on
Schedule 10.5(b) (the "Seller Cap"); provided, however, that the Seller Cap
shall not apply to (i) any Losses relating to, resulting from or arising out of
any inaccuracy in the representations and warranties of the Seller and the
Trusts set forth in Section 2.10 (Tax Matters), (ii) claims for indemnification
under Section 6.1 or Section 10.8 or (iii) the determination of the Working
Capital Adjustment under Section 1.6.
(c) Notwithstanding any other provision of this Agreement to the
contrary, the Seller and the Trusts shall be liable for indemnification under
this Article X only to the extent that the amount of any indemnifiable Loss,
individually or in the aggregate with all other such Losses covered by this
Agreement, exceeds the amount set forth on Schedule 10.5(c) (the "Seller
Basket"), and in such event, the Seller and the Trusts shall be liable only for
the amount of all such Losses that exceed the Seller Basket; provided, however,
that after the aggregate amount of all indemnifiable Losses exceeds the Seller
Basket, Seller and the Trusts shall not be liable for indemnification under this
Article X unless and until the amount of the Loss with respect to any
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individual claim or series of related claims exceeds $2,500; provided further,
that the Seller Basket shall not apply to (i) claims for indemnification under
(A) the representations and warranties contained in Section 2.10 (Tax Matters)
or (B) Section 6.1 or Section 10.8 or (ii) the determination of the Working
Capital Adjustment under Section 1.6.
(d) Notwithstanding any other provision of this Agreement to the
contrary, the aggregate liability of the Purchaser for all events or occurrences
giving rise to the Purchaser being required to indemnify the Seller and each
Trust under Section 10.3 shall not exceed the amount set forth on Schedule
10.5(d) (the "Purchaser Cap"); provided, however, that the Purchaser Cap shall
not apply to (i) any Losses relating to, resulting from or arising out of any
inaccuracy in the representations and warranties of the Purchaser set forth in
Section 3.6 (the "Purchaser Common Stock"), (ii) claims for indemnification
under Section 6.1 or Section 6.7 or (iii) the determination of the Working
Capital Adjustment under Section 1.6.
(e) Notwithstanding any other provision of this Agreement to the
contrary, the Purchaser shall be liable for indemnification under this Article X
only to the extent that the amount of any indemnifiable Loss, individually or in
the aggregate with all other such Losses covered by this Agreement, exceeds the
amount set forth on Schedule 10.5(e) (the "Purchaser Basket"), and in such
event, the Purchaser shall be liable only for the amount of all such Losses that
exceed the Purchaser Basket; provided, however, that after the aggregate amount
of all indemnifiable Losses exceeds the Purchaser Basket, Purchaser shall not be
liable for indemnification under this Article X unless and until the amount of
the Loss with respect to any individual claim or series of related claims
exceeds $2,500; provided, further, that the Purchaser Basket shall not apply to
(i) claims for indemnification under (A) the representations and warranties
contained in Section 3.6 (the Purchaser Common Stock) or (B) Section 6.1 or
Section 6.7, or (ii) the determination of the Working Capital Adjustment under
Section 1.6).
(f) In calculating the amount of any Loss for which any Indemnifying
Person is liable under this Article, there shall be taken into consideration (i)
the value of any federal or state income tax benefits and (ii) the amount of any
insurance recoveries, excluding any amounts which are in effect self-insured
whether through retention amounts or otherwise, the Indemnified Person in fact
receives as a direct consequence of the circumstances to which the Loss related
or from which the Loss resulted or arose.
(g) The Purchaser shall use commercially reasonable efforts to mitigate
any Loss suffered, incurred or sustained by the Purchaser arising out of any
matter for which the Purchaser is entitled to indemnification herein, upon the
Purchaser having obtained actual knowledge of such breach by the Seller. In the
event that the Purchaser shall fail to make such commercially reasonable efforts
to mitigate such Loss, then notwithstanding anything else to the contrary
contained herein, the Seller shall not be required to indemnify the Purchaser
for any Loss that could reasonably be expected to have been avoided had the
Purchaser made such efforts.
(h) In the event that (i) any condition set forth in Article VIII is
not satisfied, (ii) the failure of such condition to be satisfied is waived in
writing by the party or parties entitled to the benefit of such condition, and
(iii) the parties nevertheless consummate the transactions contemplated by this
Agreement at the Closing, then the parties shall be deemed to have waived
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any claim for Loss or other relief only to the extent that such Loss or other
relief relates solely and directly to such condition that was so waived in
writing.
(i) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NO PARTY
HERETO SHALL HAVE ANY LIABILITY UNDER THIS AGREEMENT FOR CONSEQUENTIAL DAMAGES
(SUCH AS LOSS OF PROFIT), OR TREBLE, EXEMPLARY OR PUNITIVE DAMAGES OF ANY TYPE
UNDER ANY CIRCUMSTANCES REGARDLESS OF WHETHER SUCH DAMAGES MAY BE AVAILABLE
UNDER TEXAS LAW, THE LAW OF ANY OTHER STATE, OR FEDERAL LAW.
SECTION 10.6 Exclusive Remedies.
------------------
(a) The remedies of the parties specifically provided for by this
Article shall be the sole and exclusive remedies of the parties for (i) any
breach or inaccuracy of the representations and warranties contained in this
Agreement, the Schedules, any Transaction Document or in any certificate,
agreement or document furnished or delivered pursuant hereto (other than a
breach of the representations and warranties set forth in Section 2.6 (Financial
Statements) (insofar as Section 2.6 relates to Accounts and Notes Receivable and
Inventory), Section 2.7 (Accounts and Notes Receivable) and Section 2.18
(Inventories), the sole remedy for which shall be the determination of the
Working Capital Adjustment under Section 1.6), (ii) the failure to perform any
covenants, agreements or obligations contained in this Agreement, any
Transaction Document or in any other agreement or document furnished or
delivered pursuant hereto, or (iii) any Loss, relating to, resulting from or
arising out of any transaction or matter relating in any manner whatsoever to
the operation of either of the Companies prior to Closing, this Agreement or to
any document furnished or delivered pursuant hereto. Without limiting the
generality of the foregoing, except with respect to such remedies specifically
set forth herein, Purchaser hereby releases, waives, and agrees not to sue
Seller, or the Trusts or any of their Affiliates, ("Sellers' Related Parties")
for any and all claims, causes of action, rights of contribution, cost recovery,
losses, liabilities, suits, costs, fees, judgments or expenses which may now
exist or which may hereafter arise, REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN
PART BY THE SOLE, CONTRIBUTORY, PASSIVE OR PARTIAL NEGLIGENCE OR STRICT
LIABILITY OF ANY OF THE SELLERS' RELATED PARTIES, in connection with (i) any
material, waste or substance the use, collection, handling, presence, recycling,
generation, treatment, storage, disposal, release or transportation of which is
or may become regulated or controlled by any Governmental Authority or the
improper management or disposal of which may affect human health or safety or
the environment, or (ii) the compliance by either of the Companies or any of
their predecessors or any of their current or former real or personal property
with applicable laws, regulations, orders or directives pertaining directly or
indirectly to human health or safety or the environment, including without
limitation, Environmental Laws.
(b) Without limiting the generality of the foregoing provisions of
Section 10.6(a), the parties acknowledge and agree that, before the Closing
Date, Section 10.1 provides the exclusive remedies for any material breach or
inaccuracy of the representations, warranties and covenants of the Seller
contained in this Agreement.
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(c) Notwithstanding the foregoing provisions of Sections 10.6(a) or
10.6(b) or anything to the contrary in this Agreement, in addition to the
remedies provided by this Agreement, the parties acknowledge and agree that (i)
the Seller and each Trust shall be entitled to specific performance for any
breach of the Purchaser's obligations under Section 1.2, provided that all the
conditions to Closing set forth in Section 8.1 and Section 8.2 shall have been
satisfied, (ii) the Purchaser shall be entitled to specific performance for any
breach of Seller's or the Trusts' obligations under Section 1.1, provided that
all of the conditions to Closing set forth in Section 8.1 and Section 8.3 shall
have been satisfied, and (iii) the parties shall retain all legal and equitable
remedies available to him or it for any breach or failure to perform under the
Employment Agreement or the Lease Agreements whether such remedies are provided
by this Agreement, the Employment Agreement, the Lease Agreements or applicable
law.
SECTION 10.7 Payment of Indemnification Obligation. The parties hereto
agree that, if the Seller and the Trusts become liable to the Purchaser for
indemnification under this Article X, the Seller and the Trusts shall have the
right, in their sole discretion (but no obligation), to satisfy such liability
for indemnification by transferring to the Purchaser a number of shares of the
Purchaser Common Stock equal to the quotient of (i) the amount of Seller's and
the Trusts' liability for indemnification under this Article X divided by (ii)
the average closing sale price of the Purchaser Common Stock, as quoted on the
Nasdaq National Market (or any national securities exchange or over-the-counter
market on which the Purchaser Common Stock is then listed or quoted), for the
ten (10) consecutive trading days ending on the trading day immediately before
the date on which the Seller (or the Trust, as applicable) transfers shares of
the Purchaser Common Stock to the Purchaser hereunder, provided, that the Seller
(or the Trust, as applicable) shall transfer to the Purchaser good and
marketable title to such shares of the Purchaser Common Stock, free and clear of
all encumbrances.
SECTION 10.8 Annual Reports on Form 5500. The Purchaser hereby agrees
to cooperate with the Seller to cause the Companies to file within a reasonable
time after the Closing any Form 5500 with respect to the Benefit Plans that are
late as of the Closing ("Late 5500's"). Seller agrees to indemnify Purchaser for
any Loss relating to, resulting from or arising out of filing any Late 5500's;
provided, however, that this indemnity obligation shall apply only if Seller
retains exclusive control over the manner and means, including the selection of
counsel (at Seller's sole expense), by which such Late 5500's are filed by the
Company. The indemnity provided by this Section 10.8 is further contingent on
the reasonable cooperation of the Purchaser and the Companies in furnishing such
information and records as have been maintained by Seller or the Companies with
respect to periods prior to the date hereof and as may be reasonably requested
by Seller in connection with the Late 5500's filings.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 11.1 Survival of Representations and Warranties. The
representations and warranties of the parties hereto contained in this Agreement
shall survive the Closing and any investigation by the other party with respect
thereto but shall terminate and be of no further force or effect on or after the
expiration of two years after the Closing Date, except that any representation
and warranty as to which written notice of a bona fide claim relating thereto is
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received by the Indemnifying Person during the survival period shall, only with
respect to such claim, survive such survival period; provided, however, that (i)
the representations and warranties set forth in Section 2.6 (Financial
Statements) (insofar as Section 2.6 relates to Accounts and Notes Receivable and
Inventory), Section 2.7 (Accounts and Notes Receivable) and Section 2.18
(Inventories) shall be continuing and shall survive only until the Determination
Date; (ii) the representations and warranties set forth in Section 2.14
(Environmental Matters) shall be continuing and shall survive only until five
years after the Closing Date; and (iii) the representations and warranties set
forth in Section 2.2 (the Companies' Capitalization), Section 2.10 (Tax Matters)
and Section 2.11 (Employee Benefit Plans) shall be continuing and shall survive
until five days after the expiration of the statute of limitations applicable to
such matter.
SECTION 11.2 Survival of Covenants. The covenants and agreements of the
parties hereto, including, but not limited to, the indemnification obligations,
contained in this Agreement and in any certificate, instrument, agreement or
document delivered in connection herewith shall survive the Closing and any
investigation by the other party with respect thereto; provided, however, that
such covenants and agreements shall survive only for the period specified, if
any, by this Agreement or any certificate, instrument, agreement or document
delivered in connection with this Agreement.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Expenses. All costs and expenses incurred in connection
with the transactions contemplated by this Agreement shall be paid by the party
incurring such costs and expenses.
SECTION 12.2 Public Announcements. Any public announcement or similar
publicity with respect to this Agreement or the transactions contemplated hereby
shall be issued, if at all, at such time and in such manner as the Purchaser and
the Seller shall jointly determine, except as may be otherwise required by
applicable law, including securities law obligations to which the Purchaser may
be subject. The Purchaser and the Seller will consult with each other concerning
the means by which both of the Companies' employees, customers and suppliers and
others having dealings with both of the Companies will be informed of the
transactions contemplated hereby, and the Purchaser shall have the right to be
present for any such communication.
SECTION 12.3 Brokers and Finders. Except for Chase Securities Inc., all
negotiations on behalf of the Purchaser and the Seller relating to this
Agreement and the transactions contemplated by this Agreement have been carried
on by the parties hereto and their respective agents directly without the
intervention of any other person in such manner as to give rise to any claim
against the Purchaser or the Seller for financial advisory fees, brokerage or
commission fees, finder's fees or other like payment in connection with the
consummation of the transactions contemplated hereby. Each party agrees to
indemnify each other party against all loss, cost, damages or expenses arising
out of claims for fees or commissions of brokers employed or alleged to have
been employed by it, including Chase Securities, Inc. in the case of the Seller
and the Trusts.
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SECTION 12.4 Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof (other than the Letter Agreement executed by Beall Industries,
Inc. and the Purchaser dated September 20, 1999 which shall remain in full force
and effect), and (b) shall not be assigned by operation of law or otherwise.
SECTION 12.5 Amendment and Modification. This Agreement may be amended,
modified, terminated, rescinded or supplemented only by written agreement of all
of the parties hereto.
SECTION 12.6 Waiver; Consents. Any failure of a party to comply with
any obligation, covenant, agreement or condition herein may be waived by the
party affected thereby only by a written instrument signed by the party granting
such waiver. No waiver, or failure to insist upon strict compliance, by any
party of any condition or any breach of any obligation, term, covenant,
representation, warranty or agreement contained in this Agreement, in any one or
more instances, shall be construed to be a waiver of, or estoppel with respect
to, any other condition or any other breach of the same or any other obligation,
term, covenant, representation, warranty or agreement. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver.
SECTION 12.7 Further Assurances. From time to time, the Purchaser, the
Seller and the Trusts shall execute and deliver such further agreements,
documents, certificates and other instruments and shall take or cause to be
taken such other actions as shall be reasonably necessary or advisable to carry
out the purposes of and effect the transactions contemplated by this Agreement.
SECTION 12.8 Reformation and Severability. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, it shall, 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, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
SECTION 12.9 Dispute Resolution.
(a) Any unresolved controversy, dispute or claim arising out of or
relating to this Agreement or any agreements or instruments relating hereto or
delivered in connection herewith, including but not limited to a claim based on
or arising from an alleged tort or the performance, enforcement, breach,
termination, statute of limitations applicable, scope or validity there of
("Dispute"), shall be submitted first to mediation to be conducted in Fort
Worth, Texas and administered by the American Arbitration Association ("AAA")
under its Commercial Mediation Rules before resorting to arbitration.
(b) If the Dispute is not resolved within 30 days after the request for
mediation, any unresolved Dispute shall be settled by arbitration administered
by the AAA under its then
44
<PAGE>
applicable Commercial Arbitration Rules and the Supplementary Procedures for
Large, Complex Disputes. The arbitration shall be conducted in Fort Worth, Texas
before a single arbitrator being a retired judge of the state or federal courts
located in the State of Texas. Judgment on the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof. The parties acknowledge
that any Dispute evidences a transaction involving interstate or foreign
commerce and that the United States Arbitration Act (Title 9 of the U.S. Code)
shall govern the interpretation, enforcement and proceedings pursuant to this
arbitration clause. If the United States Arbitration Act is inapplicable to any
such Dispute for any reason, the arbitration shall be conducted pursuant to the
Texas General Arbitration Act (V.T.C.A., Civil Practice & Remedies Code, Section
171.0001 et seq. Vernon 1997). The award shall be in writing, shall be signed by
the arbitrator and shall include findings of fact and a statement of the reasons
for the award with a breakdown as to specific claims.
(c) Any party may, without waiving any remedy of arbitration, seek from
a court or agency having jurisdiction as provided under Section 7.2 hereof, any
interim, equitable or provisional relief to protect the property or rights of
that party pending the arbitrator's determination of the merits of the Dispute,
but without award of attorneys fees, costs and expenses as set forth below in
sub paragraph (e).
(d) The arbitration award shall be made within three months of the
filing of the notice of intention to arbitrate (demand), and the arbitrator
shall agree to comply with this schedule before accepting appointment.
(e) The prevailing party shall be entitled to an award of reasonable
attorneys fees. The arbitrator shall determine how the costs and expenses shall
be allocated between or among the parties. Expenses to be allocated shall
include all reasonable pre-award expenses of the arbitration, including the
arbitrator's fees, administrative fees, travel expenses, out-of-pocket expenses
such as telephone and copying, court costs, deposition fees and witness fees.
(f) Except as may be required by law, neither the parties nor the
arbitrator shall disclose the existence, content or results of any arbitration
without the prior written consent of all the parties.
SECTION 12.10 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by cable, telecopy or telex, or by
registered or certified mail (postage prepaid, return receipt requested), to the
respective parties as follows:
if to the Purchaser:
U.S. Concrete, Inc.
1300 Post Oak Boulevard, Suite 1220
Houston, Texas 77056
Telecopy No. 713/499-6201
Attn.: Corporate Secretary
45
<PAGE>
with a copy (which shall not constitute notice) to:
Mr. J. Patrick Ryan
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
300 Convent Street, Suite 1500
San Antonio, Texas 78205
Telecopy No. (210) 224-2035
if to the Seller:
Mr. Robert S. Beall
2901 Red Oak Ct.
Colleyville, Texas 76034
Telephone No. (817) 545-7938
Telecopy No. (817) 868-7590
with a copy (which shall not constitute notice) to:
Mr. Paul W. Bishop
Locke Liddell & Sapp LLP
3400 Chase Tower
600 Travis Street
Houston, Texas 77002
Telecopy No. (713) 223-3717
if to the Trusts:
Chase Bank of Texas, National Association
Chase Tower
P. O. Box 1290
Fort Worth, Texas 76101-1290
Telecopy No. (817) 878-1274
Attn.: Trust Department
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 12.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 12.12 Jurisdiction and Venue. Any process against the Purchaser
or the Seller in, or in connection with, any suit, action or proceeding arising
out of or relating to this Agreement or any of the transactions contemplated by
this Agreement may be served personally or by certified mail at the address set
forth in Section 12.10 with the same effect as though served on it or him
personally. Subject to the provisions of Section 12.9 hereof, the Purchaser,
46
<PAGE>
the Seller and each Trust hereby irrevocably submit in any suit, action or
proceeding arising out of or relating to this Agreement or any of the
transactions contemplated by this Agreement to the exclusive jurisdiction and
venue of the United States District Court for the Northern District of Texas or
any court of the State of Texas located in Tarrant County and irrevocably waive
any and all objections to jurisdiction and review or venue that they may have
under the laws of Texas or the United States.
SECTION 12.13 Descriptive Headings. The descriptive headings are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 12.14 Parties in Interest; No Third-Party Beneficiary. This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is intended to confer
upon any other person any rights or remedies of any nature whatsoever under or
by reason of this Agreement.
SECTION 12.15 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 12.16 Incorporation by Reference. Any and all Schedules,
exhibits, annexes, statements, reports, certificates or other documents or
instruments referred to herein or attached hereto are incorporated herein by
reference hereto as though fully set forth at the point referred to in the
Agreement.
SECTION 12.17 Certain Definitions. For the purposes of this Agreement,
the following terms shall have the meanings specified or referred to below
whether or not capitalized when used in this Agreement.
(a) "Affiliate" means, with respect to any person or other entity, any
person or other entity that, directly or indirectly, controls, is controlled by,
or is under common control with, such person or other entity in question. For
the purposes of this definition and the definition of Subsidiary, "control"
(including "controlling," "controlled by" and "under common control with") as
used with respect to any person or other entity, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such person or other entity, whether through the ownership of
voting securities, by contract or otherwise.
(b) "Environmental Laws" means any and all Laws relating to (a) the
protection, preservation or restoration of the environment (including, without
limitation, ambient air, surface water (including water management and runoff),
groundwater, drinking water supply, surface land, subsurface strata, plant and
animal life or any other natural resource), (b) emissions, discharges, releases
or threatened releases of Hazardous Substances into the environment or (c) the
exposure to, or the use, storage, recycling, treatment, manufacture, generation,
transport, processing, handling, labeling, production, removal or disposal of
any Hazardous Substances, in each case as amended and as now in effect. The term
"Environmental Laws" includes, without limitation, (i) the Federal Comprehensive
Environmental Response, Compensation and Liability
47
<PAGE>
Act of 1980 (CERCLA), the Superfund Amendments and Reauthorization Act, the
Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the
Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal
Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide Fungicide and Rodenticide Act, the Federal Occupational Safety and
Health Act of 1970, the Safe Drinking Water Act, the Atomic Energy Act and the
Hazardous Materials Transportation Act, in each case as amended and any other
Laws as now in effect relating to any of the foregoing.
(c) "GAAP" means (i) with respect to the Companies, generally accepted
United States accounting principles, applied on a basis consistent with the
Companies audited financial statements as of, and for the year ended December
31, 1998, and (ii) with respect to the Purchaser, generally accepted United
States accounting principles, applied on a basis consistent with the preceding
years and throughout the periods involved.
(d) "Governmental Authority" means any federal, state, or local
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or
quasi-governmental authority.
(e) "Hazardous Substances" shall mean substances listed under 40 C.F.R.
302.4 as of the date of this Agreement, and petroleum.
(f) "Interest-Bearing Debt" means the total amount of outstanding
indebtedness of the Companies for borrowed money (including, without limitation,
bank debt, equipment debt, capital lease obligations, bank overdrafts and any
other indebtedness for borrowed money).
(g) "Knowledge" or "known" means (i) when used with reference to
Seller, any Trust or either of the Companies, that Seller, such Trust and such
Company shall be deemed to have "knowledge" of or to have "known" a particular
fact or other matter if Robert S. Beall has current actual knowledge of such
fact or other matter, after reasonable investigation or inquiry under the
circumstances, and (ii) when used with reference to the Purchaser, that the
Purchaser shall be deemed to have "knowledge" of or to have "known" a particular
fact or other matter if any officer or director, or other person with senior
managerial authority of the Purchaser has current, actual knowledge of such fact
or other matter, after reasonable investigation or inquiry under the
circumstances.
(h) "Laws" means any and all federal, state or local statutes, laws,
ordinances, codes, regulations, rulings, published requirements, orders,
decrees, judgments, injunctions and rules of any Governmental Authority,
including, without limitation, those covering environmental, Tax, energy,
safety, health, transportation, bribery, recordkeeping, zoning, discrimination,
antitrust and wage and hour matters, in each case as in effect on the date of
this Agreement.
(i) "Listed Agreements" shall have the meaning set forth in Section
2.19 of this Agreement.
(j) "Losses" means any and all liabilities, losses, claims, damages,
actions, suits, proceedings, demands, assessments, fees, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees and
costs and expenses of investigation), net of income Tax
48
<PAGE>
effects with respect thereto (including, without limitation, income Tax benefits
recognized in connection therewith and income Taxes upon any indemnification
recovery thereof).
(k) "Material Adverse Effect" or "material" means (i) any adverse
change in the financial condition, results of operations or business of the
Companies collectively (and their Subsidiaries) or the Purchaser (and its
Subsidiaries), as the case may be, taken as a whole or (ii) any adverse effect
on the ability of the Seller, the Trusts or the Purchaser, as the case may be,
to perform their respective obligations pursuant to this Agreement; provided,
however, that for purposes of determining whether there shall have been any such
adverse effect, (i) any adverse change resulting from or relating to general
business or economic conditions shall be disregarded, (ii) any adverse change
resulting from or relating to conditions generally affecting the industry in
which the Companies compete shall be disregarded, and (iii) any adverse change
resulting from or relating to the taking of any action contemplated by this
Agreement shall be disregarded.
(l) "Permits" shall have the meaning set forth in Section 2.17 of this
Agreement.
(m) "Purchaser Common Stock" shall have the meaning set forth in
Section 1.2 of this Agreement.
(n) "SEC" means the Securities and Exchange Commission.
(o) "Subsidiary" means, when used with reference to an entity, any
corporation, partnership or limited liability company, a majority of the
outstanding voting securities, partnership interests or membership interests of
which are owned directly or indirectly by such entity or any partnership, joint
venture or other enterprise in which such entity currently has, directly or
indirectly, any controlling equity interest.
(p) "Taxes" means all taxes, charges, fees, levies or other assessments
including, without limitation, income, gross receipts, excise, property, sales,
withholding, social security, unemployment, occupation, use, service, service
use, license, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the United States or any state, local or foreign government
or subdivision or agency thereof, whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest,
fines, penalties or additional amounts attributable to or imposed with respect
to any such taxes, charges, fees, levies or other assessments.
49
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
U.S. CONCRETE, INC.
By: /s/ Michael W. Harlan
-----------------------------------
Name: Michael W. Harlan
--------------------------------
Title: Chief Financial Officer
-------------------------------
/s/ Robert S. Beall
--------------------------------------
Robert S. Beall
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, IN
ITS CAPACITY AS TRUSTEE FOR ALLISON BEALL 1999
TRUST
By: /s/ Jane E. Schoomaker
-----------------------------------
Name: Jane E. Schoomaker
--------------------------------
Title: Vice President
-------------------------------
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, IN
ITS CAPACITY AS TRUSTEE FOR LOGAN BEALL 1999 TRUST
By: /s/ Jane E. Schoomaker
-----------------------------------
Name: Jane E. Schoomaker
--------------------------------
Title: Vice President
-------------------------------
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, IN
ITS CAPACITY AS TRUSTEE FOR ALLISON BEALL
DESCENDANTS' TRUST
By: /s/ Jane E. Schoomaker
-----------------------------------
Name: Jane E. Schoomaker
--------------------------------
Title: Vice President
-------------------------------
50
<PAGE>
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, IN ITS CAPACITY
AS TRUSTEE FOR LOGAN BEALL DESCENDANTS' TRUST
By: /s/ Jane E. Schoomaker
-------------------------------------
Name: Jane E. Schoomaker
-----------------------------------
Title: Vice President
----------------------------------
51
<PAGE>
EXHIBIT 2.2
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
<PAGE>
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT (this "Amendment") is
entered into as of January 28, 2000, by and among Robert S. Beall, a resident of
the State of Texas (the "Seller"), Chase Bank of Texas, National Association, or
its successor in trust, in its capacity as trustee for Allison Beall 1999 Trust,
Logan Beall 1999 Trust, Allison Beall Descendants' Trust and Logan Beall
Descendants' Trust (with all of these trusts being referred to individually as a
"Trust" and collectively as the "Trusts"), and U.S. Concrete, Inc., a Delaware
corporation (the "Purchaser"). (References to a "Trust" and the "Trusts"
hereinafter in this Agreement shall be deemed to refer to the trustee or
trustees of the respective Trust(s) acting in such capacity.) All capitalized
terms used herein shall have the meanings assigned to them in that certain Stock
Purchase Agreement by and between the Seller, the Trusts and Purchaser dated
January 20, 2000 (the "Agreement").
RECITALS
WHEREAS, under the terms of the Agreement, the Seller and the Trusts
have agreed to sell, and the Purchaser has agreed to purchase, the Shares,
subject to the terms and conditions of the Agreement; and
WHEREAS, the Seller, the Trusts and the Purchaser desire to amend the
Agreement in accordance with Sections 9.3 and 12.5 of the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable and consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto hereby amend the Agreement as set forth below:
AGREEMENTS
1. Restructuring. Immediately before the Closing, the Seller shall cause
the Companies to consummate the Restructuring. For purposes of this
Amendment and the Agreement, "Restructuring" shall mean the
restructuring of the Companies' businesses, assets and liabilities into
certain non-corporate subsidiaries, all of which are wholly-owned,
directly or indirectly, by either of the Companies, as agreed to by the
Seller and the Purchaser.
2. No Breach of Representations, Warranties or Covenants as a Result of
the Restructuring; Satisfaction of Conditions. The parties acknowledge
and agree that neither (i) the consummation of the Restructuring, nor
(ii) any action taken or transaction entered into by either of the
Companies in connection with, or in preparation for, the Restructuring
shall (i) constitute an inaccuracy or breach of any representation,
warranty or covenant of the Seller or any Trust set forth in this
Agreement or any Transaction Document or (ii) be deemed to result in
the failure of any condition set forth in Article VIII to be satisfied.
On the contrary, for purposes of determining (i) whether any
representation or warranty
<PAGE>
of the Seller or any Trust is true and correct, (ii) whether the Seller
and the Trusts have performed all obligations and agreements, and
complied with all covenants, contained in the Agreement and (iii)
whether the conditions set forth in Article VIII have been satisfied,
the Restructuring shall be disregarded so that the foregoing matters
set forth in clauses (i), (ii) and (iii) shall be determined with
respect to the Companies, their Subsidiaries and Affiliates taken as a
whole.
3. No Further Amendment or Modification. Except as specifically set forth
in this Amendment, the Agreement shall remain in full force and effect,
without any amendment or modification thereto.
[The remainder of this page is left blank intentionally.]
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment in
two or more counterparts as of the day first written above.
U.S. CONCRETE, INC.
By: /s/ Michael W. Harlan
-----------------------------------
Name: Michael W. Harlan
--------------------------------
Title: Chief Financial Officer
-------------------------------
/s/ Robert S. Beall
--------------------------------------
Robert S. Beall
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, IN ITS CAPACITY
AS TRUSTEE FOR ALLISON BEALL 1999 TRUST
By: /s/ Jane E. Schoomaker
-----------------------------------
Name: Jane E. Schoomaker
--------------------------------
Title: Vice President
-------------------------------
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, IN ITS CAPACITY
AS TRUSTEE FOR LOGAN BEALL 1999 TRUST
By: /s/ Jane E. Schoomaker
-----------------------------------
Name: Jane E. Schoomaker
--------------------------------
Title: Vice President
-------------------------------
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, IN ITS CAPACITY
AS TRUSTEE FOR ALLISON BEALL
DESCENDANTS' TRUST
By: /s/ Jane E. Schoomaker
-----------------------------------
Name: Jane E. Schoomaker
--------------------------------
Title: Vice President
-------------------------------
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, IN ITS CAPACITY
3
<PAGE>
AS TRUSTEE FOR LOGAN BEALL DESCENDANTS'
TRUST
By: /s/ Jane E. Schoomaker
-----------------------------------
Name: Jane E. Schoomaker
--------------------------------
Title: Vice President
-------------------------------
4
<PAGE>
EXHIBIT 2.3
STOCK PURCHASE AGREEMENT
<PAGE>
Oklahoma Operations
================================================================================
STOCK PURCHASE AGREEMENT
BY AND AMONG
FALLIS ARCH BEALL, NOLA SUE BEALL, ROBERT S. BEALL,
LEIGH ANN GATHRIGHT, DORIS W. STOKES AND
FALLIS ARCH BEALL, IN HIS CAPACITY AS TRUSTEE FOR THE
R.E. STOKES TRUST
AND
U.S. CONCRETE, INC.
Dated as of January 24, 2000
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
ARTICLE I - SALE OF SHARES; CLOSING.....................................................................1
SECTION 1.1 Purchase of Shares.................................................................1
SECTION 1.2 Share Purchase Price...............................................................2
SECTION 1.3 Closing............................................................................2
SECTION 1.4 Closing Deliveries.................................................................2
SECTION 1.5 Purchase Price Adjustment..........................................................3
SECTION 1.6 Tax Treatment......................................................................4
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE SELLER................................................5
SECTION 2.1 Organization and Qualification.....................................................5
SECTION 2.2 The Companies' Capitalization......................................................6
SECTION 2.3 Authority Relative to the Agreement................................................6
SECTION 2.4 No Violation.......................................................................7
SECTION 2.5 Consents and Approvals.............................................................7
SECTION 2.6 Financial Statements...............................................................7
SECTION 2.7 Accounts and Notes Receivable......................................................8
SECTION 2.8 Absence of Changes.................................................................8
SECTION 2.9 Litigation.........................................................................9
SECTION 2.10 Tax Matters .......................................................................9
SECTION 2.11 Employee Benefit Plans............................................................10
SECTION 2.12 Employment Matters................................................................11
SECTION 2.13 Patents, Trademarks and Copyrights................................................12
SECTION 2.14 Environmental Matters.............................................................13
SECTION 2.15 Insurance ........................................................................13
SECTION 2.16 Title to Properties; Encumbrances.................................................13
SECTION 2.17 Permits ..........................................................................15
SECTION 2.18 Inventories ......................................................................15
SECTION 2.19 Agreements, Contracts and Commitments.............................................15
SECTION 2.20 Compensation; Employment Agreements...............................................17
SECTION 2.21 Noncompetition, Confidentiality and Nonsolicitation
Agreements; Employee Policies.....................................................17
SECTION 2.22 Accounts with Banks and Brokerages; Powers of Attorney............................17
SECTION 2.23 Absence of Certain Business Practices.............................................17
SECTION 2.24 Competing Lines of Business; Related-Party Transactions...........................17
SECTION 2.25 Capital Expenditures..............................................................18
SECTION 2.26 Product Warranties................................................................18
SECTION 2.27 Year 2000 Compliance..............................................................18
SECTION 2.28 Disclosure .......................................................................18
SECTION 2.29 Disclaimer of Additional and Implied Warranties...................................18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER................................................18
SECTION 3.1 Organization and Authority........................................................19
SECTION 3.2 Authority Relative to Agreement...................................................19
SECTION 3.3 No Violation......................................................................19
SECTION 3.4 Consents and Approvals............................................................19
SECTION 3.5 Investment Intent.................................................................20
SECTION 3.6 The Purchaser Common Stock........................................................20
SECTION 3.7 Commission Filings; Financial Statements..........................................20
SECTION 3.8 Financing.........................................................................21
SECTION 3.9 Disclosure........................................................................21
SECTION 3.10 Disclaimer of Additional and Implied Warranties...................................21
ARTICLE IV - FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON THE PURCHASER'S
COMMON STOCK.....................................................................................22
SECTION 4.1 Compliance with Law...............................................................22
SECTION 4.2 Economic Risk; Sophistication; Accredited Investors...............................22
SECTION 4.3 Rule 144 Reporting................................................................22
SECTION 4.4 Lockup Period.....................................................................23
SECTION 4.5 Prospectus Delivery...............................................................24
ARTICLE V - COVENANTS........................................................................................24
SECTION 5.1 Affirmative Covenants of the Companies............................................24
SECTION 5.2 Negative Covenants of the Companies...............................................25
SECTION 5.3 Covenant of the Companies Regarding Companies' Trading
Securities........................................................................26
ARTICLE VI - ADDITIONAL AGREEMENTS............................................................................26
SECTION 6.1 Certain Tax Matters...............................................................26
SECTION 6.2 Repayment of Related Party Indebtedness...........................................27
SECTION 6.3 Stock Options.....................................................................28
SECTION 6.4 Access To, and Information Concerning, Properties and
Records.......................................................................... 28
SECTION 6.5 Good Faith Efforts to Consummate Transactions.....................................29
SECTION 6.6 Exclusivity.......................................................................29
SECTION 6.7 Release From Indemnity Agreements.................................................30
SECTION 6.8 Distribution or Transfer of Certain Assets........................................30
SECTION 6.9 Benefit Plans.....................................................................30
ARTICLE VII - NONCOMPETITION COVENANTS.........................................................................30
SECTION 7.1 Prohibited Activities.............................................................30
SECTION 7.2 Equitable Relief..................................................................31
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 7.3 Reasonable Restraint..............................................................32
SECTION 7.4 Severability; Reformation.........................................................32
SECTION 7.5 Material and Independent Covenant.................................................32
ARTICLE VIII -CONDITIONS TO CLOSING........................................................................32
SECTION 8.1 Conditions to Each Party's Obligations Under this Agreement.......................32
SECTION 8.2 Conditions to the Obligations of the Purchaser Under this
Agreement.........................................................................33
SECTION 8.3 Conditions to the Obligations of the Seller and each Selling
Shareholder Under this Agreement..................................................34
ARTICLE IX - TERMINATION; AMENDMENT; WAIVER...............................................................35
SECTION 9.1 Termination.......................................................................35
SECTION 9.2 Effect of Termination.............................................................36
SECTION 9.3 Amendment and Modification........................................................36
SECTION 9.4 Extension; Waiver.................................................................36
ARTICLE X - REMEDIES.....................................................................................36
SECTION 10.1 Remedies for Breach of Representations, Warranties and Covenants of the
Seller and the Selling Shareholders Before the Closing Date.......................36
SECTION 10.2 Indemnification by the Seller and the Selling Shareholders........................36
SECTION 10.3 Indemnification by the Purchaser..................................................38
SECTION 10.4 Notice and Defense of Third Party Claims..........................................39
SECTION 10.5 Limitations of Liability..........................................................40
SECTION 10.6 Exclusive Remedies................................................................42
SECTION 10.7 Payment of Indemnification Obligation.............................................43
SECTION 10.8 Annual Reports on Form 5500.......................................................43
ARTICLE XI - SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS........................................44
SECTION 11.1 Survival of Representations and Warranties........................................44
SECTION 11.2 Survival of Covenants.............................................................44
ARTICLE XII - MISCELLANEOUS................................................................................44
SECTION 12.1 Expenses..........................................................................44
SECTION 12.2 Public Announcements..............................................................44
SECTION 12.3 Brokers and Finders...............................................................44
SECTION 12.4 Entire Agreement; Assignment......................................................45
SECTION 12.5 Amendment and Modification........................................................45
SECTION 12.6 Waiver; Consents..................................................................45
SECTION 12.7 Further Assurances................................................................45
SECTION 12.8 Reformation and Severability......................................................45
</TABLE>
iii
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<TABLE>
<CAPTION>
<S> <C>
SECTION 12.9 Dispute Resolution................................................................45
SECTION 12.10 Notices...........................................................................46
SECTION 12.11 Governing Law48
SECTION 12.12 Jurisdiction and Venue............................................................48
SECTION 12.13 Descriptive Headings..............................................................49
SECTION 12.14 Parties in Interest; No Third-Party Beneficiary...................................49
SECTION 12.15 Counterparts......................................................................49
SECTION 12.16 Incorporation by Reference........................................................49
SECTION 12.17 Certain Definitions...............................................................49
</TABLE>
iv
<PAGE>
EXHIBITS
Exhibit A - List of Companies
Exhibit B - Form of Consulting Agreement
Exhibit C - Form of Lease Agreement
Exhibit D - Bill of Sale
SCHEDULES
Schedule 1.1 - Purchase of Shares
Schedule 1.2 - Allocation of Purchase Price
Schedule 1.4(c) - Lease Rental Rates and Terms
Schedule 1.4(d) - Equipment to Be Sold to Purchaser by Seller
Schedule 1.5(d) - Closing Net Working Capital
Schedule 2.1(a) - Qualification
Schedule 2.1(b) - Subsidiaries
Schedule 2.2(a) - Capitalization
Schedule 2.2(b) - Ownership of Shares
Schedule 2.4 - No Violation
Schedule 2.5 - Consents and Approvals
Schedule 2.6 - Financial Statements
Schedule 2.7 - Accounts and Notes Receivable
Schedule 2.8 - Absence of Changes
Schedule 2.9 - Litigation
Schedule 2.11 - Employee Benefit Plans
Schedule 2.12 - Employment Matters
Schedule 2.13 - Patents, Trademarks and Copyrights
Schedule 2.14 - Environmental Matters
Schedule 2.15 - Insurance
Schedule 2.16 - Title to Properties; Encumbrances
Schedule 2.17 - Permits
Schedule 2.18 - Inventories
Schedule 2.19 - Agreements, Contracts and Commitments
Schedule 2.20 - Compensation; Employment Agreements
Schedule 2.21 - Noncompetition, Confidentiality and Non-Solicitation
Agreements; Employee Policies
Schedule 2.22 - Accounts with Banks and Brokerages
Schedule 2.24 - Competing Lines of Business; Related Party Transactions
Schedule 2.25 - Capital Expenditures
Schedule 2.26 - Product Warranties
Schedule 3.7 - Commission Filings
Schedule 6.2 - Repayment of Related Party Indebtedness
Schedule 6.3 - Stock Options
Schedule 6.7 - Indemnity Agreements
Schedule 10.5(b) - Seller Cap
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Schedule 10.5(c) - Seller Basket
Schedule 10.5(d) - Purchaser Cap
Schedule 10.5(e) - Purchaser Basket
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
January 24, 2000, by and among U.S. Concrete, Inc., a Delaware corporation (the
"Purchaser"), and FALLIS ARCH BEALL (hereinafter referred to in his individual
capacity as the "Seller"), ROBERT S. BEALL, NOLA SUE BEALL, DORIS W. STOKES,
LEIGH ANN GATHRIGHT, and FALLIS ARCH BEALL, or his successor in trust, in his
capacity as trustee for the R.E. STOKES Trust (the "Trust"), (with all of these
individuals (except Fallis Arch Beall, in his individual capacity) and the Trust
being referred to individually as a "Selling Shareholder" and collectively as
the "Selling Shareholders").
RECITALS
WHEREAS, the Seller and each Selling Shareholder are the owners of all
of the issued and outstanding shares of common stock (the "Common Stock") of the
corporations, set forth on Exhibit A (with all of these corporations being
referred to individually as a "Company" and collectively as the "Companies"),
and such Common Stock constitutes all of the issued and outstanding capital
stock (of all classes) of the Companies; and
WHEREAS, the Purchaser desires to purchase from the Seller and each
Selling Shareholder, and the Seller and Selling Shareholders desire to sell to
the Purchaser, all such shares of Common Stock (the "Shares") upon the terms and
conditions set forth herein; and
WHEREAS, the Seller and each Selling Shareholder are making certain
representations, warranties, covenants and indemnities herein as an inducement
to the Purchaser to enter into this Agreement, and the Purchaser is making
certain representations, warranties, covenants and indemnities herein as an
inducement to the Seller and each Selling Shareholder to enter into this
Agreement; and
WHEREAS, capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to them in Section 12.17.
NOW, THEREFORE, in consideration of the recitals and the respective
representations, warranties, covenants and indemnities contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and intending to be legally bound hereby, the parties hereby
agree as follows:
ARTICLE I
SALE OF SHARES; CLOSING
SECTION 1.1 Purchase of Shares. Subject to the terms and conditions of
this Agreement, on the Closing Date (as defined below), the Seller and each
Selling Shareholder will sell to the Purchaser, and the Purchaser will purchase
from the Seller and each Selling Shareholder, the Shares set forth opposite the
name of the Seller and each Selling Shareholder on Schedule 1.1.
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SECTION 1.2 Share Purchase Price. The purchase price for the Shares
shall be $7,500,000 less all outstanding indebtedness (including accrued
interest thereon) under (i) that certain Consumer Credit Contract between Beall
Trucking, Inc. and Century Motors, Inc. dated May 3, 1998, which was assigned by
Century Motors, Inc. to First Bank & Trust Co., (ii) that certain Promissory
Note between Beall Trucking, Inc. and BancFirst dated April 27, 1999; (iii) that
certain Promissory Note between Beall Trucking, Inc. and National Bank of
Commerce dated December 28, 1998; (iv) that certain Promissory Note between
Beall Trucking, Inc. and National Bank of Commerce dated June 16, 1999; (v) that
certain Promissory Note between Beall Trucking, Inc. and National Bank of
Commerce dated August 31, 1999; (vi) those certain Promissory Notes between
Beall Trucking, Inc and Amquest Bank, N.A. dated August 25, 1997, July 27, 1998
and November 12, 1998; and (vii) any other Interest-Bearing Debt of any of the
Companies on the Closing Date (the "Purchase Price"). The Purchase Price shall
consist of (i) 222,857 shares of common stock, par value $.001 per share, of the
Purchaser ("Purchaser Common Stock") and (ii) the delivery of immediately
available funds equal to the difference between (A) the Purchase Price and (B)
$1,560,000. At the Closing, the Purchaser shall pay to the Seller and each
Selling Shareholder the portion of the Purchase Price set forth opposite the
name of the Seller and each Selling Shareholder on Schedule 1.2 in immediately
available funds and by the delivery of certificates evidencing Purchaser Common
Stock. The Purchase Price shall be adjusted after the Closing Date in accordance
with Section 1.5.
SECTION 1.3 Closing. The purchase and sale of the Shares (the
"Closing") provided for in this Agreement shall take place at the offices of
Chase Bank of Texas, National Association, 201 Main Street, Fort Worth, Texas
76101 or at such other place as may be mutually agreed by the parties to this
Agreement, as soon as reasonably practicable after satisfaction or waiver of the
conditions set forth in Article VIII hereof to the respective obligations of the
Purchaser, the Seller and each Selling Shareholder hereunder (but in any event
not later than ten business days after such satisfaction or waiver). For
purposes of this Agreement, the date on which the Closing actually occurs shall
be the "Closing Date."
SECTION 1.4 Closing Deliveries. The Purchaser, the Seller and each
Selling Shareholder will deliver, or cause to be delivered, at the Closing the
following instruments (collectively, the "Transaction Documents") to which they
or their Affiliates are a party:
(a) certificates or other duly executed assignment documents
representing the Shares duly endorsed by the Seller and each Selling Shareholder
for transfer to the Purchaser;
(b) the Consulting Agreement between the Seller and the Companies (or
such one or more of them as is mutually agreed by the Purchaser and the Seller)
in substantially the form attached hereto as Exhibit B (the "Consulting
Agreement");
(c) a Lease Agreement between the Seller and the Company mutually
agreed by the Purchaser and the Seller relating to each business facility of the
Companies listed on Schedule 2.16, Item Nos. 1, 2 and 4 under the subheading
Real Estate Leases in substantially the form attached hereto as Exhibit C (the
"Lease Agreement") (it being understood and agreed that such facilities shall be
leased at the rates and for the terms set forth on Schedule 1.4(c));
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(d) a Bill of Sale in substantially the form attached hereto as Exhibit
D (the "Bill of Sale") (it being understood and agreed that the equipment set
forth on Schedule 1.4(d) shall be transferred by Fallis Arch Beall to the
Purchaser (or the Company designated by the Purchaser) for aggregate
consideration of $60,000); and
(e) such additional information or documents as the Purchaser, the
Seller and each Selling Shareholder shall have reasonably required to evidence
the consummation of the transaction contemplated by this Agreement.
SECTION 1.5 Purchase Price Adjustment.
-------------------------
(a) The Purchase Price shall be adjusted in the amount equal to the
Working Capital Adjustment. For purposes hereof, the "Working Capital
Adjustment" shall equal the difference of (i) the Closing Net Working Capital of
all of the Companies collectively (as defined in Section 1.5(d)) as of the end
of the last day of the month immediately preceding the Closing Date minus (ii)
$722,000 (the "Working Capital Threshold"). If the Working Capital Adjustment is
positive (i.e., Closing Net Working Capital is greater than the Working Capital
Threshold), the Purchase Price shall be increased by the amount of the Working
Capital Adjustment. The Purchaser shall pay to the Seller and the Selling
Shareholders (pro rata in accordance with the percentage allocation of the
Purchase Price among the Seller and each Selling Shareholder set forth on
Schedule 1.2) any such positive Working Capital Adjustment in cash, plus
interest thereon at a rate of 7% per annum from the Closing Date, within five
days of the Determination Date (as defined below). If the Working Capital
Adjustment is negative (i.e., if the Closing Net Working Capital is less than
the Working Capital Threshold), the Purchase Price shall be decreased by the
amount of the Working Capital Adjustment. The Seller and Selling Shareholders
(pro rata in accordance with the percentage allocation of the Purchase Price set
forth on Schedule 1.2) shall pay to the Purchaser any such negative Working
Capital Adjustment in cash, plus interest thereon at a rate of 7% per annum from
the Closing Date, within five days of the Determination Date.
(b) Within 75 days after the Closing Date, the Purchaser will provide
the Seller and each Selling Shareholder with a reasonably detailed calculation
of the Working Capital Adjustment for their review and approval (the
"Calculation"). The Calculation shall be deemed to be final and conclusive and
agreed to by the Purchaser, the Seller and each Selling Shareholder, and shall
be the basis for the Working Capital Adjustment provided for in Section 1.5(a),
unless the Seller gives written notice to the Purchaser, within 20 days of the
receipt of the Calculation, that the Seller and the Selling Shareholders dispute
the Calculation. The Purchaser and the Seller (on his own behalf and on behalf
of each Selling Shareholder) shall attempt, within 30 days after any such
dispute notice is given, to resolve such dispute. If the parties are unable to
resolve such dispute within such 30 days, the Purchaser and the Seller (on his
own behalf and on behalf of each Selling Shareholder) shall resolve the dispute
in accordance with the procedure set forth in Section 1.5(c).
(c) If the parties do not agree on the amount of the Working Capital
Adjustment within 30 days after a dispute notice is given (as described in
Section 1.5(b)), they shall engage a mutually agreeable nationally-recognized
public accounting firm for the limited purpose of resolving only the
disagreements of the parties with respect to the Calculation, provided that all
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determinations made by such accounting firm shall be made in accordance with
this Section 1.5. The determinations of such accounting firm shall be conclusive
and binding on the parties, and the fees and expenses of such accounting firm
shall be divided equally between the Seller and the Selling Shareholders, as
appropriate, on the one hand, and the Purchaser, on the other hand. For purposes
hereof, "Determination Date" shall mean the date on which the final
determination of the Working Capital Adjustment is made in accordance with
either Section 1.5(b) or Section 1.5(c).
(d) For the purpose of Section 1.5, the Companies' "Closing Net Working
Capital" means the excess of the current assets of the Companies collectively
over the current liabilities of the Companies collectively (excluding the
current portion of long-term debt and all accrued interest thereon), determined
in accordance with GAAP and on a basis consistent with the Companies' past
practice; provided, however, that the Companies' current liabilities shall not
include any state, local or foreign taxes attributable to the Section 338(h)(10)
Election (as defined below). An example of the calculation of Closing Net
Working Capital as of December 31, 1999 is set forth on Schedule 1.5(d) hereto.
SECTION 1.6 Tax Treatment.
--------------
(a) The Purchaser, the Seller and each Selling Shareholder shall timely
make a joint election under Section 338(h)(10) of the Internal Revenue Code of
1986, as amended (the "Code"), and Treas. Reg. ss.1.338(h)(10)-1(T)(c)(1) (and
any corresponding elections under state, local or foreign tax law) (collectively
the "Section 338(h)(10) Election") with respect to the purchase and sale of the
Shares of each of the Companies that have elected to be taxed as S corporations
pursuant to Section 1361 of the Code (that is Atlas Concrete, Inc. and Beall
Trucking, Inc.) (the "S Corporations") such that (i) the S Corporations will be
treated as having sold all of their assets in a single transaction on the
Closing Date before Closing and while an S corporation pursuant to Section 1361
of the Code and (ii) the Seller and each Selling Shareholder will recognize no
gain or loss with respect to the sale of their shares of the capital stock of
the S Corporations. The Purchaser will prepare the election forms, including the
allocation of the deemed purchase price discussed hereinbelow, and provide them
to the Seller and each Selling Shareholder for their review at least five days
before the Closing Date. The Seller and each Selling Shareholder will execute
and return the election forms to the Purchaser on the Closing Date, and the
Purchaser will file such election forms on or before the respective due dates
for each such election form. The Seller and each Selling Shareholder shall, on
the Closing Date, agree with the Purchaser to the allocation of the deemed
purchase price among the assets of the S Corporations proposed by the Purchaser
as long as such allocation has a substantial basis in the law and is in
compliance with Temp. Treas. Reg. ss. 1.338(b)-6T(b).
(b) The parties each hereby covenant and agree that they will not take
a position with respect to the allocation of the Purchase Price (i) for purposes
of any tax return filed with any governmental agency charged with the collection
of any taxes or, for so long as commercially reasonable, for purposes of any
judicial proceeding, that is in any way inconsistent with the allocation made
under Section 1.6(a) or (ii) for financial reporting or accounting purposes that
is in any way inconsistent with such allocation unless a different allocation
for financial reporting or accounting purposes is required by law, regulation or
court order or decree.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except for the representations and warranties set forth in Section
2.2.(b), Section 2.3 and Section 2.4 which are being made by the Seller and each
Selling Shareholder (only insofar that Section 2.4 relates to the Selling
Shareholders and provided that each Selling Shareholder is making such
representations and warranties only on his, her or its own behalf and not on
behalf of any other Selling Shareholder), the Seller, in his individual
capacity, (but not any Selling Shareholder) hereby makes the representations and
warranties set forth in this Article II to the Purchaser. The Seller has
delivered to the Purchaser the schedules to this Agreement (the "Schedules"),
including those referred to in this Article II, on the date hereof and such
Schedules have been reviewed and accepted by the Purchaser. The Seller shall,
from time to time through the Closing Date, advise the Purchaser and its counsel
in writing as to any change, amendment or supplement to the Schedules which is
necessary to reflect material changes in the subject matter thereof occurring
through the Closing Date. The Purchaser must notify the Seller and its counsel
in writing within five business days after receipt of any material change,
amendment or supplement to the Schedules of its election to terminate this
Agreement in accordance with Section 9.1(b). If the Purchaser fails to notify
the Seller as required, it shall be deemed to have waived its right to terminate
this Agreement based on such change, amendment or supplement to the Schedules.
All matters set forth in the Schedules shall be deemed to be disclosed not only
in connection with the representation and warranty specifically referenced on a
given Schedule, but for purposes of any other representation or warranty of the
Seller set forth in this Article II, so long as a Schedule includes a specific
cross reference to another Schedule.
SECTION 2.1 Organization and Qualification.
------------------------------
(a) Each of the Companies is duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. Each of
the Companies has all requisite corporate power and authority to carry on its
business as it is now being conducted, and to own, lease and operate its
properties and assets, and to perform all its obligations under the agreements
and instruments to which it is a party or by which it is bound. Except as set
forth on Schedule 2.1(a), each of the Companies is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which the properties and assets owned, leased or operated
by it or the nature of the business conducted by it make such qualification
necessary, except in such jurisdictions where the failure to be duly qualified
or in good standing does not and would not result in a Material Adverse Effect;
provided, however, that the representations and warranties contained in this
sentence shall be of no force or effect to the extent that such Material Adverse
Effect can be eliminated by one or both of the Companies becoming qualified in
such jurisdictions. Each such jurisdiction in which any of the Companies is so
qualified is listed on Schedule 2.1(a).
(b) The Companies have no subsidiaries.
(c) True, complete and correct copies of the Articles of Incorporation
and Bylaws, each as amended, of the Companies have been provided to Purchaser
and no breach of such Articles of Incorporation or Bylaws has occurred and is
continuing. True, complete and correct
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copies of all stock records and minute books of the Companies and their
respective Subsidiaries have been provided to the Purchaser.
SECTION 2.2 The Companies' Capitalization.
-----------------------------
(a) The authorized and outstanding capital stock of each of the
Companies is set forth on Schedule 2.2(a). Except as set forth on Schedule
2.2(a), and except for the right of first refusal for the benefit of the Seller
and the Selling Shareholders set forth in the Bylaws of each of the Companies,
which right of first refusal is hereby waived by the Seller and each Selling
Shareholder, there are no outstanding subscriptions, options, convertible
securities, rights, warrants, calls, irrevocable proxies or other agreements or
commitments of any kind directly or indirectly obligating any of the Companies
to issue any security of or equity interest in any of the Companies, or
irrevocable proxies or any agreements restricting the transfer of or otherwise
relating to any security or equity interest in any of the Companies or any
Subsidiary of any of the Companies. All of the Shares (which constitute all
outstanding shares of capital stock of the Companies) and all outstanding shares
of capital stock of each Subsidiary have been duly authorized, validly issued
and are fully paid and non-assessable, and are free of preemptive rights. Except
as set forth on Schedule 2.2(a), all dividends declared prior to the date hereof
have been paid. Except as set forth in Schedule 2.2(a), the Companies own, of
record or beneficially, or control, directly or indirectly, no capital stock,
securities convertible into or exchangeable for capital stock or any other
equity interest in any corporation, association or other business entity
representing in excess of 2% of the voting power of such entity. Except as set
forth in Schedule 2.2(a), the Companies are not, directly or indirectly,
participants in any joint venture, limited liability company, partnership or
other noncorporate entity.
(b) The Seller and each Selling Shareholder (except for Fallis Arch
Beall, in his capacity as trustee for the Trust) are and will be on the Closing
Date the record and beneficial owners and holders of, and have, and on the
Closing Date will have, record and beneficial title to, the Shares set forth
opposite the name of the Seller and each Selling Shareholder as set forth on
Schedule 2.2(b). Fallis Arch Beall, in his capacity as trustee for the R.E.
Stokes Trust, is and will be on the Closing Date the record owner and holder of,
and has, on the Closing Date will have, record title to, the Shares set forth
opposite his name, in his capacity as trustee for the Trust as set forth on
Schedule 2.2(b). The Seller and each Selling Shareholder own the Shares set
forth opposite their respective names on Schedule 2.2(b), free and clear of any
adverse claim of any other person, including without limitation any lien,
mortgage, pledge, security interest or other encumbrance.
SECTION 2.3 Authority Relative to the Agreement. The Seller and each
Selling Shareholder have the requisite legal right, power and authority to enter
into this Agreement and perform the actions contemplated hereby. This Agreement
has been duly and validly executed and delivered by the Seller and each Selling
Shareholder, and this Agreement constitutes the valid and binding obligation of
the Seller and each Selling Shareholder enforceable against the Seller and each
Selling Shareholder in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
relating to creditors' rights generally and general equitable principles.
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SECTION 2.4 No Violation. Except as set forth on Schedule 2.4, neither
the execution, delivery nor performance of this Agreement, in its entirety, nor
the consummation of the transactions contemplated hereby, as of the Closing
Date, (i) violates in any material respect any order, writ, judgment,
injunction, award or decree to which the Companies, the Seller or any Selling
Shareholder are a party or, to the Seller's knowledge, any law, rule, statute,
ordinance or regulation applicable to any of the Companies, the Seller or any
Selling Shareholder, (ii) is in material conflict with, results in a material
breach or termination of any provision of, causes the acceleration of the
maturity of any debt or obligation pursuant to, causes any prepayment penalty
with respect to any debt or obligation pursuant to, constitutes a material
default (or gives rise to any right of termination, cancellation or
acceleration) under, or results in the creation of any security interest, lien,
charge or other encumbrance upon any currently owned property of any of the
Companies pursuant to, any terms, conditions or provisions of any note, license,
instrument, indenture, mortgage, deed of trust, bond, permit, lease or other
agreement or understanding or any other restriction of any kind or character, to
which any of the Companies, the Seller or any Selling Shareholder is a party or
by which any currently owned property of any of the Companies is subject or
bound, or (iii) conflicts with or results in any breach of any provision of the
Certificate or Articles of Incorporation or Bylaws of any of the Companies.
SECTION 2.5 Consents and Approvals. Except as described on Schedule 2.5
hereto, no prior consent, approval or authorization of, or declaration, filing
or registration with any person, domestic or foreign, is required of or by any
of the Companies in connection with the execution, delivery and performance by
the Seller and each Selling Shareholder of this Agreement and the transactions
contemplated hereby.
SECTION 2.6 Financial Statements. Schedule 2.6 contains copies of (i)
the unaudited compiled balance sheet of Atlas Concrete, Inc. as of December 31,
1998, and the related unaudited compiled income statement of Atlas Concrete,
Inc. for the seven months ended December 31, 1998, (ii) the unaudited compiled
balance sheet of Beall Trucking, Inc. as of December 31, 1998 and the related
unaudited compiled income statement of Beall Trucking, Inc. for the twelve
months ended December 31, 1998, (iii) the unaudited compiled balance sheet of
Stokes Transit Mix, Inc. as of March 31, 1999 and the related unaudited compiled
income statement of Stokes Transit Mix, Inc. for the twelve months ended March
31, 1999 and (iv) the unaudited compiled balance sheet of Atlas-Tuck Concrete,
Inc. as of June 30, 1999 and the related unaudited compiled income statement of
Atlas-Tuck Concrete, Inc. for the twelve months ended June 30, 1999. In
addition, the Companies have provided the Purchaser copies of (i) the unaudited
income statement of Atlas Concrete, Inc. for the nine months ended September 30,
1999, (ii) the unaudited income statement of Beall Trucking, Inc. for the nine
months ended September 30, 1999, (iii) the unaudited income statement of Stokes
Transit-Mix, Inc. for the six months ended September 30, 1999, and (iv) the
unaudited income statement of Atlas-Tuck Concrete, Inc. for the three months
ended September 30, 1999 (all of the foregoing balance sheets and income
statements of the Companies are collectively referred to as the "Companies'
Financial Statements"). The Companies' Financial Statements present fairly, in
all material respects, the financial position of each of the Companies indicated
as of the dates indicated and the results of operations of each of the Companies
indicated for the periods indicated in conformity with GAAP in all material
respects, except as set forth on Schedule 2.6.
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SECTION 2.7 Accounts and Notes Receivable. Schedule 2.7 sets forth an
accurate list of the accounts and notes receivable of the Companies as of
September 30, 1999 and of the accounts and notes receivable of the Companies as
of the second business day preceding the date hereof; such Schedule 2.7 shall be
updated by the Seller and delivered to the Purchaser as of the second business
day preceding the Closing Date. Receivables from and advances to employees, the
Seller or any Selling Shareholder and any entities or persons related to or
Affiliates of the Seller or any Selling Shareholder are separately identified in
Schedule 2.7. Schedule 2.7 also sets forth an accurate aging of all accounts and
notes receivable as of September 30, 1999, showing amounts due in 30-day aging
categories. The trade and other accounts receivable of the Companies, including
without limitation those classified as current assets on the Companies' books
and records, are bona fide receivables, were acquired in the ordinary course of
business and are stated in accordance with GAAP.
SECTION 2.8 Absence of Changes. Except as and to the extent set forth
on Schedule 2.8, since September 30, 1999, none of the Companies have, directly
or indirectly:
(a) made any amendment to its Articles of Incorporation or Bylaws, or
changed the character of its business in any material manner;
(b) suffered any Material Adverse Effect;
(c) suffered any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the assets, properties or business
of the Companies;
(d) made any change in the authorized capital stock of the Companies or
in their outstanding securities or any change in the Seller's or any of the
Selling Shareholder's ownership interests in the Companies or any grant of any
options, warrants, calls, conversion rights or commitments;
(e) made any declaration or payment of any dividend or distribution in
respect of their capital stock or any direct or indirect redemption, purchase or
other acquisition of any of the capital stock of the Companies;
(f) caused any increase in the compensation payable or to become
payable by the Companies to the Seller or any Selling Shareholder or any of
their officers, directors, employees, consultants or agents, except for ordinary
and customary bonuses and salary increases for employees in accordance with past
practice, which bonuses and salary increases are set forth in Schedule 2.8;
(g) suffered any work interruptions, labor grievances or labor claims
filed;
(h) to the Seller's knowledge, been effected by any proposed law,
regulation or event or condition of any character materially and adversely
affecting the assets, properties or business of the Companies;
(i) made or entered into, except for the transactions contemplated by
this Agreement, any sale or transfer, or any agreement to sell or transfer, any
material assets, properties or rights
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of the Companies to any person or entity, including, without limitation, the
Seller, the Selling Shareholders and their Affiliates;
(j) entered into or agreed to any cancellation, or agreement to cancel,
any indebtedness or other obligation owing to the Companies;
(k) caused any increase in the indebtedness of the Companies, other
than accounts payable incurred in the ordinary course of business, consistent
with past practices, or incurred in connection with the transactions
contemplated by this Agreement;
(l) made any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, properties or
rights of the Companies or requiring consent of any party to the transfer and
assignment of any such assets, properties or rights;
(m) made any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any assets, properties or rights outside of
the ordinary course of the Companies' business;
(n) made any waiver of any material rights or claims of the Companies;
(o) caused any material breach, amendment or termination of any Listed
Agreement (as defined herein), Permit (as defined herein) or other right to
which the Companies are a party or any of their property is subject; or
(p) entered into or amended any material agreement, commitment or
transaction, except in the ordinary course of business or except in connection
with the transactions contemplated by this Agreement.
SECTION 2.9 Litigation. Except as set forth on Schedule 2.9, there are
no actions, suits, or other proceedings pending or, to the knowledge of the
Seller, threatened against any of the Companies or involving any of the
properties or assets of any of the Companies, at law or in equity or before or
by any foreign, federal, state, municipal, or other governmental court,
department, commission, board, bureau, agency, or other instrumentality or
person or any board of arbitration or similar entity. Except as set forth on
Schedule 2.9, no written notice of any claim, action, suit or proceeding,
whether pending or threatened, has been received by any of the Companies.
SECTION 2.10 Tax Matters. The Companies have timely filed all requisite
federal, state, local and other tax returns required to be filed on or before
the date hereof for all fiscal periods ended on or before the date hereof, and
have duly paid in full or made adequate provision in the Companies' Financial
Statements for the payment of all Taxes for all periods ending at or prior to
the Closing Date. The Companies have duly withheld and paid or remitted all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
person or entity that required withholding under any applicable Law, including,
without limitation, any amounts required to be withheld or collected with
respect to social security, unemployment compensation, sales or use taxes or
workers' compensation. There have not been during the past three years nor are
there
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currently in progress any examinations, audits, proceedings, notices, waivers,
asserted deficiencies or disputed valuations or other claims against the
Companies relating to Taxes for any period or periods prior to and including
September 30, 1999 and no written notice of any claim for Taxes, whether pending
or threatened, has been received. The Companies have not granted or been
requested to grant any extension of the limitation period applicable to any
claim for Taxes or assessments with respect to Taxes. The Companies are not a
party to any Tax allocation or sharing agreement and are not otherwise liable or
obligated to indemnify any person or entity with respect to any Taxes. The
amounts shown as accruals for Taxes on the books and records of the Companies
are sufficient for the payment of all Taxes for all fiscal periods ended on or
before that date. True and complete copies of (a) any tax examinations or
audits, (b) extensions of statutory limitations and (c) the federal, state and
local Tax returns of the Companies for the last three fiscal years have been
previously provided to the Purchaser. There are no requests for any ruling in
respect of any Taxes pending between the Companies and any Governmental
Authority. Atlas Concrete, Inc. has been a validly electing S corporation within
the meaning of Section 1361 and 1362 of the Internal Revenue Code of 1986, as
amended (the "Code") at all times since May 1, 1998 and will be an S corporation
up to and including the Closing Date. Beall Trucking, Inc. has been a validly
electing S corporation within the meaning of Section 1361 and 1362 of the Code
at all times during its existence and will be a S corporation up to and
including on the Closing Date. The Companies currently utilize the accrual
method of accounting for income tax purposes. Such method of accounting has not
changed in the past five years.
SECTION 2.11 Employee Benefit Plans.
----------------------
(a) Each of the Companies has delivered to the Purchaser copies of the
health, dental, life insurance and vacation plans and all other material
employee benefit plans, programs or arrangements providing benefits for
employees of each of the Companies (the "Benefit Plans"), and except as set
forth on Schedule 2.11, the most recent annual report (Form 5500) filed with the
Internal Revenue Service with respect to each Benefit Plan (if any such report
was required). None of the Companies maintain, contribute to or participate in
(nor have any of the Companies ever maintained, contributed or participated in)
any Benefit Plans intended to be qualified under Section 401(a) of the Code.
Except as set forth in Schedule 2.11, each of the Benefit Plans has been
administered and maintained in material compliance with the requirements of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and, if
applicable, the Internal Revenue Code of 1986, as amended (the "Code") and all
other applicable laws. There are no pending or, to the knowledge of the Seller
and each Trust, threatened claims by or on behalf of the Benefit Plans, the
United States Department of Labor, the Internal Revenue Service, or by any
current or former employee of any of the Companies of such current or former
employee alleging a breach of any fiduciary duties or a violation of applicable
state or federal law which could result in a material liability on the part of
any of the Companies or a Benefit Plan under ERISA or any other law (other than
benefit claims and funding obligations in the ordinary course of business). Each
Benefit Plan may be terminated by any of the Companies, or if applicable, by an
ERISA Affiliate at any time without any liability, cost or expense, other than
costs and expenses that are customary in connection with the termination of a
Benefit Plan.
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(b) Except as set forth in Schedule 2.11, all accrued contribution
obligations of any of the Companies with respect to any Plan have either been
fulfilled in their entirety or are fully reflected in the Companies' Financial
Statements.
(c) Except as set forth in Schedule 2.11, no Benefit Plan has incurred
or to the knowledge of the Companies, will incur, and none of the Companies nor
any ERISA Affiliate has incurred or, to the knowledge of the Companies, will
incur, with respect to any Benefit Plan, any liability for excise tax or penalty
due to the Internal Revenue Service.
(d) Except as set forth in Schedule 2.11 none of the Companies nor any
ERISA Affiliate has made or extended any promises or retirement or other
benefits to employees, except as set forth in the Benefit Plans, and none of the
Companies nor any ERISA Affiliate maintains or has established any Benefit Plan
that is a "welfare benefit plan" within the meaning of Section 3(1) of ERISA
that provides for continuing benefits or coverage for any participant or any
beneficiary of a participant after such participant's termination of employment,
except as may be required by Part 6 of Subtitle B of Title I of ERISA and
Section 4980B of the Code and similar state Law provisions. Except as set forth
in Schedule 2.11, none of the Companies nor any ERISA Affiliate maintains, has
established or has ever participated in a multiple employer welfare benefit
arrangement as described in Section 3(40)(A) of ERISA.
(e) There are no investigations or audits of any Benefit Plan by any
Governmental Authority currently pending and there have been no such
investigations or audits that have been concluded that resulted in any liability
to the Companies or any ERISA Affiliate that has not been fully discharged. None
of the Companies nor any ERISA Affiliate has participated in any voluntary
compliance or closing agreement programs relating to the form or operation of a
Benefit Plan.
(f) Except as set forth in Schedule 2.11, neither the Companies nor any
ERISA Affiliate has engaged in any prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code, in connection with any Benefit
Plan for which exemption was not available.
(g) The Companies have no liability, whether actual or contingent,
under Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code.
SECTION 2.12 Employment Matters.
------------------
(a) Except as disclosed on Schedule 2.12, none of the Companies are a
party to any contracts or agreements granting benefits or rights to employees or
consultants, or any conciliation agreement with the Department of Labor, the
Equal Employment Opportunity Commission or any federal, state or local agency
which requires equal employment opportunities or affirmative action in
employment.
(b) Except as set forth in Schedule 2.12, the Companies are not bound
by or subject to any agreement with any labor union. Except as set forth in
Schedule 2.12, no employees of the Companies are represented by any labor union
or covered by any collective bargaining agreement nor, to the Seller's
knowledge, is any campaign to establish such representation in progress nor has
there been any campaign to establish such representation within the last three
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years. There is no pending or, to the Seller's knowledge, threatened labor
dispute involving the Companies and any group of their employees nor have the
Companies experienced any significant labor interruptions over the past five
years.
(c) Except as disclosed on Schedule 2.12, (i) there are no unfair labor
practice complaints pending against any of the Companies or any Subsidiary of
either of the Companies before the National Labor Relations Board and no similar
claims pending before any similar state, local or foreign agency, (ii) no
action, suit, complaint, charge, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority brought by or on behalf of
any employee, prospective employee, former employee, retiree, labor organization
or other representative of the Companies' employees is pending or, to the
Seller's and each Trust's knowledge, threatened against the Companies, (iii) no
grievance is pending or, to the Seller's and each Trust's knowledge, threatened
against the Companies, (iv) the Companies are not a party to, or otherwise bound
by, any consent decree with, or citation by, any Governmental Authority relating
to employees or employment practices, (v) the Companies are in material
compliance with and have complied in all material respects with all applicable
Laws, agreements, contracts and policies relating to employment, employment
practices, wages, hours and terms and conditions of employment, (vi) the
Companies have paid in full to, or accrued in their financial books and records,
all employees of the Companies all wages, salaries, commissions, bonuses,
benefits and other compensation due to such employees or otherwise arising under
any policy, practice, agreement, plan, program, statute or other law, (vii) the
Companies are in substantial compliance with their obligations pursuant to the
Worker Adjustment and Retraining Notification Act of 1988, and all other
notification and bargaining obligations arising under any collective bargaining
agreement, statute or otherwise.
(d) Except as set forth in Schedule 2.12, all employees of the
Companies have attested to the Companies on U.S. Immigration and Naturalization
Service Form I-9 ("Form I-9"), and have provided the Companies documentation
required by Form I-9 to corroborate, that they are (i) citizens of the United
States or (ii) not citizens of the United States, but, in accordance with the
Immigration Reform and Control Act of 1986 ("IRCA") and other applicable Laws
are either (A) immigrants authorized to work in the United States or (B)
nonimmigrants authorized to work in the United States for the Companies in their
specific jobs.
SECTION 2.13 Patents, Trademarks and Copyrights.
-----------------------------------
(a) Schedule 2.13 sets forth all patents, patent applications,
trademarks and service marks, trademark and service mark applications, and
copyrights (whether registered or unregistered) (collectively, the "Intellectual
Property") required by the Companies in their businesses and operations. The
Companies own or license or otherwise have the right to use the items listed on
Schedule 2.13.
(b) None of the Companies are currently in receipt of any notice of any
violation of, and to the knowledge of the Seller, are violating or infringing
upon the intellectual property rights of any other person or entity in any
Intellectual Property. Except as set forth on Schedule 2.13, to the knowledge of
the Seller, no other person or entity is infringing any intellectual property
rights of any of the Companies with respect to the Intellectual Property.
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SECTION 2.14 Environmental Matters. Except as set forth on Schedule
2.14, (a) the Companies are in compliance in all material respects with all
applicable Environmental Laws, (b) the Companies have obtained and are in
compliance with all necessary permits, licenses, authorizations and other
approvals necessary to treat, transport, store, dispose of and otherwise handle
Hazardous Substances and have reported, to the extent required by all applicable
Environmental Laws, all past and present sites owned or operated by any of the
Companies where Hazardous Substances have been treated, stored, disposed of or
otherwise handled, (c) except in compliance with applicable Environmental Laws,
or except as would not reasonably be expected to cause the Companies to incur
material liability, there have been no "releases" or threats of "releases" (as
defined in any Environmental Laws) caused by the Companies at, from, in, to,
under or on any property currently or previously owned or operated by the
Companies, (d) there is no on-site or off-site location to which the Companies
have transported or disposed of Hazardous Substances or arranged for the
transportation or disposal of Hazardous Substances which is known by the Seller
to be the subject of any federal, state, local or foreign enforcement action or
any other investigation which could lead to any material claim against the
Purchaser or the Companies for any clean-up cost, remedial work, damage to
natural resources or personal injury, including, but not limited to, any claim
under any Environmental Law and (e) the Companies have no material contingent
liability in connection with any release or disposal of any Hazardous Substance
into the environment caused by the Companies, or to the Seller's knowledge, by
any other person. Except as set forth on Schedule 2.14, to the Seller's
knowledge, none of the past or present sites owned or operated by the Companies
is currently or has ever been designated as a hazardous waste (as defined
pursuant to the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901, et
seq.) treatment, storage and/or disposal facility, nor has any such facility
ever applied for a permit, license, authorization or other approval designating
it as a hazardous waste treatment, storage and/or disposal facility, under any
Environmental Law. The Companies have made available to the Purchaser copies
(or, if not available, accurate written summaries) of all environmental
investigations, studies, audits, reviews and other analyses which are in the
actual possession of the Companies respecting any facility site or other
property presently owned or operated by the Companies.
SECTION 2.15 Insurance. Schedule 2.15 sets forth an accurate list as of
September 30, 1999 of (a) all insurance policies carried by the Companies, (b)
all insurance loss runs or workmen's compensation claims received for the past
two policy years, and (c) the following information with respect to all
insurance policies currently carried by the Companies and previously carried by
the Companies within the last two years: (i) insurer, (ii) type of policy, (iii)
coverage period, and (iv) policy limits and amount of deductible or loss
retention. Except as set forth in Schedule 2.15, none of such policies are
"claims made" policies. To the knowledge of the Seller the policies described in
Schedule 2.15 for the current policy year are currently in full force and
effect. No termination notices with respect to the policies have been received
by any of the Companies and none of the Companies have defaulted on the payment
of any premiums with respect to the policies. All of the claims listed on
Schedule 2.9 are recoverable under such policies, except to the extent of any
applicable deductible or loss retention as set forth on Schedule 2.9 (it being
understood and agreed that this sentence applies only to the claims listed on
Schedule 2.9 and no other claims or potential claims).
SECTION 2.16 Title to Properties; Encumbrances. Schedule 2.16 sets
forth an accurate list of all real and personal property included in "Fixed
Assets" on the balance sheets included
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among the Companies' Financial Statements and includes all tangible assets of
the Companies with a historical cost in excess of $5,000 (i) owned by the
Companies as of September 30, 1999 or (ii) acquired since September 30, 1999.
Schedule 2.16 also sets forth an accurate list of all real and personal property
currently leased by the Companies, and includes an accurate list of all leases
for significant equipment and for all real property leased by the Companies and
descriptions of all real property (as currently owned or leased by the
Companies) on which plants, buildings, warehouses, workshops, garages and other
structures (collectively, the "Structures") and vehicles used in the operation
of the business of the Companies are situated 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 Companies. Schedule
2.16 indicates which properties and assets used in the operation of the
businesses of the Companies are currently owned by the Seller or the Companies
or Affiliates of any of the Companies or the Seller or third parties. Except as
specifically identified in Schedule 2.16, all of the tangible assets, plants,
Structures, vehicles and other significant machinery and equipment owned or
leased by the Companies listed in Schedule 2.16 are in good working order and
condition, ordinary wear and tear excepted. Except as set forth on Schedule
2.16, none of the Companies nor the Seller have received any notice nor have any
knowledge that any of the real property owned or leased by any of the Companies
is or will be affected by any special assessments, condemnation, eminent domain,
off-site improvements to be constructed, change in grade of public streets or
similar proceedings. There is ingress and egress to and from each of the real
properties owned and leased by the Companies of record adequate for the use of
such properties as currently operated by the Companies. Except as disclosed in
Schedule 2.16, none of the Companies have made any off-record agreements
affecting the ownership, use or occupation of any such properties. Except as set
forth on Schedule 2.16, all public utilities, including, without limitation,
sewers, water, electric, gas and telephone, required for the operation of each
of the real properties owned and leased by the Companies as presently operated
are installed and operating, and all installation and connection charges
therefor have been paid in full. Except as set forth on Schedule 2.16, each of
the Companies has good and indefeasible title to all of the assets reflected in
the balance sheets included among the Companies' Financial Statements and
acquired since September 30, 1999 other than any assets therein reflected that
have been sold or otherwise disposed of in the ordinary course of business since
the date thereof free and clear of liens, claims and encumbrances other than (i)
liens, mortgages, pledges, security interests or other encumbrances securing
indebtedness shown on the Companies' Financial Statements, (ii) liens for
current taxes, payments of which are not yet delinquent or that are being
contested in good faith by appropriate proceedings, (iii) liens in respect of
pledges or deposits under workers' compensation laws or similar legislation, or
carriers', warehousemen's, mechanics', laborers' and materialmen's and similar
liens, if the obligations secured by such liens are not then delinquent or are
being contested in good faith by appropriate proceedings, (iv) liens relating to
accounts payable incurred in the ordinary course of business and consistent with
past practice, and (v) such imperfections of title which do not materially
detract from the value of the assets of any of the Companies (collectively, the
"Permitted Liens"). Each of the Companies holds under valid lease agreements all
real and personal properties that are subject to the leases to which reference
is made on Schedule 2.16 and enjoy peaceful and undisturbed possession of such
properties under such leases, other than any personal property as to which such
leases have terminated in accordance with their terms or in the ordinary course
of business since such date. The leases set forth on Schedule 2.16 are in full
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force and effect and constitute valid and binding agreements of the Companies
and, to the Seller's knowledge, the other parties thereto in accordance with
their respective terms, and all amounts currently payable thereunder have been
paid. Schedule 2.16 sets forth a list of all title reports and title insurance
policies received or owned by the Companies with respect to the real property
owned or leased by the Companies. Schedule 2.16 includes a summary description
of all outstanding commitments of the Companies involving the opening of new
operations, expansion of existing operations or the acquisition of any real
property or existing business, to which management of the Companies has devoted
any significant effort or expenditure in the two-year period prior to the date
of this Agreement. Schedule 2.16 also lists (A) certain assets used in the
business owned by Seller which will be separately sold to the Purchaser (or one
of the Companies designated by the Purchaser) concurrently with the Closing
under the Bill of Sale and (B) certain assets that are currently owned or used
by the Companies which will be distributed to the Seller and Selling
Shareholders (or one or more Affiliates thereof) prior to the Closing.
SECTION 2.17 Permits. Seller has provided the Purchaser an accurate
list, summary description and/or copies of all licenses, franchises, permits,
approvals, certificates, transportation authorities and other authorizations
issued by any Governmental Authority held by the Companies that are material to
the conduct of their respective business, including, without limitation,
permits, licenses and operating authorizations, fuel permits, franchises and
certificates, owned or held by the Companies (collectively, the "Permits"). The
Permits are valid, and none of the Companies have received any written notice
that any Governmental Authority intends to cancel, terminate or not renew any
such Permit. Except as set forth on Schedule 2.17, the Permits are all the
material permits, licenses, operating authorizations, franchises, approvals,
certificates, transportation authorities and other governmental authorizations
that are required for the operation of the businesses of the Companies as
conducted as of the date hereof in material compliance with all applicable Laws.
Except as set forth on Schedule 2.17, the Companies have conducted and are
conducting their respective businesses in material compliance with the
requirements, standards, criteria and conditions set forth in the Permits, as
well as the applicable orders, approvals and variances related thereto, and are
not in material violation of any of the foregoing. Except as specifically
provided in Schedule 2.17, (i) the transactions contemplated by this Agreement
will not result in a material default under, a material breach or violation of,
a termination of, or materially and adversely affect the rights and benefits
afforded to the Companies by, any Permits and (ii) none of the Permits require
notice to, or the consent or approval of, any Governmental Authority to the
transactions contemplated by this Agreement or to the use of such Permit by the
Companies after the transactions contemplated by this Agreement.
SECTION 2.18 Inventories. Except as Schedule 2.18 sets forth: (i) all
inventories of the Companies which are classified as such on the books and
records of the Companies are merchantable and salable or usable in the ordinary
course of business of the Companies; and (ii) the Companies do not depend on any
single vendor for its inventories the loss of which could have a material
adverse effect on the business or financial condition of the Companies.
SECTION 2.19 Agreements, Contracts and Commitments.
-------------------------------------
(a) Schedule 2.19 (i) sets forth a list of all customers representing
5% or more of the Companies' revenues for the fiscal year ended December 31,
1998 and the interim period ended
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on September 30, 1999 (the "Material Customers"), and (ii) sets forth an
accurate list and briefly describes the following contracts to which the
Companies are currently a party or by which either of them or any of their
respective properties is bound (the "Listed Agreements"): (A) all customer
contracts, other than purchase orders entered into by the Companies in the
ordinary course of business, (B) contracts with any labor organizations, (C)
leases providing for annual rental payments in excess of $10,000, (D) loan
agreements, (E) pledge and security agreements, (F) financing agreements, (G)
indemnity or guaranty agreements or obligations, (H) bonds, debentures and
indentures, (I) notes, (J) mortgages, (K) joint venture, partnership or
cost-sharing agreements, (L) options to purchase real or personal property, (M)
agreements relating to the purchase or sale by the Companies of assets or
securities outside the ordinary course of business for more than $10,000, (N)
agreements, which, by their terms, require the consent of any party thereto to
the consummation of the transactions contemplated hereby, (O) voting trust
agreements or similar stockholders' agreements, (P) agreements providing for the
purchase from a supplier of all or substantially all the requirements of the
Companies of a particular product, material or service and (Q) any other
contracts, warranties, commitments, understandings, instruments and similar
agreements and arrangements which involve aggregate payments in excess of
$10,000 that cannot be canceled in 30 days' or less notice without penalty or
premium or any continuing obligation or liability. Prior to the date hereof, the
Companies have made available to the Purchaser true, complete and correct copies
and complete written descriptions of all the Listed Agreements. Except as set
forth in Schedule 2.19, since December 31, 1998, (i) none of the Companies have
breached any material provision of, or are in default in any material respect
under the terms of any Listed Agreement and, to the knowledge of the Seller, no
event has occurred and no condition exists which, after notice or lapse of time
or both, would constitute such a material default under the terms of any such
Listed Agreement by any third party and (ii) no Material Customer has canceled
or substantially reduced or, to the knowledge of the Seller and each Trust, is
threatening to cancel or substantially reduce its purchases of the Companies'
products or services. The Listed Agreements are in full force and effect and
constitute valid and binding agreements of the Companies and, to the knowledge
of the Seller, the other parties thereto in accordance with their respective
terms.
(b) Except as set forth in Schedule 2.19, the Companies are not a party
to any contracts that expressly provide for price redetermination or
renegotiation (it being understood and agreed that the foregoing representation
and warranty does not apply to purchase orders entered into in the ordinary
course of business). Except to the extent set forth in Schedule 2.19, the
Companies are not required to provide any bonding or other financial security
arrangements in any material amount in connection with any transactions with any
of its customers or suppliers.
(c) Except as set forth in Schedule 2.19, to the knowledge of the
Seller, none of the Companies or the Seller, nor any officer, employee,
stockholder, director, representative or agent thereof is a party to any
contract, arrangement, commitment or understanding among themselves or with any
of the Companies' customers for the repurchase of products, sharing of fees,
rebating of charges, bribes, kickbacks or other similar arrangements.
(d) Except as set forth in Schedule 2.19, the Seller has no knowledge
of any plan or intention of any other party to any Listed Agreement to exercise
any right to cancel or terminate
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that Listed Agreement, and the Seller has no knowledge of any condition or state
of facts which would justify the exercise of such a right.
SECTION 2.20 Compensation; Employment Agreements. Schedule 2.20 sets
forth an accurate schedule of all officers and managerial employees of the
Companies with annual salaries of $50,000 or more, listing the rate of
compensation (and the portions thereof attributable to salary, bonus, benefits
and other compensation, respectively) of each of such persons as of December 31,
1998. The Seller has no knowledge that any of such individuals has any present
intention of terminating his or her employment or association with the Company
by which he or she is currently employed. Schedule 2.20 sets forth a list of all
written employment or consulting agreements. Except as set forth in Schedule
2.20, none of the Companies 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 officer,
director, stockholder, member or employee of such Company or other person
performing services for such Company which would not be payable or provided in
the absence of this Agreement or the consummation of the transactions
contemplated hereby, including any parachute payment under Section 280G of the
Code.
SECTION 2.21 Noncompetition, Confidentiality and Nonsolicitation
Agreements; Employee Policies. Schedule 2.21 sets forth all agreements
containing covenants not to compete or solicit employees or to maintain the
confidentiality of information to which any of the Companies are bound or under
which any of the Companies have any rights or obligations.
SECTION 2.22 Accounts with Banks and Brokerages; Powers of Attorney.
Schedule 2.22 sets forth an accurate schedule, as of the date of this Agreement,
of (a) the name of each financial institution or brokerage firm in which any of
the Companies have accounts or safe deposit boxes; (b) the names in which the
accounts or boxes are held; (c) the type of account and (d) the name of each
person authorized to draw thereon or have access thereto. Schedule 2.22 also
sets forth the name of each person, corporation, firm or other entity holding a
general or special power of attorney from any of the Companies and a description
of the terms thereof.
SECTION 2.23 Absence of Certain Business Practices. None of the
Companies nor any of their respective Affiliates has given or offered to give
anything of value to any governmental official, political party or candidate for
government office that was illegal to give or offer to give nor has it otherwise
taken any action which would constitute a violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any similar Law.
SECTION 2.24 Competing Lines of Business; Related-Party Transactions.
Except as set forth in Schedule 2.24, neither the Seller nor any other Affiliate
of the Companies owns, directly or indirectly, any interest in, or is an
officer, director, employee or consultant of or otherwise receives remuneration
from, any Competitive Business (as defined in Section 7.1(a)(i)), lessor,
lessee, customer or supplier of any of the Companies. Except as set forth in
Schedule 2.24, the Seller, nor any officer or director of any of the Companies,
has, nor had any interest in any tangible or intangible assets or real or
personal property used in or pertaining to the business of the Companies.
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SECTION 2.25 Capital Expenditures. Schedule 2.25 sets forth the total
amount of the current, legally binding obligations of each of the Companies with
respect to capital expenditures in excess of $25,000.
SECTION 2.26 Product Warranties. Schedule 2.26 sets forth all the terms
and conditions of all express written product or service warranties and
guarantees given by any of the Companies. The aggregate amount of losses and
expenses incurred by reason of allowances, customer dissatisfaction or
liabilities arising under such warranties and guarantees did not exceed an
aggregate of approximately $250,000 during the five years ended December 31,
1998, and there has been no material adverse change in that experience since
said date.
SECTION 2.27 Year 2000 Compliance. The Seller represents and warrants
that his responses to the Purchaser's Year 2000 Compliance Questionnaire
provided to Purchaser's attorneys on December 20, 1999 are true and correct in
all material respects.
SECTION 2.28 Disclosure. To the knowledge of the Seller, none of the
representations or warranties of the Seller in this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements herein, in light of the circumstances under
which they were made, not misleading.
SECTION 2.29 Disclaimer of Additional and Implied Warranties. The
Seller is making no representations or warranties, express or implied, of any
nature whatsoever except as specifically set forth in Article II of this
Agreement. Each Selling Shareholder is making no representation or warranties,
express or implied, of any nature whatsoever, except for the representations and
warranties set forth in Section 2.2(b), Section 2.3 and Section 2.4 (insofar
that Section 2.4 relates to the Selling Shareholders).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby makes the representations and warranties set forth
in this Article III to the Seller and each Selling Shareholder.
SECTION 3.1 Organization and Authority.
--------------------------
(a) The Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The Purchaser has all
requisite corporate power and authority to carry on its business as it is now
being conducted, and to own, lease and operate its properties and assets, and to
perform all its obligations under the agreements and instruments to which it is
a party or by which it is bound. The Purchaser is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which the properties and assets owned, leased or operated
by it or the nature of the business conducted by it make such qualification
necessary, except in such jurisdictions where the failure to be duly qualified
or in good standing does not and would not result in a Material Adverse Effect;
provided, however, that the representations and warranties contained in this
sentence shall be of no force and effect to the extent that such Material
Adverse Effect can be eliminated by the Purchaser becoming qualified in such
jurisdictions.
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(b) True, correct and complete copies of the Articles of Incorporation
and Bylaws of the Purchaser, with all amendments thereto through the date of
this Agreement, have been delivered by the Purchaser to the Seller.
SECTION 3.2 Authority Relative to Agreement. The Purchaser has full
corporate power and authority to execute and deliver this Agreement, and no
further corporate proceedings on the part of the Purchaser are necessary to
consummate the transactions contemplated hereby, which have been duly and
validly authorized by the Board of Directors of the Purchaser. This Agreement
has been duly and validly executed and delivered by the Purchaser, and this
Agreement constitutes the valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium, or other similar
laws relating to creditors' rights generally and general equitable principles.
SECTION 3.3 No Violation. Neither the execution, delivery nor
performance of this Agreement, in its entirety, nor the consummation of the
transactions contemplated hereby, as of the Closing Date, (i) violates any
order, writ, judgment, injunction, award, decree, or to the Purchaser's
knowledge, law, rule, statute, ordinance or regulation applicable to the
Purchaser, (ii) is in conflict with, results in a breach or termination of any
provision of, causes the acceleration of the maturity of any debt or obligation
pursuant to, constitutes a default (or gives rise to any right of termination,
cancellation or acceleration) under, or results in the creation of any security
interest, lien, charge or other encumbrance upon any currently owned property of
the Purchaser pursuant to, any terms, conditions or provisions of any note,
license, instrument, indenture, mortgage, deed of trust or other agreement or
understanding or any other restriction of any kind or character, to which the
Purchaser is a party or by which any currently owned property of the Purchaser
is subject or bound, or (iii) conflicts with or results in any breach of any
provision of the Certificate or Articles of Incorporation or Bylaws of the
Purchaser.
SECTION 3.4 Consents and Approvals. No prior consent, approval or
authorization of, or declaration, filing or registration with any person,
domestic or foreign, is required of or by the Purchaser in connection with the
execution, delivery and performance by the Purchaser of this Agreement and the
transactions contemplated hereby.
SECTION 3.5 Investment Intent.
-----------------
(a) The Purchaser is acquiring the Shares for its own account for
investment and not with a view toward resale or redistribution in a manner which
would require registration under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, and the Purchaser does
not presently have any reason to anticipate any change in its circumstances or
other particular occasion or event which would cause it to sell the Shares or
any part thereof or interest therein. The Purchaser has not offered or sold the
Shares or any part thereof or interest therein, and has no present intention of
dividing the Shares with others or of reselling or otherwise disposing of the
Shares or any part thereof or interest therein either currently or after the
passage of a fixed or determinable period of time or upon the occurrence or
nonoccurrence of any predetermined event or circumstance.
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(b) The Purchaser acknowledges that (i) its investment in each of the
Companies involves a substantial degree of risk and (ii) it understands that the
purchase of the Shares is an illiquid investment.
(c) The Purchaser acknowledges that the Seller has made available, or
caused each of the Companies to make available, to Purchaser the opportunity to
evaluate the merits and risks associated with ownership of the Shares, including
information related to the financial position and results of operations of each
of the Companies. Specifically, the Purchaser acknowledges receipt of the
Companies Financial Statements and the Purchaser has had access to officers of
each of the Companies to make such further inquiry as the Purchaser has deemed
appropriate. The Purchaser further acknowledges that there can be no assurance
that the results of each of the Companies' operations will be as contained in
any of the information provided to the Purchaser. The Purchaser represents that
it has made other investments of a similar nature or, by reason of the
Purchaser's business and financial experience and of the business and financial
experience of those persons it has retained to advise it with respect to its
purchase and ownership of the Shares, it is a sophisticated, well-informed
investor and has acquired the capacity to protect its own interest in
investments of this nature. In reaching the conclusion that it desires to
acquire the Shares, the Purchaser has carefully evaluated its financial
resources and investment position, and the risks associated with this investment
and acknowledges that it is able to bear the economic risks of this investment.
SECTION 3.6 The Purchaser Common Stock. The shares of the Purchaser
Common Stock to be issued to the Seller and each Selling Shareholder pursuant to
this Agreement are duly authorized and, when issued in accordance with the terms
of this Agreement, will be validly issued, fully paid and nonassessable. The
issuance of the Purchaser Common Stock pursuant to this Agreement will transfer
to the Seller and each Selling Shareholder valid title to such shares of the
Purchaser Common Stock, free and clear of all liens, claims, pledges, security
interests or other encumbrances, except for any liens, claims, pledges, security
interests or other encumbrances created by the Seller or any Selling
Shareholder.
SECTION 3.7 Commission Filings; Financial Statements.
----------------------------------------
(a) Since May 21, 1999, the Purchaser has filed all reports,
registration statements and other filings, together with any amendments required
to be made with respect thereto, that it has been required to file with the SEC
under the Securities Act and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). All reports, registration statements and other filings
filed by the Purchaser with the SEC since May 21, 1999 through the date of this
Agreement, together with any amendments thereto, are listed on Schedule 3.7 and
are sometimes collectively referred to as the "Purchaser Commission Filings".
The Purchaser has heretofore delivered to the Seller and each Selling
Shareholder copies of the Purchaser Commission Filings. As of the respective
dates of their filing with the SEC, the Purchaser Commission Filings complied,
and any reports, registration statements and other filings filed by the
Purchaser with the SEC after the date of this Agreement through the Closing Date
will comply, in all material respects with the Securities Act, the Exchange Act
and the rules and regulations of the SEC promulgated thereunder, and did not, or
will not, as the case may be, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the
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statements made therein, in light of the circumstances under which they were
made, not misleading.
(b) All material contracts of the Purchaser and the Purchaser's
Subsidiaries have been included in the Purchaser Commission Filings, except for
those contracts not required to be filed pursuant to the rules and regulations
of the SEC and those contracts entered into in connection with the transactions
contemplated hereby.
(c) Each of the consolidated financial statements (including any
related notes or schedules) included in the Purchaser Commission Filings was
prepared in accordance with GAAP applied on a consistent basis (except as may be
noted therein or in the notes or schedules thereto), and fairly presents in all
material respects the consolidated financial position of the Purchaser and the
Purchaser's Subsidiaries as of the dates thereof and the results of operations,
cash flows and changes in shareholders' equity for the periods then ended
(subject, in the case of the unaudited interim financial statements, to normal
year-end audit adjustments on a basis comparable with past periods). None of
Purchaser's Subsidiaries is subject to the information reporting requirements of
Section 13 of the Exchange Act.
SECTION 3.8 Financing. The Purchaser has sufficient capital resources
to enable Purchaser to pay the Purchase Price in accordance with Section 1.2 and
to effect the other transactions contemplated by this Agreement at the Closing
Date.
SECTION 3.9 Disclosure. To the knowledge of the Purchaser, none of the
representations or warranties of the Purchaser to the Seller and each Selling
Shareholder in this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
herein, in light of the circumstances under which they were made, not
misleading.
SECTION 3.10 Disclaimer of Additional and Implied Warranties. The
Purchaser is making no representations or warranties, express or implied, of any
nature whatsoever except as specifically set forth in Article III of this
Agreement.
ARTICLE IV
FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON THE
PURCHASER'S COMMON STOCK
SECTION 4.1 Compliance with Law. The Seller and the Selling
Shareholders acknowledge the shares of Purchaser Common Stock issued in
accordance with the terms of this Agreement (the "Restricted Shares") will not
be registered under the Securities Act and therefore may not be resold without
compliance with the Securities Act. The Restricted Shares will be acquired by
the Seller and the Selling Shareholders solely for their own account, for
investment purposes only, and with no present intention of distributing, selling
or otherwise disposing of them in connection with a distribution requiring
registration under the Securities Act. Seller and each Selling Shareholder
covenants, warrants and represents that none of the Restricted Shares held by
the Seller and each Selling Shareholder will be, directly or indirectly,
offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all of the applicable provisions
of the Securities Act and the rules and
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regulations of the SEC. Certificates representing the Restricted Shares shall
bear the following legend:
The shares represented by this certificate were not issued in a
transaction registered under the Securities Act of 1933, as amended
("Securities Act"), or any applicable state securities laws. The shares
represented hereby have been acquired for investment and may not be
sold or transferred unless such sale or transfer is covered by an
effective registration statement under the Securities Act and
applicable state securities laws or, in the opinion of counsel to the
issuer, is exempt from the registration requirements of the Securities
Act and such laws.
SECTION 4.2 Economic Risk; Sophistication; Accredited Investors. Seller
and each Sharing Shareholder is able to bear the economic risk of an investment
in the Restricted Shares and can afford to sustain a total loss of such
investment. Seller and each Selling Shareholder has such knowledge and
experience in financial and business matters that he or it is capable of
evaluating the merits and risks of the proposed investment and therefore has the
capacity to protect his or its own interests in connection with the acquisition
of the Restricted Shares pursuant hereto. Seller and each Selling Shareholder
represent to the Purchaser that he, she or it is an "accredited investor," as
that term is defined in Regulation D under the Securities Act. Seller, each
Selling Shareholder or their representatives have had an adequate opportunity to
ask questions of, and receive answers from the appropriate officers and
representatives of the Purchaser concerning, among other matters, the Purchaser,
its management, business, operations and financial condition, its plans for the
operation of its business and potential additional acquisitions, and to obtain
any additional information requested by the Seller or such Selling Shareholder
or their representatives concerning such matters.
SECTION 4.3 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the SEC that may permit the resale
of the Purchaser Common Stock to the public without registration, for a period
of two years after the Closing, the Purchaser agrees to use its commercially
reasonable efforts to:
(a) make and keep public information (as such terms are defined in Rule
144 promulgated under the Securities Act or any successor thereto ("Rule 144"))
regarding the Purchaser available;
(b) file with the SEC in a timely manner all reports and other
documents required of the Purchaser under the Securities Act and the Securities
Exchange Act of 1934, as amended, (the "Exchange Act"); and
(c) furnish to the Seller or a Selling Shareholder upon written request
a written statement by the Purchaser as to its compliance with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of the Purchaser, and such other reports
and documents so filed as the Seller or such Selling Shareholder may reasonably
request in availing himself or itself of any rule or regulation of the SEC
allowing the Seller or such Selling Shareholder to sell any such shares without
registration.
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SECTION 4.4 Lockup Period. The Seller and each Selling Shareholder
severally, and not jointly, with respect to the Restricted Shares owned by him
or it covenant, warrant and represent that during the two-year period commencing
on the Closing Date (the "Lockup Period") (i) none of the Restricted Shares will
be offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of, directly or indirectly, during the one-year period commencing on
the Closing Date; (ii) following the one-year period described in clause (i) and
for the remainder of the Lockup Period, the Seller and each Selling Shareholder
shall be entitled to sell 23% of the Restricted Shares in accordance with Rule
144 (it being understood and agreed that the number of Restricted Shares that
may be sold under this clause (ii) may be apportioned among any one or more of
the Seller and the Selling Shareholders as mutually agreed by the Seller and the
Selling Shareholders); (iii) after the Lockup Period, the Restricted Shares may
be offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of directly or indirectly, only after full compliance with all of the
applicable provisions of the Securities Act and the rules and regulations of the
SEC; (iv) during the one-year period commencing on the Closing Date, the Seller
and each Selling Shareholder shall not engage in put, call, short-sale, hedge,
straddle, collar or similar transactions with respect to any of the Restricted
Shares intended to reduce his, her or its risk of owning such Restricted Shares;
and (v) following the one-year period described in clause (iv) and for the
remainder of the Lockup Period, the Seller or the Selling Shareholders shall not
engage in put, call, short-sale, hedge, straddle, collar or similar transactions
with respect to more than 50% of the Restricted Shares intended to reduce his,
her or its risk of owning such Restricted Shares (it being understood and agreed
that the number of Restricted Shares referenced in this clause (v) may be
apportioned among any one or more of the Seller and the Selling Shareholders as
mutually agreed by the Seller and the Selling Shareholders). Certificates
representing the Restricted Shares shall bear the following legend, which shall
reflect the Lockup Period, in addition to the legend under Section 4.1:
The shares represented by this certificate are subject to a contractual
restriction on transfer that expires on February ___, 2002 and may not
be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of except as permitted by such contractual
restriction without the prior written consent of U.S. Concrete, Inc.
SECTION 4.5 Prospectus Delivery. Seller and each Selling Shareholder
represent and acknowledge that he, she or it has been provided with the most
current prospectus of the Purchaser, dated May 21, 1999, for informational
purposes only (the Purchaser not having yet been required to file an annual
report on Form 10-K) on November 1, 1999.
ARTICLE V
COVENANTS
SECTION 5.1 Affirmative Covenants of the Companies. For so long as this
Agreement is in effect, the Seller shall (without the Seller, any Selling
Shareholder or any of the Companies having any obligation to incur any expense
outside the ordinary course of business), from the date of this Agreement to the
Closing, except as specifically contemplated by this Agreement or as otherwise
agreed to by the Purchaser, cause each of the Companies to:
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(a) use reasonable efforts to preserve their business organization
intact and to conduct their affairs only in the ordinary course of business;
(b) use reasonable efforts to preserve their existing business
relationships with their customers and others having business relationships with
them and to maintain the goodwill enjoyed by them with such persons;
(c) continue to pay all vendors and suppliers on a timely basis;
(d) use reasonable efforts to keep available the services of their key
employees;
(e) comply with all material contractual obligations applicable to it;
(f) comply in all material respects with all laws, statutes and
regulations applicable to it and the conduct of its business, including the
timely payment of all taxes (except for those being contested in good faith);
(g) maintain all of its assets in good repair, order and condition,
reasonable wear and tear excepted, and maintain its insurance coverages in
effect before the date hereof or obtain comparable insurance coverages from
reputable insurers which, in respect to amounts, types and risks insured, are
consistent with its coverages in effect before the date hereof;
(h) promptly notify the Purchaser upon obtaining knowledge of any
default, event of default or condition which with the passage of time or giving
of notice would constitute a default or event of default under any of the
Companies' contractual obligations;
(i) promptly notify the Purchaser upon obtaining knowledge of any
material pending or threatened litigation against any of the Companies;
(j) maintain and preserve intact its corporate existence, business
organization, assets, licenses, permits, authorizations and business
opportunities;
(k) maintain good accounting practices;
(l) promptly notify the Purchaser upon the Seller's obtaining knowledge
(i) of any condition or event which constitutes a material breach of any of the
covenants or agreements set forth in this Agreement, specifying the nature and
period of existence of any such condition or event and what action any of the
Companies have taken, is taking or proposes to take with respect thereto or (ii)
of any condition or event which, in the opinion of the Seller, could have a
Material Adverse Effect; and
(m) notify the Purchaser of the declaration or payment of any cash
dividend or distribution in respect of the capital stock of any of the Companies
by the delivery of an updated Schedule 2.8 as of the Closing Date.
SECTION 5.2 Negative Covenants of the Companies. For so long as this
Agreement is in effect, the Seller shall, from the date of this Agreement to the
Closing, except as specifically
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contemplated by this Agreement, as disclosed in the Schedules to this Agreement
or as otherwise agreed to by the Purchaser, cause each of the Companies not to:
(a) sell or otherwise dispose of tangible or intangible assets or real
or personal property except in the ordinary course of business;
(b) make any amendments to its Articles or Certificate of Incorporation
or Bylaws;
(c) make any capital expenditures not in the ordinary course of
business;
(d) enter into any contract or transaction with any Affiliate of the
Companies except for (i) contracts and transactions entered into in the ordinary
course of business whereby the monetary or business consideration arising from
such contract or transaction would be substantially as advantageous to the
Companies as the monetary and business consideration which it would obtain in a
comparable arm's length transaction and (ii) the Transaction Documents to which
the Companies are a party and other contracts entered into pursuant to this
Agreement;
(e) except for the transaction bonus set forth on Schedule 2.20 (which
shall be included among the Companies' current liabilities for purposes of
calculating the Working Capital Adjustment), change any compensation or rate of
compensation payable to any officer, director or key employee, other than in the
ordinary course of business;
(f) contract to create any mortgage, pledge, lien, security interest or
encumbrance, restriction, or charge of any kind on its assets (other than liens
existing as of the date hereof, or liens created in the ordinary course of
business);
(g) materially change the terms of any agreement with a customer or
supplier or materially discount any accounts receivable from any customer;
(h) incur any indebtedness for borrowed money not in the ordinary
course of business;
(i) issue any equity security or redeem, purchase or otherwise acquire
any of the capital stock of the Companies; or
(j) enter into any transactions not in the ordinary course of business.
SECTION 5.3 Covenant of the Companies Regarding Companies' Trading
Securities. The Seller shall cause the Companies to liquidate the Companies'
trading securities on or before January 31, 2000, and the tax liability
resulting from such liquidation shall be included among the current liabilities
of the Companies for purposes of calculating Closing Net Working Capital and the
Working Capital Adjustment.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Certain Tax Matters.
-------------------
(a) "Excess Federal Tax" means (i) the federal tax incurred by the
Seller and the Selling Shareholders on the sale of the Shares of the S
Corporations attributable to the making of the Section 338(h)(10) Election that
exceeds (ii) the federal tax that would have been incurred by the Seller and the
Selling Shareholders on the sale of the Shares of the S Corporations if the
Section 338(h)(10) Election had not been made. The Purchaser will pay 80% of the
Excess Federal Tax and State Taxes (as defined below) and the Seller and the
Selling Shareholders will pay the remaining 20% of the Excess Federal Tax and
State Taxes (as defined below). The Purchaser will indemnify the Seller and each
Selling Shareholder, and the Seller will indemnify the Purchaser, against any
adverse consequences arising out of any failure to pay their respective shares
of the Excess Federal Tax and State Taxes. Notwithstanding anything to the
contrary herein, the maximum amount of Excess Federal Tax and State Taxes that
the Purchaser shall be obligated to pay pursuant to this Section 6.1(a) is
$360,000, and any Excess Federal Tax and State Taxes that the Purchaser is not
obligated to pay under this Section 6.1(a) shall be paid by the Seller or
Selling Shareholders, as appropriate. "State Taxes" means any state, local or
foreign tax attributable to such an election under state, local or foreign law
similar to the election available under Section 338(g) of the Code (or which
results from the making of an election under Section 338(g) of the Code) with
respect to the purchase and sale of the stock of each of the S Corporations
hereunder, including, but not limited to, (i) any tax imposed under Section 1374
of the Code; (ii) any tax imposed under Reg. ss.1.338(h)(10) - 1T(d)(2); or
(iii) any state, local or foreign tax imposed on each of the Companies' gain on
the deemed asset sale.
(b) Prior to the Closing Date, neither of the S Corporations, the
Seller nor any Selling Shareholder will revoke the S Corporations' election to
be taxed as S corporations within the meaning of Sections 1361 and 1362 of the
Code. Prior to the Closing Date, neither of the S Corporations, the Seller nor
any of the Selling Shareholders will take or allow any action that would result
in the termination of either of the S Corporation's status as validly electing S
corporations within the meaning of Sections 1361 and 1362 of the Code.
(c) The Seller and each Selling Shareholder shall prepare or cause to
be prepared and file or cause to be filed all tax returns for each of the
Companies for all periods ending on or prior to the Closing Date which are filed
after the Closing Date. The Seller and each of the Selling Shareholders shall
permit the Purchaser to review and comment on each such tax return described in
the preceding sentence prior to filing. With respect to those of the Companies
that are S corporations to the extent permitted by applicable law, the Seller
and each Selling Shareholder shall include any income, gain, loss, deduction or
other tax items for such periods on their tax returns in a manner consistent
with the Schedule K-1s prepared by the Seller and each Selling Shareholder for
such periods. To the extent the Purchaser is obligated to make any tax payments
pursuant to Section 6.1(a) hereof, the Purchaser shall pay to the Seller and the
Selling Shareholders, as appropriate, the respective amount of each such tax
payment no later than five (5) days prior to the original due date for the
filing of any tax return with respect to which the Purchaser has such payment
obligations.
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(d) The Purchaser, the Seller and each Selling Shareholder shall
cooperate fully (and the Purchaser shall cause the Companies to cooperate
fully), as and to the extent reasonably requested by the other party, in
connection with the filing of tax returns pursuant to this Section 6.1 and any
audit, litigation or other proceeding with respect to taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The Seller, each Selling Shareholder and the
Purchaser agree, (and the Purchaser agrees to cause the Companies) (i) to retain
all books and records with respect to tax matters pertinent to the Companies
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by
Purchaser or the Seller any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, and (ii) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books and records and,
if the other party so requests, the Seller, each Selling Shareholder or the
Purchaser shall allow (and the Purchaser shall cause the Companies to allow), as
the case may be, the other party to take possession of such books and records.
The Purchaser, the Seller and each Selling Shareholder further agree, upon
request, to use their best efforts to obtain any certificate or other document
from any governmental authority or any other person or entity as may be
necessary to mitigate, reduce or eliminate any tax that could be imposed
(including, but not limited to, with respect to the transactions contemplated
hereby).
(e) Subject to Section 6.1(a) hereof, all transfer, documentary, sales,
use, stamp, registration and such other taxes and fees (including any penalties
and interest) incurred in connection with this Agreement (including any
corporate-level gains tax triggered by the sale of the stock of either of the
Companies), shall be paid by the Purchaser when due, and the Purchaser or each
of the Companies will, at its own expense, file all necessary tax returns and
other documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other taxes and fees, and, if required by applicable
law, the Seller and each Selling Shareholder will join in the execution of any
such tax returns and other documentation.
SECTION 6.2 Repayment of Related Party Indebtedness. Immediately before
the Closing, (a) the Seller and the Selling Shareholders shall repay to the
Companies all amounts outstanding as advances to or receivables from the Seller
or the Selling Shareholders, each of which advances or receivables is
specifically reflected in Schedule 6.2, and (b) the Companies shall repay all
amounts outstanding under loans to the Companies from the Seller and the Selling
Shareholders, each of which loans to the Companies is specifically reflected in
Schedule 6.2.
SECTION 6.3 Stock Options. The Purchaser shall grant nonqualified
options to purchase an aggregate of 60,000 shares of Purchaser Common Stock as
of the Closing Date under the Purchaser's 1999 Incentive Plan (the "Incentive
Plan") to certain key employees of the Companies, other than the Seller, at an
exercise price equal to the closing price of the Purchaser Common Stock on the
Nasdaq National Market as of the Closing Date. The Seller recommends that such
options be allocated as set forth on Schedule 6.3 (it being understood and
agreed that such allocation is subject to approval of the Purchaser's board of
directors or a committee thereof). Seller shall provide the social security
number and home address of each individual listed on Schedule 6.3 to the
Purchaser at or prior to Closing. Such options shall vest in equal
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annual increments for four years, commencing on the first anniversary of the
Closing Date. The Purchaser hereby represents and warrants that the offering of
the shares of Purchaser Common Stock that may be acquired upon exercise of such
options under the Incentive Plan has been registered under the Securities Act on
Form S-8.
SECTION 6.4 Access To, and Information Concerning, Properties and
-----------------------------------------------------
Records.
- --------
(a) During the pendency of the transactions contemplated hereby, the
Seller shall cause each of the Companies, to the extent not prohibited by law or
contract, to give to the Purchaser, its legal counsel, accountants and other
representatives full access, upon reasonable request and at reasonable times,
throughout the period prior to the Closing, to all of each of the Companies'
properties, books, contracts, commitments and records, permit the Purchaser and
such representatives to make such inspections (including, without limitation,
with regard to currently owned properties and certain properties leased by any
of the Companies (collectively, the "Real Property"), physical inspection of the
surface and subsurface thereof) as they may reasonably require and furnish to
the Purchaser and such representatives during such period all such information
concerning each of the Companies and their affairs as Purchaser may reasonably
request.
(b) Notwithstanding any other provision of this Agreement to the
contrary, after the date hereof neither the Purchaser nor any of its respective
agents or representatives shall perform any investigation or study of the Real
Property which may involve the intrusive or destructive sampling or analysis or
chemical testing of any portion of such property or its improvements, including
without limitation, of any soil, water or groundwater on, under or about such
Real Property ("Phase II Investigation"), without first (a) submitting to each
of the Companies and the Seller a detailed description of (i) the work to be
performed as part of the Phase II Investigation after the date hereof, (ii) the
persons to undertake such Phase II Investigation, and (iii) the types and
amounts of insurance coverage maintained by such persons, and (b) obtaining the
prior written consent of the Seller as to such matters, which shall not be
unreasonably withheld. The Seller may grant such consent subject to such terms,
conditions or restrictions as the Seller may reasonably require. In all events,
the Seller or its representatives shall have the right, but not the obligation,
to observe any and all activities associated with performance of any agreed
Phase II Investigation, and may obtain half of any samples which the Purchaser
or its representatives may collect during the Phase II Investigation. In the
event the Purchaser or its representatives conduct a Phase II Investigation
after the date hereof, the Purchaser shall cause, at its expense, (x) any
investigation-derived waste generated or created in connection with performance
of the Phase II Investigation (including without limitation, drill cuttings,
purged or developed water, or sample remnants) to be removed from the property,
(y) any wells installed during the Phase II Investigation to be plugged and
abandoned, and (z) the restoration of the property to substantially the same
physical condition which existed before commencement of the Phase II
Investigation, all within seven days after completion of the field activities
related to the Phase II Investigation, and in compliance with applicable laws
and regulations. The Purchaser shall be responsible for executing on its own
behalf any and all manifests, shipping documents, plugging and abandoning
reports and similar documents in connection with its obligations under this
subsection. The Purchaser agrees to indemnify and hold each of the Companies,
the Seller, each Selling Shareholder and each of their Affiliates harmless from
and against any and all claims, liabilities, damages and causes of action
arising out of, and to the extent attributable to, the
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Purchaser's inspections of the Real Property, including, without limitation, any
Phase II Investigation. All test results associated with any such physical or
environmental inspection shall be held in strictest confidence by the Purchaser
and shall not be disclosed to any third party.
(c) All information disclosed by any of the parties hereto (the
"Disclosing Party") to another party hereto (the "Recipient") shall be held
strictly confidential by the Recipient and its representatives, shall be used
solely for purposes of evaluating the transactions contemplated hereby, and
shall not be disclosed to any third party. In the event this Agreement is
terminated pursuant to the provisions of Article IX, upon the written request of
the Disclosing Party, the Recipient agrees to return to the Disclosing Party all
copies of such confidential information, together with all extracts or other
reproductions thereof in the possession of the Recipient or its representatives.
It is understood that confidential information shall not include the following:
(i) information that is or becomes generally available to the public
other than as a result of a disclosure by the Recipient , its representatives or
its agents;
(ii) information that was in the possession of the Recipient or its
representatives prior to disclosure by the Recipient, its representatives or its
agents; or
(iii) information that becomes available to the Recipient or its
representatives on a non-confidential basis from a source other than the
Disclosing Party, its representatives or agents.
SECTION 6.5 Good Faith Efforts to Consummate Transactions. Subject to
the terms and conditions of this Agreement, the Purchaser and the Seller agree
to use reasonable good faith efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper, or advisable under
this Agreement and applicable laws and regulations, to consummate and make
effective, as soon as practicable after the date hereof, the transactions
contemplated by this Agreement, including, without limitation, securing all
third-party or regulatory approvals necessary to consummate the transactions
provided herein and to satisfy the other conditions to Closing contained herein
as soon as reasonably practicable. Each party agrees to make copies of its
respective regulatory filings and related correspondence to regulatory agencies
available to the other party.
SECTION 6.6 Exclusivity. The Seller will not, and the Seller will cause
each of the Companies not to (i) directly or indirectly, solicit or initiate any
proposals or offers from any person relating to any acquisition or purchase of
assets outside the ordinary course of business of, or any securities of, or any
merger, consolidation or business combination with, any of the Companies, or
(ii) participate in any negotiations regarding, or furnish to any other person
any information with respect to, or otherwise cooperate in any way with, any
effort or attempt by any other person to do or seek any of the foregoing.
SECTION 6.7 Release From Indemnity Agreements. The Purchaser shall use
its commercially reasonable efforts to have the Seller and the applicable
Selling Shareholders released from all of their respective obligations under the
indemnity agreement identified in Schedule 6.7 within 90 days after the Closing
Date. The Purchaser hereby agrees to indemnify and defend the Seller and the
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applicable Selling Shareholders and hold the Seller and the applicable Selling
Shareholders harmless for any amounts that the Seller or the applicable Selling
Shareholders are required to pay in connection with the enforcement of any
obligations under such indemnity agreement after the Closing, including without
limitation any reasonable attorneys' fees and expenses incurred in connection
therewith.
SECTION 6.8 Distribution or Transfer of Certain Assets. Notwithstanding
anything to the contrary stated in this Agreement, the Purchaser and the Seller
acknowledge and agree that the Companies, the Seller, the Selling Shareholders
and each of their Affiliates shall be permitted to take all action necessary to
distribute or otherwise transfer to the Seller or any Selling Shareholder or an
Affiliate of the Seller or any Selling Shareholder all right, title and interest
of the Companies in and to the assets of the Companies set forth on Schedule
2.16, under the subheading "Assets Withheld."
SECTION 6.9 Benefit Plans. Effective no later than 30 days after the
Closing, the Purchaser shall cause the Companies to terminate the Benefit Plans
referenced on Schedule 2.11. Effective as of the date such Benefit Plans are
terminated, the Purchaser shall establish a health plan for the Companies which
is substantially similar to such Plans referenced on Schedule 2.11 and shall
grant credit thereunder for prior service with the Companies.
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION 7.1 Prohibited Activities.
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(a) For no additional consideration, Seller and each Selling
Shareholder will not for the five years following the Closing Date (and, in the
case of the Seller, if longer, one year following the termination of Seller's
consulting services with the Companies or their Affiliates) (with the applicable
period being herein referred to as the "Noncompete Term"), directly or
indirectly, for himself, herself or itself or on behalf of or in conjunction
with any other person, company, partnership, corporation or business or other
entity of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
investor, partner, joint venturer, or in a managerial or advisory
capacity, whether as an employee, independent contractor, consultant or
advisor, or as a sales representative, dealer or distributor, in any
business conducted by the Companies on the Closing Date, including,
without limitation, any business that involves the production and sale
of ready-mixed concrete (including truck-mixed concrete) and other
cement mixtures and pre-cast concrete products (a "Competitive
Business") within any Territory surrounding any plant or other
operating facility from which any of the Companies was engaged in
business on the date immediately prior to the Closing Date (for
purposes of this Article VII, the "Territory" surrounding any such
plant or other operating facility will be: (A) the city, town or
village in which such plant or facility is located, (B) the county in
which such plant or facility is located, (C) the counties contiguous to
the county in which such plant or facility is located, (D) the area
located within 100 miles of such plant or facility, and (E) the area in
which such plant or facility regularly provides products or services at
the locations of its customers.
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(ii) call upon or otherwise solicit any person, who is, at
that time, an employee or consultant of the Purchaser or the Companies,
for the purpose or with the intent or effect of enticing such employee
or consultant away from or out of the employ or contract with the
Purchaser or the Companies;
(iii) call upon or otherwise solicit any person or entity
which is, at that time, or which has been, within two years prior to
that time, a customer of the Companies or the Purchaser within the
Territory for the purpose of soliciting or selling services or products
in a Competitive Business within the Territory; or
(iv) call upon or otherwise solicit any entity engaged in a
Competitive Business which the Companies or the Purchaser has called on
in connection with the possible acquisition by either of them of such
entity or of which either of them has made an acquisition analysis,
with the knowledge of that entity's status as an acquisition candidate
of the Purchaser, for the purpose of acquiring that entity or arranging
the acquisition of that entity by any person or entity other than the
Purchaser.
(b) Notwithstanding the above, Section 7.1(a) shall not be deemed to
prohibit the Seller or any Selling Shareholder from any of the following:
(i) acquiring, as a passive investor with no involvement in
the operations of the business, not more than two and one-half percent
of the capital stock of a Competitive Business whose stock is publicly
traded on a national securities exchange, the Nasdaq National Market or
over-the-counter; or
(ii) engaging in a business that is not a Competitive Business
or selling products or services to, purchasing products or services
from or otherwise doing business with a Competitive Business.
(c) Notwithstanding the above, Section 7.1(a) shall not be deemed to
prohibit Robert S. Beall from continuing the ownership and activities as
permitted by Section 7.1(b)(iii) and (iv) of the Texas Agreement (as defined
below).
SECTION 7.2 Equitable Relief. Because of the difficulty of measuring
economic losses to the Purchaser or the Companies as a result of a breach of the
covenant described in Section 7.1(a) of this Article, because a breach of such
covenants would diminish the value of the assets, properties and business of the
Companies being sold pursuant to this Agreement, and because of the immediate
and irreparable damage that could be caused to the Purchaser and the Companies
for which it would have no other adequate remedy, Seller and each Selling
Shareholder agree that the foregoing covenant may be enforced against such
persons by injunctions, restraining orders and other equitable actions.
SECTION 7.3 Reasonable Restraint. It is agreed by the parties hereto
that the foregoing covenants in this Article VII are necessary in terms of time,
activity and territory to protect the Purchaser's and the Companies' interest in
the assets, properties and business being acquired pursuant to the terms of this
Agreement and imposes a reasonable restraint on the Seller and the Selling
Shareholders in light of the activities and businesses of the Purchaser on the
date of the execution of this Agreement and the current plans of the Purchaser.
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SECTION 7.4 Severability; Reformation. The covenants in this Article
VII are severable and separate, and the unenforceability of any specific
covenant shall not affect the continuing validity and enforceability of any
other covenant. In the event any court of competent jurisdiction shall determine
that the scope, time or territorial restrictions set forth in this Article VII
are unreasonable and therefore unenforceable, then it is the intention of the
parties that such restrictions be enforced to the fullest extent which the court
deems reasonable and this Agreement shall thereby be reformed.
SECTION 7.5 Material and Independent Covenant. The Seller and the
Selling Shareholders acknowledge that their agreements and the covenants set
forth in this Article VII are material conditions to the Purchaser's agreements
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby and that the Purchaser would not have entered into this
Agreement without such covenants. All of the covenants in this Article VII shall
be construed as an agreement independent of any other provision in this
Agreement. The existence of any claim or cause of action by the Seller or any
Selling Shareholder against the Purchaser, whether predicated on this Agreement
or otherwise, will not constitute a defense to the enforcement by the Purchaser
of any of the covenants of this Article VII. It is specifically agreed that the
time period Section 7.1 specifies will be computed in the case of the Seller and
each Selling Shareholder by excluding from that computation any time during
which the Seller or that Selling Shareholder is in violation of any provision of
Section 7.1. The covenants this Article VII contains will not be affected by any
breach of any other provision hereof by any party hereto.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.1 Conditions to Each Party's Obligations Under this
Agreement. The respective obligations of (i) the Purchaser to purchase and pay
for the Shares and (ii) the Seller and each Selling Shareholder to sell their
respective Shares, at the Closing are subject to the satisfaction or waiver of
the following conditions on or prior to the Closing Date:
(a) the receipt of regulatory approvals required by applicable law for
the consummation of the transactions contemplated by this Agreement and the
expiration or termination of any applicable waiting period with respect thereto;
and
(b) there shall not have been instituted, pending or threatened any
action or proceeding by any Governmental Authority before any Governmental
Authority or court of competent jurisdiction, nor shall there be in effect any
judgment, decree order, or injunction of any Governmental Authority or court of
competent jurisdiction, or any other legal restraint preventing or seeking to
prevent consummation of the transactions contemplated by this Agreement.
SECTION 8.2 Conditions to the Obligations of the Purchaser Under this
Agreement. The obligations of the Purchaser to purchase and pay for the Shares
at the Closing are subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
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(a) all representations and warranties of the Seller and each Selling
Shareholder shall be true and correct as of the date hereof (subject to the
Seller's and each Selling Shareholder's right to cure any inaccuracy or breach
of any representation or warranty set forth herein) and at and as of the Closing
(provided that the text of any representation or warranty that refers to a
specific date (including the date of this Agreement) shall be deemed to continue
to refer to such date), with the same force and effect as though made on and as
of the Closing, except when any failure of a representation or warranty to be
true and correct would not result in a Material Adverse Effect;
(b) the Seller and each Selling Shareholder shall have performed all
obligations and agreements and complied with all covenants and conditions
contained in this Agreement to be performed or complied with by them prior to
the Closing Date, except when any failure to so perform or comply would not
result in a Material Adverse Effect;
(c) all consents, approvals and waivers from third parties and
governmental authorities required to be obtained to consummate the transactions
contemplated by this Agreement shall have been obtained, except to the extent
that failure to obtain such consents, approvals and waivers would not result in
a Material Adverse Effect;
(d) the Purchaser in the course of its due diligence investigation of
the Companies shall have discovered no condition or event which would result in
a Material Adverse Effect; provided, however, that the foregoing shall be a
condition to the Purchaser's obligations to purchase and pay for the Shares, if,
and only if, the Seller receives from the Purchaser written notice not later
than January 31, 2000 that Purchaser has discovered such a condition or event;
provided further, that for purposes of determining whether such a condition or
event exists, neither any environmental matter nor any financial matter shall be
deemed to constitute a condition or event which would result in a Material
Adverse Effect; and, provided further, that for purposes of determining whether
such a condition or event exists, any matter disclosed in this Agreement or in
the Schedules to this Agreement shall be deemed to not constitute a condition or
event which would result in a Material Adverse Effect;
(e) the Seller and the Companies (or such one or more of them as is
mutually agreed by the Purchaser and the Seller) shall have entered into the
Consulting Agreement;
(f) the Seller and the Company mutually agreed by the Purchaser and the
Seller shall have entered into a Lease Agreement with respect to each business
facility of the Companies listed on Schedule 2.16, Item Nos. 1, 2 and 4 under
the subheading Real Estate Leases;
(g) the receipt at Closing by the Purchaser of a satisfactory legal
opinion from counsel to the Seller and the Selling Shareholders;
(h) the Purchaser shall have received the duly endorsed certificate(s)
or other assignment documents representing the Shares contemplated by Section
1.4; and
(i) the transactions contemplated by that certain Stock Purchase
Agreement dated as of January 20, 2000 between Purchaser, Robert S. Beall and
certain trusts (the "Texas Agreement") shall have been consummated prior to or
concurrent with the Closing.
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SECTION 8.3 Conditions to the Obligations of the Seller and each
Selling Shareholder Under this Agreement. The obligations of the Seller and each
Selling Shareholder to sell their respective Shares at the Closing are subject
to the satisfaction or waiver of the following conditions on or prior to the
Closing Date:
(a) all representations and warranties of the Purchaser contained
herein shall be true and correct as of the date hereof (subject to the
Purchaser's right to cure any inaccuracy or breach of any representation or
warranty set forth herein) and at and as of the Closing, with the same force and
effect as though made on and as of the Closing, except when any failure of a
representation or warranty to be true and correct would not result in a Material
Adverse Effect;
(b) the Purchaser shall have performed all obligations and agreements
and complied with all covenants contained in this Agreement to be performed or
complied with by it prior to the Closing Date, except when any failure to so
perform or comply would not result in a Material Adverse Effect;
(c) all consents, approvals and waivers from third parties and
governmental authorities required to be obtained to consummate the transactions
contemplated by this Agreement shall have been obtained, except to the extent
that failure to obtain such consents, approvals and waivers would not result in
a Material Adverse Effect;
(d) the transactions contemplated by that certain Stock Purchase
Agreement dated as of January 20, 2000 entered into among Purchaser, Robert S.
Beall and certain trusts shall have been consummated prior to or concurrent with
the Closing;
(e) the Seller, each Selling Shareholder, and their Affiliates (other
than the Companies) shall have been unconditionally released from all
obligations under any guaranty, security agreement or other instrument that
secures any indebtedness of any of the Companies or any of the Companies'
Affiliates;
(f) the Seller and the Companies (or such one or more of them as is
mutually agreed by the Purchaser and the Seller) shall have entered into the
Consulting Agreement;
(g) the Seller and the Company mutually agreed by the Purchaser and the
Seller shall have entered into a Lease Agreement with respect to each business
facility of the Companies listed on Schedule 2.16, Item Nos. 1, 2 and 4 under
the subheading Real Property Leases;
(h) the receipt at Closing by the Seller and the Selling Shareholders
of a satisfactory legal opinion from counsel to the Purchaser; and
(i) the Seller and each Selling Shareholder shall have received the
Purchase Price payable by the Purchaser in accordance with Section 1.2.
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
SECTION 9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date:
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(a) by mutual written consent executed by the parties and duly
authorized by the Board of Directors of the Purchaser;
(b) by the Purchaser if there is an inaccuracy or breach of any
representation, warranty or covenant of the Seller or any Selling Shareholder
set forth in this Agreement which breach has not been cured within 30 days
following receipt by the Seller or the appropriate Selling Shareholder of
written notice of such breach and which breach results in or can reasonably be
anticipated to result in a Material Adverse Effect; provided, however, that the
Purchaser's right to terminate this Agreement in accordance with this Section
9.1(b) is subject to the notice requirement set forth in the first paragraph of
Article II;
(c) by the Seller and the Selling Shareholders if there is an
inaccuracy or breach of any representation, warranty or covenant of the
Purchaser set forth in this Agreement which breach has not been cured within 30
days following receipt by the Purchaser of written notice of such breach and
which breach results in or can reasonably be anticipated to result in a Material
Adverse Effect;
(d) (i) by the Purchaser upon written notice to Seller and the Selling
Shareholders if any of the conditions in Section 8.1 and Section 8.2 have not
been satisfied within 60 days of the date hereof, or such later date agreed to
in writing by the Purchaser, the Seller and the Selling Shareholders (other than
through the failure of the Purchaser to comply with its obligations under this
Agreement) and the Purchaser has not waived such condition in writing on or
before the expiration of such 60-day period (or such later date agreed to in
writing by the Purchaser, the Seller and the Selling Shareholders); or (ii) by
the Seller and the Selling Shareholders upon written notice to the Purchaser if
any of the conditions in Section 8.1 and Section 8.3 have not been satisfied
within 60 days of the date hereof, or such later date agreed to in writing by
the Purchaser, the Seller and the Selling Shareholders (other than through the
failure of the Seller or the Selling Shareholders to comply with their
respective obligations under this Agreement) and the Seller and the Selling
Shareholders have not waived such condition in writing on or before the
expiration of such 60-day period (or such later date agreed to in writing by the
Purchaser, the Seller and the Selling Shareholders); or
(e) by the Purchaser or the Seller and the Selling Shareholders if any
court of competent jurisdiction in the United States of America or other
(federal or state) governmental body shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have been final and nonappealable.
SECTION 9.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.1 hereof, this Agreement
shall thereafter become null and void and have no effect, without any liability
on the part of any party or its directors, officers or shareholders, other than
the provisions of this Section 9.2, Section 6.4, Article X and Article XII;
provided, however, that nothing contained in this Section 9.2 shall relieve any
party from liability for any breach or violation of this Agreement, subject to
Article X hereof.
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SECTION 9.3 Amendment and Modification. This Agreement may be amended,
modified, terminated, rescinded, or supplemented only by written agreement of
all of the parties hereto.
SECTION 9.4 Extension; Waiver. At any time prior to the Closing Date,
the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (ii) waive any inaccuracies
in the representations and warranties contained herein or in any document,
certificate or writing delivered pursuant hereto, or (iii) waive compliance with
any of the agreements or conditions contained herein. Any agreement on the part
of any party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed by or on behalf of such party.
ARTICLE X
REMEDIES
SECTION 10.1 Remedies for Breach of Representations, Warranties and
Covenants of the Seller and the Selling Shareholders Before the Closing Date.
Upon execution of this Agreement through and including the Closing, the
exclusive remedy for any material inaccuracy or breach of any representation,
warranty or covenant in this Agreement by the Seller or any Selling Shareholder
shall be termination of this Agreement by the Purchaser in accordance with and
subject to Article X. This Section 10.1 shall not apply to any breach by the
Seller of his obligations under Section 6.6 of this Agreement.
SECTION 10.2 Indemnification by the Seller and the Selling
Shareholders. Except as otherwise expressly provided in this Article X and
subject to the limitations stated in this Article X, beginning immediately after
the Closing and continuing for the periods specified by the notice periods and
survival periods set forth in Section 10.5(a), Section 11.1 and Section 11.2,
respectively, the Seller agrees (and each Selling Shareholder agrees only with
respect to such Selling Shareholder's representation and warranties set forth in
Section 2.2(a), Section 2.3 and Section 2.4 (insofar as Section 2.4 relates to
such Selling Shareholder) to and shall defend, indemnify and hold harmless the
Purchaser from and against, and shall reimburse the Purchaser for, each and
every claim, action, demand, cost, expense, liability, penalty and other damage
incurred by the Purchaser, including, without limitation, reasonable attorney's
fees (collectively, a "Loss"), relating to, resulting from or arising out of, or
any allegation by any third party of, the following:
(a) any inaccuracy in any representation or warranty of the Seller and
the Selling Shareholders, as applicable, set forth in this Agreement, the
Schedules, any Transaction Document, or any certificate, agreement or document
executed and delivered by the Seller or any Selling Shareholder under this
Agreement (it being understood and agreed that any such inaccuracy shall be
determined without regard to any materiality qualification contained in any
representation or warranty, provided that the materiality qualifications set
forth in Section 2.6 (Financial Statements) shall apply to the representations
and warranties set forth therein); provided, however, that (i) any inaccuracy in
any representation or warranty of the Seller set forth in Section 2.11 (Employee
Benefit Plans) and the related Schedule 2.11 shall be governed by Section
10.2(c) and Section 10.8, (ii) any inaccuracy in any representation or warranty
of the Seller set forth in Section 2.14 (Environmental Matters) shall be
governed by Section 10.2(d),
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and (iii) any inaccuracy in any representation or warranty of the Seller set
forth in Section 2.17 (Permits) (insofar that Section 2.17 relates to Permits
required pursuant to Environmental Laws) shall be governed by Section 10.2(d);
or
(b) any breach or nonfulfillment of any covenant, agreement or other
obligation of the Seller set forth in this Agreement, any Transaction Document
or any other agreement or document executed and delivered by the Seller pursuant
to this Agreement; or
(c) any inaccuracy in any representation or warranty of the Seller set
forth in Section 2.11 of this Agreement, it being understood and agreed that any
such inaccuracy shall be determined without regard to Items 3 and 4 on Schedule
2.11; provided, however, that the failure to file annual reports (Form 5500)
with the Internal Revenue Service with respect to the Benefit Plans shall be
governed by Section 10.8; and provided further, that this Section 10.2(c) shall
be null and void and the Seller shall not have any liability under this Section
10.2(c) in the event that any such Loss relates to, results from or arises out
of any voluntary action caused or initiated by the Purchaser, including, without
limitation, the filing of IRS Form 5330 (but excluding any action of the
Purchaser relating to, resulting from or arising out of the initiation of any
audit or investigation by any governmental agency without any such prior
voluntary action by Purchaser); or
(d) any inaccuracy in any representation or warranty of the Seller (i)
set forth in Section 2.14 of this Agreement, it being understood and agreed that
any such inaccuracy shall be determined without regard to Item 2 on Schedule
2.14 or (ii) set forth in Section 2.17 (insofar that Section 2.17 relates to
Permits required pursuant to Environmental Laws), it being understood and agreed
that any such inaccuracy shall be determined without regard to Item 1 and Item 2
on Schedule 2.17, except to the extent provided in clause (2) below; provided,
however, that Purchaser shall be solely responsible for, and shall not be
entitled to indemnification from the Seller for, or application towards the
Seller Basket for, costs and expenses associated with (1) preparing and
implementing any Spill Prevention Control and Countermeasure Plan for any of the
Companies' sites or facilities (but the limitation in this clause (1) shall not
apply to any penalty or liability related to the applicable Companies' prior
failure to take any such action), (2) evaluating the necessity for, applying
for, renewing, and/or complying with, Permits for the discharge of storm water
or emission of air pollutants associated with any of the Companies' sites or
operations (but the limitation in this clause (2) shall not apply to any penalty
or liability related to the applicable Companies' prior failure to take any such
action), (3) modifying or relocating any wash area at any of the Companies'
sites, and (4) performing work, response activities, repairs, investigations, or
modifications, or acquiring or installing improvements, equipment or property to
address or respond to conditions, matters, events, circumstances, violations, or
liabilities existing or occurring on or prior to Closing, except to the extent
required by applicable Laws.
With respect to matters not involving any judicial, administrative, arbitration,
or investigatory proceeding or other proceeding, claim or controversy
(collectively, a "Proceeding") brought or asserted by third parties, within ten
days after notification from the Purchaser supported by reasonable documentation
setting forth the nature of the circumstances entitling the Purchaser to
indemnity hereunder, the Seller (or, if applicable, any Selling Shareholder) at
no cost or expense to the Purchaser, shall diligently commence resolution of
such matters in a manner reasonably
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acceptable to the Purchaser and shall diligently and timely prosecute such
resolution to completion. With respect to those claims that may be satisfied by
payment of a liquidated sum of money, including, without limitation, claims for
reimbursement of expenses incurred in connection with any circumstances
entitling the Purchaser to indemnity hereunder, the Seller (or, if applicable,
any Selling Shareholder) shall pay the full amount so claimed to the extent
supported by reasonable documentation within 15 days of such resolution. If the
Seller (or, if applicable, any Selling Shareholder) disputes his, her or its
liability in connection with such claim, the Seller (or, if applicable, such
Selling Shareholder) shall pay any undisputed part of such liability, and the
Purchaser and the Seller (or, if applicable, such Selling Shareholder) shall
have 30 days to resolve any remaining dispute. If the Purchaser and the Seller
(or, as applicable, such Selling Shareholder) are unable to resolve such dispute
within 30 days, they shall resolve such dispute in accordance with Section 12.9.
If litigation or any other Proceeding is commenced or threatened by any third
party for which the Purchaser is entitled to indemnification under this Section
10.2, the provisions of Section 10.4 shall control.
SECTION 10.3 Indemnification by the Purchaser. In addition to
Purchaser's indemnification of Seller and each Selling Shareholder for certain
taxes resulting from the Section 338(h)(10) Election pursuant to Section 6.1,
and, except as otherwise expressly provided in this Article X, the Purchaser
agrees to and shall defend, indemnify and hold harmless the Seller and each
Selling Shareholder from and against, and shall reimburse the Seller and each
Selling Shareholder for, each and every Loss, relating to, resulting from or
arising out of, or any allegation by any third party of, the following:
(a) any inaccuracy in any representation or warranty of the Purchaser
set forth in this Agreement, any Transaction Document or any certificate,
agreement or other document executed and delivered by the Purchaser under this
Agreement (it being understood and agreed that any such inaccuracy shall be
determined without regard to any materiality qualification contained in any
representation or warranty, provided that the materiality qualifications set
forth in Section 3.7 (Commission Filings; Financial Statements) shall apply to
the representations and warranties set forth therein);
(b) any breach or nonfulfillment of any covenant, agreement or other
obligation of the Purchaser set forth in this Agreement, any Transaction
Document or any other agreement or document executed and delivered by the
Purchaser pursuant to this Agreement; or
(c) any Proceeding relating to events, conditions, operations, facts,
circumstances or acts of the Purchaser, any of the Companies or any of their
respective Affiliates which shall occur subsequent to the Closing Date.
With respect to matters not involving Proceedings brought or asserted by third
parties, within ten days after notification from the Seller or any Selling
Shareholder supported by reasonable documentation setting forth the nature of
the circumstances entitling such party to indemnity hereunder, the Purchaser, at
no cost or expense to such party shall diligently commence resolution of such
matters in a manner reasonably acceptable to such party and shall diligently and
timely prosecute such resolution to completion. With respect to those claims
that may be satisfied by payment of a liquidated sum of money, the Purchaser
shall pay the amount so claimed to the extent supported by reasonable
documentation within 15 days of such resolution.
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If the Purchaser disputes its liability in connection with such claim, it shall
pay any undisputed part of such liability, and the Purchaser and the party
seeking indemnity shall have 30 days to resolve any remaining dispute. If the
Purchaser and such party are unable to resolve such dispute within 30 days, they
shall resolve such dispute in accordance with Section 12.9 If litigation or any
other Proceeding is commenced or threatened by any third party for which the
Seller or any Selling Shareholder is entitled to indemnification under this
Section 10.3, the provisions of Section 10.4 shall control.
SECTION 10.4 Notice and Defense of Third Party Claims. If any
Proceeding shall be brought or asserted by a third party under this Article
against an indemnified party or any successor thereto (the "Indemnified Person")
in respect of which indemnity may be sought under this Article from an
indemnifying person or any successor thereto (the "Indemnifying Person")
pursuant to any Proceeding, the Indemnified Person shall give prompt written
notice of such Proceeding to the Indemnifying Person who shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Person and the payment of all reasonable expenses; provided,
that any delay or failure so to notify the Indemnifying Person shall relieve the
Indemnifying Person of its obligations hereunder only to the extent, if at all,
that it is prejudiced by reason of such delay or failure. In no event shall any
Indemnified Person be required to make any expenditure or bring any cause of
action to enforce the Indemnifying Person's obligations and liability under and
pursuant to the indemnifications set forth in this Article. The Indemnified
Person shall have the right to employ separate counsel in any of the foregoing
Proceedings and to participate in the defense thereof, but the reasonable fees
and expenses of such counsel shall be at the expense of the Indemnified Person
unless the Indemnified Person shall in good faith determine that there exist
actual or potential conflicts of interest which make representation by the same
counsel inappropriate. The Indemnified Person's right to participate in the
defense or response to any Proceeding should not be deemed to limit or otherwise
modify its obligations under this Article. In the event that the Indemnifying
Person, within 20 days after notice of any such Proceeding, fails to assume the
defense thereof, the Indemnified Person shall have the right to undertake the
defense, compromise or settlement of such Proceeding for the account of and at
the expense of the Indemnifying Person, subject to the right of the Indemnifying
Person to assume the defense of such Proceeding with counsel reasonably
satisfactory to the Indemnified Person at any time prior to the settlement,
compromise or final determination thereof. Notwithstanding anything in this
Article to the contrary, the Indemnifying Person shall not, without the
Indemnified Person's prior written consent (which consent shall not be
unreasonably withheld or delayed), settle or compromise any Proceeding or
consent to the entry of any judgment with respect to any Proceeding.
SECTION 10.5 Limitations of Liability.
------------------------
(a) An Indemnifying Person shall have no liability for any inaccuracy
in any representation or warranty made under this Agreement unless written
notice of a claim for indemnity, or written notice of specific facts as to which
an indemnifiable Loss is expected to be incurred, shall have been given prior to
the expiration of two years after the Closing Date; provided, however, that (i)
the sole remedy for any breach or inaccuracy of the representations and
warranties contained in Section 2.6 (Financial Statements) (insofar as Section
2.6 relates to Accounts and Notes Receivable and Inventory), Section 2.7
(Accounts and Notes Receivable) or Section 2.18 (Inventories) shall be the
determination of the Working Capital Adjustment under
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Section 1.6; (ii) with respect to the representations and warranties contained
in Section 2.14 (Environmental Matters), written notice of a claim for
indemnity, or written notice of facts as to which an indemnifiable Loss is
expected to be incurred, shall have been given within five years after the
Closing Date; (iii) with respect to the representations and warranties contained
in Section 2.2 (the Companies' Capitalization), Section 2.10 (Tax Matters) and
Section 2.11 (Employee Benefit Plans), written notice of a claim for indemnity,
or written notice of facts as to which an indemnifiable Loss is expected to be
incurred, shall have been given within five days after the expiration of the
statute of limitations applicable to such matter; and (iv) with respect to acts
of fraud or willful misrepresentation by the party making any representation or
warranty, written notice of a claim for indemnity, or written notice of facts as
to which an indemnifiable loss is expected to be incurred, may be given at any
time.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the aggregate liability of the Seller (and, to the extent applicable,
each Selling Shareholder) for all events or occurrences giving rise to the
Seller (and, to the extent applicable, each Selling Shareholder) being required
to indemnify the Purchaser under Section 10.2 shall not exceed the amount set
forth on Schedule 10.5(b) (the "Seller Cap"); provided, however, that the Seller
Cap shall not apply to (i) any Losses relating to, resulting from or arising out
of any inaccuracy in the representations and warranties of the Seller set forth
in Section 2.10 (Tax Matters), (ii) claims for indemnification under Section
10.8, or (iii) the determination of the Working Capital Adjustment under Section
1.6; and provided, further, that the aggregate liability of any Selling
Shareholder shall not exceed the Purchase Price received by such Selling
Shareholder.
(c) Notwithstanding any other provision of this Agreement to the
contrary, the Seller (and, to the extent applicable, each Selling Shareholder)
shall be liable for indemnification under this Article X only to the extent that
the amount of any indemnifiable Loss, individually or in the aggregate with all
other such Losses covered by this Agreement, exceeds the amount set forth on
Schedule 10.5(c) (the "Seller Basket"), and in such event, the Seller (and, to
the extent applicable, each Selling Shareholder) shall be liable only for the
amount of all such Losses that exceed the Seller Basket; provided, however, that
after the aggregate amount of all indemnifiable Losses exceeds the Seller
Basket, Seller (and, to the extent applicable, each Selling Shareholder) shall
not be liable for indemnification under this Article X unless and until the
amount of the Loss with respect to any individual claim or series of related
claims exceeds $2,500; provided further, that the Seller Basket shall not apply
to (i) claims for indemnification under (A) the representations and warranties
contained in Section 2.10 (Tax Matters) or (B) Section 10.8 or (ii) the
determination of the Working Capital Adjustment under Section 1.5.
(d) Notwithstanding any other provision of this Agreement to the
contrary, the aggregate liability of the Purchaser for all events or occurrences
giving rise to the Purchaser being required to indemnify the Seller and each
Selling Shareholder under Section 10.3 shall not exceed the amount set forth on
Schedule 10.5(d) (the "Purchaser Cap"); provided, however, that the Purchaser
Cap shall not apply to (i) any Losses relating to, resulting from or arising out
of any inaccuracy in the representations and warranties of the Purchaser set
forth in Section 3.6 (the "Purchaser Common Stock"), (ii) claims for
indemnification under Section 6.7 or (iii) the determination of the Working
Capital Adjustment under Section 1.5.
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(e) Notwithstanding any other provision of this Agreement to the
contrary, the Purchaser shall be liable for indemnification under this Article X
only to the extent that the amount of any indemnifiable Loss, individually or in
the aggregate with all other such Losses covered by this Agreement, exceeds the
amount set forth on Schedule 10.5(e) (the "Purchaser Basket"), and in such
event, the Purchaser shall be liable only for the amount of all such Losses that
exceed the Purchaser Basket; provided, however, that after the aggregate amount
of all indemnifiable Losses exceeds the Purchaser Basket, Purchaser shall not be
liable for indemnification under this Article X unless and until the amount of
the Loss with respect to any individual claim or series of related claims
exceeds $2,500; provided, further, that the Purchaser Basket shall not apply to
(i) claims for indemnification under (A) the representations and warranties
contained in Section 3.6 (the Purchaser's Common Stock) or (B) Section 6.7 or
(ii) the determination of the Working Capital Adjustment under Section 1.5).
(f) In calculating the amount of any Loss for which any Indemnifying
Person is liable under this Article, there shall be taken into consideration (i)
the value of any federal or state income tax benefits and (ii) the amount of any
insurance recoveries, excluding any amounts which are in effect self-insured
whether through retention amounts or otherwise, the Indemnified Person in fact
receives as a direct consequence of the circumstances to which the Loss related
or from which the Loss resulted or arose.
(g) The Purchaser shall use commercially reasonable efforts to mitigate
any Loss suffered, incurred or sustained by the Purchaser arising out of any
matter for which the Purchaser is entitled to indemnification herein, upon the
Purchaser having obtained actual knowledge of such breach by the Seller or any
Selling Shareholder. In the event that the Purchaser shall fail to make such
commercially reasonable efforts to mitigate such Loss, then notwithstanding
anything else to the contrary contained herein, the Seller or, to the extent
applicable, any such Selling Shareholder shall not be required to indemnify the
Purchaser for any Loss that could reasonably be expected to have been avoided
had the Purchaser made such efforts.
(h) In the event that (i) any condition set forth in Article VIII is
not satisfied, (ii) the failure of such condition to be satisfied is waived in
writing by the party or parties entitled to the benefit of such condition, and
(iii) the parties nevertheless consummate the transactions contemplated by this
Agreement at the Closing, then the parties shall be deemed to have waived any
claim for Loss or other relief only to the extent that such Loss or other relief
relates solely and directly to such condition that was so waived in writing.
(i) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NO PARTY
HERETO SHALL HAVE ANY LIABILITY UNDER THIS AGREEMENT FOR CONSEQUENTIAL DAMAGES
(SUCH AS LOSS OF PROFIT), OR TREBLE, EXEMPLARY OR PUNITIVE DAMAGES OF ANY TYPE
UNDER ANY CIRCUMSTANCES REGARDLESS OF WHETHER SUCH DAMAGES MAY BE AVAILABLE
UNDER TEXAS LAW, THE LAW OF ANY OTHER STATE, OR FEDERAL LAW.
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SECTION 10.6 Exclusive Remedies.
------------------
(a) The remedies of the parties specifically provided for by this
Article shall be the sole and exclusive remedies of the parties for (i) any
breach or inaccuracy of the representations and warranties contained in this
Agreement, the Schedules, any Transaction Document or in any certificate,
agreement or document furnished or delivered pursuant hereto (other than a
breach of the representations and warranties set forth in Section 2.6 (Financial
Statements) (insofar as Section 2.6 relates to Accounts and Notes Receivable and
Inventory), Section 2.7 (Accounts and Notes Receivable) and Section 2.18
(Inventories), the sole remedy for which shall be the determination of the
Working Capital Adjustment under Section 1.5, (ii) the failure to perform any
covenants, agreements or obligations contained in this Agreement, any
Transaction Document or in any other agreement or document furnished or
delivered pursuant hereto, or (iii) any Loss, relating to, resulting from or
arising out of any transaction or matter relating in any manner whatsoever to
the operation of any of the Companies prior to Closing, this Agreement or to any
document furnished or delivered pursuant hereto. Without limiting the generality
of the foregoing, except with respect to such remedies specifically set forth
herein, Purchaser hereby releases, waives, and agrees not to sue Seller, or any
Selling Shareholder or any of their Affiliates, ("Sellers' Related Parties") for
any and all claims, causes of action, rights of contribution, cost recovery,
losses, liabilities, suits, costs, fees, judgments or expenses which may now
exist or which may hereafter arise, REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN
PART BY THE SOLE, CONTRIBUTORY, PASSIVE OR PARTIAL NEGLIGENCE OR STRICT
LIABILITY OF ANY OF THE SELLERS' RELATED PARTIES, in connection with (i) any
material, waste or substance the use, collection, handling, presence, recycling,
generation, treatment, storage, disposal, release or transportation of which is
or may become regulated or controlled by any Governmental Authority or the
improper management or disposal of which may affect human health or safety or
the environment, or (ii) the compliance by any of the Companies or any of their
predecessors or any of their current or former real or personal property with
applicable laws, regulations, orders or directives pertaining directly or
indirectly to human health or safety or the environment, including without
limitation, Environmental Laws.
(b) Without limiting the generality of the foregoing provisions of
Section 10.6(a), the parties acknowledge and agree that, before the Closing
Date, Section 10.1 provides the exclusive remedies for any material breach or
inaccuracy of the representations, warranties and covenants of the Seller (and,
to the extent applicable, any Selling Shareholder) contained in this Agreement.
(c) Notwithstanding the foregoing provisions of Sections 10.6(a) or
10.6(b) or anything to the contrary in this Agreement, in addition to the
remedies provided by this Agreement, the parties acknowledge and agree that (i)
the Seller and each Selling Shareholder shall be entitled to specific
performance for any breach of the Purchaser's obligations under Section 1.2,
provided that all the conditions to Closing set forth in Section 8.1 and Section
8.2 shall have been satisfied, (ii) the Purchaser shall be entitled to specific
performance for any breach of Seller's or any Selling Shareholder's obligations
under Section 1.1, provided that all of the conditions to Closing set forth in
Section 8.1 and Section 8.3 shall have been satisfied, and (iii) the parties
shall retain all legal and equitable remedies available to him or it for any
breach or failure to perform under the Consulting Agreement or the Lease
Agreements whether such
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remedies are provided by this Agreement, the Consulting Agreement, the Lease
Agreements or applicable law.
(d) There shall be no remedies against any Selling Shareholder, except
(i) as specifically provided in Section 10.6(c) or (ii) with respect to a breach
or inaccuracy of any representation or warranty made by such Selling Shareholder
set forth in Section 2.2(b), Section 2.3 or Section 2.4 (insofar that Section
2.4 relates to such Selling Shareholder).
SECTION 10.7 Payment of Indemnification Obligation. The parties hereto
agree that, if the Seller or the Selling Shareholders become liable to the
Purchaser for indemnification under this Article X, the Seller and the Selling
Shareholders shall have the right, in their sole discretion, (but no obligation)
to satisfy such liability for indemnification by transferring to the Purchaser a
number of shares of the Purchaser Common Stock equal to the quotient of (i) the
amount of Seller's or the Selling Shareholder's liability, as applicable, for
indemnification under this Article X divided by (ii) the average closing sale
price of the Purchaser Common Stock, as quoted on the Nasdaq National Market (or
any national securities exchange or over-the-counter market on which the
Purchaser's Common Stock is then listed or quoted), for the ten (10) consecutive
trading days ending on the trading day immediately before the date on which the
Seller (or the Selling Shareholder, as applicable) transfers shares of the
Purchaser Common Stock to the Purchaser hereunder, provided, that the Seller (or
the Selling Shareholder, as applicable) shall transfer to the Purchaser good and
marketable title to such shares of the Purchaser Common Stock, free and clear of
all encumbrances.
SECTION 10.8 Annual Reports on Form 5500. The Purchaser hereby agrees
to cooperate with the Seller to cause the Companies to file within a reasonable
time after the Closing any Form 5500 with respect to the Benefit Plans that are
late as of the Closing ("Late 5500's"). Seller agrees to indemnify Purchaser for
any Loss relating to, resulting from or arising out of filing any Late 5500's;
provided, however, that this indemnity obligation shall apply only if Seller
retains exclusive control over the manner and means, including the selection of
counsel (at Seller's sole expense), by which such Late 5500's are filed by the
Companies. The indemnity provided by this Section 10.8 is further contingent on
the reasonable cooperation of the Purchaser and the Companies in furnishing such
information and records as have been maintained by Seller or the Companies with
respect to periods prior to the date hereof and as may be reasonably requested
by Seller in connection with the Late 5500's filings.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 11.1 Survival of Representations and Warranties. The
representations and warranties of the parties hereto contained in this Agreement
shall survive the Closing and any investigation by the other party with respect
thereto but shall terminate and be of no further force or effect on or after the
expiration of two years after the Closing Date, except that any representation
and warranty as to which written notice of a bona fide claim relating thereto is
received by the Indemnifying Person during the survival period shall, only with
respect to such claim, survive such survival period; provided, however, that (i)
the representations and warranties set forth in Section 2.6 (Financial
Statements) (insofar as Section 2.6 relates to Accounts and Notes Receivable and
Inventory), Section 2.7 (Accounts and Notes Receivable)
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and Section 2.18 (Inventories) shall be continuing and shall survive only until
the Determination Date; (ii) the representations and warranties set forth in
Section 2.14 (Environmental Matters) shall be continuing and shall survive only
until five years after the Closing Date; and (iii) the representations and
warranties set forth in Section 2.2 (the Companies' Capitalization) Section 2.10
(Tax Matters) and Section 2.11 (Employee Benefit Plans) shall be continuing and
shall survive until five days after the expiration of the statute of limitations
applicable to such matter.
SECTION 11.2 Survival of Covenants. The covenants and agreements of the
parties hereto, including, but not limited to, the indemnification obligations,
contained in this Agreement and in any certificate, instrument, agreement or
document delivered in connection herewith shall survive the Closing and any
investigation by the other party with respect thereto; provided, however, that
such covenants and agreements shall survive only for the period specified, if
any, by this Agreement or any certificate, instrument, agreement or document
delivered in connection with this Agreement.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Expenses. All costs and expenses incurred in connection
with the transactions contemplated by this Agreement shall be paid by the party
incurring such costs and expenses.
SECTION 12.2 Public Announcements. Any public announcement or similar
publicity with respect to this Agreement or the transactions contemplated hereby
shall be issued, if at all, at such time and in such manner as the Purchaser and
the Seller shall jointly determine, except as may be otherwise required by
applicable law, including securities law obligations to which the Purchaser may
be subject. The Purchaser and the Seller will consult with each other concerning
the means by which any of the Companies' employees, customers and suppliers and
others having dealings with any of the Companies will be informed of the
transactions contemplated hereby, and the Purchaser shall have the right to be
present for any such communication.
SECTION 12.3 Brokers and Finders. Except for Chase Securities Inc., all
negotiations on behalf of the Purchaser and the Seller relating to this
Agreement and the transactions contemplated by this Agreement have been carried
on by the parties hereto and their respective agents directly without the
intervention of any other person in such manner as to give rise to any claim
against the Purchaser or the Seller for financial advisory fees, brokerage or
commission fees, finder's fees or other like payment in connection with the
consummation of the transactions contemplated hereby. Each party agrees to
indemnify each other party against all loss, cost, damages or expenses arising
out of claims for fees or commissions of brokers employed or alleged to have
been employed by it, including Chase Securities, Inc. in the case of the Seller
and the Selling Shareholders.
SECTION 12.4 Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof (other than the Letter Agreement executed by
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Beall Industries, Inc. and the Purchaser dated September 20, 1999 which shall
remain in full force and effect), and (b) shall not be assigned by operation of
law or otherwise.
SECTION 12.5 Amendment and Modification. This Agreement may be amended,
modified, terminated, rescinded or supplemented only by written agreement of all
of the parties hereto.
SECTION 12.6 Waiver; Consents. Any failure of a party to comply with
any obligation, covenant, agreement or condition herein may be waived by the
party affected thereby only by a written instrument signed by the party granting
such waiver. No waiver, or failure to insist upon strict compliance, by any
party of any condition or any breach of any obligation, term, covenant,
representation, warranty or agreement contained in this Agreement, in any one or
more instances, shall be construed to be a waiver of, or estoppel with respect
to, any other condition or any other breach of the same or any other obligation,
term, covenant, representation, warranty or agreement. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver.
SECTION 12.7 Further Assurances. From time to time, the Purchaser, the
Seller and each Selling Shareholder shall execute and deliver such further
agreements, documents, certificates and other instruments and shall take or
cause to be taken such other actions as shall be reasonably necessary or
advisable to carry out the purposes of and effect the transactions contemplated
by this Agreement.
SECTION 12.8 Reformation and Severability. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, it shall, 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, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
SECTION 12.9 Dispute Resolution.
-------------------
(a) Any unresolved controversy, dispute or claim arising out of or
relating to this Agreement or any agreements or instruments relating hereto or
delivered in connection herewith, including but not limited to a claim based on
or arising from an alleged tort or the performance, enforcement, breach,
termination, statute of limitations applicable, scope or validity there of
("Dispute"), shall be submitted first to mediation to be conducted in Fort
Worth, Texas and administered by the American Arbitration Association ("AAA")
under its Commercial Mediation Rules before resorting to arbitration.
(b) If the Dispute is not resolved within 30 days after the request for
mediation, any unresolved Dispute shall be settled by arbitration administered
by the AAA under its then applicable Commercial Arbitration Rules and the
Supplementary Procedures for Large, Complex Disputes. The arbitration shall be
conducted in Fort Worth, Texas before a single arbitrator being a retired judge
of the state or federal courts located in the State of Texas. Judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The parties acknowledge that any Dispute evidences a transaction
involving interstate or foreign
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commerce and that the United States Arbitration Act (Title 9 of the U.S. Code)
shall govern the interpretation, enforcement and proceedings pursuant to this
arbitration clause. If the United States Arbitration Act is inapplicable to any
such Dispute for any reason, the arbitration shall be conducted pursuant to the
Texas General Arbitration Act (V.T.C.A., Civil Practice & Remedies Code, Section
171.0001 et seq. Vernon 1997). The award shall be in writing, shall be signed by
the arbitrator and shall include findings of fact and a statement of the reasons
for the award with a breakdown as to specific claims.
(c) Any party may, without waiving any remedy of arbitration, seek from
a court or agency having jurisdiction as provided under Section 7.2 hereof, any
interim, equitable or provisional relief to protect the property or rights of
that party pending the arbitrator's determination of the merits of the Dispute,
but without award of attorneys fees, costs and expenses as set forth below in
sub paragraph (e).
(d) The arbitration award shall be made within three months of the
filing of the notice of intention to arbitrate (demand), and the arbitrator
shall agree to comply with this schedule before accepting appointment.
(e) The prevailing party shall be entitled to an award of reasonable
attorneys fees. The arbitrator shall determine how the costs and expenses shall
be allocated between or among the parties. Expenses to be allocated shall
include all reasonable pre-award expenses of the arbitration, including the
arbitrator's fees, administrative fees, travel expenses, out-of-pocket expenses
such as telephone and copying, court costs, deposition fees and witness fees.
(f) Except as may be required by law, neither the parties nor the
arbitrator shall disclose the existence, content or results of any arbitration
without the prior written consent of all the parties.
SECTION 12.10 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by cable, telecopy or telex, or by
registered or certified mail (postage prepaid, return receipt requested), to the
respective parties as follows:
if to the Purchaser:
U.S. Concrete, Inc.
1300 Post Oak Boulevard, Suite 1220
Houston, Texas 77056
Telecopy No. 713/499-6201
Attn.: Corporate Secretary
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with a copy (which shall not constitute notice) to:
Mr. J. Patrick Ryan
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
300 Convent Street, Suite 1500
San Antonio, Texas 78205
Telecopy No. 210/224-2035
if to the Seller:
Mr. Fallis Arch Beall
1000 Alpine Drive
Duncan, Oklahoma 73533
Telecopy No.: (580) 255-8050
with a copy (which shall not constitute notice) to:
Mr. Paul W. Bishop
Locke Liddell & Sapp LLP
3400 Chase Tower
600 Travis Street
Houston, Texas 77002
Telecopy No. (713) 223-3717
if to the Selling Shareholders:
Ms. Nola Sue Beall
1000 Alpine Drive
Duncan, Oklahoma 73533
Telecopy No.: (580) 255-8050
Ms. Doris W. Stokes
2303 Country Club Road, #5
Duncan, OK 73533
Telecopy No.: (580) 255-8050
Mr. Robert S. Beall
2901 Red Oak Ct.
Colleyville, Texas 76034
Telecopy No. 817/868-7590
Ms. Leigh Ann Gathright
5508 E. 76th Street
Tulsa, OK 74136
Telecopy No.: 918/496-8814
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Mr. Fallis Arch Beall, Trustee
R.E. Stokes Trust
1000 Alpine Drive
Duncan, Oklahoma 73533
Telecopy No.: (580) 255-8050
with a copy (which shall not constitute notice) to:
Mr. Paul W. Bishop
Locke Liddell & Sapp LLP
3400 Chase Tower
600 Travis Street
Houston, Texas 77002
Telecopy No. (713) 223-3717
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 12.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 12.12 Jurisdiction and Venue. Any process against the
Purchaser, the Seller or any Selling Shareholder in, or in connection with, any
suit, action or proceeding arising out of or relating to this Agreement or any
of the transactions contemplated by this Agreement may be served personally or
by certified mail at the addresses set forth in Section 12.10 with the same
effect as though served on them personally. Subject to the provisions of Section
12.9 hereof, the Purchaser, the Seller and each Selling Shareholder hereby
irrevocably submit in any suit, action or proceeding arising out of or relating
to this Agreement or any of the transactions contemplated by this Agreement to
the exclusive jurisdiction and venue of the United States District Court for the
Western District of Oklahoma or any court of the State of Oklahoma located in
Stephens County and irrevocably waive any and all objections to jurisdiction and
review or venue that they may have under the laws of Oklahoma or the United
States.
SECTION 12.13 Descriptive Headings. The descriptive headings are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 12.14 Parties in Interest; No Third-Party Beneficiary. This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is intended to confer
upon any other person any rights or remedies of any nature whatsoever under or
by reason of this Agreement.
SECTION 12.15 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
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SECTION 12.16 Incorporation by Reference. Any and all Schedules,
exhibits, annexes, statements, reports, certificates or other documents or
instruments referred to herein or attached hereto are incorporated herein by
reference hereto as though fully set forth at the point referred to in the
Agreement.
SECTION 12.17 Certain Definitions. For the purposes of this Agreement,
the following terms shall have the meanings specified or referred to below
whether or not capitalized when used in this Agreement.
(a) "Affiliate" means, with respect to any person or other entity, any
person or other entity that, directly or indirectly, controls, is controlled by,
or is under common control with, such person or other entity in question. For
the purposes of this definition and the definition of Subsidiary, "control"
(including "controlling," "controlled by" and "under common control with") as
used with respect to any person or other entity, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such person or other entity, whether through the ownership of
voting securities, by contract or otherwise. (b) "Environmental Laws" means any
and all Laws relating to (a) the protection, preservation or restoration of the
environment (including, without limitation, ambient air, surface water
(including water management and runoff), groundwater, drinking water supply,
surface land, subsurface strata, plant and animal life or any other natural
resource), (b) emissions, discharges, releases or threatened releases of
Hazardous Substances into the environment or (c) the exposure to, or the use,
storage, recycling, treatment, manufacture, generation, transport, processing,
handling, labeling, production, removal or disposal of any Hazardous Substances,
in each case as amended and as now in effect. The term "Environmental Laws"
includes, without limitation, (i) the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA), the Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, the
Safe Drinking Water Act, the Atomic Energy Act and the Hazardous Materials
Transportation Act, in each case as amended and any other Laws as now in effect
relating to any of the foregoing.
(c) "GAAP" means generally accepted United States accounting principles
consistently applied.
(d) "Governmental Authority" means any federal, state, or local
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or
quasi-governmental authority.
(e) "Hazardous Substances" shall mean substances listed under 40 C.F.R.
302.4 as of the date of this Agreement, and petroleum.
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(f) "Interest-Bearing Debt" means the total amount of outstanding
indebtedness of the Companies for borrowed money (including, without limitation,
bank debt, equipment debt, capital lease obligations, bank overdrafts and any
other indebtedness for borrowed money).
(g) "Knowledge" or "known" means (i) when used with reference to the
Seller or any of the Companies, that Seller and such Company shall be deemed to
have "knowledge" of or to have "known" a particular fact or other matter if
Fallis Arch Beall has current actual knowledge of such fact or other matter,
after reasonable investigation or inquiry under the circumstances, (ii) when
used with reference to any Selling Shareholder, such Selling Shareholder shall
be deemed to have "knowledge" of or to have "known" a particular fact or other
matter if such Selling Shareholder has current actual knowledge of such fact or
other matter, after reasonable investigation or inquiry under the circumstances,
and (iii) when used with reference to the Purchaser, that the Purchaser shall be
deemed to have "knowledge" of or to have "known" a particular fact or other
matter if any officer or director, or other person with senior managerial
authority of the Purchaser has current, actual knowledge of such fact or other
matter, after reasonable investigation or inquiry under the circumstances.
(h) "Laws" means any and all federal, state or local statutes, laws,
ordinances, codes, regulations, rulings, published requirements, orders,
decrees, judgments, injunctions and rules of any Governmental Authority,
including, without limitation, those covering environmental, Tax, energy,
safety, health, transportation, bribery, recordkeeping, zoning, discrimination,
antitrust and wage and hour matters, in each case as in effect on the date of
this Agreement.
(i) "Listed Agreements" shall have the meaning set forth in Section
2.19 of this Agreement.
(j) "Losses" means any and all liabilities, losses, claims, damages,
actions, suits, proceedings, demands, assessments, fees, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees and
costs and expenses of investigation), net of income Tax effects with respect
thereto (including, without limitation, income Tax benefits recognized in
connection therewith and income Taxes upon any indemnification recovery
thereof).
(k) "Material Adverse Effect" or "material" means (i) any adverse
change in the financial condition, results of operations or business of the
Companies collectively or the Purchaser (and its Subsidiaries), as the case may
be, taken as a whole or (ii) any adverse effect on the ability of the Seller,
the Selling Shareholders or the Purchaser, as the case may be, to perform their
respective obligations pursuant to this Agreement; provided, however, that for
purposes of determining whether there shall have been any such adverse effect,
(i) any adverse change resulting from or relating to general business or
economic conditions shall be disregarded, (ii) any adverse change resulting from
or relating to conditions generally affecting the industry in which the
Companies compete shall be disregarded, and (iii) any adverse change resulting
from or relating to the taking of any action contemplated by this Agreement
shall be disregarded.
(l) "Permits" shall have the meaning set forth in Section 2.17 of this
Agreement.
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(m) "Purchaser Common Stock" shall have the meaning set forth in
Section 1.2 of this Agreement.
(n) "SEC" means the Securities and Exchange Commission.
(o) "Subsidiary" means, when used with reference to an entity, any
corporation, partnership or limited liability company, a majority of the
outstanding voting securities, partnership interests or membership interests of
which are owned directly or indirectly by such entity or any partnership, joint
venture or other enterprise in which such entity currently has, directly or
indirectly, any controlling equity interest.
(p) "Taxes" means all taxes, charges, fees, levies or other assessments
including, without limitation, income, gross receipts, excise, property, sales,
withholding, social security, unemployment, occupation, use, service, service
use, license, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the United States or any state, local or foreign government
or subdivision or agency thereof, whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest,
fines, penalties or additional amounts attributable to or imposed with respect
to any such taxes, charges, fees, levies or other assessments.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
THE PURCHASER
U.S. CONCRETE, INC.
By: /s/ Michael W. Harlan
-------------------------
Name: Michael W. Harlan
-----------------------
Title: Senior Vice President and
-------------------------
Chief Financial Officer
-----------------------
THE SELLER
/s/ Fallis Arch Beall
-------------------------
Mr. Fallis Arch Beall
THE SELLING SHAREHOLDERS
/s/ Doris W. Stokes
-------------------------
Doris W. Stokes
/s/ Nola Sue Beall
-------------------------
Nola Sue Beall
/s/ Robert S. Beall
-------------------------
Robert S. Beall
/s/ Leigh Ann Gathright
-------------------------
Leigh Ann Gathright
Fallis Arch Beall in his
capacity as Trustee for the R.E.
Stokes, Trust
By: /s/ Fallis Arch Beall
-------------------------
Name: Fallis Arch Beall
Title: Trustee
52
