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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark one) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-12977
U. S. CONCRETE, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware 76-0586680
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1300 Post Oak Blvd., Suite 1220 77056
Houston, Texas (Zip Code)
(Address of Principal Executive Offices)
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Registrant's telephone number, including area code: (713) 499-6200
Securities Registered Pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange on which registered
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None Not applicable
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of class)
Rights to Purchase Series A Junior
Participating Preferred Stock
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
As of March 24, 2000, there were 21,252,430 shares of common stock, par
value $.001 per share, of the Registrant issued and outstanding, 12,004,771 of
which, having an aggregate market value of $76.5 million, based on the closing
price per share of the common stock of the Registrant reported on The Nasdaq
Stock Market(R) on that date, were held by non-affiliates of the Registrant.
For purposes of the above statement only, all directors and executive officers
of the Registrant are assumed to be affiliates.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement related to the Registrant's 2000 Annual
Stockholders Meeting are incorporated by reference into Part III of this
report.
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TABLE OF CONTENTS
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Page
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PART I
Items 1 and 2. Business and Properties................................. 1
Cautionary Statement Concerning Forward-looking
Statements.............................................. 11
Item 3. Legal Proceedings....................................... 12
Item 4. Submission of Matters to a Vote of Security Holders..... 12
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters..................................... 13
Item 6. Selected Financial Data................................. 13
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 14
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk.................................................... 19
Item 8. Financial Statements and Supplementary Data............. 19
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................... 37
PART III
Item 10. Directors and Executive Officers of the Registrant...... 37
Item 11. Executive Compensation.................................. 37
Item 12. Security Ownership of Certain Beneficial Owners and
Management.............................................. 37
Item 13. Certain Relationships and Related Transactions.......... 37
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K................................................ 37
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Statements we make in this Annual Report on Form 10-K which express a belief,
expectation or intention, as well as those that are not historical fact, are
forward-looking statements under the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are subject to various risks,
uncertainties and assumptions, including those to which we refer under the
heading "Cautionary Statement Concerning Forward-Looking Statements" following
Items 1 and 2 of Part I of this report.
PART I
Items 1 and 2. Business and Properties
General
U.S. Concrete provides ready-mixed concrete and related products and
services to the construction industry in several major markets in the United
States. As of March 24, 2000, we have 59 operating plants producing over 4.5
million cubic yards of concrete annually. Our operations consist principally
of formulating, preparing, delivering and placing ready-mixed concrete at the
job sites of our customers. We provide services intended to reduce our
customers' overall construction costs by lowering the installed, or "in-
place," cost of concrete. These services include the formulation of new
mixtures for specific design uses, on-site and lab-based product quality
control and delivery programs we configure to meet our customers' needs.
We completed our initial public offering in May 1999. At the same time, we
acquired six ready-mixed concrete and related businesses and began operating
26 concrete plants in three major markets in the United States. Since our IPO
and through March 24, 2000, we have acquired an additional 11 ready-mixed
concrete and related businesses, operating an additional 33 concrete plants,
in five additional major markets in the United States.
To increase our geographic diversification and expand the scope of our
operations, we seek to acquire businesses operating under quality management
teams in growing markets. Our acquisition strategy has two primary objectives.
In a new market, we target one or more companies that can serve as platform
businesses into which we can integrate other concrete operations. In markets
where we have existing operations and seek to increase our market penetration,
we pursue tuck-in acquisitions.
Industry Overview
Annual usage of ready-mixed concrete in the United States is currently at a
record level. According to the National Ready-Mixed Concrete Association,
total sales from production and delivery of ready-mixed concrete in the United
States grew over the past three years as follows:
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Year Sales
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($ millions)
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1997......................................................... $21,183
1998......................................................... 23,672
1999......................................................... 25,812
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Also according to this industry association, the four major segments of the
construction industry accounted for the following approximate percentages of
total sales of ready-mixed concrete in the United States in 1999:
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Commercial and industrial construction............................... 28%
Residential construction............................................. 23%
Street and highway construction and paving........................... 30%
Other public works and infrastructure construction................... 19%
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Total............................................................ 100%
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Ready-mixed concrete is a versatile, low-cost manufactured material the
construction industry uses in substantially all its projects. It is a stone-
like compound that results from combining fine and coarse aggregates, such as
sand, gravel and crushed stone, with water, various admixtures and cement.
Ready-mixed concrete can be manufactured in thousands of variations which in
each instance may reflect a specific design use. Manufacturers of ready-mixed
concrete generally maintain less than one day's requirements of raw materials
and must coordinate their daily material purchases with the time-sensitive
delivery requirements of their customers.
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Ready-mixed concrete begins to harden when mixed and generally becomes
difficult to place within 60 to 90 minutes after mixing. This characteristic
generally limits the market for a permanently installed plant to an area within
a 25-mile radius of its location. Concrete manufacturers produce ready-mixed
concrete in batches at their plants and use mixer and other trucks to
distribute and place it at the job sites of their customers. These
manufacturers generally do not provide paving or other finishing services
construction contractors or subcontractors typically perform.
Manufacturers generally obtain contracts through local sales and marketing
efforts they direct at general contractors, developers and home builders. As a
result, local relationships are very important.
On the basis of information the National Ready-Mixed Concrete Association has
provided to us, we estimate that, in addition to vertically integrated
manufacturers of cement and ready-mixed concrete, more than 3,500 independent
producers currently operate a total of approximately 5,300 plants in the United
States. Larger markets generally have numerous producers competing for business
on the basis of price, timing of delivery and reputation for quality and
service. We believe, on the basis of available market information, that the
typical ready-mixed concrete company is family-owned and has limited access to
capital, limited financial and technical expertise and limited exit strategies
for its owners. Given these operating constraints, we believe many ready-mixed
concrete companies are finding it difficult to both grow their businesses and
compete effectively against larger, more cost-efficient and technically capable
competitors. We believe these characteristics in our highly fragmented industry
present growth opportunities for a company with a focused acquisition program
and access to capital.
Barriers to the start-up of a new ready-mixed concrete manufacturing
operation historically have been low. In recent years, however, public concerns
about the dust, noise and heavy mixer and other truck traffic associated with
the operation of ready-mixed concrete plants and their general appearance have
made obtaining the permits and licenses required for new plants more difficult.
Delays in the regulatory process, coupled with the substantial capital
investment start-up operations entail, have raised the barriers to entry for
those operations.
Significant Factors Impacting the Market for Ready-Mixed Concrete
On the basis of available industry information, we believe that between 1996
and 1999 ready-mixed concrete sales as a percentage of total construction
expenditures in the United States increased 8.3%. In addition to favorable
trends in the overall economy of the United States, we believe three
significant factors have been expanding the market for ready-mixed concrete in
particular:
. the increased level of industry-wide promotional and marketing
activities;
. the development of new and innovative uses for ready-mixed concrete; and
. the enactment of the federal legislation commonly called TEA-21.
Industry-wide Promotional and Marketing Activities. We believe industry
participants have only in recent years focused on and benefited from
promotional activities to increase the industry's share of street and highway
and residential construction expenditures. Many of these promotional efforts
resulted from an industry-wide initiative called RMC 2000, a program
established in 1993 under the leadership of our chief executive officer, Eugene
P. Martineau. The National Ready-Mixed Concrete Association, the industry's
largest trade organization, has adopted this program. Its principal goals have
been to (1) promote ready-mixed concrete as a building and paving material and
(2) improve the overall image of the ready-mixed concrete industry. We believe
RMC 2000 has been a catalyst for increased investment in the promotion of
concrete.
Development of New and Innovative Ready-mixed Concrete Products. Ready-mixed
concrete has many attributes that make it a highly versatile construction
material. In recent years, industry participants have developed various product
innovations, including:
. concrete housing;
. pre-cast modular paving stones;
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. pre-stressed concrete railroad ties to replace wood ties;
. continuous-slab rail-support systems for rapid transit and heavy-traffic
intricate rail lines; and
. concrete bridges, tunnels and other structures for rapid transit systems.
Other examples of successful innovations that have opened new markets for
ready-mixed concrete include:
. highway median barriers;
. highway sound barriers;
. paved shoulders to replace less permanent and increasingly costly asphalt
shoulders;
. parking lots providing a long-lasting and aesthetically pleasing urban
environment; and
. colored pavements to mark entrance and exit ramps and lanes of
expressways.
Impact of TEA-21. The Federal Transportation Equity Act for the 21st
Century, commonly called TEA-21, is the largest public works funding bill in
the history of the United States. It became effective in June 1998 and
provides a $218 billion budget for federal highway, transit and safety
spending for the six-year period from 1998 through 2003. This represents a 43%
increase over the funding levels similar federal funding programs authorized
for the 1992-1997 period. Although road and highway construction and paving
accounted for only 17% of our pro forma 1999 sales, we believe we should
benefit from the impact we expect TEA-21 will have on the overall demand for
ready-mixed concrete in the United States.
Our Business Strategy
Our objective is to continue expanding the geographic scope of our
operations and become the leading value-added provider of ready-mixed concrete
and related products and services in each of our markets. We plan to achieve
this objective by (1) continuing to make acquisitions and (2) continuing to
implement our national operating strategy aimed at increasing revenue growth
and market share, achieving cost efficiencies and enhancing profitability.
Growth Through Acquisitions. The significant costs and regulatory
requirements involved in building new plants make acquisitions an important
element of our growth strategy. Our acquisition program targets opportunities
for (1) expansion in our existing markets and (2) entering new geographic
markets in the United States.
. Expanding in Existing Markets. We seek to continue acquiring other well-
established companies operating in our existing markets in order to
expand our market penetration. We have acquired operating companies in
Northern California, Michigan, North Texas, Memphis/Northern Mississippi
and the Washington, D.C. area following our initial entry into these
markets. By expanding in existing markets through acquisitions, we
expect to continue realizing various operating synergies, including:
. increased market coverage;
. improved utilization and range of mixer trucks because of access to
additional plants;
. customer cross-selling opportunities; and
. reduced operating and overhead costs.
. Entering New Geographic Markets. We seek to continue entering new
geographic markets that have a balanced mix of residential, commercial,
industrial and public sector concrete consumption and have demonstrated
adequate sustainable demand and prospects for growth. In each new market
we enter, we target for acquisition one or more leading local or
regional ready-mixed concrete companies that can serve as platform
businesses into which we can consolidate other ready-mixed concrete
operations. Important criteria for these acquisition candidates include
historically successful operating results, established customer
relationships and superior operational management personnel, whom we
generally will seek to retain. Since our formation in May 1999, we have
entered into new geographic markets in San Diego, North Texas/Southwest
Oklahoma, Memphis/Northern Mississippi, Knoxville and Michigan.
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Implementation of National Operating Strategy. We designed our national
operating strategy (1) to increase revenues and market share through improved
marketing and sales initiatives and enhanced operations and (2) to achieve
cost efficiencies.
. Improving Marketing and Sales Initiatives and Enhancing Operations. Our
basic operating strategy emphasizes the sale of value-added product to
customers who are more focused on reducing their installed, or in-place,
concrete costs than on the price per cubic yard of the ready-mixed
concrete they purchase. Key elements of our service-oriented strategy
include:
. providing corporate-level marketing and sales expertise;
. establishing company-wide quality control improvements;
. continuing to develop and implement training programs that emphasize
successful marketing, sales and training techniques and the sale of
high-margin concrete mix designs; and
. investing in computer and communications technology at each of our
locations to improve communications, purchasing, accounting, load
dispatch, delivery efficiency, reliability, truck tracking and
customer relations.
. Achieving Cost Efficiencies. We expect to reduce the total operating
expenses of the businesses we acquire by eliminating duplicative
administrative functions and consolidating other functions each business
performed separately prior to its acquisition. In addition, we believe
that, as we continue to increase in size, we should continue
experiencing reduced costs as a percentage of net sales compared to
those of the individual businesses we acquire in such areas as:
. materials procurement;
. purchases of mixer trucks and other equipment, spare parts and tools;
. vehicle and equipment maintenance;
. employee benefit plans; and
. insurance and other risk management programs.
Products and Services
Ready-Mixed Concrete. Our ready-mixed concrete products consist of
proportioned mixes we prepare and deliver in unhardened plastic states for
placement and shaping into their designed forms. Selecting the optimum mix for
a job entails determining not only the ingredients that will produce the
desired permeability, strength, appearance and other properties of the
concrete after it has hardened and cured, but also the ingredients necessary
to achieve a workable consistency under the weather and other conditions at
the job site. We believe we can achieve product differentiation for the mixes
we offer because of the variety of mixes we can produce, our volume production
capacity and our scheduling, delivery and placement reliability. We also
believe we distinguish ourselves with our value-added service approach that
emphasizes reducing our customers' overall construction costs by lowering the
installed, or in-place, cost of concrete.
From a contractor's perspective, the in-place cost of concrete includes both
the amount paid to the ready-mixed concrete manufacturer and the internal
costs associated with the labor and equipment the contractor provides. A
contractor's unit cost of concrete is often only a small component of the
total in-place cost that takes into account all the labor and equipment costs
required to place and finish the ready-mixed concrete, including the cost of
additional labor and time lost as a result of substandard products or delivery
delays. By carefully designing proper mixes and using advances in mixing
technology, we can assist our customers in reducing the amount of reinforcing
steel and labor they will require in various applications.
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We provide a variety of services in connection with our sale of ready-mixed
concrete which can help reduce our customers' in-place cost of concrete. These
services include:
. production of new formulations and alternative product recommendations
that reduce labor and materials costs;
. quality control, through automated production and laboratory testing,
that ensures consistent results and minimizes the need to correct
completed work;
. automated scheduling and tracking systems that ensure timely delivery
and reduce the downtime incurred by the customer's finishing crew; and
. innovative pricing discounts that are designed to minimize the time the
customer keeps our trucks on site, thereby resulting in a lower price to
the customer as well as a more efficient use of the customer's crews and
equipment.
We produce ready-mixed concrete by combining the desired type of cement,
sand, gravel and crushed stone with water and typically one or more
admixtures. These admixtures, such as chemicals, minerals and fibers,
determine the usefulness of the product for particular applications.
We use a variety of chemical admixtures to achieve one or more of five basic
purposes:
. relieve internal pressure and increase resistance to cracking in
subfreezing weather;
. retard the hardening process to make concrete more workable in hot
weather;
. strengthen concrete by reducing its water content;
. accelerate the hardening process and reduce the time required for
curing; and
. facilitate the placement of concrete having a low water content.
We frequently use various mineral admixtures as supplementary cementing
materials to alter the permeability, strength and other properties of
concrete. These materials include fly ash, ground granulated blast-furnace
slag and silica fume.
We also use fibers, such as steel, glass and synthetic and carbon filaments,
as an additive in various formulations of concrete. Fibers help to control
shrinkage cracking, thus reducing permeability and improving abrasion
resistance. In many applications, fibers replace welded steel wire and
reinforcing bars. Relative to the other components of ready-mixed concrete,
these additives generate comparatively high margins.
Our ready-mixed concrete operations comprised 90% of our pro forma 1999
revenues.
Pre-Cast Concrete. We produce pre-cast concrete products at our Pleasanton,
Santa Rosa and San Diego, California plants. Our pre-cast concrete products
consist of ready-mixed concrete we produce and then pour into molds at the
plant site. These operations produce a wide variety of specialized finished
products, including specialty engineered structures, custom signage and curb
inlets. After the concrete sets, we strip the molds from the products and ship
the finished product to our customers. Because these products are not
perishable, pre-cast concrete plants can serve a much larger market than
ready-mixed concrete plants.
Our pre-cast operations comprised 6.5% of our pro forma 1999 revenues.
Building Materials. Our building materials operations supply various
materials, products and tools contractors use in the concrete construction
industry. These materials include rebar, wire mesh, color additives, curing
compounds, grouts, wooden forms, hard hats, rubber boots, gloves, trowels,
lime slurry used to stabilize foundations and numerous other items. Our
building materials operations are generally located near our ready-mixed
concrete operations.
Our building materials operations comprised 3.5% of our pro forma 1999
revenues.
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Operations
The businesses we have acquired have made substantial capital investments in
equipment, systems and personnel at their respective plants to facilitate
continuous multi-customer deliveries of highly perishable products. In any
given market, we may maintain a number of plants whose production we centrally
coordinate to meet customer production requirements. We must be able to adapt
constantly to continually changing delivery schedules.
Our ready-mixed concrete plants consist of permanent and mobile facilities
that produce ready-mixed concrete in wet or dry batches. Our fixed-plant
operations use our 59 permanent plant facilities to produce ready-mixed
concrete that we transport to job sites by mixer trucks. Our on-site mobile
plant operations deploy our eight mobile-plant facilities to produce ready-
mixed concrete at the job site that we direct into place using a series of
conveyor belts or a mixer truck. Several factors govern the choice of plant
type, including:
. capital availability;
. production consistency requirements;
. daily production capacity requirements; and
. job-site location.
A wet batch plant generally costs more, but yields greater consistency in
the concrete produced and has greater daily production capacity, than a dry
batch plant. We believe that a wet batch plant having an hourly capacity of
250 cubic yards currently would cost approximately $1.5 million, while a dry
batch plant having the same capacity currently would cost approximately $0.7
million. At March 24, 2000, we operated 12 wet batch plants and 47 dry batch
plants.
The market primarily will drive our future plant decisions. The relevant
market factors include:
. the expected production demand for the plant;
. the expected types of projects the plant will service; and
. the desired location of the plant.
Generally, plants intended primarily to serve high-volume, commercial or
public works projects will be wet batch plants, while plants intended
primarily to serve low-volume, residential construction projects will be dry
batch plants. From time to time, we also may use portable plants, which
include both wet batch and dry batch facilities, to service large, long-term
jobs and jobs in remote locations.
The batch operator in a dry batch plant simultaneously loads the dry
components of stone, sand and cement with water and admixtures in a mixer
truck that begins the mixing process during loading and completes that process
while driving to the job site. In a wet batch plant, the batch operator blends
the dry components and water in a plant mixer from which he loads the already
mixed concrete into the mixer truck, which leaves for the job site promptly
after loading.
Mixer trucks slowly rotate their loads on route to job sites in order to
maintain product consistency. A mixer truck typically has a load capacity of
nine cubic yards, or approximately 18 tons, and a useful life of 12 years.
Depending upon the type of batch plant from which the mixer trucks generally
are loaded, some components of the mixer trucks will require refurbishment
after three to nine years. A new truck of this size currently costs
approximately $125,000. At March 24, 2000, we operated a fleet of
approximately 720 mixer trucks.
In our manufacture and delivery of ready-mixed concrete, we emphasize
quality control, pre-job planning, customer service and coordination of
supplies and delivery. We often obtain purchase orders for ready-mixed
concrete months in advance of actual delivery to a job site. A typical order
contains various specifications the contractor requires the concrete to meet.
After receiving the specifications for a particular job, we use computer
modeling, industry information and information from previous similar jobs to
formulate a variety of mixtures of cement, aggregates, water and admixtures
which meet or exceed the contractor's specifications. We perform testing to
determine which mix design is most appropriate to meet the required
specifications. The test results enable us to select the mixture that has the
lowest cost and meets or exceeds the job specifications. The testing center
creates and
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maintains a project file that details the mixture we will use when we produce
the concrete for the job. For quality control purposes, the testing center
also is responsible for maintaining batch samples of concrete we have
delivered to a job site.
We use computer modeling to prepare bids for particular jobs based on the
size of the job, location, desired margin, cost of raw materials and the
design mixture identified in our testing process. If the job is large enough,
we obtain quotes from our suppliers as to the cost of raw materials we use in
preparing the bid. Once we obtain a quotation from our suppliers, the price of
the raw materials for the specified job is informally established. Several
months may elapse from the time a contractor has accepted our bid until actual
delivery of the ready-mixed concrete begins. During this time, we maintain
regular communication with the contractor concerning the status of the job and
any changes in the job's specifications in order to coordinate the multi-
sourced purchases of cement and other materials we will need to fill the job
order and meet the contractor's delivery requirements. We confirm that our
customers are ready to take delivery of manufactured product throughout the
placement process. On any given day, a particular plant may have production
orders for dozens of customers at various locations throughout its area of
operation. To fill an order:
. the dispatch office coordinates the timing and delivery of the concrete
to the job site;
. a load operator supervises and coordinates the receipt of the necessary
raw materials and operates the hopper that dispenses those materials
into the appropriate storage bins;
. a batch operator prepares the specified mixture from the order and
oversees the loading of the mixer truck with either dry ingredients and
water in a dry batch plant or the already-mixed concrete in a wet batch
plant; and
. the driver of the mixer truck delivers the load to the job site,
discharges the load and, after washing the truck, departs at the
direction of the dispatch office.
The central dispatch system tracks the status of each mixer truck as to
whether a particular truck is:
. loading concrete;
. in route to a particular job site;
. on the job site;
. discharging concrete;
. being washed; or
. in route to a particular plant.
The system is updated continuously via signals received from the individual
truck operators as to their status. In this manner, the dispatcher can
determine the optimal routing and timing of subsequent deliveries by each
mixer truck and monitor the performance of each driver.
A plant manager oversees the operation of each plant. Our employees also
include:
. maintenance personnel who perform routine maintenance work throughout
our plants;
. a full-time staff of mechanics who perform substantially all the
maintenance and repair work on our vehicles;
. testing center staff who prepare mixtures for particular job
specifications and maintain quality control;
. various clerical personnel who perform administrative tasks; and
. sales personnel who are responsible for identifying potential customers
and maintaining existing customer relationships.
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We generally operate on a single shift with some overtime operation during the
construction season. On occasion, however, we may have projects that require
deliveries around the clock.
Cement and Raw Materials
We obtain most of the materials necessary to manufacture ready-mixed
concrete at each of our facilities on a daily basis. These raw materials
include cement, which is a manufactured product, stone, gravel and sand. Each
plant typically maintains an inventory level of these materials sufficient to
satisfy its operating needs for one day or less. Cement represents the highest
cost material used in manufacturing a cubic yard of ready-mixed concrete,
while the combined cost of the stone, gravel and sand used is slightly less
than the cement cost. In each of our markets, we purchase each of these
materials from any one of several suppliers.
Sales and Marketing
General contractors typically select their suppliers of ready-mixed
concrete. In large, complex projects, an engineering firm or division within a
state transportation or public works department may influence the purchasing
decision, particularly if the concrete has complicated design specifications.
In those projects and in government-funded projects generally, the general
contractor or project engineer usually awards supply orders on the basis of
either direct negotiation or competitive bidding. We believe the purchasing
decision in many cases ultimately is relationship-based. Our marketing efforts
target general contractors, design engineers and architects whose focus
extends beyond the price of ready-mixed concrete to product quality and
consistency and reducing their in-place cost of concrete.
Customers
Of our pro forma 1999 sales, we made approximately 43% to commercial and
industrial construction contractors, approximately 35% to residential
construction contractors, approximately 17% to street and highway construction
contractors and approximately 5% to other public works and infrastructure
contractors. In 1999, no single customer or project accounted for more than 8%
of our total sales.
We rely heavily on repeat customers. Our management and dedicated sales
personnel are responsible for developing and maintaining successful long-term
relationships with key customers. We believe that by expanding our operations
into more geographic markets, we will be in a better position to market to and
service large nationwide and regional contractors.
Training and Safety
Our future success will depend, in part, on the extent to which we can
attract, retain and motivate qualified employees. We believe that our ability
to do so will depend on the quality of our recruiting, training, compensation
and benefits, the opportunities we afford for advancement and our safety
record. Historically, we have supported and funded continuing education
programs for our employees. We intend to continue and expand these programs.
We require all field employees to attend periodic safety training meetings and
all drivers to participate in training seminars followed by certification
testing. The responsibilities of our national safety director include managing
and executing a unified, company-wide safety program.
Competition
The ready-mixed concrete industry is highly competitive. Our competitive
position in a market depends largely on the location and operating costs of
our ready-mixed concrete plants and prevailing prices in that market. Price is
the primary competitive factor among suppliers for small or simple jobs,
principally in residential construction, while timeliness of delivery and
consistency of quality and service as well as price are the principal
competitive factors among suppliers for large or complex jobs. Our competitors
range from small, owner-operated private companies to subsidiaries or
operating units of large, vertically integrated cement manufacturing and
concrete products companies. Competitors having lower operating costs than we
do or having the financial resources to enable them to accept lower margins
than we do have a competitive advantage over us for jobs that are particularly
price-sensitive. Competitors having greater financial resources to build
plants in new areas or pay for acquisitions also have competitive advantages
over us.
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Employees
At March 24, 2000, we had approximately 239 salaried employees, including
executive officers, management personnel, sales personnel, technical
personnel, administrative staff and clerical personnel, and approximately
1,137 hourly personnel generally employed on an as-needed basis, including 801
truck drivers. The number of employees fluctuates depending on the number and
size of projects ongoing at any particular time, which may be impacted by
variations in weather conditions throughout the year.
At March 24, 2000, approximately 635 of our employees were represented by
labor unions having collective bargaining agreements with us. Generally, these
agreements have multi-year terms and expire on a staggered basis. Under these
agreements, we pay specified wages to covered employees, observe designated
workplace rules and make payments to multi-employer pension plans and employee
benefit trusts rather than administering the funds on behalf of these
employees.
None of the businesses we have acquired has experienced any strikes or
significant work stoppages in the past five years. We believe our
relationships with our employees and union representatives are satisfactory.
Facilities and Equipment
At March 24, 2000, we operated a fleet of approximately 720 owned and leased
mixer trucks and 323 other vehicles. Our own mechanics service most of the
fleet. We believe these vehicles are generally well maintained and adequate
for our operations. The average age of the mixer trucks is approximately 7.3
years.
We operated 67 fixed-plant facilities and eight onsite mobile-plant
facilities at March 24, 2000. We believe that these facilities are sufficient
for our immediate needs. The table below summarizes operations at our fixed-
plant facilities at March 24, 2000. The ready-mixed volumes in the table
represent the pro forma 1999 volumes produced by each location.
<TABLE>
<CAPTION>
Ready-Mixed
Volume
Building (in thousands
Location Ready-Mixed Pre-Cast Materials of cubic yards)
- ------------------------ ----------- -------- --------- ---------------
<S> <C> <C> <C> <C>
Northern California..... 20 2 3 2,102
North Texas/Southwest
Oklahoma............... 14 -- 2 773
Washington, D.C. area... 4 -- -- 476
Michigan................ 7 -- -- 392
Memphis/Northern
Mississippi............ 6 -- -- 357
Knoxville............... 3 -- -- 215
New Jersey.............. 5 -- -- 211
San Diego............... -- 1 -- --
--- --- --- -----
59 3 5 4,526
=== === === =====
The information above includes the following locations we purchased between
January 1, 2000 and March 24, 2000:
<CAPTION>
Ready-Mixed
Volume
Building (in thousands
Location Ready-Mixed Pre-Cast Materials of cubic yards)
- ------------------------ ----------- -------- --------- ---------------
<S> <C> <C> <C> <C>
North Texas/Southwest
Oklahoma............... 14 -- 2 773
Michigan................ 4 -- -- 147
--- --- --- -----
18 -- 2 920
=== === === =====
</TABLE>
- -------------------------------------------------------------------------------
9
<PAGE>
Governmental Regulation and Environmental Matters
A wide range of federal, state and local laws apply to our operations,
including such matters as:
. land usage;
. street and highway usage;
. noise levels; and
. health, safety and environmental matters.
In many instances, we must have certificates, permits or licenses to conduct
our business. Failure to maintain required certificates, permits or licenses
or to comply with applicable laws could result in substantial fines or
possible revocation of our authority to conduct some of our operations. Delays
in obtaining approvals for the transfer or grant of certificates, permits or
licenses, or failures to obtain new certificates, permits or licenses, could
impede the implementation of our acquisition program.
Environmental laws that impact our operations include those relating to air
quality, solid waste management and water quality. Environmental laws are
complex and subject to frequent change. These laws impose strict liability in
some cases without regard to negligence or fault. Sanctions for noncompliance
may include revocation of permits, corrective action orders, administrative or
civil penalties and criminal prosecution. Some environmental laws provide for
joint and several strict liability for remediation of spills and releases of
hazardous substances. In addition, businesses may be subject to claims
alleging personal injury or property damage as a result of alleged exposure to
hazardous substances, as well as damage to natural resources. These laws also
may expose us to liability for the conduct of or conditions caused by others,
or for acts which complied with all applicable laws when performed. We have
conducted Phase I investigations to assess environmental conditions on
substantially all the real properties we own or lease and have engaged
independent environmental consulting firms in that connection. We have not
identified any environmental concerns we believe are likely to have a material
adverse effect on our business, financial condition or results of operations,
but you have no assurance material liabilities will not occur. You also have
no assurance our compliance with amended, new or more stringent laws, stricter
interpretations of existing laws or the future discovery of environmental
conditions will not require additional, material expenditures. OSHA
regulations establish requirements our training programs must meet.
We have all material permits and licenses we need to conduct our operations
and are in substantial compliance with applicable regulatory requirements
relating to our operations. Our capital expenditures relating to environmental
matters were not material on a pro forma combined basis in 1999. We currently
do not anticipate any material adverse effect on our business or financial
position as a result of our future compliance with existing environmental laws
controlling the discharge of materials into the environment.
Insurance
Our operations involve providing ready-mixed concrete formulations that must
meet building code or other regulatory requirements and contractual
specifications for durability, stress-level capacity, weight-bearing capacity
and other characteristics. If we fail or are unable to provide product meeting
these requirements and specifications, claims may arise against us or our
reputation could be damaged. Although we have not experienced any material
claims of this nature in recent periods, we may experience such claims in the
future. In addition, our employees perform a significant portion of their work
moving and storing large quantities of heavy raw materials, driving large
mixer trucks in heavy traffic conditions or placing concrete at construction
sites or in other areas that may be hazardous. These operating hazards can
cause personal injury and loss of life, damage to or destruction of property
and equipment and environmental damage. We maintain insurance coverage in
amounts and against the risks we believe accord with industry practice, but
this insurance may not be adequate to cover all losses or liabilities we may
incur in our operations, and we may be unable to maintain insurance of the
types or at levels we deem necessary or adequate or at rates we consider
reasonable.
- -------------------------------------------------------------------------------
10
<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
We are including the following discussion to inform our existing and
potential security holders generally of some of the risks and uncertainties
that can affect our company and to take advantage of the "safe harbor"
protection for forward-looking statements that applicable federal securities
law affords.
From time to time, our management or persons acting on our behalf make
forward-looking statements to inform existing and potential security holders
about our company. These statements may include projections and estimates
concerning the timing of pending acquisitions and the success of our
acquisition program, revenues, income and capital spending. Forward-looking
statements generally use words such as "estimate," "project," "predict,"
"believe," "expect," "anticipate," "plan," "goal" or other words that convey
the uncertainty of future events or outcomes. In addition, sometimes we will
specifically describe a statement as being a forward-looking statement and
refer to this cautionary statement.
In addition, various statements this report contains, including those that
express a belief, expectation or intention, as well as those that are not
statements of historical fact, are forward-looking statements. Those forward-
looking statements appear in Items 1 and 2--"Business and Properties" and Item
3--"Legal Proceedings" in Part I of this report and in Item 7--"Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
in the notes to our consolidated financial statements in Item 8 of Part II of
this report and elsewhere in this report. These forward-looking statements
speak only as of the date of this report, we disclaim any obligation to update
these statements and we caution you not to rely unduly on them. We have based
these forward-looking statements on our current expectations and assumptions
about future events. While our management considers these expectations and
assumptions to be reasonable, they are inherently subject to significant
business, economic, competitive, regulatory and other risks, contingencies and
uncertainties, most of which are difficult to predict and many of which are
beyond our control. These risks, contingencies and uncertainties relate to,
among other matters, the following:
. our acquisition and national operating strategies;
. our ability to integrate the businesses we acquire;
. our ability to obtain the capital necessary to finance our growth
strategies;
. the availability of qualified personnel;
. the trends we anticipate in the ready-mixed concrete industry;
. the level of activity in the construction industry generally and in our
local markets for ready-mixed concrete;
. the highly competitive nature of our business;
. changes in, or our ability to comply with, governmental regulations,
including those relating to the environment;
. our labor relations and those of our suppliers of cement and aggregates;
. our ability to control costs and maintain quality; and
. continuing uncertainties relating to the recent change over to the year
2000.
We believe the items we have outlined above are important factors that could
cause our actual results to differ materially from those expressed in a
forward-looking statement made in this report or elsewhere by us or on our
behalf. We have discussed most of these factors in more detail elsewhere in
this report. These factors are not necessarily all the important factors that
could affect us. Unpredictable or unknown factors we have not discussed in
this report could also have material adverse effects on actual results of
matters that are the subject of our forward-looking statements. We do not
intend to update our description of important factors each time a potential
important factor arises. We advise our stockholders and prospective investors
that they should (1) be aware that important factors to which we do not refer
above could affect the accuracy of our forward-looking statements and (2) use
caution and common sense when considering our forward-looking statements.
- -------------------------------------------------------------------------------
11
<PAGE>
Item 3. Legal Proceedings
From time to time, and currently, we are subject to claims and litigation
brought by employees, customers and third parties for, among other matters,
personal injuries, property damages, product defects and delay damages, that
have, or allegedly have, resulted from the conduct of our operations.
Currently, we do not have pending any litigation that, separately or in the
aggregate, if adversely determined, we believe would have a material adverse
effect on our business, financial condition or results of operations. We
expect that in the future we will from time to time be a party to litigation
or administrative proceedings which arise in the normal course of our
business.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of the Company's security holders during
the fourth quarter of 1999.
- -------------------------------------------------------------------------------
12
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Our common stock began trading on The Nasdaq Stock Market in May 1999 under
the symbol "RMIX." As of March 24, 2000, 21.3 million shares of our common
stock were outstanding, held by approximately 155 stockholders of record. The
number of record holders does not necessarily bear any relationship to the
number of beneficial owners of our common stock.
The following table sets forth the range of high and low bid prices for our
common stock on The Nasdaq Stock Market for the periods indicated:
<TABLE>
<CAPTION>
Year Ended December 31, 1999 High Low
---------------------------- ---- ---
<S> <C> <C>
Second Quarter (May 26 to June 30)....................... $10 1/32 $7 7/8
Third Quarter............................................ 11 1/8 6 1/2
Fourth Quarter........................................... 8 5/32 5 7/8
</TABLE>
The last reported bid price for our common stock on The Nasdaq Stock Market
on March 24, 2000 was $6.375 per share.
During the quarter ended December 31, 1999, we issued 688,000 shares of our
common stock as part of the consideration we paid to the former owners of four
businesses we acquired during the quarter. We issued these shares without
registration under the Securities Act in reliance on the exemption provided by
Section 4(2) of the Securities Act as transactions not involving any public
offering. Each acquisition involved a limited number of owners.
We have not paid or declared any dividends since our formation and currently
intend to retain earnings to fund our working capital. Any future dividends
will be at the discretion of our board of directors after taking into account
various factors it deems relevant, including our financial condition and
performance, cash needs, income tax consequences and the restrictions Delaware
and other applicable laws and our credit facilities then impose. Our credit
facility prohibits the payment of cash dividends on our common stock. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" in Item 7 of this Report and Note
6 of our Notes to Consolidated Financial Statements in Item 8 of this Report.
Item 6. Selected Financial Data
During 1999, we purchased 14 operating businesses for which we have
accounted in accordance with the purchase method of accounting. Our financial
statements present Central Concrete Supply Co., Inc., one of our initial six
acquisitions, as the acquirer of the other 13 businesses and U.S. Concrete.
The following historical financial information is of Central prior to June 1,
1999 and of U.S. Concrete and its consolidated subsidiaries after that date.
The historical financial information for Central as of December 31, 1998 and
1997, and for the years ended December 31, 1998, 1997 and 1996, derives from
the audited financial statements of Central. The remaining historical
financial information for Central derives from Central's unaudited financial
statements, which have been prepared on the same basis as the audited
financial statements and reflect all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of that information.
See the historical financial statements and related notes this document
contains.
- -------------------------------------------------------------------------------
13
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31 Year Ended
----------------------------------- April 30,
1999 1998 1997 1996 1996
-------- ------- ------- ------- -----------
(in thousands) (unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Information:
Sales....................... $167,912 $66,499 $53,631 $39,204 $37,781
Cost of goods sold.......... 135,195 53,974 43,794 33,402 32,040
-------- ------- ------- ------- -------
Gross profit................ 32,717 12,525 9,837 5,802 5,741
Selling, general and
administrative expenses.... 9,491 4,712 4,265 3,644 2,955
Stock compensation charge... 2,880 -- -- -- --
Depreciation and
amortization............... 3,453 930 1,330 1,203 586
-------- ------- ------- ------- -------
Income from operations...... 16,893 6,883 4,242 955 2,200
Interest and other income
(expense) net.............. (1,045) (129) (200) (188) (73)
-------- ------- ------- ------- -------
Income before provision
(benefit) for income
taxes...................... 15,848 6,754 4,042 767 2,127
Provision (benefit) for
income taxes............... 7,658 100 (457) 303 937
-------- ------- ------- ------- -------
Net income.................. $ 8,190 $ 6,654 $ 4,499 $ 464 $ 1,190
======== ======= ======= ======= =======
<CAPTION>
December 31
----------------------------------- April 30,
1999 1998 1997 1996 1996
-------- ------- ------- ------- -----------
(in thousands) (unaudited)
<S> <C> <C> <C> <C> <C>
Balance Sheet Information:
Working capital............. $ 14,578 $ 7,431 $ 4,899 $ 1,363 $ 1,074
Total assets................ 212,734 26,640 19,837 13,603 9,683
Long-term debt, including
current maturities......... 57,375 3,530 2,660 1,730 2,091
Total stockholders' equity.. 110,793 15,154 10,731 6,472 3,158
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results Of Operations
Statements we make in the following discussion which express a belief,
expectation or intention, as well as those that are not historical fact, are
forward-looking statements that are subject to risks, uncertainties and
assumptions. Our actual results, performance or achievements, or industry
results, could differ materially from those we express in the following
discussion as a result of a variety of factors, including the risks and
uncertainties we have referred to under the heading "Cautionary Statement
Concerning Forward-looking Statements" following Items 1 and 2 of Part I of
this report and under the heading "Factors That May Affect Our Future
Operating Results" below.
Overview
We derive substantially all our revenues from the sale of ready-mixed
concrete, other concrete products and related construction materials to the
construction industry in the United States. We serve substantially all
segments of the construction industry, and our customers include contractors
for commercial, industrial, residential and public works and infrastructure
construction. We typically sell ready-mixed concrete under daily purchase
orders that require us to formulate, prepare and deliver ready-mixed concrete
to the job sites of our customers. We generally recognize our sales from these
orders when we deliver the ordered products.
Our cost of goods sold consists principally of the costs we incur in
obtaining the cement, aggregates and admixtures we combine to produce ready-
mixed concrete and other concrete products in various formulations. We obtain
all these materials from third parties and generally have only one day's
supply at each of our concrete plants. Our cost of goods sold also includes
labor costs and the operating, maintenance and rental expenses we incur in
operating our concrete plants and mixer trucks and other vehicles.
Our selling expenses include the salary and incentive compensation we pay
our sales force, the salaries and incentive compensation of our sales managers
and travel, entertainment and other promotional expenses. Our general and
administrative expenses include the salaries and benefits we pay to our
executive officers, the senior managers of
- -------------------------------------------------------------------------------
14
<PAGE>
our local and regional operations, plant managers and administrative staff.
These expenses also include office rent and utilities, communications expenses
and professional fees.
During 1999, we purchased 14 operating businesses for which we have
accounted in accordance with the purchase method of accounting. Our financial
statements present Central Concrete Supply Co., Inc., one of our initial six
acquisitions, as the acquirer of the other 13 businesses and U.S. Concrete.
These financial statements are those of Central prior to June 1, 1999 and of
U.S. Concrete and its consolidated subsidiaries after that date.
Factors That May Affect Our Future Operating Results
Reflecting the levels of construction activity, the demand for ready-mixed
concrete is highly seasonal. We believe that this demand may be as much as
three times greater in a prime summer month than in a slow winter month and
that the six-month period of May through October is the peak demand period.
Consequently, we expect that our sales generally will be materially lower in
the first and fourth calendar quarters. Because we incur fixed costs, such as
wages, rent, depreciation and other selling, general and administrative
expenses, throughout the year, we expect our gross profit margins will be
disproportionately lower than our sales in these quarters. Even during
traditional peak periods, sustained periods of inclement weather and other
extreme weather conditions can slow or delay construction and thus slow or
delay our sales.
You should not rely on (1) quarterly comparisons of our revenues and
operating results as indicators of our future performance or (2) the results
of any quarterly period during a year as an indicator of results you may
expect for that entire year.
Demand for ready-mixed concrete and other concrete products depends on the
level of activity in the construction industry. That industry is cyclical in
nature, and the general condition of the economy and a variety of other
factors beyond our control affect its level of activity. These factors
include, among others:
. the availability of funds for public or infrastructure construction;
. commercial and residential vacancy levels;
. changes in interest rates;
. the availability of short- and long-term financing;
. inflation;
. consumer spending habits; and
. employment levels.
The construction industry can exhibit substantial variations in activity
across the country as a result of these factors impacting regional and local
economies differently.
Markets for ready-mixed concrete generally are local. Our results of
operations are susceptible to swings in the level of construction activity
which may occur in our markets.
Ready-mixed concrete is highly price-sensitive. Our prices are subject to
changes in response to relatively minor fluctuations in supply and demand,
general economic conditions and market conditions, all of which are beyond our
control. Because of the fixed-cost nature of our business, our overall
profitability is sensitive to minor variations in sales volumes and small
shifts in the balance between supply and demand.
Competitive conditions in our industry also may affect our future operating
results.
As we acquire additional businesses in the future for which we will account
in accordance with the purchase method of accounting, we will include the
operating results of those businesses in our consolidated operating results
from their respective acquisition dates and begin writing off any purchased
goodwill resulting from those acquisitions
- -------------------------------------------------------------------------------
15
<PAGE>
on those same dates. Consequently, the magnitude and timing of our future
acquisitions will affect our operating results.
Results of Operations
The following table sets forth for us selected historical statement of
operations information and that information as a percentage of sales for the
years indicated. These financial statements are those of Central prior to June
1, 1999 and of U.S. Concrete and its consolidated subsidiaries after that
date. Except as we note below, the consolidation of operating results
beginning on June 1, 1999 and our subsequent acquisitions in 1999 principally
account for the changes in 1999 from 1998.
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------------
1999 1998 1997
--------------- -------------- --------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Sales......................... $167,912 100.0% $66,499 100.0% $53,631 100.0%
Cost of goods sold............ 135,195 80.5 53,974 81.2 43,794 81.7
-------- ----- ------- ----- ------- -----
Gross profit................ 32,717 19.5 12,525 18.8 9,837 18.3
Selling, general and
administrative expenses...... 9,491 5.7 4,712 7.1 4,265 7.9
Stock compensation charge..... 2,880 1.7 -- -- -- --
Depreciation and
amortization................. 3,453 2.1 930 1.4 1,330 2.5
-------- ----- ------- ----- ------- -----
Income from operations...... 16,893 10.0 6,883 10.3 4,242 7.9
Interest expense, net......... 1,708 1.0 165 0.2 226 0.4
Other income (expense), net... (663) (0.4) (36) (0.1) (26) --
-------- ----- ------- ----- ------- -----
Income before income tax
provision (benefit)........ 15,848 9.4 6,754 10.2 4,042 7.5
Income tax provision
(benefit).................... 7,658 4.5 100 0.2 (457) (0.9)
-------- ----- ------- ----- ------- -----
Net income.................. $ 8,190 4.9% $ 6,654 10.0% $ 4,499 8.4%
======== ===== ======= ===== ======= =====
</TABLE>
1999 Compared to 1998
Sales. Sales increased $101.4 million, or 152.5%, from $66.5 million in 1998
to $167.9 million in 1999.
Gross profit. Gross profit increased $20.2 million, or 161.2%, from $12.5
million in 1998 to $32.7 million in 1999. Gross margins increased from 18.8%
in 1998 to 19.5% in 1999, primarily because increases in our product prices
more than offset increases in labor rates, additional technical personnel and
increases in our costs of raw materials.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased $4.8 million, or 101.4%, from $4.7 million
in 1998 to $9.5 million in 1999. The 1999 expenses include the salaries of our
executive officers and expenses we incurred in building our corporate
infrastructure.
Stock compensation charge. The 1999 stock compensation charge represents a
noncash charge for the 400,000 shares of our common stock we issued in
December 1998 and March 1999 to management and nonemployee directors at a
nominal cost.
Depreciation and amortization. Depreciation and amortization expense increased
$2.6 million, or 271.3%, from $0.9 million in 1998 to $3.5 million in 1999.
This increase reflects our initial amortization of the goodwill attributable
to our 1999 acquisition activity. We are amortizing this goodwill over 40
years for each acquisition. At December 31, 1999, the annualized amount of
this noncash expense was $2.7 million.
Interest expense, net. Interest expense, net, increased $1.5 million from $0.2
million in 1998 to $1.7 million in 1999. This increase was attributable
principally to borrowings we made to finance our post-IPO acquisitions in 1999
and to refinance indebtedness of our acquired businesses. At December 31,
1999, we had borrowings totaling $57.1 million outstanding under our credit
facility at a weighted average interest cost of 7.9% per annum.
- -------------------------------------------------------------------------------
16
<PAGE>
Income tax provision. We provided for income taxes of $7.7 million in 1999, an
increase of $7.6 million from our provision in 1998. This increase is
attributable to the fact that Central was an S corporation during 1998 and the
first five months of 1999 and thus made no provision for federal income taxes
during those periods.
1998 Compared to 1997
Sales. Sales increased $12.9 million, or 24.1%, from $53.6 million in 1997 to
$66.5 million in 1998, principally as a result of strong construction activity
in the Silicon Valley region in California. Both increases in the size of
Central's customer base and in repeat sales to its existing customers
contributed to this increase.
Gross profit. Gross profit increased $2.7 million, or 27.3%, from $9.8 million
in 1997 to $12.5 million in 1998. Gross margins increased from 18.3% in 1997
to 18.8% in 1998 because increases in Central's product prices more than
offset increases in labor rates and costs of raw materials.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased $0.4 million, or 10.5%, from $4.3 million in
1997 to $4.7 million in 1998 as a result of the addition of administrative
infrastructure necessary to support Central's growth. As a percentage of
sales, these expenses decreased from 7.9% in 1997 to 7.1% in 1998.
Liquidity and Capital Resources
The consolidation of operating results on June 1, 1999 and our subsequent
acquisitions in 1999 principally account for the changes in our working
capital accounts and our property, plant and equipment account from December
31, 1998 to December 31, 1999.
On May 28, 1999, we completed our initial public offering. In the IPO, we
issued and sold 3.8 million shares of common stock at an initial offering
price of $8 per share. On June 11, 1999, we issued and sold an additional
570,000 shares on the exercise in full of the over-allotment option we had
granted to the underwriters for the IPO. Our net proceeds from these sales,
after deducting the underwriting discount and other IPO expenses, totaled
$27.7 million. We used $22.3 million of these proceeds to pay the cash
portions of the purchase prices of our six initial businesses and the
remaining $5.4 million to repay a portion of their indebtedness.
On May 28, 1999, we entered into a $75 million secured revolving credit
facility with a group of banks and borrowed approximately $22.7 million,
principally to refinance outstanding indebtedness of our acquired businesses.
In December 1999, we increased the size of the facility to $100 million. We
had $57.1 million of outstanding borrowings under the facility at December 31,
1999. In February 2000, we increased the size of the facility to $200 million.
We had $130.8 million of outstanding borrowings under the facility at March
24, 2000.
The facility has a three-year term and a $5.0 million sublimit for letters
of credit issued on our behalf. We may use the facility for the following
purposes:
. finance acquisitions;
. internally expand operations;
. working capital; and
. general corporate purposes.
Our subsidiaries have guaranteed the repayment of all amounts owing under
the facility, and we secured the facility with the capital stock and assets of
our subsidiaries. The facility:
. requires the consent of the lenders for certain acquisitions;
. prohibits the payment of cash dividends on our common stock;
. limits our ability to incur additional indebtedness; and
. requires us to comply with financial covenants.
- -------------------------------------------------------------------------------
17
<PAGE>
The failure to comply with these covenants and restrictions would constitute
an event of default under the facility. Our borrowing capacity under the
facility will vary from time to time depending on our satisfaction of several
financial tests.
We anticipate that our consolidated cash flow from our operations will
exceed our normal working capital needs, debt service requirements and the
amount of our planned capital expenditures, excluding acquisitions, for at
least the next 12 months.
Our growth strategy will require substantial capital. We currently intend to
finance future acquisitions through issuances of our common stock or debt
securities, including convertible debt securities, and borrowings under our
credit facility. Using debt to complete acquisitions could substantially limit
our operational and financial flexibility. The extent to which we will be able
or willing to use our common stock to make acquisitions will depend on its
market value from time to time and the willingness of potential sellers to
accept it as full or partial payment. Using our common stock for this purpose
may result in dilution to our then existing stockholders. To the extent we are
unable to use our common stock to make future acquisitions, our ability to
grow will be limited by the extent to which we are able to raise capital for
this purpose, as well as to expand existing operations, through debt or
additional equity financings. If we are unable to obtain additional capital on
acceptable terms, we may be required to reduce the scope of our presently
anticipated expansion, which could materially adversely affect our business
and the value of our common stock.
We cannot accurately predict the timing, size and success of our acquisition
efforts or our associated potential capital commitments.
Year 2000 Compliance
The "year 2000" problem resulted from the fact that many software
applications, computer hardware and related equipment and systems that use
embedded technology, such as microprocessors, rely on two digits rather than
four to represent years in performing computations and decision-making
functions. Absent modification, many of these programs, hardware items and
systems would have failed on January 1, 2000 or earlier because they would
have misinterpreted "00" as the year 1900 rather than 2000.
By December 31, 1999, we completed all tasks that we scheduled for
completion before that date to resolve the year 2000 problems that might have
affected us, and the transition to the year 2000 did not have a material
impact on any of our critical systems or facilities. To date, the year 2000
problems of third parties, including our customers and suppliers, have not had
a significant impact on our operations.
The costs associated with modifications to our systems and other activities
related to achieving year 2000 readiness have not had a material impact on our
consolidated financial condition, cash flows or results of operations. The
total cost of our year 2000 project was under $0.1 million, which we funded
through our cash flows from operations.
Although it appears the transition to the year 2000 has not impacted us,
some risk will continue until we encounter other critical dates in the current
year and until we execute all our software and other systems through complete
business and operating cycles.
This disclosure is subject to protection under the Year 2000 Information and
Readiness Disclosure Act of 1998 as a "Year 2000 Statement" and "Year 2000
Readiness Disclosure," as that Act defines those terms.
Inflation
As a result of the relatively low levels of inflation during the past three
years, inflation did not significantly affect our results of operations in any
of those years.
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18
<PAGE>
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Borrowings under our revolving credit facility expose us to certain market
risks. Outstanding borrowings under our credit facility were $57.1 million at
December 31, 1999. A change of one percent in the interest rate would cause a
change in interest expense of approximately $571,000, or $0.02 per share, on
an annual basis. We did not enter into our credit facility for trading
purposes and the facility carries interest at a pre-agreed percentage point
spread from either the prime interest rate or 30-day Eurodollar interest rate.
Item 8. Financial Statements and Supplementary Data
U.S. CONCRETE, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
U.S. Concrete, Inc. and Subsidiaries
Report of Independent Public Accountants................................ 20
Consolidated Balance Sheets at December 31, 1999 and 1998............... 21
Consolidated Statements of Operations for the Years Ended December 31,
1999, 1998 and 1997.................................................... 22
Consolidated Statements of Changes in Stockholders' Equity for the Years
Ended December 31, 1999, 1998 and 1997................................. 23
Consolidated Statements of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997.................................................... 24
Notes to Consolidated Financial Statements.............................. 25
</TABLE>
- -------------------------------------------------------------------------------
19
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To U.S. Concrete, Inc.:
We have audited the accompanying consolidated balance sheets of U.S. Concrete,
Inc., a Delaware corporation, and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of U.S.
Concrete, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
/s/ ARTHUR ANDERSEN LLP
- -------------------------------
ARTHUR ANDERSEN LLP
Houston, Texas
March 10, 2000
- --------------------------------------------------------------------------------
20
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
<TABLE>
<CAPTION>
December 31
----------------
ASSETS 1999 1998
------ -------- -------
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................ $ 627 $ 4,213
Trade accounts receivable, net................................... 44,085 7,641
Receivables from related parties................................. 1,496 2,712
Inventories...................................................... 4,351 792
Prepaid expenses and other current assets........................ 1,758 989
-------- -------
Total current assets......................................... 52,317 16,347
-------- -------
Property, plant and equipment, net................................. 53,949 9,138
Goodwill, net...................................................... 105,492 --
Cash surrender value of life insurance............................. -- 1,155
Other assets....................................................... 976 --
-------- -------
Total assets................................................. $212,734 $26,640
======== =======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt............................. $ 140 $ 1,006
Accounts payable and accrued liabilities......................... 37,599 7,910
-------- -------
Total current liabilities.................................... 37,739 8,916
-------- -------
Long-term debt, net of current maturities.......................... 57,235 2,524
Deferred income taxes.............................................. 6,967 46
-------- -------
Total liabilities............................................ 101,941 11,486
-------- -------
Stockholders' equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized,
none issued and outstanding..................................... -- --
Common stock, $0.001 par value; 60,000,000 shares authorized;
18,639,228 and 3,120,130 shares issued and outstanding in 1999
and 1998, respectively.......................................... 19 3
Additional paid-in capital..................................... 104,271 621
Retained earnings.............................................. 6,503 14,530
-------- -------
Total stockholders' equity................................... 110,793 15,154
-------- -------
Total liabilities and stockholders' equity................... $212,734 $26,640
======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
- --------------------------------------------------------------------------------
21
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Sales............................................. $167,912 $66,499 $53,631
Cost of goods sold................................ 135,195 53,974 43,794
-------- ------- -------
Gross profit.................................... 32,717 12,525 9,837
Selling, general and administrative expenses...... 9,491 4,712 4,265
Stock compensation charge......................... 2,880 -- --
Depreciation and amortization..................... 3,453 930 1,330
-------- ------- -------
Income from operations.......................... 16,893 6,883 4,242
Interest expense, net............................. 1,708 165 226
Other, net........................................ (663) (36) (26)
-------- ------- -------
Income before income tax provision (benefit).... 15,848 6,754 4,042
Income tax provision (benefit).................... 7,658 100 (457)
-------- ------- -------
Net income...................................... $ 8,190 $ 6,654 $ 4,499
======== ======= =======
Earnings per share:
Basic........................................... $ 0.70 $ 2.13 $ 1.44
======== ======= =======
Diluted......................................... $ 0.70 $ 2.13 $ 1.44
======== ======= =======
Number of shares used in calculating earnings per
share:
Basic........................................... 11,770 3,120 3,120
======== ======= =======
Diluted......................................... 11,783 3,120 3,120
======== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
- --------------------------------------------------------------------------------
22
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Common Stock Additional
------------- Paid-In Retained Stockholders'
Shares Amount Capital Earnings Equity
------ ------ ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996..... 3,120 $ 3 $ 621 $ 5,848 $ 6,472
Distributions to
stockholders................ -- -- -- (240) (240)
Net income................... -- -- -- 4,499 4,499
------ --- -------- ------- --------
BALANCE, December 31, 1997..... 3,120 3 621 10,107 10,731
Distributions to
stockholders................ -- -- -- (2,231) (2,231)
Net income..................... -- -- -- 6,654 6,654
------ --- -------- ------- --------
BALANCE, December 31, 1998..... 3,120 3 621 14,530 15,154
Initial public offering, net
of offering costs........... 4,370 4 27,668 -- 27,672
Acquisitions of founding
companies................... 8,719 10 60,784 (6,064) 54,730
Acquisitions of purchased
companies................... 2,430 2 15,198 -- 15,200
Distributions to
stockholders................ -- -- -- (10,153) (10,153)
Net income................... -- -- -- 8,190 8,190
------ --- -------- ------- --------
BALANCE, December 31, 1999..... 18,639 $19 $104,271 $ 6,503 $110,793
====== === ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
- --------------------------------------------------------------------------------
23
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................... $ 8,190 $ 6,654 $ 4,499
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................. 3,453 930 1,330
Net gain on sale of property, plant and
equipment..................................... (218) (36) (27)
Deferred income tax provision (benefit)........ 762 11 (483)
Provision for doubtful accounts................ 118 17 --
Stock compensation charge...................... 2,880 -- --
Changes in assets and liabilities, excluding
effects of acquisitions:
Receivables.................................... (5,372) (1,697) (4,640)
Prepaid expenses and other current assets...... 69 (519) (378)
Accounts payable and accrued liabilities....... (959) 1,499 1,947
-------- ------- -------
Net cash provided by operating activities.... 8,923 6,859 2,248
-------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment....... (7,547) (3,300) (2,222)
Payments for acquisitions accounted for as
purchases, net of cash received of $10,070, $0
and $0.......................................... (78,793) -- --
Proceeds from disposals of property, plant and
equipment....................................... 1,031 52 91
Increase in cash surrender value of life
insurance....................................... -- (189) (177)
-------- ------- -------
Net cash used in investing activities........ (85,309) (3,437) (2,308)
-------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings......................... 57,266 2,006 1,570
Repayments of borrowings......................... (3,607) (1,136) (640)
Proceeds from issuances of common stock.......... 32,512 -- --
Cash paid related to common stock issuance
costs........................................... (4,373) -- --
Distributions to stockholders.................... (8,998) (2,024) (240)
-------- ------- -------
Net cash provided by (used in) financing
activities.................................. 72,800 (1,154) 690
-------- ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS....................................... (3,586) 2,268 630
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD... 4,213 1,945 1,315
-------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD......... $ 627 $ 4,213 $ 1,945
======== ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest........................... $ 1,412 $ 344 $ 285
Cash paid for income taxes....................... $ 4,973 $ 78 $ 749
NONCASH FINANCING ACTIVITY:
Distribution of cash surrender value of life
insurance to stockholder........................ $ 1,155 $ -- $ --
Distribution of note receivable to stockholder... $ -- $ 207 $ --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
- --------------------------------------------------------------------------------
24
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
U.S. Concrete, Inc., a Delaware corporation, was founded in July 1997 to
create a leading provider of ready-mixed concrete and related products and
services to the construction industry in major markets in the United States.
It did not conduct any operations prior to May 1999. On May 28, 1999, it
completed an initial public offering of its common stock and concurrently
acquired six operating businesses. From the date of its IPO through
December 31, 1999, U.S. Concrete acquired eight additional operating
businesses. It intends to acquire additional companies to expand its
operations.
For financial statement presentation purposes, (1) Central Concrete Supply
Co., Inc., one of the acquired businesses, is presented as the acquirer of the
other acquired businesses and U.S. Concrete, (2) all the 1999 acquisitions are
accounted for in accordance with the purchase method of accounting and (3) the
effective date of the initial acquisitions is May 31, 1999. These consolidated
financial statements are those of (1) Central for periods prior to June 1,
1999 and (2) U.S. Concrete and its consolidated subsidiaries on that date and
thereafter.
U.S. Concrete's future success depends on a number of factors which include
integrating operations successfully, identifying and integrating satisfactory
acquisition candidates, obtaining acquisition financing, managing growth,
attracting and retaining qualified management and employees, complying with
government regulations and other regulatory requirements or contract
specifications, and addressing risks associated with competition, seasonality
and quarterly fluctuations.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements consist of the accounts of U.S.
Concrete and its wholly owned subsidiaries. They eliminate all intercompany
transactions and balances.
Cash and Cash Equivalents
U.S. Concrete records as cash equivalents all highly liquid investments
having maturities of three months or less at the date of purchase.
Inventories
Inventories consist primarily of raw materials, pre-cast products, building
materials and repair parts that U.S. Concrete holds for use or sale in the
ordinary course of business. It uses the first-in, first-out method to value
inventories at the lower of cost or market. For each of the three years ended
December 31, 1999, management believes U.S. Concrete incurred no material
impairments in the carrying value of its inventories.
Prepaid Expenses
Prepaid expenses primarily include amounts U.S. Concrete has paid for fuel,
property taxes, licenses and insurance. It expenses or amortizes all prepaid
amounts as used or over the period of benefit, as applicable.
Property, Plant and Equipment, Net
U.S. Concrete states property, plant and equipment at cost, unless impaired,
and uses the straight-line method to compute depreciation of these assets over
their estimated useful lives. It capitalizes leasehold improvements on
properties it holds under operating leases and amortizes them over the lesser
of their estimated useful lives or the lives of the applicable leases. It
states equipment it holds under capital leases at the net present value of the
future minimum lease payments at the inception of the applicable leases and
amortizes that equipment over the lesser of the life of the lease or the
estimated useful life of the asset.
U.S. Concrete expenses maintenance and repair costs when incurred and
capitalizes and depreciates expenditures for major renewals and betterments
that extend the useful lives of its existing assets. When U.S. Concrete
retires or disposes of property, plant or equipment, it removes the related
cost and accumulated depreciation from its accounts and reflects any resulting
gain or loss in its statements of operations.
- -------------------------------------------------------------------------------
25
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Goodwill
Goodwill represents the amount by which the total purchase price U.S.
Concrete has paid to acquire businesses accounted for as purchases exceeds its
estimated fair market value of the net tangible assets acquired. It amortizes
goodwill on a straight-line basis over 40 years. Management routinely
evaluates whether events or circumstances have occurred that indicate that the
remaining estimated useful life of goodwill may warrant revision or that the
remaining balances may not be recoverable. During an evaluation the estimated
future undiscounted cash flows associated with the asset are compared to the
asset's carrying amount to determine if such an impairment exists. As of
December 31, 1999 and 1998, accumulated amortization was $1.1 million and $0,
respectively.
Debt Issue Costs
Other long-term assets include debt issue costs related to U.S. Concrete's
credit facility. See Note 6. U.S. Concrete amortizes these costs as interest
expense over the scheduled maturity period of the debt. As of December 31,
1999 and 1998, accumulated amortization of debt issue costs was $154,780 and
$0, respectively.
Allowance for Doubtful Accounts
U.S. Concrete provides an allowance for accounts receivable it believes it
may not collect in full.
Sales and Expenses
U.S. Concrete derives its sales primarily from the production and delivery
of ready-mixed concrete. It recognizes sales when products are delivered. Cost
of goods sold consists primarily of product costs and operating expenses.
Operating expenses consist primarily of wages, benefits and other expenses
attributable to plant operations, repairs and maintenance and trucks. Selling
expenses consist primarily of sales commissions, salaries of sales managers,
travel and entertainment expenses and trade show expenses. General and
administrative expenses consist primarily of executive compensation and
related benefits, administrative salaries and benefits, office rent and
utilities, communication expenses and professional fees.
Income Taxes
U.S. Concrete uses the liability method of accounting for income taxes.
Under this method, it records deferred income taxes based on temporary
differences between the financial reporting and tax bases of assets and
liabilities and uses enacted tax rates and laws that will be in effect when it
recovers those assets or settles those liabilities, as the case may be, to
measure those taxes.
U.S. Concrete files a consolidated federal income tax return, which includes
the operations of all acquired businesses for periods subsequent to their
respective acquisition dates. The acquired businesses file "short period"
federal income tax returns for the period from their last fiscal year through
their respective acquisition dates.
Fair Value of Financial Instruments
The financial instruments of U.S. Concrete consist primarily of cash and
cash equivalents, trade receivables, trade payables and long-term debt.
Management considers the book values of these items to be representative of
their respective fair values.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
by management in determining the reported amounts of liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of expenses during the reporting period.
Actual results could differ from those estimates.
- -------------------------------------------------------------------------------
26
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Valuation of Long-Lived Assets
U.S. Concrete reviews its long-lived assets for impairment whenever events
or changes in circumstances indicate that their carrying amounts may not be
recoverable. If the expected future undiscounted cash flows of an asset it
intends to hold for use is less than the carrying amount of the asset, it will
recognize a loss equal to the difference between the fair value (calculated by
discounting the estimated future operating cash flows) and the carrying amount
of the asset. If it intends to dispose of an asset that is impaired, it will
recognize a loss equal to the difference between the estimated fair value of
the asset, less estimated costs to sell, and its carrying amount.
Reclassifications
Certain reclassifications have been made to amounts in prior period
financial statements to conform with current period presentation.
Earnings per Share
Since Central is presented as the acquirer of the other acquired businesses
and U.S. Concrete, U.S. Concrete uses the shares of its common stock
beneficially owned by the former owners of Central in the calculation of its
earnings per share for all periods prior to the IPO.
The following table reconciles the numerators and denominators of the basic
and diluted earnings per share for the periods shown (in thousands, except per
share amounts). Basic earnings represent earnings per weighted average
outstanding share, while diluted earnings represent those earnings as diluted
by potentially dilutive securities such as outstanding options.
<TABLE>
<CAPTION>
Year Ended December
31
--------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Numerator:
Net income............................................... $8,190 $6,654 $4,499
Denominator:
Weighted average common shares outstanding-basic......... 11,770 3,120 3,120
Effect of dilutive stock options......................... 13 -- --
------ ------ ------
Weighted average common shares outstanding-diluted....... 11,783 3,120 3,120
====== ====== ======
Earnings per share:
Basic.................................................... $ 0.70 $ 2.13 $ 1.44
Diluted.................................................. $ 0.70 $ 2.13 $ 1.44
</TABLE>
For the year ended December 31, 1999, 1.3 million stock options were
excluded from the computation of diluted earnings per share because their
exercise prices were greater than the average market price of the common
stock.
Collective Bargaining Agreements
U.S. Concrete's subsidiaries are parties to various collective bargaining
agreements with labor unions. These agreements require them to pay specified
wages and provide certain benefits to their union employees. These agreements
will expire at various times through April 2002.
New Accounting Pronouncements
In the first quarter of 1999, U.S. Concrete adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income," which
requires the display of comprehensive income and its
- -------------------------------------------------------------------------------
27
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
components in the financial statements. Comprehensive income represents all
changes in equity of an entity during the reporting period, except those
resulting from investments by and distributions to stockholders. For each of
the three years ended December 31, 1999, no material differences exist between
the historical net income and comprehensive income of U.S. Concrete.
U.S. Concrete has adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information," which establishes standards for the way
public enterprises are to report information about operating segments in
annual financial statements and requires the reporting of selected information
about operating segments in interim financial reports issued to stockholders.
Beginning January 1, 2001, U.S. Concrete will apply SFAS No. 133,
"Accounting for Derivative Securities and Hedging Activities." SFAS No. 133
will require it to recognize all derivative instruments (including some
derivative instruments embedded in other contracts) as assets or liabilities
on its balance sheet and measure them at fair value. The statement requires
that changes in the fair value of derivatives be recognized currently in
earnings unless specific hedge accounting criteria are met. U.S. Concrete is
evaluating SFAS No. 133 and its impact on existing accounting policies and
financial reporting disclosure. U.S. Concrete has not, to date, engaged in
activities or entered into arrangements associated with derivative
instruments.
3. BUSINESS COMBINATIONS
During 1999, U.S. Concrete acquired 14 businesses. The aggregate
consideration it paid in these transactions, all of which are accounted for as
purchases, consisted of $40.0 million in cash and 2.4 million shares of common
stock. The accompanying balance sheet as of December 31, 1999 includes
preliminary allocations of the purchase prices and is subject to final
adjustment. The following summarized unaudited pro forma financial information
adjusts the historical financial information by assuming U.S. Concrete
acquired all these businesses on January 1, 1998:
<TABLE>
<CAPTION>
Year Ended
December 31
-----------------
1999 1998
-------- --------
(unaudited)
<S> <C> <C>
Revenues.................................................. $282,598 $270,611
Net income................................................ $ 12,308 $ 9,115
Basic earnings per share.................................. $ 0.66 $ 0.49
Diluted earnings per share................................ $ 0.66 $ 0.49
</TABLE>
Pro forma adjustments these amounts include primarily relate to:
. contractual reductions in salaries, bonuses and benefits to former
owners of the businesses;
. elimination of legal, accounting and other professional fees incurred in
connection with the acquisitions;
. amortization of goodwill resulting from the acquisitions;
. reduction in interest expense, net of interest expense on borrowings to
fund acquisitions; and
. adjustments to the federal and state income tax provision based on pro
forma operating results.
The pro forma financial information does not purport to represent what the
combined financial results of operations of U.S. Concrete actually would have
been if these transactions and events had in fact occurred when assumed and
are not necessarily representative of its financial results of operations for
any future period.
- -------------------------------------------------------------------------------
28
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
In connection with the acquisitions, U.S. Concrete has determined a
preliminary calculation of the resulting goodwill as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
1999
------------
<S> <C>
Fair value of assets acquired, net of cash acquired............. $ 75,067
Less: liabilities assumed....................................... (37,808)
--------
Net assets acquired, net of cash................................ 37,259
--------
Cash paid, net of cash acquired................................. 69,026
Issuance of common stock........................................ 74,816
--------
Total consideration paid........................................ 143,842
--------
Goodwill........................................................ $106,583
========
</TABLE>
These amounts are preliminary and are subject to final adjustment.
4. PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment is as follows (dollars in
thousands):
<TABLE>
<CAPTION>
Useful December 31
Lives in ----------------
Years 1999 1998
-------- ------- -------
<S> <C> <C> <C>
Land.............................................. -- $12,381 $ 584
Buildings and improvements........................ 10-40 7,225 1,019
Machinery and equipment........................... 10-30 14,191 5,827
Mixers, trucks and other vehicles................. 6-12 29,211 11,313
Furniture and fixtures............................ 3-10 527 512
Construction in progress.......................... -- 2,322 --
------- -------
65,857 19,255
Less: accumulated depreciation.................... (11,908) (10,117)
------- -------
$53,949 $ 9,138
======= =======
</TABLE>
5. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
Activity in U.S. Concrete's allowance for doubtful accounts receivable
consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31
---------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance, beginning of period................................ $ 97 $80 $80
Additions from acquisitions................................. 686 -- --
Provision for uncollectible accounts........................ 118 17 --
Uncollectible receivables written off, net of recoveries.... (171) -- --
---- --- ---
Balance, end of period...................................... $730 $97 $80
==== === ===
</TABLE>
- -------------------------------------------------------------------------------
29
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Inventory consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31
-----------
1999 1998
------ ----
<S> <C> <C>
Raw materials................................................... $1,905 $259
Building materials for resale................................... 844 533
Precast products................................................ 993 --
Repair parts.................................................... 609 --
------ ----
$4,351 $792
====== ====
</TABLE>
Accounts payable and accrued liabilities consist of the following (in
thousands):
<TABLE>
<CAPTION>
December 31
--------------
1999 1998
------- ------
<S> <C> <C>
Accounts payable............................................. $27,473 $7,042
Accrued compensation and benefits............................ 2,764 868
Accrued interest............................................. 172 --
Accrued income taxes......................................... 3,827 --
Other........................................................ 3,363 --
------- ------
$37,599 $7,910
======= ======
</TABLE>
6. LONG-TERM DEBT
A summary of long-term debt is as follows (in thousands):
<TABLE>
<CAPTION>
December 31
----------------
1999 1998
------- -------
<S> <C> <C>
Secured revolving credit facility............................ $57,100 $ --
Notes payable to various financial institutions, secured by
mixer trucks, maturing in varying amounts through May 2003,
with interest ranging from 7.0% to 9.7%..................... -- 2,860
Notes payable to various financial institutions, secured by
various equipment and guaranteed by stockholders, maturing
in varying amounts through September 2003, with interest
ranging from 4.7% to 8.8%................................... -- 670
Other........................................................ 275 --
------- -------
57,375 3,530
Less: current maturities................................... (140) (1,006)
------- -------
Long-term debt, net of current maturities.................... $57,235 $ 2,524
======= =======
</TABLE>
On May 28, 1999, U.S. Concrete entered into a three-year $75 million
revolving credit facility with a group of banks. It may use this facility for
working capital, to finance acquisitions and for other general corporate
purposes. Availability under the facility is tied to consolidated cash flow
and liquidity. Advances bear interest, at U.S. Concrete's option, at a prime
rate or LIBOR, in each case plus a margin keyed to the ratio of consolidated
indebtedness to cash flow. At December 31, 1999, U.S. Concrete had borrowings
totaling $57.1 million outstanding under its credit facility at a weighted
average interest cost of 7.9%. Commitment fees are due on any unused borrowing
capacity. The facility requires U.S. Concrete to maintain financial covenants
regarding net worth, coverage ratios and additional indebtedness and prohibits
dividends on its common stock. Subsidiary guarantees and pledges of
substantially all U.S. Concrete's fixed assets secure the payment of all
obligations owing under the facility. The size of the facility increased to
$100 million in December 1999 and $200 million in February 2000.
- -------------------------------------------------------------------------------
30
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Aggregate maturities are as follows (in thousands):
<TABLE>
<CAPTION>
Year Ending December 31
-----------------------
<S> <C>
2000................................................................ $ 140
2001................................................................ 114
2002................................................................ 57,121
-------
$57,375
=======
</TABLE>
7. STOCKHOLDERS' EQUITY
Initial Public Offering
In May 1999, U.S. Concrete completed its IPO, issuing 3.8 million shares of
its common stock to the public at a price of $8.00 per share, resulting in net
proceeds to U.S. Concrete of $23.5 million, after deducting offering costs. In
June 1999, it sold an additional 570,000 shares of common stock on the
exercise of the underwriters' over-allotment option. It realized net proceeds
from this sale of $4.2 million.
Warrants
In connection with the IPO, U.S. Concrete issued warrants to the
underwriters to purchase 200,000 shares of common stock at an exercise price
of $8.00 per share. At December 31, 1999, all these warrants remained
outstanding. They expire in May 2002.
Stock Options
U.S. Concrete's 1999 incentive plan enables U.S. Concrete to grant non-
qualified options, restricted stock, deferred stock, incentive stock options,
stock appreciation rights and other long-term incentive awards. The number of
shares available for issuance under the plan is limited to the greater of 2.0
million shares of common stock or 15% of the number of shares of common stock
outstanding on the last day of the preceding calendar quarter, although the
board of directors of U.S. Concrete may, in its discretion, grant additional
awards or establish other compensation plans. The number of shares available
for issue under the plan was 1.3 million as of December 31, 1999.
The following table summarizes stock option activity during 1999 (in
thousands, except prices):
<TABLE>
<CAPTION>
Weighted
Average
Exercise
Options Price
----------- --------
<S> <C> <C>
Options outstanding at January 1....................... -- --
Granted.............................................. 1,425 7.93
Exercised............................................ -- --
Forfeited............................................ (32) 8.13
----------- ----
Options outstanding at December 31..................... 1,393 7.93
=========== ====
Options exercisable at December 31..................... 28 6.60
=========== ====
Option exercise price range at December 31............. $6.25-$8.75
</TABLE>
As allowed by SFAS No. 123, "Accounting for Stock-Based Compensation," U.S.
Concrete accounts for stock option awards in accordance with Accounting
Principles Board (APB) Opinion No. 25. The exercise prices of all options U.S.
Concrete awarded during 1999 equaled the fair market values of the common
stock on the dates of
- -------------------------------------------------------------------------------
31
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
grant. As a result, under APB No. 25, it did not recognize any compensation
expense attributable to these options. Had it determined compensation expense
under the SFAS No. 123 method, its net income and earnings per share during
1999 would have been the following pro forma amounts (in thousands, except per
share amounts):
<TABLE>
<S> <C>
Net income
As reported........................................................ $8,190
======
Pro forma.......................................................... $7,699
======
Diluted earnings per share
As reported........................................................ $ 0.70
======
Pro forma.......................................................... $ 0.65
======
</TABLE>
The effects of applying SFAS No. 123 in the pro forma disclosure may not be
indicative of future amounts because U.S. Concrete expects to make additional
awards. For purposes of this disclosure, U.S. Concrete estimated the fair value
of each option grant on the date of grant using the Black-Scholes option
pricing model with the following assumptions:
<TABLE>
<S> <C>
Expected dividend yield............................................. 0.0%
Expected stock price volatility..................................... 54.7%
Risk-free interest rate............................................. 6.0%
Expected life of options............................................ 10 years
</TABLE>
8. INCOME TAXES
U.S. Concrete's consolidated federal and state tax returns include the
results of operations of acquired businesses from their dates of acquisition.
The amounts of consolidated federal and state income tax provision (benefit)
are as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended
December 31
-----------------
1999 1998 1997
------ ---- -----
<S> <C> <C> <C>
Current:
Federal.................................................... $6,398 $ -- $ (32)
State...................................................... 498 89 58
------ ---- -----
6,896 89 26
------ ---- -----
Deferred:
Federal.................................................... 700 -- (393)
State...................................................... 62 11 (90)
------ ---- -----
762 11 (483)
------ ---- -----
$7,658 $100 $(457)
====== ==== =====
</TABLE>
- --------------------------------------------------------------------------------
32
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A reconciliation of U.S. Concrete's effective income tax rate to the amounts
calculated by applying the federal statutory corporate tax rate of 35% is as
follows (in thousands):
<TABLE>
<CAPTION>
Year Ended
December 31
-------------------
1999 1998 1997
------ ---- -----
<S> <C> <C> <C>
Tax at statutory rate..................................... $5,547 $ -- $ --
Add (deduct):
State income taxes...................................... 364 100 (32)
Nondeductible expenses.................................. 405 -- 4
Nondeductible compensation charge....................... 1,008 -- --
Income taxed to Central shareholders.................... (590) -- (429)
Deferred tax charge for S corporation taxes............. 924 -- --
------ ---- -----
Income tax provision (benefit)............................ $7,658 $100 $(457)
====== ==== =====
Effective income tax rate................................. 48.3% 1.5% (11.3%)
====== ==== =====
</TABLE>
Deferred income tax provisions (benefits) result from temporary differences
in the recognition of expenses for financial reporting purposes and for tax
reporting purposes. U.S. Concrete presents the effects of those differences as
deferred income tax liabilities and assets, as follows (in thousands):
<TABLE>
<CAPTION>
December 31
-----------
1999 1998
------ ----
<S> <C> <C>
Deferred income tax liabilities:
Property and equipment, net....................................... $7,838 $47
Other............................................................. 476 10
------ ---
Total deferred income tax liabilities........................... 8,314 57
------ ---
Deferred income tax assets:
Allowance for doubtful accounts................................... 197 1
Inventory......................................................... 42 --
Accrued expenses.................................................. 1,062 9
Other............................................................. 46 1
------ ---
Total deferred income tax assets................................ 1,347 11
------ ---
Net deferred income tax liabilities........................... $6,967 $46
====== ===
</TABLE>
Prior to their respective acquisitions, Central and other acquired
businesses were S corporations and were not subject to federal income taxes.
Effective with their acquisition they became subject to those taxes, and U.S.
Concrete has recorded an estimated deferred tax liability to provide for its
estimated future income tax liability as a result of the difference between
the book and tax bases of the net assets of these corporations as of the dates
of their acquisitions. These consolidated financial statements reflect the
federal and state income taxes of these corporations since their dates of
acquisition.
- -------------------------------------------------------------------------------
33
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
9. RELATED-PARTY TRANSACTIONS
U.S. Concrete has transactions in the normal course of business with related
parties. These transactions consist principally of operating leases under
which U.S. Concrete leases facilities from former owners of its acquired
businesses or their affiliates. These leases are for periods generally ranging
from three to five years and are on terms management believes are comparable
to non-related party leases. Lease payments under these leases were
approximately $597,000 in 1999, $144,000 in 1998 and $144,000 in 1997. The
schedule of minimum lease payments in Note 11 includes U.S. Concrete's future
commitments under these leases.
U.S. Concrete's venture capital partner advanced funds to U.S. Concrete from
August 1998 until May 1999 totaling $1.7 million to enable it to pay its
expenses in connection with the completion of its IPO and concurrent
acquisitions of six operating businesses. U.S. Concrete repaid these advances,
including interest accrued at the rate of 6% per year, from the gross proceeds
of its IPO. U.S. Concrete paid its venture capital partner an additional
$180,000 during the remainder of 1999 for services related to U.S. Concrete's
acquisition program.
10. RISK CONCENTRATION
U.S. Concrete grants credit, generally without collateral, to its customers,
which include general contractors, municipalities and commercial companies
located solely in the United States. Consequently, it is subject to potential
credit risk related to changes in business and economic factors throughout the
United States. U.S. Concrete generally has lien rights in the work it
performs, and concentrations of credit risk are limited because of the
diversity of its customer base. Further, management believes that its contract
acceptance, billing and collection policies are adequate to minimize any
potential credit risk.
U.S. Concrete maintains cash balances at financial institutions, which may
at times be in excess of federally insured levels. It has not incurred losses
related to these balances during the three-year period ended December 31,
1999.
11. COMMITMENTS AND CONTINGENCIES
Litigation
In the normal course of business, U.S. Concrete is subject to proceedings,
lawsuits and other claims. In the opinion of management, pending or threatened
litigation involving U.S. Concrete will not have a material adverse effect on
its financial condition or results of operations.
Lease Payments
U.S. Concrete leases tracts of land, facilities and equipment it uses in its
operations. Rental expense under operating leases was $2.0 million, $322,000
and $320,000 in 1999, 1998 and 1997, respectively. Minimum future annual lease
payments under these leases are as follows (in thousands):
<TABLE>
<CAPTION>
Year Ending
December 31
-----------
<S> <C>
2000............................................................. $ 3,503
2001............................................................. 2,926
2002............................................................. 2,349
2003............................................................. 1,861
2004............................................................. 1,621
Thereafter....................................................... 2,086
-------
$14,346
=======
</TABLE>
- -------------------------------------------------------------------------------
34
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
12. SIGNIFICANT CUSTOMERS
Significant customers represented sales (as a percentage of total sales) as
follows:
<TABLE>
<CAPTION>
Year Ended
December 31
----------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Customer A................................................. 8% 16% 14%
Customer B (related party)................................. 8 22 20
</TABLE>
13. SIGNIFICANT SUPPLIERS
Significant suppliers represented purchases (as a percentage of total
purchases) as follows:
<TABLE>
<CAPTION>
Year Ended
December 31
----------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Supplier A................................................. 23% 41% 39%
Supplier B................................................. 17 18 22
Supplier C................................................. 4 9 10
</TABLE>
14. SEGMENT REPORTING
SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information," requires that companies report separately information about each
significant operating segment reviewed by the chief operating decision maker.
All segments that meet a threshold of 10% of revenues, reported profit or
loss, or combined assets are defined as significant segments. U.S. Concrete
currently operates as one segment, and all operations and long-lived assets
are in the United States.
15. EMPLOYEE BENEFIT PLANS
U.S. Concrete maintains defined contribution profit-sharing and money
purchase pension plans for its non union employees. Contributions to these
plans were approximately $816,000 in 1999, $404,000 in 1998 and $404,000 in
1997.
In connection with its collective bargaining agreements with various unions,
U.S. Concrete participates with other companies in the unions' multi-employer
pension plans. These plans cover all of U.S. Concrete's employees who are
members of such unions. The Employee Retirement Income Security Act of 1974,
as amended by the Multi-Employer Pension Plan Amendments Act of 1980, imposes
certain liabilities upon employers who are contributors to a multi-employer
plan in the event of the employer's withdrawal from, or upon termination of
such plan. U.S. Concrete has no plans to withdraw from these plans. These
plans do not maintain information on net assets and actuarial present value of
the accumulated share of the plans' unfunded vested benefits allocable to U.S.
Concrete, and amounts, if any, for which U.S. Concrete may be contingently
liable are not ascertainable at this time. U.S. Concrete made contributions to
these plans of $4.2 million in 1999, $2.3 million in 1998 and $2.0 million in
1997.
- -------------------------------------------------------------------------------
35
<PAGE>
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
16. SELECTED QUARTERLY FINANCIAL INFORMATION (unaudited; in thousands, except
per share data)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
1999
Revenues.................................... $12,956 $27,648 $59,803 $67,505
Operating income (loss)..................... 716 (182) 8,296 8,063
Net income (loss)........................... 926 (1,979) 4,913 4,330
Basic earnings (loss) per share............. 0.30 (0.23) 0.30 0.24
Diluted earnings (loss) per share........... 0.30 (0.23) 0.30 0.24
1998
Revenues.................................... 9,918 15,775 21,482 19,324
Operating income............................ 593 1,654 2,390 2,246
Net income.................................. 683 1,584 2,340 2,047
Basic earnings per share.................... 0.22 0.51 0.75 0.66
Diluted earnings per share.................. 0.22 0.51 0.75 0.66
</TABLE>
In the second quarter of 1999, in connection with the IPO, U.S. Concrete
recorded a noncash compensation charge for 400,000 shares of common stock
issued to management at a nominal cost. The compensation charge was calculated
using a fair value of $7.20 per share, which reflects a 10% discount from the
IPO price of $8.00 per share because of restrictions on the sale and
transferability of the shares issued.
Also in the second quarter, an additional tax provision of $924,000 was
recorded with the conversion of Central from C-corp status to S-corp status.
Central had made no provision for federal income taxes for the first five
months of 1999.
17. SUBSEQUENT EVENTS
Profit Sharing Plan
In February 2000, U.S. Concrete established a defined contribution 401(k)
profit sharing plan for employees meeting various employment requirements.
Eligible employees may contribute amounts up to the lesser of 15% of their
annual compensation or the maximum amount permitted under IRS regulations.
U.S. Concrete matches 100% of employee contributions up to a maximum of 5% of
their compensation.
Acquisitions
From January 1 through March 10, 2000, U.S. Concrete acquired three
businesses. The aggregate consideration it paid in these transactions, all of
which it accounted for as purchases, consisted of $67.4 million in cash and
2.6 million shares of common stock.
- -------------------------------------------------------------------------------
36
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
Please see the definitive proxy statement for our 2000 Annual Meeting of
Stockholders for the information required by Items 10, 11, 12 and 13. We will
file the definitive proxy statement with the SEC by May 1, 2000. We are
incorporating our definitive proxy statement into this report by reference
except for the information appearing under the captions "Report from the
Compensation Committee Regarding Executive Compensation" and "Performance
Graph".
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial Statements.
See Index to Consolidated Financial Statements on page 19.
(2) Financial Statement Schedules.
All financial statement schedules are omitted because they are not required
or the required information is shown in our consolidated financial statements
or the notes thereto.
(3) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
2.1* --Agreement and Plan of Reorganization dated as of March 22, 1999 by
and among U.S. Concrete, OCC Acquisition Inc., Opportunity Concrete
Corporation and the stockholders named therein (Form S-1 (Reg. No.
333-74855), Exhibit 2.1).
2.2* --Agreement and Plan of Reorganization dated as of March 22, 1999 by
and among U.S. Concrete, Walker's Acquisition Inc., Walker's
Concrete, Inc. and the stockholders named therein (Form S-1 (Reg.
No. 333-74855), Exhibit 2.2).
2.3* --Agreement and Plan of Reorganization dated as of March 22, 1999 by
and among U.S. Concrete, Central Concrete Acquisitions Inc., Central
Concrete Supply Co., Inc. and the stockholders named therein (Form
S-1 (Reg. No. 333-74855), Exhibit 2.3).
2.4* --Agreement and Plan of Reorganization dated as of March 22, 1999 by
and among U.S. Concrete, Bay Cities Acquisition Inc., Bay Cities
Building Materials Co., Inc. and the stockholders named therein
(Form S-1 (Reg. No. 333-74855), Exhibit 2.4).
2.5* --Agreement and Plan of Reorganization dated as of March 22, 1999 by
and among U.S. Concrete, Baer Acquisition Inc., Baer Concrete,
Incorporated and the stockholders named therein (Form S-1 (Reg. No.
333-74855), Exhibit 2.5).
</TABLE>
- -------------------------------------------------------------------------------
37
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
2.6* --Agreement and Plan of Reorganization dated as of March 22, 1999 by
and among U.S. Concrete, Santa Rosa Acquisition, Inc., R.G.
Evans/Associates d/b/a Santa Rosa Cast Products Co.) and the
stockholders named therein (Form S-1 (Reg. No. 333-74855), Exhibit
2.6).
2.7* --Uniform Provisions for the Acquisitions (incorporated into the
agreements filed as Exhibits 2.1 through 2.6 hereto) (Form S-1 (Reg.
No. 333-74855), Exhibit 2.7).
2.8 --Acquisition Agreement and Plan of Reorganization dated as of
September 14, 1999 by and among U.S. Concrete, Inc., Concrete XI
Acquisition, Inc., Carrier Excavation and Foundation Company, John F.
Carrier, William Henry Carrier, Michael K. Carrier, Mary G. Carrier,
Trustee for Anne Carrier (TN UGMA), William Henry Carrier, Trustee
for William Henry Carrier, Jr. (TN UGMA), and Mary G. Carrier.
2.9 --Stock Purchase Agreement dated as of November 5, 1999 by and among
U. S. Concrete, Inc., B. Thomas Stover, as Trustee under Trust
Agreement dated February 20, 1986 for B. Thomas Stover, Sarah M.
Stover, as Trustee under Trust Agreement dated February 27, 1990 for
Sarah M. Stover, B. Andrew Stover, B. Thomas Stover, Custodian under
Michigan Uniform Gifts to Minors Act for the benefit of Carolyn A.
Stover, Jeffery D. Spahr, Jeffrey T. Stover, and Bradley C. Stover.
2.10* --Stock Purchase Agreement dated as of January 20, 2000 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. (Form 8-K dated February 23, 2000,
Exhibit 2.1).
2.11* --Amendment No. 1 to Stock Purchase Agreement dated January 28, 2000
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. (Form 8-K dated
February 23, 2000, Exhibit 2.2).
2.12* --Stock Purchase Agreement dated as of January 24, 2000 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. (Form 8-K
dated February 23, 2000, Exhibit 2.3).
2.13 --Acquisition Agreement and Plan of Reorganization dated as of
February 8, 2000 by and among U. S. Concrete, Inc., Concrete XIX
Acquisition, Inc., Cornillie Fuel & Supply, Inc., Richard A. Deneweth
and Joseph C. Cornillie, Trustee URTA of Joseph C. Cornillie.
2.14 --Stock Purchase Agreement dated as of February 8, 2000 by and among
U. S. Concrete, Inc., Cornillie Fuel & Supply, Inc., Dencor, Inc.
Richard A. Deneweth and Joseph C. Cornillie, Trustee URTA of Joseph
C. Cornillie.
2.15 --Acquisition Agreement and Plan of Reorganization dated as of
February 8, 2000 by and among U. S. Concrete, Inc., Concrete XVIII
Acquisition, Inc., Cornillie Leasing, Inc., Richard A. Deneweth, and
Joseph C. Cornillie, Trustee URTA of Joseph C. Cornillie.
2.16 --Acquisition Agreement and Plan of Reorganization dated as of March
2, 2000 by and among U. S. Concrete, Inc., Concrete XXIV Acquisition,
Inc., Stancon Inc. and Donald S. Butler and John Grace.
3.1* --Restated Certificate of Incorporation of U.S. Concrete (Form S-1
(Reg. No. 333-74855), Exhibit 3.1).
3.2* --Bylaws of U.S. Concrete (Form S-1 (Reg. No. 333-74855), Exhibit
3.2).
4.1* --Form of Certificate representing common stock (Form S-1 (Reg. No.
333-74855), Exhibit 4.1).
4.2* --Form of Registration Rights Agreement by and among U.S. Concrete and
the stockholders listed on the signature pages thereto (Form S-1
(Reg. No. 333-74855), Exhibit 4.2).
4.3* --Funding Agreement dated as of September 10, 1999 by and between U.S.
Concrete and Main Street Merchant Partners II, L.P. (Form S-1 (Reg.
No. 333-74855), Exhibit 4.3).
4.4* --Rights Agreement by and between U.S. Concrete and American Stock
Transfer & Trust Company, including form of Rights Certificate
attached as Exhibit B thereto (Form S-1 (Reg. No. 333-74855), Exhibit
4.4).
4.5* --Form of Warrant Agreement among U.S. Concrete, Scott & Stringfellow,
Inc. and Sanders Morris Mundy, Inc. (Form S-1 (Reg. No. 333-74855),
Exhibit 1.2).
</TABLE>
- --------------------------------------------------------------------------------
38
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
4.6 --Amended and Restated Credit Agreement dated as of February 9, 2000,
among U.S. Concrete, the Guarantors named therein, the Lenders named
therein, Bankers Trust Company, as syndication agent, First Union
National Bank, as documentation agent, Bank One, Texas, NA, Branch
Banking & Trust Company, Credit Lyonnais New York Branch and The Bank
of Nova Scotia, as co-managing agents and Chase Bank of Texas, N.A.,
as the Administrative Agent, and Chase Securities, Inc., as sole book
manager and lead arranger.
U.S. Concrete and some of its subsidiaries are parties to debt
instruments under which the total amount of securities authorized
does not exceed 10% of the total assets of U.S. Concrete and its
subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii)
(A) of Item 601(b) of Regulation S-K, U.S. Concrete agrees to furnish
a copy of those instruments to the SEC on request.
10.1* --1999 Incentive Plan of U.S. Concrete (Form S-1 (Reg. No. 333-74855),
Exhibit 10.1).
10.2* --Employment Agreement between U.S. Concrete and William T. Albanese
(Form S-1 (Reg. No. 333-74855), Exhibit 10.2).
10.3* --Form of Employment Agreement between U.S. Concrete and Michael W.
Harlan (Form S-1 (Reg. No. 333-74855), Exhibit 10.3).
10.4* --Form of Employment Agreement between U.S. Concrete and Eugene P.
Martineau (Form S-1 (Reg. No. 333-74855), Exhibit 10.4).
10.5* --Employment Agreement between U.S. Concrete and Michael D. Mitschele
(Form S-1 (Reg. No. 333-74855), Exhibit 10.5).
10.6* --Employment Agreement between U.S. Concrete and Charles W. Sommer
(Form S-1 (Reg. No. 333-74855), Exhibit 10.6).
10.7* --Employment Agreement between U.S. Concrete and Neil J. Vannucci
(Form S-1 (Reg. No. 333-74855), Exhibit 10.7).
10.8* --Employment Agreement between U.S. Concrete and Robert S. Walker
(Form S-1 (Reg. No. 333-74855), Exhibit 10.8).
10.9* --Form of Indemnification Agreement between U.S. Concrete and each of
its directors and officers (Form S-1 (Reg. No. 333-74855), Exhibit
10.9).
10.10* --Form of Employment Agreement between U.S. Concrete and Terry Green
(Form S-1 (Reg. No. 333-74855), Exhibit 10.10).
10.11 --Employment Agreement between U.S. Concrete and Donald C. Wayne.
21 --Subsidiaries
23 --Consent of independent public accountants.
27 --Financial Data Schedule.
</TABLE>
- --------
* Incorporated by reference to the filing indicated.
(b) Reports on Form 8-K.
None
- --------------------------------------------------------------------------------
39
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
U.S. CONCRETE, INC.
Date: March 24, 2000 /s/ Eugene P. Martineau
By:__________________________________
Eugene P. Martineau
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 24, 2000.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Eugene P. Martineau President and Chief Executive
___________________________________________ Officer and Director (Principal
Eugene P. Martineau Executive Officer)
/s/ Michael W. Harlan Chief Financial Officer and Director
___________________________________________ (Principal Financial and Accounting
Michael W. Harlan Officer
/s/ Vincent D. Foster Director
___________________________________________
Vincent D. Foster
/s/ John R. Colson Director
___________________________________________
John R. Colson
/s/ Peter T. Dameris Director
___________________________________________
Peter T. Dameris
/s/ William T. Albanese Director
___________________________________________
William T. Albanese
/s/ Michael D. Mitschele Director
___________________________________________
Michael D. Mitschele
/s/ Murray S. Simpson Director
___________________________________________
Murray S. Simpson
/s/ Neil J. Vannucci Director
___________________________________________
Neil J. Vannucci
/s/ Robert S. Walker Director
___________________________________________
Robert S. Walker
</TABLE>
- -------------------------------------------------------------------------------
40
<PAGE>
EXHIBIT 2.8
ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
U.S. CONCRETE, INC.,
CONCRETE XI ACQUISITION, INC.,
CARRIER EXCAVATION AND FOUNDATION COMPANY,
JOHN F. CARRIER,
WILLIAM HENRY CARRIER,
MICHAEL K. CARRIER,
MARY G. CARRIER, TRUSTEE FOR ANNE CARRIER (TN UGMA),
WILLIAM HENRY CARRIER, TRUSTEE FOR
WILLIAM HENRY CARRIER, JR. (TN UGMA),
AND
MARY G. CARRIER
Dated as of September 14, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
ARTICLE I DEFINITIONS........................................................................ 1
1.01 DEFINITIONS............................................................................. 1
1.02 INTERPRETATION.......................................................................... 6
ARTICLE II THE MERGER AND THE SURVIVING CORPORATION................................................ 6
2.01 THE MERGER.............................................................................. 6
2.02 EFFECTIVE TIME OF THE MERGER............................................................ 6
2.03 CERTIFICATE OF INCORPORATION, BYLAWS AND BOARD OF DIRECTORS OF SURVIVING CORPORATION.... 6
ARTICLE III CONVERSION OF SHARES.................................................................... 7
3.01 CONVERSION OF SHARES.................................................................... 7
3.02 NEWCO SHARES............................................................................ 7
3.03 DELIVERY OF MERGER CONSIDERATION........................................................ 7
ARTICLE IV CLOSING................................................................................. 7
4.01 CLOSING................................................................................. 7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS...................................... 8
5.01 DUE ORGANIZATION AND QUALIFICATION...................................................... 8
5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS............................................. 8
5.03 CAPITALIZATION AND OWNERSHIP............................................................ 9
5.04 SUBSIDIARIES............................................................................ 9
5.05 FINANCIAL STATEMENTS.................................................................... 9
5.06 LIABILITIES AND OBLIGATIONS............................................................. 10
5.07 ACCOUNTS AND NOTES RECEIVABLE........................................................... 10
5.08 PROPERTIES AND ASSETS................................................................... 11
5.09 MATERIAL CUSTOMERS AND CONTRACTS........................................................ 13
5.10 PERMITS................................................................................. 14
5.11 ENVIRONMENTAL MATTERS................................................................... 14
5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS........................................ 15
5.13 INSURANCE............................................................................... 16
5.14 COMPENSATION; EMPLOYMENT AGREEMENTS..................................................... 16
5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS; EMPLOYEE POLICIES....... 16
5.16 EMPLOYEE BENEFIT PLANS.................................................................. 16
5.17 LITIGATION AND COMPLIANCE WITH LAW...................................................... 18
5.18 TAXES................................................................................... 19
5.19 ABSENCE OF CHANGES...................................................................... 19
5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY.................................. 20
5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES................................................... 21
5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS................................. 21
5.23 INTANGIBLE PROPERTY..................................................................... 21
5.24 CAPITAL EXPENDITURES.................................................................... 21
5.25 INVENTORIES............................................................................. 21
5.26 TAX REORGANIZATION REPRESENTATION....................................................... 21
5.27 NO IMPLIED REPRESENTATIONS.............................................................. 21
5.28 DISCLOSURE.............................................................................. 22
5.29 YEAR 2000 COMPLIANCE.................................................................... 22
</TABLE>
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO.............................. 22
6.01 ORGANIZATION............................................................................. 22
6.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.............................................. 22
6.03 U.S. CONCRETE COMMON STOCK............................................................... 23
6.04 TAX REORGANIZATION REPRESENTATIONS....................................................... 23
6.05 SEC FILINGS; DISCLOSURE.................................................................. 24
6.06 NO IMPLIED REPRESENTATIONS............................................................... 24
6.07 DISCLOSURE............................................................................... 24
ARTICLE VII CERTAIN COVENANTS................................................................... 25
7.01 RELEASE FROM GUARANTEES.................................................................. 25
7.02 FUTURE COOPERATION; TAX MATTERS.......................................................... 25
7.03 EXPENSES................................................................................. 25
7.04 LEGAL OPINION............................................................................ 25
7.05 EMPLOYMENT AGREEMENTS.................................................................... 26
7.06 REPAYMENT OF RELATED PARTY INDEBTEDNESS.................................................. 26
7.07 STOCK OPTIONS............................................................................ 26
7.08 PRE-CLOSING DISTRIBUTIONS................................................................ 27
7.09 WORKING CAPITAL ADJUSTMENT............................................................... 27
ARTICLE VIII IDEMNIFICATION..................................................................... 27
8.01 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS.............................................. 27
8.02 INDEMNIFICATION BY U.S. CONCRETE......................................................... 28
8.03 THIRD PERSON CLAIMS...................................................................... 28
8.04 NON-THIRD PERSON CLAIMS.................................................................. 29
8.05 INDEMNIFICATION DEDUCTIBLE............................................................... 29
8.06 INDEMNIFICATION LIMITATION............................................................... 29
8.07 INDEMNIFICATION FOR NEGLIGENCE OF INDEMNIFIED PARTY...................................... 29
ARTICLE IX NONCOMPETITION COVENANTS............................................................ 30
9.01 PROHIBITED ACTIVITIES................................................................... 30
9.02 EQUITABLE RELIEF........................................................................ 31
9.03 REASONABLE RESTRAINT.................................................................... 31
9.04 SEVERABILITY; REFORMATION............................................................... 31
9.05 MATERIAL AND INDEPENDENT COVENANT....................................................... 31
ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................................. 31
10.01 GENERAL................................................................................. 31
10.02 EQUITABLE RELIEF........................................................................ 31
ARTICLE XI INTENDED TAX TREATMENT.................................................................. 32
11.01 TAX-FREE REORGANIZATION................................................................. 32
ARTICLE XII FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON STOCK... 32
12.01 COMPLIANCE WITH LAW..................................................................... 32
12.02 ECONOMIC RISK; SOPHISTICATION; ACCREDITED INVESTORS..................................... 33
12.03 RULE 144 REPORTING...................................................................... 34
12.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES.............................. 34
</TABLE>
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ARTICLE XIII MISCELLANEOUS............................................................... 34
13.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES............................................... 34
13.02 ENTIRE AGREEMENT....................................................................... 35
13.03 COUNTERPARTS........................................................................... 35
13.04 BROKERS AND AGENTS..................................................................... 35
13.05 NOTICES................................................................................ 35
13.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES............................................. 36
13.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE................................... 36
13.08 REFORMATION AND SEVERABILITY........................................................... 36
13.09 SECTION HEADINGS; GENDER............................................................... 37
13.10 GOVERNING LAW.......................................................................... 37
13.11 DISPUTE RESOLUTION..................................................................... 37
</TABLE>
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ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is
made as of September 14, 1999, by and among U.S. Concrete, Inc., a Delaware
corporation ("U.S. Concrete"), Concrete XI Acquisition, Inc., a Delaware
corporation that is a subsidiary of U.S. Concrete ("Newco"), Carrier Excavation
and Foundation Company, a Tennessee corporation (the "Company") and John F.
Carrier, William Henry Carrier, Michael K. Carrier, Mary G. Carrier, Trustee for
Anne Carrier (TN UGMA), William Henry Carrier, Trustee for William Henry
Carrier, Jr. (TN UGMA), and Mary G. Carrier (such individuals and trustees are
collectively referred to hereinafter as the "Stockholders"), with the
Stockholders being all of the Company's Stockholders.
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively referred to as "Constituent Corporations") deem it advisable and
in the best interests of the Constituent Corporations and the stockholders of
the Constituent Corporations that the Company merge with and into Newco (the
"Merger"); and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization within the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, the stockholders of the Constituent Corporations have approved the
Merger in accordance with the GCL and the TBCA.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. Capitalized terms used in this Agreement shall have the
following meanings:
"Affiliate" of, or "Affiliated" with, a specified person or entity means a
person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the specified person or entity.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Balance Sheet Date" has the meaning set forth in Section 5.05.
"Broker" has the meaning set forth in Section 13.04.
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"Closing" has the meaning set forth in ARTICLE IV.
"Closing Date" has the meaning set forth in ARTICLE IV.
"Code" has the meaning set forth in the third paragraph of this Agreement.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Common Stock" means the Company's common stock, $24.00 par value
per share.
"Competitive Business" means any business that competes with the Company or
the Surviving Corporation, 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 and any
logical extension of or business activity reasonably related to any of the
foregoing.
"Constituent Corporations" has the meaning set forth in the second
paragraph of this Agreement.
"Effective Time" has the meaning set forth in Section 2.02.
"Employee benefit plan" has the meaning set forth in Section 5.16.
"Employee pension benefit plan" has the meaning set forth in Section 5.16.
"Employment Agreements" has the meaning set forth in Section 7.05.
"Encumbrances" means all liens, encumbrances, mortgages, pledges, security
interests, conditional sales agreements, charges, options, preemptive rights,
rights of first refusal, reservations, restrictions or other encumbrances or
defects in title.
"Environmental Laws" means any and all Laws or agreements with any
Governmental Authority 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) or human health or safety, (b) emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes (including, without
limitation, Hazardous Substances) or noxious noise or odor 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 pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes (including, without limitation, Hazardous
Substances), in each case as amended from time to time and as now or hereafter
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,
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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 from
time to time, and any other Laws now or hereafter relating to any of the
foregoing, and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of,
effects of or exposure to any Hazardous Substance.
"ERISA" has the meaning set forth in Section 5.16.
"ERISA Affiliate" has the meaning set forth in Section 5.16.
"Expiration Date" has the meaning set forth in Section 13.06.
"Financial Statements" has the meaning set forth in Section 5.05.
"GAAP" means generally accepted accounting principles as currently applied
by the respective party on a basis consistent with preceding years and
throughout the periods involved.
"GCL" means the General Corporation Law of the State of Delaware, as
amended.
"Governmental Authority" means any federal, state, local or foreign
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or quasi-
governmental authority.
"Hazardous Substances" means any and all substances presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law. The term "Hazardous
Substances" includes, without limitation, any substance to which exposure is
regulated by any Governmental Authority or any Environmental Law including,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial substance
or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos or asbestos containing material, urea formaldehyde foam
insulation, lead or polychlorinated biphenyls.
"Incentive Plan" has the meaning set forth in Section 7.07.
"Indemnified Party" has the meaning set forth in Section 8.03.
"Indemnifying Party" has the meaning set forth in Section 8.03.
"Initial Lockup Period" has the meaning set forth in Section 12.04.
"Interim Balance Sheet" has the meaning set forth in Section 5.05.
"Interim Financial Statements" has the meaning set forth in Section 5.05.
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"IRCA" has the meaning set forth in Section 5.12.
"JAMS" has the meaning set forth in Section 13.10.
"Judge List" has the meaning set forth in Section 13.10.
"Laws" means any and all federal, state, local or foreign statutes, laws,
ordinances, proclamations, codes, regulations, licenses, permits,
authorizations, rulings, approvals, consents, legal doctrines, 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 amended and in effect from time to time.
"Letter of Intent" means that certain letter of intent dated August 4, 1999
by and among U.S. Concrete, the Company and the Stockholders, and the other
parties named therein, as amended or supplemented.
"Listed Agreements" has the meaning set forth in Section 5.09.
"Lockup Periods" has the meaning set forth in Section 12.04.
"Losses" means any and all liabilities, losses, claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, fees, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees and
costs and expenses of investigation), net of (i) income Tax effects with respect
thereto (including, without limitation, income Tax benefits recognized in
connection therewith and income Taxes upon any indemnification recovery thereof)
and (ii) insurance recoveries.
"Material Customers" has the meaning set forth in Section 5.09.
"Merger" has the meaning set forth in the second paragraph of this
Agreement.
"Merger Consideration" has the meaning set forth in Section 3.01.
"Merger Filings" has the meaning set forth in Section 2.02.
"Newco" has the meaning set forth in the first paragraph of this Agreement.
"Noncompete Term" has the meaning set forth in Section 9.01(a).
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Permits" has the meaning set forth in Section 5.10.
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"Permitted Encumbrances" means any and all (a) Encumbrances reserved
against in the Interim Balance Sheet, (b) Encumbrances for property or ad
valorem Taxes not yet due and payable or which are being contested in good faith
and by appropriate proceedings if adequate reserves with respect thereto are
maintained on the Company's books in accordance with GAAP, and (c) obligations
under operating and capital leases described in Schedule 5.08.
"Plan" has the meaning set forth in Section 5.16.
"Prospectus" means the prospectus of U.S. Concrete, dated May 25, 1999,
relating to the initial public offering of U.S. Concrete Common Stock.
"Qualified Plan" has the meaning set forth in Section 5.16.
"Restricted Shares" has the meaning set forth in Section 12.01.
"Rule 144" means Rule 144 as promulgated under the 1933 Act.
"SEC" means the Securities and Exchange Commission.
"Secondary Lockup Period" has the meaning set forth in Section 12.04.
"Stockholder" means any of the Stockholders.
"Stockholders" has the meaning set forth in the first paragraph
of this Agreement.
"Structures" has the meaning set forth in Section 5.08.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Taxes" has the meaning set forth in Section 5.18.
"TBCA" means the Tennessee Business Corporation Act, as amended.
"10-Q" means the Quarterly Report on Form 10-Q of U.S. Concrete for the
period ended June 30, 1999.
"Territory" has the meaning set forth in Section 9.01.
"Third Person" has the meaning set forth in Section 8.03.
"U.S. Concrete" has the meaning set forth in the first paragraph
of this Agreement.
"U.S. Concrete Common Stock" means U.S. Concrete's Common Stock, par value
$.001 per share.
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"Year-End Financial Statements has the meaning set forth in Section 5.05.
"Year 2000 Compliant" has the meaning set forth in Section 5.27.
1.02 INTERPRETATION. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in Section 1.01 and elsewhere in this Agreement
include the plural as well as the singular and vice versa;
(b) all accounting terms not otherwise defined herein have the
meanings ascribed to them in accordance with GAAP; and
(c) the words "herein," "hereof," and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE II
THE MERGER AND THE SURVIVING CORPORATION
2.01 THE MERGER. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time in accordance with the TBCA and the GCL, the
Company shall be merged with and into Newco and the separate existence of the
Company shall thereupon cease. Newco shall be the surviving corporation in the
Merger (hereinafter sometimes referred to as the "Surviving Corporation").
2.02 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective at
such time (the "Effective Time") as (a) holders of all of the Company Common
Stock approve the Merger, and (b) a certificate of merger, in form mutually
acceptable to U.S. Concrete and the Company, is filed with the Secretaries of
State of the States of Delaware and Tennessee, respectively (the "Merger
Filings"). The Merger Filings shall be made simultaneously with or as soon as
practicable after the Closing.
2.03 CERTIFICATE OF INCORPORATION, BYLAWS AND BOARD OF DIRECTORS OF
SURVIVING CORPORATION. As a result of the Merger and at the Effective Time:
(a) The Certificate of Incorporation of Newco in effect immediately
prior to the Effective Time shall become the Certificate of Incorporation
of the Surviving Corporation, except that such Certificate of Incorporation
shall be amended as of the Effective Time to change the name of the
Surviving Corporation to "Carrier Excavation and Foundation Company" After
the Effective Time, the Certificate of Incorporation of the Surviving
Corporation may be amended in accordance with its terms and as provided in
the GCL.
(b) The Bylaws of Newco in effect immediately prior to the Effective
Time shall become the Bylaws of the Surviving Corporation, and thereafter
may be amended in accordance
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with their terms and as provided by the Certificate of Incorporation of the
Surviving Corporation and the GCL.
(c) The Board of Directors of Newco as constituted immediately prior
to the Effective Time shall be the Board of Directors of the Surviving
Corporation.
ARTICLE III
CONVERSION OF SHARES
3.01 CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger,
and without any action on the part of any holder of any capital stock of the
Company, the issued and outstanding shares of Company Common Stock as of the
Effective Time shall be converted into the right to receive, and become
exchangeable for $3,603,186.76 in cash and 568,224 shares of U.S. Concrete
Common Stock at Closing (the cash and U.S. Concrete Common Stock paid in
exchange for the Company Common Stock being herein collectively referred to as
the "Merger Consideration").
3.02 NEWCO SHARES. The outstanding shares of common stock, par value $1.00
per share, of Newco shall remain outstanding following the Merger.
3.03 DELIVERY OF MERGER CONSIDERATION. At the Closing, (a) each
Stockholder shall furnish to U.S. Concrete the certificates representing his or
her Company Common Stock, duly endorsed in blank by such Stockholder or
accompanied by duly executed blank stock powers, and (b) U.S. Concrete shall
deliver to each Stockholder cash (by wire transfer of immediately available
funds in accordance with the wiring instructions for such Stockholder set forth
on Schedule 3.01) and a copy of an irrevocable instruction letter to U.S.
Concrete's transfer agent directing that certificates representing the shares of
U.S. Concrete Common Stock be delivered to such Stockholder pursuant to Section
3.01. Each Stockholder agrees promptly to cure any deficiencies with respect to
the endorsement of the certificates or other documents of conveyance with
respect to the Company Common Stock or with respect to the stock powers
accompanying such stock.
ARTICLE IV
CLOSING
4.01 CLOSING. The consummation of the Merger and delivery of the Merger
Consideration and the other transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of U.S. Concrete, 1300 Post Oak
Blvd., Suite 1220, Houston, Texas 77056, concurrently with the execution of this
Agreement or at such other time and date as U.S. Concrete, the Company and the
Stockholders may mutually agree, which date is herein referred to as the
"Closing Date."
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders, jointly and severally, represent and warrant to U.S.
Concrete as follows:
5.01 DUE ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Tennessee and is duly authorized and qualified to do business under all
applicable Laws to carry on its business in the places and in the manner as now
conducted. The Company has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as such business
is currently being conducted. Schedule 5.01 includes (a) certificate(s) of
existence and good standing for the Company issued by the appropriate
Governmental Authorities of the State of Tennessee, (b) a list of all
jurisdictions in which the Company is authorized or qualified to do business and
(c) certificate(s) of qualification or authority to do business (or similar
certificates) for the Company issued by the appropriate Governmental Authorities
of each of the jurisdictions in which the Company is authorized or qualified to
do business. The Company does not own, lease or operate any assets or
properties or carry on any business in any jurisdiction that Schedule 5.01 does
not list. Schedule 5.01 also contains a list of each county in Tennessee in
which the Company conducts business or has conducted business within the past
three years. True, complete and correct copies of the Articles of Incorporation
and Bylaws, each as amended, of the Company are attached hereto as Schedule
5.01, 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 Company have been provided to U.S. Concrete.
5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) The Company has the requisite corporate power and authority to enter
into this Agreement and the ancillary documents and agreements described herein
and to effect the Merger. Each Stockholder has the full legal right, power and
authority to enter into this Agreement. The execution, delivery and performance
of this Agreement and the transactions contemplated hereby have been approved by
the board of directors of the Company and by the Stockholders. No additional
corporate proceedings on the part of the Company are necessary to authorize the
execution and delivery of this Agreement and the consummation by the Company of
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and the Stockholders, and, assuming the
due authorization, execution and delivery hereof by U.S. Concrete and Newco,
constitutes a valid and binding agreement of the Company and the Stockholders,
enforceable against each of them in accordance with its terms.
(b) The execution and delivery of this Agreement by the Company and the
Stockholders do not, and the consummation by the Company and the Stockholders of
the transactions contemplated hereby will not, violate or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration under, or result in the creation of any
Encumbrance upon any of the properties or assets of the Company under any of the
terms, conditions or provisions of, (i) the Articles of Incorporation or Bylaws
of the Company, (ii) any Law applicable to the Stockholders or the Company or
any of the properties or assets of the
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Stockholders or the Company, or (iii) except as set forth in Schedule 5.02, any
agreement, note, bond, mortgage, indenture, deed of trust, license, franchise,
Permit, concession, lease or other instrument, obligation or agreement of any
kind to which any Stockholder or the Company is now a party or by which the
Company or any of its properties or assets may be bound or affected.
(c) Except for the Merger Filings and as set forth in Schedule 5.02, no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any Governmental Authority or other person or entity is
necessary for the execution and delivery of this Agreement by the Company and
the Stockholders or the consummation by the Company and the Stockholders of the
transactions contemplated hereby. Except as set forth in Schedule 5.02, none of
the contracts or agreements with Material Customers or contracts providing for
purchases or services individually in excess of $10,000, or in the aggregate in
excess of $25,000, or other agreements, licenses or Permits to which the Company
is a party requires notice to, or the consent or approval of, any Governmental
Authority or other person or entity to the execution and delivery of this
Agreement by the Company and the Stockholders or to any of the transactions
contemplated hereby to remain in full force and effect following such
transaction.
5.03 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of the
Company consists solely of 2,000 shares of Company Common Stock, of which 1048.1
shares are issued and outstanding. All of the issued and outstanding shares of
the Company Common Stock are owned beneficially and of record by the
Stockholders as set forth in Schedule 5.03. All of the issued and outstanding
shares of the Company Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, and were offered, issued, sold and delivered
by the Company in compliance with all applicable Laws, including, without
limitation, those Laws concerning the issuance of securities. None of such
shares were issued in violation of the preemptive rights of any past or present
stockholder of the Company. The exchange of Company Common Stock for U.S.
Concrete Common Stock pursuant to the Merger will transfer to U.S. Concrete
good, valid and marketable title in the shares of the Company Common Stock owned
by the Stockholders, free and clear of all Encumbrances except for those created
by U.S. Concrete. At the Effective Time, by virtue of the Merger Filing in
Tennessee the Merger will become effective in Tennessee. Except as set forth in
Schedule 5.03, (a) no shares of Company Common Stock are held by the Company as
treasury shares, and (b) no subscription, option, warrant, call, convertible or
exchangeable security, other conversion right or commitment of any kind exists
which obligates the Company to issue any of its capital stock or the
Stockholders to transfer any of the capital stock of the Company.
5.04 SUBSIDIARIES. Except as set forth in Schedule 5.04, the Company owns,
of record or beneficially, or controls, 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.
Except as set forth in Schedule 5.04, the Company is not, directly or
indirectly, a participant in any joint venture, limited liability company,
partnership or other noncorporate entity.
5.05 FINANCIAL STATEMENTS.
(a) The Company has delivered to U.S. Concrete true, complete and correct
copies of the following financial statements:
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(i) the reviewed balance sheets of the Company as of December 31,
1996, 1997 and 1998 and the related reviewed statements of operations,
stockholders' equity and cash flows for the three-year period ended
December 31, 1998, together with the related notes, schedules and report of
the Company's independent accountants (such balance sheets, the related
statements of operations, stockholders' equity and cash flows and the
related notes and schedules are referred to herein as the "Year-End
Financial Statements"); and
(ii) the unaudited balance sheet (the "Interim Balance Sheet") of the
Company as of June 30, 1999 (the "Balance Sheet Date") and the related
unaudited statements of operations, stockholders' equity and cash flows for
the six-month period ended on the Balance Sheet Date, together with the
related notes and schedules (such balance sheets, the related statements of
operations, stockholders' equity and cash flows and the related notes and
schedules are referred to herein as the "Interim Financial Statements").
The Year-End Financial Statements and the Interim Financial Statements
(collectively, the "Financial Statements") are attached as Schedule 5.05 to
this Agreement;
(b) Except as set forth in Schedule 5.05, the Financial Statements have
been prepared from the books and records of the Company in conformity with GAAP
and present fairly the financial position and results of operations of the
Company as of the dates of such statements and for the periods covered thereby.
The books of account of the Company have been kept accurately in all material
respects in the ordinary course of business, the transactions entered therein
represent bona fide transactions, and the revenues, expenses, assets and
liabilities of the Company have been properly recorded therein in all material
respects. Within the past five fiscal years of the Company, the Company has not
received any correspondence with its accountants, including without limitation,
management letters, which have indicated or disclosed that there is a "material
weakness" in or "reportable condition" with respect to (as those terms are
defined under GAAP) the Company's financial condition.
5.06 LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule 5.06, as
of the Balance Sheet Date the Company does not have, nor has it incurred since
that date, any liabilities or obligations (whether absolute, accrued, contingent
or otherwise) of any nature, except liabilities, obligations or contingencies
(a) that are reflected or accrued or reserved against in the Financial
Statements or reflected in the notes thereto, (b) that are of a nature not
required to be reflected in the Financial Statements and that do not exceed or
reasonably could be expected to exceed $5,000 individually or $10,000 in the
aggregate and (c) that were incurred after the Balance Sheet Date and were
incurred in the ordinary course of business, consistent with past practices.
Schedule 5.06 contains a reasonable estimate by the Company and the Stockholders
of the maximum amount that may be payable with respect to liabilities which are
not fixed. For each such liability for which the amount is not fixed or is
contested, the Company has provided a summary description of the liability
together with copies of all relevant documentation relating thereto. Schedule
5.06 sets forth the Company's outstanding principal amount of indebtedness for
borrowed money (including overdrafts) as of the date hereof. Except as set
forth in Schedule 5.06, there are no prepayment penalties, termination fees or
other payments triggered by the prepayment or termination of any loan or
indebtedness of the Company.
5.07 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.07 sets forth an accurate
list of the accounts and notes receivable of the Company as of the Balance Sheet
Date and of those generated
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between the Balance Sheet Date and the second business day preceding the Closing
Date, including any such amounts which are not reflected in the Interim Balance
Sheet. Receivables from and advances to employees, the Stockholders and any
entities or persons related to or Affiliates of the Stockholders are separately
identified in Schedule 5.07. Schedule 5.07 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
Company, 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, are stated in accordance with GAAP and are collectible in
the amounts shown on Schedule 5.07, net of reserves reflected in the Interim
Financial Statements with respect to the accounts receivable as of the Balance
Sheet Date, and net of reserves reflected in the books and records of the
Company (consistent with the methods used in the Interim Financial Statements)
with respect to receivables of the Company after the Balance Sheet Date.
5.08 PROPERTIES AND ASSETS.
(a) Schedule 5.08 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 Company with a book value in excess of $5,000
(i) owned by the Company as of the Balance Sheet Date and (ii) acquired since
the Balance Sheet Date. Schedule 5.08 also sets forth an accurate list of all
real and personal property currently leased by the Company, and includes
complete and correct copies of leases for significant equipment and for all real
property leased by the Company and descriptions of all real property (as
currently owned or leased by the Company) on which plants, buildings,
warehouses, workshops, garages and other structures (collectively, the
"Structures") and vehicles used in the operation of the business of the Company
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 Company. Schedule 5.08 indicates which
properties and assets used in the operation of the businesses of the Company are
currently owned by the Stockholders or Affiliates of either of the Company or
the Stockholders. Except as specifically identified in Schedule 5.08, all of
the tangible assets, plants, Structures, vehicles and other significant
machinery and equipment owned or leased by the Company listed in Schedule 5.08
are in good working order and condition, ordinary wear and tear excepted, have
been maintained in accordance with standard industry practice and are adequate
for the purpose for which they presently are being used or held for use. Except
as specifically described in Schedule 5.08, all properties and fixed assets used
by the Company in its business are either owned by the Company or leased under
agreements identified in Schedule 5.08 and are affixed only to one or more of
the real properties Schedule 5.08 lists. All leases set forth in Schedule 5.08
are in full force and effect and constitute valid and binding agreements of the
Company and the other parties thereto in accordance with their respective terms,
and all amounts currently payable thereunder have been paid. Neither the
Company nor any other party to the leases set forth in Schedule 5.08 is or has
been asserted to be in default, violation or breach of any such lease, and no
event has occurred and is continuing that constitutes or, with notice or the
passage of time or both, would constitute a default, violation or breach under
any such lease. The Company has good, valid and marketable title to the
tangible and intangible assets, personal property and real property owned and
used in its business, including, without limitation, the properties identified
in Schedule 5.08 as owned real property (each of which the Company owns in fee),
free and clear of all Encumbrances other than Permitted Encumbrances and those
set forth in Schedule 5.08. Schedule 5.08 contains true, complete and correct
copies of all title reports and title
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insurance policies received or owned by the Company with respect to the real
property owned or leased by the Company. Schedule 5.08 includes a summary
description of all commitments of the Company 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 Company has devoted
any significant effort or expenditure in the two-year period prior to the date
of the Agreement.
(b) Except as specifically described in Schedule 5.08, all uses of the real
property owned and leased by the Company conform in all material respects to all
applicable Laws and do not violate any instrument of record or agreement
affecting any such property. Neither the Company nor the Stockholders have
received any notice or communication from any Governmental Authority or other
person or entity indicating that any condition exists with respect to any of the
real property owned or leased by the Company or with respect to the improvements
thereon that violates any Law, including without limitation, any Environmental
Law. Neither the Company nor the Stockholders have received from any insurance
carrier insuring or proposing to insure any of the real property owned or leased
by the Company or any other person or entity any notice or other communication
noting any dangerous or illegal condition at any such property or any other
condition at any of such properties otherwise requiring corrective action.
Except as otherwise described on Schedule 5.08, all of the real property owned
and leased by the Company is in satisfactory, usable and operating condition
without the necessity of any major repairs, and all such real properties can be
used for the operations currently being conducted on such real properties.
Neither the Company nor the Stockholders have received any notice nor have any
knowledge that any of the real property owned or leased by the Company 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 no writ, injunction, decree, order or judgment
outstanding, nor any action, claim, suit or proceeding, pending or threatened,
relating to the ownership, lease, use, occupancy or operation of any real
property owned or leased by the Company.
(c) There is ingress and egress to and from each of the real properties
owned and leased by the Company of record adequate for the use of such
properties as currently operated by the Company. Except as disclosed in
Schedule 5.08, the Company has made no off-record agreements affecting the
ownership, use or occupation of any such properties. 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 Company as presently operated are installed and operating, and all
installation and connection charges therefor have been paid in full. Neither
the Company nor the Stockholders have received any notice stating that the
Company will not be able to obtain adequate supplies of water to operate its
business on any such properties as presently conducted, or that the provision of
utilities violates any public or private easement. Except as disclosed in
Schedule 5.08, neither the Company nor the Stockholders have received notice
that any part of any improvements on the real property owned or leased by the
Company (including any of the structures thereon) encroaches upon any property
adjacent thereto or upon any easement, nor is there any encroachment or overlap
upon the real property owned or leased by the Company. Each of the real
property leases listed in Schedule 5.08 grants the Company the exclusive right
to use and occupy the demised premises thereunder, and the Company enjoys
peaceful and undisturbed possession under its respective real property leases
listed on Schedule 5.08 for the real property leased by the Company. No person
or entity other than the Company is in possession of any of the real property
owned or leased by the Company. Except as set forth on Schedule 5.08, to the
best knowledge of the Company there are no contracts outstanding for the sale,
exchange, lease or transfer of
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any of the real property owned or leased by the Company, or any other right of a
third party to acquire any interest therein. To the best knowledge of the
Stockholders, the heating, cooling, ventilation, electrical and plumbing systems
at all of the real property owned and leased by the Company is in good working
condition.
5.09 MATERIAL CUSTOMERS AND CONTRACTS.
(a) Schedule 5.09 (i) sets forth an accurate list of all customers
representing 5% or more of the Company's revenues for each of the fiscal year
ended in 1998 and the interim period ended on the Balance Sheet Date (the
"Material Customers"), and (ii) sets forth an accurate list and briefly
describes all material contracts, warranties, commitments, understandings,
instruments and similar agreements and arrangements to which the Company is
currently a party or by which it or any of its properties is bound (the "Listed
Agreements"), including, but not limited to, (A) all customer contracts in
excess of $10,000, individually, or $25,000 in the aggregate, (B) contracts with
any labor organizations, (C) leases providing for annual rental payments in
excess of $5,000, individually, or $10,000 in the aggregate, (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 Company of assets or
securities for more than $5,000, individually, or $10,000 in the aggregate or
which contain, or commit or will commit the Company for a fixed term, (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
Company 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
Company has made available to U.S. Concrete true, complete and correct copies
and complete written descriptions of all the Listed Agreements.
(b) Except as set forth in Schedule 5.09, since December 31, 1998 (i) no
Material Customer has canceled or substantially reduced or, to the knowledge of
the Company and the Stockholders, is threatening to cancel or substantially
reduce its purchases of the Company's products or services, and (ii) neither the
Company nor any other party to the Listed Agreements is or has been asserted to
be in default, violation or breach of any such Listed Agreement, and no event
has occurred and is continuing that constitutes or with notice or the passage of
time or both, would constitute a default, violation or breach under any such
Listed Agreement. The Listed Agreements are in full force and effect and
constitute valid and binding agreements of the Company and the other parties
thereto in accordance with their respective terms.
(c) Except as set forth in Schedule 5.09, the Company is not a party to any
contracts subject to price redetermination or renegotiation. Except to the
extent set forth in Schedule 5.09, the Company is 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.
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(d) Except as set forth in Schedule 5.09, neither the Company, the
Stockholders 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 Company's customers for the
repurchase of products, sharing of fees, rebating of charges, bribes, kickbacks
or other similar arrangements.
(e) Schedule 5.09 sets forth a summary of each outstanding bid or proposal
by the Company that, if awarded to the Company, contemplates payments to the
Company in excess of $25,000.
(f) Except as set forth in Schedule 5.09, neither the Company nor the
Stockholders 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 Company nor the Stockholders have any knowledge of
any condition or state of facts which would justify the exercise of such a
right.
5.10 PERMITS. Schedule 5.10 contains an accurate list, summary description
and copies of all licenses, franchises, permits, approvals, certificates,
transportation authorities and other governmental authorizations and intangible
assets held by the Company that are material to the conduct of its business,
including, without limitation, permits, licenses and operating authorizations,
titles (including motor vehicle titles and current registrations), fuel permits,
franchises, certificates, trademarks, trade names, patents, patent applications
and copyrights owned or held by the Company (collectively, the "Permits"). The
Permits are valid, and the Company has not received any written notice that any
Governmental Authority intends to cancel, terminate or not renew any such
Permit. The Permits are all the permits, licenses, operating authorizations,
franchises, approvals, certificates, transportation authorities and other
governmental authorizations and intangible assets that are required by Law for
the operation of the businesses of the Company as conducted at the Balance Sheet
Date and the ownership of the assets and properties of the Company. The Company
has conducted and is conducting its business in substantial 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 is
not in violation of any of the foregoing. Except as specifically provided in
Schedule 5.10, the transactions contemplated by this Agreement will not result
in a default under, a breach or violation of, a termination of, or adversely
affect the rights and benefits afforded to the Company by, any Permits.
5.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5.11, (a) the
Company has complied with and is in compliance with all Environmental Laws, (b)
the Company has obtained and complied with all necessary permits, licenses,
authorizations and other approvals necessary to treat, transport, store, dispose
of and otherwise handle Hazardous Substances and has reported, to the extent
required by all Environmental Laws, all past and present sites owned or operated
by the Company where Hazardous Substances have been treated, stored, disposed of
or otherwise handled, (c) there have been no "releases" or threats of "releases"
(as defined in any Environmental Laws) at, from, in, to, under or on any
property currently or previously owned or operated by the Company, (d) there is
no on-site or off-site location to which the Company has transported or disposed
of Hazardous Substances or arranged for the transportation or disposal of
Hazardous Substances which is or could be the subject of any federal, state,
local or foreign enforcement action or any other investigation which could lead
to any claim against the Surviving Corporation, U.S. Concrete or Newco for any
clean-up cost, remedial work, damage to natural resources or personal injury,
including, but not limited to, any claim under any
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Environmental Law and (e) the Company has no contingent liability in connection
with any release or disposal of any Hazardous Substance into the environment.
None of the past or present sites owned or operated by the Company is currently
or has ever been designated as a 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 treatment, storage and/or disposal facility,
under any Environmental Law. The Company has provided U.S. Concrete with copies
(or, if not available, accurate written summaries) of all environmental
investigations, studies, audits, reviews and other analyses conducted by or on
behalf, or which otherwise are in the possession, of the Company respecting any
facility site or other property previously or presently owned or operated by the
Company.
5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS.
(a) Except as set forth in Schedule 5.12, the Company is not bound by or
subject to any arrangement with any labor union. Except as set forth in Schedule
5.12, no employees of the Company are represented by any labor union or covered
by any collective bargaining agreement nor, to the Company's or the
Stockholders' 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 Company's or the
Stockholders' knowledge, threatened labor dispute involving the Company and any
group of its employees nor has the Company experienced any significant labor
interruptions over the past five years. Neither the Company nor the Stockholders
have any knowledge of any significant issues or problems in connection with the
relationship of the Company with its employees. The Company considers its
relationship with its employees to be good.
(b) Except as set forth in Schedule 5.12, (i) there is no unfair labor
practice charge or complaint pending or, to the knowledge of the Stockholders,
threatened against or otherwise affecting the Company, (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 Company's employees is pending or threatened against the
Company, (iii) no grievance is pending or threatened against the Company, (iv)
the Company is 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 Company has paid in full to, or accrued in its financial
books and records, all employees of the Company 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 and (vi) the Company is in substantial compliance with its
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.
(c) Except as set forth in Schedule 5.12, all employees of the company 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 Company in their specific jobs.
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5.13 INSURANCE. Schedule 5.13 sets forth an accurate list as of the
Balance Sheet Date of (a) all insurance policies carried by the Company, copies
of which are attached as Schedule 5.13, (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 Company and previously carried by the Company 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
5.13, none of such policies are "claims made" policies. The policies described
in Schedule 5.13 for the current policy year provide adequate coverage against
the risks involved in the Company's business and are currently in full force and
effect. Any open claims as of the Closing Date are recoverable under such
policies, except to the extent of any applicable deductible or loss retention as
set forth on Schedule 5.13.
5.14 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 5.14 sets forth an
accurate schedule of all officers, directors and Stockholder employees of the
Company 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 (a) the
Balance Sheet Date and (b) the date hereof. Neither the Company nor the
Stockholders have any knowledge that any of such individuals has any present
intention of terminating his or her employment or association with the Company.
Attached to Schedule 5.14 are true, complete and correct copies of each
employment or consulting agreement with any employee of the Company or the
Stockholders. Except as set forth in Schedule 5.14, the Company is not a party
to any agreement, nor has it 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 the Company or other person performing services for the 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.
5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS;
EMPLOYEE POLICIES. Schedule 5.15 sets forth all agreements containing covenants
not to compete or solicit employees or to maintain the confidentiality of
information to which the Company or any of the Stockholders is bound or under
which the Company or any of the Stockholders has any rights or obligations.
Schedule 5.15 lists all employee manuals and all material policies, procedures
and work-related rules that apply to any employee, director or officer of, or
any other individual performing consulting or other independent contractor
services for, the Company. The Company has provided U.S. Concrete with a copy of
all such written policies and procedures and a written description of all such
unwritten policies and procedures.
5.16 EMPLOYEE BENEFIT PLANS.
(a) Schedule 5.16 sets forth an accurate schedule of each "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and all deferred compensation or retirement
funding arrangements, whether formal or informal and whether legally binding or
not, that are currently in force or under which the Company or an ERISA
Affiliate has any current or future obligation or liability or under which any
present or former employee of the Company or an ERISA Affiliate, or such present
or former employee's dependents or beneficiaries, has any current or future
right to benefits (each such plan and arrangement referred to hereinafter as a
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"Plan"), together with true and complete copies of such Plans, arrangements and
any trusts related thereto, and classifications of employees covered thereby as
of the Balance Sheet Date. Except as set forth in Schedule 5.16, neither the
Company nor any ERISA Affiliate sponsors, maintains or contributes currently, or
sponsored, maintained or contributed at any time during the preceding five
years, to any plan, program, fund or arrangement that constitutes an employee
pension benefit plan. Each Plan may be terminated by the Company, 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 Plan. For purposes of this Agreement, the term "employee
pension benefit plan" shall have the meaning given that term in Section 3(2) of
ERISA, and the term "ERISA Affiliate" means any corporation or trade or business
under common control with the Company as determined under Section 414(b), (c),
(m) or (o) of the Code.
(b) Each Plan listed in Schedule 5.16 is in compliance in all material
respects with the applicable provisions of ERISA, the Code and any other
applicable Law. Except as set forth in Schedule 5.16, with respect to each Plan
of the Company and each ERISA Affiliate (other than a "multiemployer plan," as
defined in Section 4001(a)(3) of ERISA), all reports and other documents
required under ERISA or other applicable Law to be filed with any Governmental
Authority, including without limitation all Forms 5500, or required to be
distributed to participants or beneficiaries, have been duly and timely filed or
distributed. True and complete copies of all such reports and other documents
with respect to the past five years for each Plan have been provided to U.S.
Concrete. No "accumulated funding deficiency" (as defined in Section 412(a) of
the Code) with respect to any Plan has been incurred (without regard to any
waiver granted under Section 412 of the Code), nor has any funding waiver from
the Internal Revenue Service been received or requested. Except as set forth in
Schedule 5.16, each Plan that is intended to be "qualified" within the meaning
of Section 401(a) of the Code (a "Qualified Plan") is, and has been during the
period from its adoption to the date hereof, so qualified, both as to form and
operation and all necessary approvals of Governmental Authorities, including a
favorable determination as to the qualification under the Code of each of such
Qualified Plans and each amendment thereto, have been timely obtained. Except
as set forth in Schedule 5.16, all accrued contribution obligations of the
Company with respect to any Plan have either been fulfilled in their entirety or
are fully reflected in the Financial Statements.
(c) No Plan has incurred or will incur, and neither the Company nor any
ERISA Affiliate has incurred or will incur, with respect to any Plan, any
liability for excise tax or penalty due to the Internal Revenue Service. There
have been no terminations, partial terminations or discontinuances of
contributions to any Qualified Plan during the preceding five years without
notice to and approval by the Internal Revenue Service and payment of all
obligations and liabilities attributable to such Qualified Plan.
(d) Except as set forth in Schedule 5.16, neither the Company nor any ERISA
Affiliate has made any promises of retirement or other benefits to employees,
except as set forth in the Plans, and neither the Company nor any ERISA
Affiliate maintains or has established any 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, and at the expense of the participant or the
beneficiary of the
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participant, or retiree medical liabilities. Neither the Company 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.
Except as set forth in Schedule 5.16, neither the Company nor any ERISA
Affiliate has any current or future obligation or liability with respect to a
Plan pursuant to the provisions of a collective bargaining agreement.
(e) Neither the Company nor any ERISA Affiliate has incurred, nor will it
incur as a result of past activities, any material liability to the Pension
Benefit Guaranty Corporation in connection with any Plan. The assets of each
Plan that are subject to Title IV of ERISA are sufficient to provide the
benefits under such Plan, the payment of which the Pension Benefit Guaranty
Corporation would guarantee if such Plan were terminated, and such assets are
also sufficient to provide all other "benefits liabilities" (as defined in ERISA
Section 4001(a)(16)) due under such Plan upon termination.
(f) No "reportable event" (as defined in Section 4043 of ERISA) has
occurred and is continuing with respect to any Plan. There are no pending, or to
the Company's and the Stockholders' knowledge, threatened claims, lawsuits or
actions (other than routine claims for benefits in the ordinary course) asserted
or instituted against, and neither the Company nor any ERISA Affiliate has
knowledge of any threatened litigation or claims against, the assets of any Plan
or its related trust or against any fiduciary of a Plan with respect to the
operation of such Plan. To the Company's and the Stockholders' knowledge, there
are no investigations or audits of any 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 Company or any ERISA
Affiliate that has not been fully discharged. Neither the Company nor any ERISA
Affiliate has participated in any voluntary compliance or closing agreement
programs established with respect to the form or operation of a Plan.
(g) Neither the Company 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 Plan for which exemption was not
available. Except as set forth in Schedule 5.16, neither the Company nor any
ERISA Affiliate is, or ever has been, a participant in or is obligated to make
any payment to a multiemployer plan. No person or entity that was engaged by the
Company or an ERISA Affiliate as an independent contractor within the last five
years reasonably can or will be characterized or deemed to be an employee of the
Company or an ERISA Affiliate under applicable Laws for any purpose whatsoever,
including, without limitation, for purposes of federal, state and local income
taxation, workers' compensation and unemployment insurance and Plan eligibility.
5.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in Schedule
5.17, there are no claims, actions, suits or proceedings, pending or, to the
knowledge of the Company and the Stockholders, threatened against or affecting
the Company, at law or in equity, or before or by any Governmental Authority
having jurisdiction over the Company. No written notice of any claim, action,
suit or proceeding, whether pending or threatened, has been received by the
Company and, to the Stockholders' and the Company's knowledge, there is no basis
therefor. Except to the extent set forth in Schedule 5.17, the Company has
conducted and is conducting its business in compliance with all Laws applicable
to the Company, its assets or the operation of its business.
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5.18 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
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. The Company has timely filed all
requisite federal, state, local and other tax returns for all fiscal periods
ended on or before the Closing, and has duly paid in full or made adequate
provision in the Financial Statements for the payment of all Taxes for all
periods ending at or prior to the Closing Date. The Company has 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 any examinations, audits,
proceedings, notices, waivers, asserted deficiencies or disputed valuations in
progress or claims against the Company relating to Taxes for any period or
periods prior to and including the Balance Sheet Date and no notice of any claim
for Taxes, whether pending or threatened, has been received. The Company has
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
Company is not a party to any Tax allocation or sharing agreement and is 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 Financial
Statements as of the Balance Sheet Date 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 Company for
the last three fiscal years have been previously provided to U.S. Concrete.
There are no requests for ruling in respect of any Tax pending between the
Company and any Taxing authority. The Company has been taxed under the
provisions of Subchapter S of the Code since March 3, 1993. The Company
currently utilizes the accrual method of accounting for income tax purposes.
Such method of accounting has not changed in the past five years.
5.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
in Schedule 5.19, the Company has conducted its operations in the ordinary
course and there has not been:
(a) any material adverse change in the business, operations, properties,
condition (financial or other), assets, liabilities (contingent or otherwise),
results of operations or prospects of the Company;
(b) any damage, destruction or loss (whether or not covered by insurance)
materially adversely affecting the assets, properties or business of the
Company;
(c) any change in the authorized capital stock of the Company or in its
outstanding securities or any change in the Stockholders' ownership interests in
the Company or any grant of any options, warrants, calls, conversion rights or
commitments;
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(d) except as set forth on Schedule 7.08, any declaration or payment of any
dividend or distribution in respect of the capital stock or any direct or
indirect redemption, purchase or other acquisition of any of the capital stock
of the Company;
(e) any increase in the compensation payable or to become payable by the
Company to the Stockholders or any of its 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 5.19;
(f) any work interruptions, labor grievances or claims filed;
(g) any proposed law, regulation or event or condition of any character
materially adversely affecting the assets, properties or business of the
Company;
(h) except for the Merger, any sale or transfer, or any agreement to sell
or transfer, any material assets, properties or rights of the Company to any
person or entity, including, without limitation, the Stockholders and their
Affiliates;
(i) any cancellation, or agreement to cancel, any indebtedness or other
obligation owing to the Company;
(j) any increase in the indebtedness of the Company, 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;
(k) 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;
(l) 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 Company's business;
(m) any waiver of any material rights or claims of the Company;
(n) any material breach, amendment or termination of any Listed Agreement,
Permit or other right to which the Company is a party or any of its property is
subject; or
(o) any other material transaction by the Company outside the ordinary
course of business.
5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY. Schedule 5.20
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 the Company has
accounts or safe deposit boxes; (b) the names in which the accounts or boxes are
held; (c) the type of account and the cash, cash equivalents and securities held
in such account as of the second business day prior to the Closing, none of
which assets have been withdrawn from such accounts since such date except for
bona fide business purposes in the ordinary
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course of the business of the Company; and (d) the name of each person
authorized to draw thereon or have access thereto. Schedule 5.20 also sets forth
the name of each person, corporation, firm or other entity holding a general or
special power of attorney from the Company and a description of the terms
thereof.
5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor the
Stockholders 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.
5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth in Schedule 5.22, neither the Stockholders nor any other Affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
Competitive Business, lessor, lessee, customer or supplier of the Company.
Except as set forth in Schedule 5.22, no officer or director of the Company nor
the Stockholders have, nor had any interest in any tangible or intangible assets
or property, real or personal, used in or pertaining to the business of the
Company.
5.23 INTANGIBLE PROPERTY. Schedule 5.23 sets forth an accurate list of all
patents, patent applications, trademarks, service marks, technology, licenses,
trade names, copyrights and other intellectual property or proprietary property
rights owned or used by the Company. The Company owns or possesses, and the
assets of the Company include, sufficient legal rights to use all of such items
without conflict with or infringement of the rights of others.
5.24 CAPITAL EXPENDITURES. Schedule 5.24 sets forth the total amount of
capital expenditures currently budgeted to be incurred by the company in excess
of $25,000 in the aggregate during the balance of the Company's current fiscal
year.
5.25 INVENTORIES. Except as Schedule 5.25 sets forth: (i) all
inventories, net of reserves determined in accordance with GAAP, of the Company
which are classified as such on the Interim Balance Sheet are merchantable and
salable or usable in the ordinary course of business of the Company; and (ii)
the Company does 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 Company or during the past five years has sustained a
difficulty material to the Company in obtaining its inventories.
5.26 TAX REORGANIZATION REPRESENTATION. The Surviving Corporation will
acquire substantially all of the properties of the Company within the meaning of
Section 368(a)(2)(D) of the Code.
5.27 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of the Stockholders
and the Company that U.S. Concrete and Newco are not making any representation
or warranty whatsoever, express or implied, other than those representations and
warranties of U.S. Concrete and Newco expressly set forth in this Agreement.
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5.28 DISCLOSURE. The Stockholders and the Company have fully provided U.S.
Concrete or its representatives with all the information that U.S. Concrete has
requested in analyzing whether to consummate the Merger and the other
transactions contemplated by this Agreement. None of the information so
provided nor any representation or warranty of the Stockholders to U.S. Concrete
or Newco 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. There
is no fact known to the Stockholders which has specific application to the
Company (other than general economic or industry conditions) and which
materially adversely affects or, so far as the Stockholders can reasonably
foresee, materially threatens, the business or financial condition of the
Company which has not been described in the Agreement or the Schedules hereto or
disclosed in writing to U.S. Concrete.
5.29 YEAR 2000 COMPLIANCE. To the best knowledge of the Stockholders after
reasonable investigation, all devices, systems, machinery, information
technology, computer software and hardware, and other date sensitive technology
(jointly and severally its "systems") necessary for the Company's business as
presently conducted will be Year 2000 Compliant within a period of time
calculated to result in no material disruption of any of their business
operations. For purposes hereof, "Year 2000 Compliant" means that such systems
are designed to be used prior to, during and after the Gregorian calendar year
2000 A.D. and will operate during each such time period without error relating
to date data, specifically including any error relating to, or the product of,
date data which represents or references different centuries or more than one
century.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO
U.S. Concrete and Newco jointly and severally represent and warrant to the
Stockholders as follows:
6.01 ORGANIZATION. Each of U.S. Concrete and Newco is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, and is duly authorized and qualified under all applicable Laws to
carry on its business in the places and in the manner now conducted. Each of
U.S. Concrete and Newco has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as such business
is currently being conducted.
6.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) Each of U.S. Concrete and Newco has the full legal right, power and
authority to enter into this Agreement and the ancillary documents and
agreements described herein and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement has been
approved by the boards of directors of U.S. Concrete and Newco and by U.S.
Concrete, as the sole stockholder of Newco. No additional corporate proceedings
on the part of U.S. Concrete or Newco are necessary to authorize the execution
and delivery of this Agreement and the consummation by U.S. Concrete and Newco
of the transactions contemplated hereby. This Agreement has been duly and
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validly executed and delivered by U.S. Concrete and Newco, and, assuming the due
authorization, execution and delivery by the Company and the Stockholders,
constitutes valid and binding agreements of U.S. Concrete and Newco, enforceable
against U.S. Concrete and Newco in accordance with its terms.
(b) The execution and delivery of this Agreement by U.S. Concrete and Newco
do not, and the consummation by U.S. Concrete and Newco of the transactions
contemplated hereby will not, violate or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under any of the terms, conditions or provisions of (i) the
Certificate of Incorporation or By-Laws of U.S. Concrete or Newco, (ii) any Law
applicable to either U.S. Concrete or Newco or any of its properties or assets
or (iii) any material note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which U.S. Concrete or Newco is now a party or by
which either U.S. Concrete or Newco or any of its properties or assets may be
bound or affected.
(c) Except for the Merger Filings and such filings as may be required under
federal or state securities Laws, no declaration, filing or registration with,
or notice to, or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this Agreement by U.S.
Concrete and Newco or the consummation by U.S. Concrete and Newco of the
transactions contemplated hereby.
6.03 U.S. CONCRETE COMMON STOCK. The shares of U.S. Concrete Common Stock
to be issued to the Stockholders pursuant to the Merger 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 U.S. Concrete Common
Stock pursuant to the Merger will transfer to the Stockholders valid title to
such shares of U.S. Concrete Common Stock, free and clear of all Encumbrances,
except for any Encumbrances created by the Stockholders.
6.04 TAX REORGANIZATION REPRESENTATIONS.
(a) Prior to the Merger, U.S. Concrete will be in control of Newco within
the meaning of Section 368(c) of the Code.
(b) U.S. Concrete has no plan or intention to cause the Surviving
Corporation to issue additional shares of its stock that would result in U.S.
Concrete losing control of the Surviving Corporation within the meaning of
Section 368(c) of the Code.
(c) U.S. Concrete has no plan or intention to reacquire any of its stock
issued in the Merger.
(d) U.S. Concrete has no plan or intention to liquidate the Surviving
Corporation; to merge the Surviving Corporation with or into another
corporation; to sell or otherwise dispose of the stock of the Surviving
Corporation except for transfers of stock to another corporation controlled by
U.S. Concrete; or to cause the Surviving Corporation to sell or otherwise
dispose of any of its assets,
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except for dispositions made in the ordinary course of business or transfers of
assets to a corporation controlled by U.S. Concrete.
(e) Following the Closing, U.S. Concrete's intention is that the Surviving
Corporation will continue the historic business of the Company or use a
significant portion of the historic business assets of the Company in a
business, all as required to satisfy the "continuity of business enterprise"
requirement under Section 368 of the Code.
(f) U.S. Concrete does not own, nor has it owned during the past five
years, any shares of the stock of the Company.
(g) Each of U.S. Concrete and Newco is undertaking the Merger for a bona
fide business purpose and not merely for the avoidance of federal income tax.
(h) Neither U.S. Concrete nor Newco is an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
(i) As of the Closing Date, the fair market value of the assets of Newco
will exceed the sum of Newco's liabilities plus the amount of other liabilities,
if any, to which Newco's assets are subject.
6.05 SEC FILINGS; DISCLOSURE. U.S. Concrete has filed with the SEC all
material forms, statements, reports and documents required to be filed by it
prior to the date hereof under each of the 1933 Act and the 1934 Act and the
respective rules and regulations thereunder, (a) all of which, as amended, if
applicable, complied when filed in all material respects with all applicable
requirements of the appropriate Act and the rules and regulations thereunder,
and (b) none of which, as amended, if applicable, contains any untrue statement
of material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made and at the time they were made, not
misleading.
6.06 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of U.S. Concrete
and Newco that the Stockholders are not making any representation or warranty
whatsoever, express or implied, other than those representations and warranties
of the Stockholders expressly set forth in this Agreement.
6.07 DISCLOSURE. U.S. Concrete has fully provided the Stockholders or
their representatives with all the information that the Stockholders have
requested in analyzing whether to consummate the Merger. None of the
information so provided nor any representation or warranty of U.S. Concrete
contained 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
or therein, in light of the circumstances under which they were made, not
misleading.
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ARTICLE VII
CERTAIN COVENANTS
7.01 Release From Guarantees. U.S. Concrete shall use its commercially
reasonable efforts to have the Stockholders released from the personal
guarantees of the Company's indebtedness identified in Schedule 7.01 within 90
days after the Closing Date. U.S. Concrete hereby agrees to indemnify and
defend the Stockholders and hold each Stockholder harmless for any amounts that
such Stockholder is required to pay in connection with the enforcement of any
obligations under such personal guarantees after the Closing, including without
limitation any reasonable attorneys' fees and expenses incurred in connection
therewith.
7.02 FUTURE COOPERATION; TAX MATTERS. The Stockholders and U.S. Concrete
shall each deliver or cause to be delivered to the other following the Closing
such additional instruments as the other may reasonably request for the purpose
of fully carrying out this Agreement. The Stockholders will cooperate and use
their commercially reasonable best efforts to have the present officers,
directors and employees of the Company cooperate with U.S. Concrete and the
Surviving Corporation at and after the Closing in furnishing information,
evidence, testimony and other assistance in connection with any actions,
proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to the Closing. The Stockholders will cooperate
with the Surviving Corporation in the preparation of all Tax returns covering
the period from the beginning of the Company's current Tax year through the
Closing. In addition, U.S. Concrete will provide the Stockholders with access
to such of its books and records as may be reasonably requested by the
Stockholders in connection with federal, state and local tax matters relating to
periods prior to the Closing. The party requesting cooperation, information or
actions under this Section 7.02 shall reimburse the other party for all
reasonable out-of-pocket costs and expenses paid or incurred in connection
therewith, which costs and expenses shall not, however, include per diem charges
for employees or allocations of overhead charges.
7.03 EXPENSES. U.S. Concrete will pay the fees, expenses and disbursements
of U.S. Concrete and its agents, representatives, accountants and counsel
incurred in connection with the execution, delivery and performance of this
Agreement and any amendments hereto. The Company will be responsible for the
fees and expenses of Arthur Andersen LLP's audit or audit related procedures in
connection with the transactions contemplated hereby. The Stockholders will pay
their fees, expenses and disbursements and those of their and the Company's
agents, representatives, financial advisors, accountants and counsel incurred in
connection with the execution, delivery and performance of this Agreement and
any amendments hereto and the consummation of the transactions contemplated
hereby, including, without limitation, accounting fees and related expenses
attributable to the final Tax returns of the Company and the Stockholders for
periods through the Closing. The Stockholders will also pay any costs
associated with business brokers or other advisors engaged by the Stockholders
or the Company.
7.04 LEGAL OPINION. At the Closing, the Company and the Stockholders shall
cause their legal counsel, Evans & Petree, a Professional Association, to
deliver to U.S. Concrete a legal opinion in form and substance acceptable to
U.S. Concrete.
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7.05 EMPLOYMENT AGREEMENTS. Concurrently with the execution of this
Agreement, the Surviving Corporation shall enter into a mutually acceptable
Employment Agreement with each of the individuals identified on Schedule 7.05
(collectively, the "Employment Agreements").
7.06 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the
execution of this Agreement, (a) the Stockholders shall repay to the Company all
amounts outstanding as advances to or receivables from the Stockholders, each of
which advances or receivables is specifically reflected in Schedule 5.07, and
(b) the Company shall repay all amounts outstanding under loans to the Company
from the Stockholders, each of which loans to the Company is specifically
reflected in Schedule 5.06.
7.07 STOCK OPTIONS. U.S. Concrete shall grant nonqualified options to
purchase an aggregate of 40,000 shares of U.S. Concrete Common Stock as of the
Closing Date under U.S. Concrete's 1999 Incentive Plan (the "Incentive Plan") to
certain key employees of the Company (other than the Stockholders), as set forth
on Schedule 7.07 in the amounts listed thereon. Schedule 7.07 shall also
include the social security number and home address of each individual listed
thereon. Such options shall vest in equal annual increments for four years,
commencing on the first anniversary of the Closing Date.
7.08 PRE-CLOSING DISTRIBUTIONS. Prior to the Closing, the Company may have
distributed to the Stockholders the cash and other assets set forth on Schedule
7.08. Any such distributions shall have been authorized by the Board of
Directors of the Company prior to the Closing, and the Company and the
Stockholders shall have used their respective best efforts to complete such
distributions prior to the Closing. Notwithstanding the foregoing, if any such
authorized distributions have not been completed prior to the Closing, the
Surviving Corporation shall use reasonable efforts to complete such authorized
distributions after the Closing. The Stockholders' sole recourse against the
Company with respect to this Section 7.08 shall be to receive the assets to be
distributed.
7.09 WORKING CAPITAL ADJUSTMENT. As soon as practicable, and in any event
within 75 days after the Closing Date, U.S. Concrete shall cause to be prepared
and delivered to the Stockholders a balance sheet of the Company as of August
31, 1999 (the "August 31, 1999 Balance Sheet") and a working capital adjustment
schedule (the "Adjustment Schedule"). The Adjustment Schedule will set forth
(a) the amount of cash on the August 31, 1999 Balance Sheet less the amount of
cash and cash equivalents of the Company distributed between August 31, 1999 and
the Closing Date (excluding the distribution of $116,000 from the proceeds of
the sale of real property located in Olive Branch, Mississippi), as set forth on
Schedule 7.08 (the "Adjusted Cash Amount") and (b) the amount of net working
capital of the Company at August 31, 1999 (computed by subtracting current
liabilities from current assets (excluding (i) cash and (ii) any current assets
of the Company distributed between August 31, 1999 and the Closing Date as set
forth on Schedule 7.08) listed on the August 31, 1999 Balance Sheet) (the
"Adjusted Working Capital Amount"). If the aggregate of the Adjusted Cash
Amount and the Adjusted Working Capital Amount (the "Adjusted Amount") is less
than $1,220,000, then the Stockholders shall, no later than 15 days after
delivery of the Adjustment Schedule by U.S. Concrete, pay to the Surviving
Corporation the amount by which $1,220,000 exceeds the Adjusted Amount (the
"Shortfall"). If the Adjusted Amount is greater than $1,220,000, then the
Surviving Corporation shall, no later than 15 days after delivery of the
Adjustment Schedule, pay to the Stockholders, on a pro rata basis in proportion
to their percentage ownership of the Company Common Stock outstanding
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immediately prior to the Closing, the amount by which the Adjusted Amount
exceeds $1,220,000 (the "Excess"). The August 31, 1999 Balance Sheet and
Adjustment Schedule will be final and binding on the parties hereto unless,
within 15 days following the delivery of the Adjustment Schedule by U.S.
Concrete, the Stockholders notify U.S. Concrete in writing that the Stockholders
disagree with all or any portion of the August 31, 1999 Balance Sheet and/or the
Adjustment Schedule. If the Stockholders and U.S. Concrete cannot mutually
resolve any such disagreement within 15 days after the expiration of the
Stockholders' notice of disagreement, then the Stockholders and U.S. Concrete
shall submit the dispute to a mutually agreeable "Big Five" independent
certified public accountant (the "Accounting Firm") within 10 days after the end
of such 15-day period. If the Stockholders and U.S. Concrete are unable to
agree upon such an accountant within such 10-day period, then the Stockholders
and U.S. Concrete shall each select a "Big Five" accountant and within five days
after their selection, those two accountants shall select a third "Big Five"
accountant, which third accountant shall act as the Accounting Firm. The
Stockholders and U.S. Concrete shall request that the Accounting Firm audit the
August 31, 1999 Balance Sheet and provide a computation of the Adjusted Cash
Amount and/or the Adjusted Working Capital Amount within 30 days thereafter, and
this computation will be final and binding upon the parties hereto and used to
compute the Shortfall or the Excess, as the case may be, the payment of which
shall be made within five days of delivery by U.S. Concrete of the audited
August 31, 1999 Balance Sheet.
ARTICLE VIII
INDEMNIFICATION
The Stockholders, U.S. Concrete and Newco each make the following
covenants:
8.01 General Indemnification by the Stockholders. Subject to Section 8.05
and Section 8.06, the Stockholders covenant and agree that they will jointly and
severally (without any right of indemnification or contribution from the
Company) indemnify, defend, protect and hold harmless U.S. Concrete, Newco and
the Surviving Corporation, and their respective officers, directors, employees,
stockholders, agents, representatives and Affiliates, at all times from and
after the date of this Agreement from and against all Losses incurred by any of
such indemnified persons and entities as a result of or arising from (a) until
the Expiration Date any breach of the representations and warranties of the
Stockholders set forth herein or in the Schedules attached hereto or
certificates delivered in connection herewith, (b) any breach or nonfulfillment
of any covenant or agreement on the part of the Stockholders or the Company
under this Agreement, (c) all income Taxes payable by the Company for all
periods prior to and including the Closing Date, (d) all transfer and other
Taxes arising from the transactions contemplated by this Agreement, (e) any
violation of any Environmental Law by the Company or with respect to any
property currently or previously owned by the Company (f) any encroachment of
the improvements on the real property owned or leased by the Company upon any
property adjacent thereto or upon any easement or (g) all claims naming the
Company as a "potentially responsible party" in connection with the site known
as the South 8th Street Superfund Site in West Memphis, Arkansas and/or the site
known as the Gurley Pit Site in Edmiston, Arkansas, including without limitation
those brought in the case of USA and the State of Arkansas v. Aircraft Service
International, et al, No. J-C-98-362 in the United States District Court,
Eastern District of Arkansas, Jonesboro Division; provided, however, that in the
event any amount previously paid by the Company to cover clean-up costs of these
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sites is returned to the Company, then Newco shall pay such amount to the
Stockholders, on a pro rata basis in proportion to their percentage ownership of
the Company Common Stock outstanding immediately prior to the Closing, within 30
days of receipt of such returned funds.
8.02 INDEMNIFICATION BY U.S. CONCRETE. Subject to Section 8.05 and Section
8.06, U.S. Concrete covenants and agrees that it will indemnify, defend, protect
and hold harmless the Stockholders and their respective agents, representatives,
Affiliates, beneficiaries and heirs and employees at all times from and after
the date of this Agreement from and against all Losses incurred by any of such
indemnified persons as a result of or arising from (a) until the Expiration
Date, any breach of the representations and warranties of U.S. Concrete or Newco
set forth herein or in the Schedules attached hereto or certificates delivered
in connection herewith or (b) any breach or nonfulfillment of any covenant or
agreement on the part of U.S. Concrete or Newco under this Agreement.
8.03 THIRD PERSON CLAIMS. Promptly after any party entitled to
indemnification under Sections 8.01 and 8.02 hereof (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person or entity not a party to this Agreement ("Third Person"), of the
commencement of any action or proceeding by a Third Person, which the
Indemnified Party believes in good faith is an indemnifiable claim under this
Agreement, the Indemnified Party shall give to the party obligated to provide
indemnification pursuant to Sections 8.01 or 8.02 hereof (hereinafter the
"Indemnifying Party") written notice of such claim or the commencement of such
action or proceeding. Such notice shall state the nature and the basis of such
claim and a reasonable estimate of the amount thereof. The Indemnifying Party
shall have the right to defend and settle, at its own expense and by its own
counsel reasonably acceptable to the Indemnified Party, any such matter so long
as the Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in all commercially
reasonable respects in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records and other information reasonably
requested by the Indemnifying Party and in the Indemnified Party's possession or
control. After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability, and for
so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability; provided, however, that the Indemnified Party shall
be entitled, at its expense, to participate in the defense of such asserted
liability and the negotiations of the settlement thereof. The Indemnifying
Party shall not settle any such Third Person claim without the consent of the
Indemnified Party, unless the settlement thereof imposes no liability or
obligation on, and includes a complete release from liability of, the
Indemnified Party. If the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person claim and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section with respect to such Third Person claim shall be limited to
the amount so offered in settlement by said Third Person; provided, however,
that notwithstanding the foregoing, the Indemnified Party shall be entitled to
refuse to consent to any such proposed settlement and the Indemnifying Party's
liability hereunder shall not be limited by the amount of the proposed
settlement if such settlement imposes any liability or obligation on, or does
not provide for the complete release of, the Indemnified Party. If, upon
receiving notice, the Indemnifying Party does not timely undertake to
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defend such matter to which the Indemnified Party is entitled to indemnification
hereunder, or fails diligently to pursue such defense, the Indemnified Party may
undertake such defense through counsel of its choice, at the cost and expense of
the Indemnifying Party, and the Indemnified Party may settle such matter, in its
discretion, and the Indemnifying Party shall reimburse the Indemnified Party for
the amount paid in such settlement and any other liabilities or expenses
incurred by the Indemnified Party in connection therewith.
8.04 Non-Third Person Claims. In the event that any Indemnified Party
asserts the existence of a claim giving rise to Losses (but excluding claims
resulting from the assertion of liability by Third Persons), such party shall
give written notice to the Indemnifying Party. Such written notice shall state
that it is being given pursuant to this Section 8.04, specify the nature and
amount of the claim asserted, and indicate the date on which such assertion
shall be deemed accepted and the amount of the claim deemed a valid claim (such
date to be established in accordance with the next sentence). If such
Indemnifying Party, within 60 days after the mailing of notice by such
Indemnified Party, shall not give written notice to such Indemnified Party
announcing such Indemnifying Party's intent to contest such assertion of such
Indemnified Party, such assertion shall be deemed accepted and the amount of
such claim shall be deemed a valid claim. In the event, however, that such
Indemnifying Party contests such assertion of a claim by giving such written
notice to the Indemnified Party within said period, then the parties shall act
in good faith to reach agreement regarding such claim. In the event that
litigation shall arise with respect to any such claim, the prevailing party
shall be entitled to reimbursement of costs and expenses incurred in connection
with such litigation including reasonable attorneys' fees, if the parties
hereto, acting in good faith, cannot reach agreement with respect to such claim
within 60 days after the notice provided by the Indemnified Party.
8.05 Indemnification Deductible. Neither the Stockholders, on the one
hand, nor U.S. Concrete, Newco and the Surviving Corporation, on the other hand,
shall be entitled to indemnification from the other under the provisions of
Section 8.01(a) or Section 8.02(a), as the case may be, until such time as, and
only to the extent that, the claims subject to indemnification by such other
party exceed, in the aggregate, $77,974. Notwithstanding the foregoing, the
limitations set forth in this Section 8.05 shall not apply to fraudulent
misrepresentations.
8.06 INDEMNIFICATION LIMITATION. Subject to Section 8.05, the aggregate
indemnification obligation of the Stockholders under Section 8.01(a) and of U.S.
Concrete and Newco under Section 8.02(a) shall be limited to $7,797,390.
Notwithstanding the foregoing, the limitations set forth in this Section 8.06
shall not apply to fraudulent misrepresentations.
8.07 Indemnification for Negligence of Indemnified Party. THE RIGHTS TO
INDEMNIFICATION UNDER THIS ARTICLE VIII INCLUDE RIGHTS TO INDEMNIFICATION FOR
THE RESULTS OF AN INDEMNIFIED PARTY'S ACTUAL OR ALLEGED NEGLIGENCE, IF SUCH
INDEMNIFIED PARTY WOULD OTHERWISE BE ENTITLED TO INDEMNIFICATION HEREUNDER.
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ARTICLE IX
NONCOMPETITION COVENANTS
9.01 PROHIBITED ACTIVITIES.
(a) For no additional consideration, each Stockholder will not for five
years following the Closing Date and, if any Stockholder is party to an
Employment Agreement, if longer, one year following such Stockholder's
termination of employment with the Surviving Corporation or its Affiliates (with
the applicable period being herein referred to as the "Noncompete Term"),
directly or indirectly, for himself 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 Competitive Business
within any Territory surrounding any plant or other operating facility in
which the Company was engaged in business on the date immediately prior to
the Closing Date (for purposes of this ARTICLE IX, the "Territory"
surrounding any plant or other operating facility will be: (A) the city,
town or village in which that plant or facility is located, (B) the county
or parish in which that plant or facility is located, (C) the counties or
parishes contiguous to the county or parish in which that plant or facility
is located, (D) the area located within 50 miles of that plant or facility,
(E) the area located within 100 miles of that plant or facility and (F) the
area in which that plant or facility regularly provides products or
services at the locations of its customers).
(ii) call upon or otherwise solicit any person, who is, at that time,
an employee or consultant of U.S. Concrete, the Surviving Corporation 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 U.S. Concrete, the Surviving Corporation 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 Company, U.S. Concrete or the Surviving Corporation 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 which the Company or
U.S. Concrete 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 U.S. Concrete, for the purpose of acquiring that
entity or arranging the acquisition of that entity by any person or entity
other than U.S. Concrete.
(b) Notwithstanding the above, Section 9.01(a) shall not be deemed to
prohibit any Stockholder from acquiring, as a passive investor with no
involvement in the operations of the business,
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not more than one 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.
9.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to U.S. Concrete and the Surviving Corporation as a result of a breach of
the foregoing covenant, because a breach of such covenant would diminish the
value of the assets, properties and business of the Company being sold pursuant
to this Agreement, and because of the immediate and irreparable damage that
could be caused to U.S. Concrete and the Surviving Corporation for which it
would have no other adequate remedy, each Stockholder agrees that the foregoing
covenant may be enforced against such individual by injunctions, restraining
orders and other equitable actions.
9.03 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this ARTICLE IX are necessary in terms of time, activity
and territory to protect U.S. Concrete's and the Surviving Corporation's
interest in the assets, properties and business being acquired pursuant to the
terms of this Agreement and impose a reasonable restraint on the Stockholders in
light of the activities and businesses of U.S. Concrete on the date of the
execution of this Agreement and the current plans of U.S. Concrete.
9.04 SEVERABILITY; REFORMATION. The covenants in this ARTICLE IX 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 IX 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.
9.05 MATERIAL AND INDEPENDENT COVENANT. The Stockholders acknowledge that
their agreements and the covenants set forth in this ARTICLE IX are material
conditions to U.S. Concrete's and Newco's agreements to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and that U.S.
Concrete and Newco would not have entered into this Agreement without such
covenants. All of the covenants in this ARTICLE IX shall be construed as an
agreement independent of any other provision in this Agreement. The existence of
any claim or cause of action by any Stockholder against U.S. Concrete, whether
predicated on this Agreement or otherwise, will not constitute a defense to the
enforcement by U.S. Concrete of any of the covenants of this ARTICLE IX. It is
specifically agreed that the time period Section 9.01 specifies will be computed
in the case of each Stockholder by excluding from that computation any time
during which that Stockholder is in violation of any provision of Section 9.01.
The covenants this ARTICLE IX contains will not be affected by any breach of any
other provision hereof by any party hereto.
ARTICLE X
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
10.01 General. The Stockholders recognize and acknowledge that they had
in the past, currently have, and in the future will have, access to certain
confidential information relating to the businesses of the Company, the
Surviving Corporation and/or U.S. Concrete, including, without limitation, lists
of customers, operational policies, and pricing and cost policies that are, and
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following the Closing will be, valuable, special and unique assets of the
Surviving Corporation and U.S. Concrete. Each Stockholder agrees that he or she
will not use or disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose whatsoever, except as
is required in the course of performing his or her duties, if any, to the
Surviving Corporation and/or U.S. Concrete, unless (a) such information becomes
known to the public generally through no fault of the Stockholder or (b)
disclosure is required by Law, provided that prior to disclosing any information
pursuant to this clause (b) the disclosing Stockholder(s) shall give prior
written notice thereof to U.S. Concrete and the Surviving Corporation and
provide U.S. Concrete with the opportunity to contest such disclosure. In the
event of a breach or threatened breach by any Stockholder of the provisions of
this Section, U.S. Concrete shall be entitled to an injunction restraining such
Stockholder from disclosing, in whole or in part, such confidential information.
Nothing herein shall be construed as prohibiting U.S. Concrete from pursuing any
other available remedy for such breach or threatened breach, including, without
limitation, the recovery of damages.
10.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to U.S. Concrete and the Surviving Corporation as a result of the breach
of the foregoing covenant, because a breach of such covenant would diminish the
value of the assets, properties and business of the Company being sold pursuant
to this Agreement, and because of the immediate and irreparable damage that
would be caused for which the Surviving Corporation and/or U.S. Concrete would
have no other adequate remedy, each Stockholder agrees that the foregoing
covenants may be enforced against such individual by injunctions, restraining
orders and other equitable actions.
ARTICLE XI
INTENDED TAX TREATMENT
11.01 TAX-FREE REORGANIZATION. U.S. Concrete and the Stockholders are
entering into this Agreement with the intention that the Merger qualify as a
tax-free reorganization for federal income tax purposes, except to the extent of
any "boot" received, and neither U.S. Concrete nor the Stockholders will take
any actions that disqualify the Merger for such treatment.
ARTICLE XII
FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE
COMMON STOCK
12.01 Compliance with Law. The Stockholders acknowledge the shares of
U.S. Concrete Common Stock issued in accordance with the terms of this Agreement
(the "Restricted Shares") will not be registered under the 1933 Act and
therefore may not be resold without compliance with the 1933 Act. The
Restricted Shares are being or will be acquired by the Stockholders 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. Each Stockholder covenants, warrants and represents that none of
the Restricted Shares held by such Stockholder will be, directly or indirectly,
offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all of the
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applicable provisions of the 1933 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.
12.02 Economic Risk; Sophistication; Accredited Investors. Schedule 12.02
correctly states (i) whether each Stockholder is, or is not, an "accredited
investor" as defined in the Securities Act Rule 501(a) and, if he or she is not
such an investor, (ii) the name and address of his or her "purchaser
representative(s)" (as defined in Securities Act Rule 501(h)). Each Stockholder
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. Each Stockholder has
such knowledge and experience in financial and business matters that he or she
is capable of evaluating the merits and risks of the proposed investment and
therefore has the capacity to protect his or her own interests in connection
with the acquisition of the Restricted Shares pursuant hereto. The purchaser
representative(s) of each Stockholder that is not an accredited investor has
received and reviewed a copy of each of the Prospectus and 10-Q. Each
Stockholder and his or her purchaser representative(s), if such Stockholder is
not an accredited investor, has had an adequate opportunity to ask questions of,
and receive answers from the appropriate officers and representatives of U.S.
Concrete and Newco concerning, among other matters, U.S. Concrete, 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 such Stockholder or his or her purchaser
representative(s), if such Stockholder is not an accredited investor, concerning
such matters, and all those questions have been answered to the satisfaction of
such Stockholder or purchaser representative(s).
12.03 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 U.S.
Concrete Common Stock to the public without registration, for a period of two
years after the Closing, U.S. Concrete agrees to use its commercially reasonable
efforts to:
(a) make and keep public information (as such terms are defined in
Rule 144) regarding U.S. Concrete available;
(b) file with the SEC in a timely manner all reports and other
documents required of U.S. Concrete under the 1933 Act and the 1934 Act;
and
(c) furnish to a Stockholder upon written request a written statement
by U.S. Concrete as to its compliance with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, a copy of the most recent annual
or quarterly report of U.S. Concrete, and such other reports and documents
so filed as such Stockholder may reasonably request in availing
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himself or herself of any rule or regulation of the SEC allowing such
Stockholder to sell any such shares without registration.
12.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES. The
Stockholders covenant, warrant and represent that (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 (the "Initial Lockup Period") and (ii) 50% of the
Restricted Shares will not be offered, sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of, directly or indirectly, during the two-
year period commencing on the Closing Date (the "Secondary Lockup Period" and
together with the Initial Lockup Period, the "Lockup Periods") and, after the
applicable 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 1933 Act and the rules and regulations of the SEC; and, during the
applicable Lockup Period, the Stockholders shall not engage in put, call, short-
sale, hedge, straddle, collar or similar transactions intended to reduce the
Stockholders' risk of owning the Restricted Shares subject to the applicable
Lockup Period. Certificates representing 50% of the Restricted Shares shall
bear the following legend, which shall reflect the Initial Lockup Period, in
addition to the legend under Section 12.01:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL
RESTRICTION ON TRANSFER THAT EXPIRES ON SEPTEMBER 14, 2000 AND MAY NOT BE
OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE
PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC.
Certificates representing the remaining 50% of the Restricted Shares shall bear
the following legend, which shall reflect the Secondary Lockup Period, in
addition to the legend under Section 12.01:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL
RESTRICTION ON TRANSFER THAT EXPIRES ON SEPTEMBER 14, 2001 AND MAY NOT BE
OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE
PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC.
ARTICLE XIII
MISCELLANEOUS
13.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES. This Agreement and the
rights of the parties hereunder may not be assigned (except by operation of Law)
and shall be binding upon and shall inure to the benefit of the parties hereto,
the successors of U.S. Concrete, Newco, the Surviving Corporation and the
Company, and the heirs and legal representatives of the Stockholders. Except as
provided in ARTICLE VIII or in this Section 13.01, nothing in this Agreement is
intended or will be construed to confer upon or give any person or entity other
than the parties hereto any rights or remedies under or by reason of this
Agreement or any transaction contemplated hereby.
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13.02 ENTIRE AGREEMENT. This Agreement (including the Schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders, the
Company, Newco and U.S. Concrete and supersede any prior agreement and
understanding relating to the subject matter of this Agreement, including,
without limitation, the Letter of Intent. This Agreement may be modified or
amended only by a written instrument executed by the Stockholders, the Company,
Newco and U.S. Concrete, acting through their respective officers, duly
authorized by their respective Boards of Directors. Any right hereunder may be
waived only by a written instrument executed by the party waiving such right.
13.03 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. Facsimile
transmission of any signed original document and/or retransmission of any signed
facsimile transmission will be deemed the same as delivery of an original. At
the request of any party, the parties will confirm facsimile transmission by
signing a duplicate original document.
13.04 BROKERS AND AGENTS. Each party hereto represents and warrants that
it employed no broker or agent in connection with the transactions contemplated
by this Agreement. Each party agrees to indemnify each other party against all
loss, cost, damages or expense arising out of claims for fees or commissions of
brokers employed or alleged to have been employed by such indemnifying party.
13.05 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested (which will be deemed
given three business days after deposit), or by delivering the same in person to
an officer or agent of such party (which will be deemed given when actually
received), as follows:
If to U.S. Concrete, Newco or the Surviving Corporation, addressed to them
at:
U.S. Concrete, Inc.
1300 Post Oak Blvd., Suite 1200
Houston, Texas 77056
Attn: Corporate Secretary
If to the Stockholders, addressed as follows:
John F. Carrier
10310 Latting Road
Cordova, Tennessee 38018
William Henry Carrier
77 Waring
Memphis, Tennessee 38117
Michael King Carrier
2490 Birnam Wood
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Germantown, Tennessee 38138
Mary G. Carrier, Trustee for Anne Carrier (TN UGMA)
77 Waring
Memphis, Tennessee 38117
William Henry Carrier, Trustee for
William Henry Carrier, Jr. (TN UGMA)
77 Waring
Memphis, Tennessee 38117
Mary G. Carrier
77 Waring
Memphis, Tennessee 38117
with a copy (which shall not constitute notice) to:
Evans & Petree
81 Monroe Avenue
Memphis, Tennessee 38103
Attn: W. Lytle Nichol IV, Esq.
or such other address as any party hereto shall specify pursuant to this Section
13.05 from time to time.
13.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in ARTICLE V and ARTICLE VI shall survive the Closing for a
period of two years from the Closing Date (the "Expiration Date"), except that
the representations and warranties set forth in Sections 5.03, 5.11, 5.16 and
5.18 hereof shall survive until such time as the applicable statute of
limitations period has run, which shall be deemed to be the Expiration Date for
Sections 5.03, 5.11, 5.16 and 5.18, as the case may be. The respective parties
shall remain liable after the Expiration Date for breaches of the
representations and warranties set forth in ARTICLE V and ARTICLE VI, provided
such breaches are asserted in good faith by notice in writing to the alleged
breaching party prior to the Expiration Date.
13.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE. Except as
otherwise provided herein, no delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of any similar breach or default occurring later; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default occurring before or after that waiver. No right, remedy or
election any term of this Agreement gives will be deemed exclusive, but each
will be cumulative with all other rights, remedies and elections available at
law or in equity.
13.08 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
36
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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.
13.09 Section Headings; Gender. The Section headings contained in this
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement. Words of the masculine gender
in this Agreement shall be deemed and construed to include correlative words of
the feminine and neuter genders and words of the neuter gender shall be deemed
and construed to include correlative words of the masculine and feminine
genders.
13.10 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Tennessee (except for its principles governing
conflicts of laws).
13.11 DISPUTE RESOLUTION.
(a) Except with respect to injunctive relief as provided in Section 9.02
and Section 10.02 (which relief may be sought from any court or administrative
agency with jurisdiction with respect thereto), any unresolved dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in accordance with the rules of the American
Arbitration Association then in effect. The arbitration shall be conducted by a
retired judge employed by the Atlanta, Georgia Regional Office of
J.A.M.S./Endispute, Inc. ("JAMS"). The arbitration shall be held in JAMS'
Atlanta, Georgia office.
(b) The parties shall obtain from JAMS a list of the retired judges
available to conduct the arbitration. The parties shall use their reasonable
efforts to agree upon a judge to conduct the arbitration. If the parties cannot
agree upon a judge to conduct the arbitration within 10 days after receipt of
the list of available judges, the parties shall ask JAMS to provide the parties
a list of three available judges (the "Judge List"). Within five days after
receipt of the Judge List, each party shall strike one of the names of the
available judges from the Judge List and return a copy of such list to JAMS and
the other party. If two different judges are stricken from the Judge List, the
remaining judge shall conduct the arbitration. If only one judge is stricken
from the Judge List, JAMS shall select a judge from the remaining two judges on
the Judge List to conduct the arbitration.
(c) The arbitrator shall not have the authority to add to, detract from, or
modify any provision hereof nor to award punitive damages to any injured party.
The arbitrator shall have the authority to order payment of damages,
reimbursement of costs, including those incurred to enforce this Agreement, and
interest thereon in the event the arbitrator determines that a material breach
of this Agreement has occurred. A decision by the arbitrator shall be final and
binding. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
U.S. CONCRETE, INC.
By: /s/ Donald Wayne
_____________________________
Donald Wayne, Vice President
CONCRETE XI ACQUISITION, INC.
By: /s/ Donald Wayne
_____________________________
Donald Wayne, President
CARRIER EXCAVATION AND
FOUNDATION COMPANY
By: /s/ John F. Carrier
________________________
Name: John F. Carrier
Title: President
/s/ John F. Carrier
__________________________________
John F. Carrier, Individually
/s/ William Henry Carrier
___________________________________
William Henry Carrier, Individually
/s/ Michael K. Carrier
___________________________________
Michael K. Carrier, Individually
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MARY G. CARRIER, TRUSTEE FOR
ANN CARRIER (TN UGMA)
/s/ Mary G. Carrier
______________________________
Mary G. Carrier, Trustee
WILLIAM HENRY CARRIER, TRUSTEE FOR
WILLIAM HENRY CARRIER, JR. (TN UGMA)
/s/ William Henry Carrier
______________________________
William Henry Carrier, Trustee
/s/ Mary G. Carrier
______________________________
Mary G. Carrier, Individually
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<PAGE>
Exhibit 2.9
STOCK PURCHASE AGREEMENT
BY AND AMONG
U.S. CONCRETE, INC.,
B. THOMAS STOVER, AS TRUSTEE UNDER TRUST AGREEMENT DATED FEBRUARY 20, 1986 FOR
B. THOMAS STOVER,
SARAH M. STOVER, AS TRUSTEE UNDER TRUST AGREEMENT DATED FEBRUARY 27, 1990 FOR
SARAH M. STOVER,
B. ANDREW STOVER,
B. THOMAS STOVER, CUSTODIAN UNDER MICHIGAN UNIFORM GIFTS TO MINORS ACT FOR THE
BENEFIT OF CAROLYN A. STOVER,
JEFFERY D. SPAHR,
JEFFREY T. STOVER, AND
BRADLEY C. STOVER
Dated as of November 5, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I DEFINITIONS...................................................................................... 1
1.01 DEFINITIONS........................................................................................ 1
1.02 INTERPRETATION..................................................................................... 6
ARTICLE II SALE; PURCHASE PRICE............................................................................ 6
2.01 SALE AND TRANSFER OF COMPANIES SHARES.............................................................. 6
2.02 PURCHASE PRICE..................................................................................... 7
2.03 DELIVERY OF CONSIDERATION.......................................................................... 7
ARTICLE III CLOSING........................................................................................ 7
3.01 CLOSING............................................................................................ 7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.............................................. 7
4.01 DUE ORGANIZATION AND QUALIFICATION................................................................. 8
4.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS........................................................ 8
4.03 CAPITALIZATION AND OWNERSHIP....................................................................... 9
4.04 SUBSIDIARIES....................................................................................... 9
4.05 FINANCIAL STATEMENTS............................................................................... 9
4.06 LIABILITIES AND OBLIGATIONS........................................................................ 11
4.07 ACCOUNTS AND NOTES RECEIVABLE...................................................................... 11
4.08 PROPERTIES AND ASSETS.............................................................................. 12
4.09 MATERIAL CUSTOMERS AND CONTRACTS................................................................... 13
4.10 PERMITS............................................................................................ 14
4.11 ENVIRONMENTAL MATTERS.............................................................................. 15
4.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS................................................... 15
4.13 INSURANCE.......................................................................................... 16
4.14 COMPENSATION; EMPLOYMENT AGREEMENTS................................................................ 16
4.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS; EMPLOYEE POLICIES.................. 17
4.16 EMPLOYEE BENEFIT PLANS............................................................................. 17
4.17 LITIGATION AND COMPLIANCE WITH LAW................................................................. 19
4.18 TAXES.............................................................................................. 20
4.19 ABSENCE OF CHANGES................................................................................. 20
4.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY............................................. 22
4.21 ABSENCE OF CERTAIN BUSINESS PRACTICES.............................................................. 22
4.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS............................................ 22
4.23 INTANGIBLE PROPERTY................................................................................ 22
4.24 CAPITAL EXPENDITURES............................................................................... 22
4.25 INVENTORIES........................................................................................ 22
4.26 NO IMPLIED REPRESENTATIONS......................................................................... 22
4.27 DISCLOSURE......................................................................................... 23
4.29 YEAR 2000 COMPLIANCE............................................................................... 23
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO...................................... 23
5.01 ORGANIZATION....................................................................................... 23
5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS........................................................ 24
5.03 U.S. CONCRETE COMMON STOCK......................................................................... 24
5.04 SEC FILINGS; DISCLOSURE............................................................................ 24
5.05 NO IMPLIED REPRESENTATIONS......................................................................... 24
5.06 DISCLOSURE......................................................................................... 24
ARTICLE VI CERTAIN COVENANTS.............................................................................. 25
6.01 RELEASE FROM GUARANTEES............................................................................ 25
6.02 FUTURE COOPERATION; TAX MATTERS.................................................................... 25
6.03 EXPENSES........................................................................................... 25
6.04 LEGAL OPINION...................................................................................... 25
6.05 EMPLOYMENT AGREEMENTS.............................................................................. 25
6.06 OTHER DOCUMENTS.................................................................................... 25
6.07 REPAYMENT OF RELATED PARTY INDEBTEDNESS............................................................ 25
6.08 STOCK OPTIONS...................................................................................... 26
6.09 SECTION 338(H)(10) ELECTION........................................................................ 26
6.10 WORKING CAPITAL ADJUSTMENT......................................................................... 26
6.11 PRE-CLOSING DISTRIBUTIONS.......................................................................... 26
6.12 LEASE AGREEMENTS................................................................................... 26
ARTICLE VII INDEMNIFICATION............................................................................... 28
7.01 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS......................................................... 28
7.02 INDEMNIFICATION BY U.S. CONCRETE.................................................................... 29
7.03 THIRD PERSON CLAIMS................................................................................. 29
7.04 NON-THIRD PERSON CLAIMS............................................................................. 30
7.05 INDEMNIFICATION DEDUCTIBLE.......................................................................... 30
7.06 INDEMNIFICATION LIMITATION.......................................................................... 30
7.07 INDEMNIFICATION FOR NEGLIGENCE OF INDEMNIFIED PARTY................................................. 30
ARTICLE VIII NONCOMPETITION COVENANTS........................................................................ 31
8.01 PROHIBITED ACTIVITIES............................................................................... 31
8.02 EQUITABLE RELIEF.................................................................................... 32
8.03 REASONABLE RESTRAINT................................................................................ 32
8.04 SEVERABILITY; REFORMATION........................................................................... 32
8.05 MATERIAL AND INDEPENDENT COVENANT................................................................... 32
ARTICLE IX NONDISCLOSURE OF CONFIDENTIAL INFORMATION....................................................... 33
9.01 GENERAL............................................................................................. 33
9.02 EQUITABLE RELIEF.................................................................................... 33
ARTICLE X FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON STOCK............... 33
10.01 COMPLIANCE WITH LAW................................................................................ 33
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10.02 ECONOMIC RISK; SOPHISTICATION; ACCREDITED INVESTORS................................................ 34
10.03 RULE 144 REPORTING................................................................................. 34
10.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES......................................... 34
ARTICLE XI MISCELLANEOUS................................................................................... 35
11.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES.......................................................... 35
11.02 ENTIRE AGREEMENT................................................................................... 35
11.03 COUNTERPARTS....................................................................................... 35
11.04 BROKERS AND AGENTS................................................................................. 36
11.05 NOTICES............................................................................................ 36
11.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................................................... 37
11.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE............................................... 37
11.08 REFORMATION AND SEVERABILITY....................................................................... 37
11.09 SECTION HEADINGS; GENDER........................................................................... 37
11.10 GOVERNING LAW...................................................................................... 38
11.11 DISPUTE RESOLUTION................................................................................. 38
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of November 5,
1999, by and among U.S. Concrete, Inc., a Delaware corporation ("U.S.
Concrete"), and B. Thomas Stover, as Trustee under the Trust Agreement dated
February 20, 1986 for B. Thomas Stover, Sarah M. Stover, as Trustee under the
Trust Agreement dated February 27, 1990 for Sarah M. Stover, B. Andrew Stover,
B. Thomas Stover, Custodian under the Michigan Uniform Gifts to Minors Act for
the benefit of Carolyn A. Stover, Jeffery D. Spahr, Jeffrey T. Stover and
Bradley C. Stover (such individuals, trustees and trusts are collectively
referred to hereinafter as the "Stockholders"), with the Stockholders being the
only stockholders of Fendt Transit Mix, Inc., a Michigan corporation ("Fendt"),
AFTM Corporation, a Michigan corporation ("AFTM"), and Hunter Equipment Company,
a Michigan corporation ("Hunter") (Fendt, AFTM and Hunter are collectively
referred to hereinafter as the "Companies"),.
WHEREAS, the Stockholders are the owners and holders of the issued and
outstanding (i) shares (the "Fendt Shares") of common stock of Fendt, no par
value (the "Fendt Common Stock"), (ii) shares (the "AFTM Shares") of common
stock of AFTM, no par value (the "AFTM Common Stock") and (iii) shares (the
"Hunter Shares") of common stock of Hunter, no par value (the "Hunter Common
Stock") set forth opposite his or her name on Schedule 4.03 (the Fendt Shares,
AFTM Shares and Hunter Shares are collectively referred to herein as the
"Companies Shares"), which Companies Shares in the aggregate constitute one
hundred percent (100%) of the issued and outstanding capital stock of Fendt,
AFTM and Hunter.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. Capitalized terms used in this Agreement shall have the
following meanings:
"Affiliate" of, or "Affiliated" with, a specified person or entity means a
person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the specified person or entity.
"AFTM" has the meaning set forth in the first paragraph of this Agreement.
"AFTM Common Stock" has the meaning set forth in the second paragraph of
this Agreement.
"AFTM Financial Statements" has the meaning set forth in Section 4.05.
"AFTM Interim Balance Sheet" has the meaning set forth in Section 4.05.
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"AFTM Interim Financial Statements" has the meaning set forth in Section
4.05.
"AFTM Shares" has the meaning set forth in the second paragraph of this
Agreement.
"AFTM Year-End Financial Statements" has the meaning set forth in Section
4.05.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Balance Sheet Date" has the meaning set forth in Section 4.05.
"Cash" means all cash and cash equivalents of the Companies.
"Closing" has the meaning set forth in ARTICLE III.
"Closing Date" has the meaning set forth in ARTICLE III.
"Code" means the Internal Revenue Code of 1986, as amended.
"Companies" has the meaning set forth in the first paragraph of this
Agreement.
"Companies Common Stock" has the meaning set forth in Section 4.03.
"Companies Shares" has the meaning set forth in the second paragraph of
this Agreement.
"Company" means any of the Companies.
"Competitive Business" means any business that involves the production and
sale of any building material that competes with any building material produced
and sold by any Company, 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 and any
logical extension of or business activity reasonably related to any of the
foregoing.
"Employee benefit plan" has the meaning set forth in Section 4.16.
"Employee pension benefit plan" has the meaning set forth in Section 4.16.
"Employment Agreements" has the meaning set forth in Section 6.05.
"Encumbrances" means all liens, encumbrances, mortgages, pledges, security
interests, conditional sales agreements, charges, options, preemptive rights,
rights of first refusal, reservations, restrictions or other encumbrances or
defects in title.
"Environmental Laws" means any and all Laws or agreements with any
Governmental Authority relating to (a) the protection, preservation or
restoration of the environment (including, without
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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) or human health or safety, (b)
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
(including, without limitation, Hazardous Substances) or noxious noise or odor
into the environment or (c) the exposure to, or the use, storage, recycling,
treatment, manufacture, generation, transport, distribution, processing,
handling, labeling, production, removal, release or disposal of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
(including, without limitation, Hazardous Substances), in each case as amended
and as now or hereafter 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, each
as amended from time to time, and any other Laws now or hereafter relating to
any of the foregoing, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result of, the
presence of, effects of or exposure to any Hazardous Substance.
"ERISA" has the meaning set forth in Section 4.16.
"ERISA Affiliate" has the meaning set forth in Section 4.16.
"Expiration Date" has the meaning set forth in Section 11.06.
"Fendt" has the meaning set forth in the first paragraph of this Agreement.
"Fendt Common Stock" has the meaning set forth in the second paragraph of
this Agreement.
"Fendt Financial Statements" has the meaning set forth in Section 4.05.
"Fendt Interim Balance Sheet" has the meaning set forth in Section 4.05.
"Fendt Interim Financial Statements" has the meaning set forth in Section
4.05.
"Fendt Shares" has the meaning set forth in the second paragraph of this
Agreement.
"Fendt Year-End Financial Statements" has the meaning set forth in Section
4.05.
"Financial Statements" has the meaning set forth in Section 4.05.
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"GAAP" means generally accepted accounting principles as currently applied
by the respective party on a basis consistent with preceding years and
throughout the periods involved.
"Governmental Authority" means any federal, state, local or foreign
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or quasi-
governmental authority.
"Hazardous Substances" means any and all substances presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law. The term "Hazardous
Substances" includes, without limitation, any substance to which exposure is
regulated by any Governmental Authority or any Environmental Law including,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial substance
or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos or asbestos containing material, urea formaldehyde foam
insulation, lead or polychlorinated biphenyls.
"Hunter" has the meaning set forth in the first paragraph of this
Agreement.
"Hunter Common Stock" has the meaning set forth in the fourth paragraph of
this Agreement.
"Hunter Financial Statements" has the meaning set forth in Section 4.05.
"Hunter Interim Balance Sheet" has the meaning set forth in Section 4.05.
"Hunter Interim Financial Statements" has the meaning set forth in Section
4.05.
"Hunter Shares" has the meaning set forth in the second paragraph of this
Agreement.
"Hunter Year-End Financial Statements" has the meaning set forth in Section
4.05.
"Incentive Plan" has the meaning set forth in Section 6.07.
"Indemnified Party" has the meaning set forth in Section 7.03.
"Indemnifying Party" has the meaning set forth in Section 7.03.
"Initial Lockup Period" has the meaning set forth in Section 10.04.
"Interim Balance Sheets" has the meaning set forth in Section 4.05.
"Interim Financial Statements" has the meaning set forth in Section 4.05.
"IRCA" has the meaning set forth in Section 4.12.
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"Laws" means any and all federal, state, local or foreign statutes, laws,
ordinances, proclamations, codes, regulations, licenses, permits,
authorizations, rulings, approvals, consents, legal doctrines, published
requirements, orders, decrees, judgments, injunctions and rules of any
Governmental Authority, including, without limitation, those covering
environmental, Tax, energy, safety, health, transportation, bribery, record
keeping, zoning, discrimination, antitrust and wage and hour matters, in each
case as amended and in effect from time to time.
"Listed Agreements" has the meaning set forth in Section 4.09.
"Lockup Periods" has the meaning set forth in Section 10.04.
"Losses" means any and all liabilities, losses, claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, fees, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees and
costs and expenses of investigation), net of (i) income Tax effects with respect
thereto (including, without limitation, income Tax benefits recognized in
connection therewith and income Taxes upon any indemnification recovery thereof)
and (ii) insurance recoveries.
"Material Customers" has the meaning set forth in Section 4.09.
"Noncompete Term" has the meaning set forth in Section 8.01(a).
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Options" has the meaning set forth in Section 6.08.
"Permits" has the meaning set forth in Section 4.10.
"Permitted Encumbrances" means any and all (a) Encumbrances reserved
against in the Interim Balance Sheet, (b) Encumbrances for property or ad
valorem Taxes not yet due and payable or which are being contested in good faith
and by appropriate proceedings if adequate reserves with respect thereto are
maintained on the Companies' books in accordance with GAAP, and (c) obligations
under operating and capital leases described in Schedule 4.09.
"Plan" has the meaning set forth in Section 4.16.
"Qualified Plan" has the meaning set forth in Section 4.16.
"Restricted Shares" has the meaning set forth in Section 10.01.
"Rule 144" means Rule 144 as promulgated under the 1933 Act.
"SEC" means the Securities and Exchange Commission.
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"Secondary Lockup Period" has the meaning set forth in Section 10.04.
"Section 338(h)(10) Election" has the meaning set forth in Section 6.09.
"Stockholder" means any of the Stockholders.
"Stockholders" has the meaning set forth in the first paragraph of this
Agreement.
"Structures" has the meaning set forth in Section 4.08.
"Taxes" has the meaning set forth in Section 4.18.
"Territory" has the meaning set forth in Section 8.01.
"Third Person" has the meaning set forth in Section 7.03.
"U.S. Concrete" has the meaning set forth in the first paragraph of this
Agreement.
"U.S. Concrete Common Stock" means U.S. Concrete's Common Stock, par value
$.001 per share.
"Year-End Financial Statements" has the meaning set forth in Section 4.05.
"Year 2000 Compliant" has the meaning set forth in Section 4.28.
1.02 INTERPRETATION. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in Section 1.01 and elsewhere in this Agreement
include the plural as well as the singular and vice versa;
(b) all accounting terms not otherwise defined herein have the
meanings ascribed to them in accordance with GAAP; and
(c) the words "herein," "hereof," and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE II
SALE; PURCHASE PRICE
2.01 SALE AND TRANSFER OF COMPANIES SHARES. Subject to the terms and
conditions of this Agreement, the Stockholders shall sell, convey and deliver to
U.S. Concrete, and U.S. Concrete shall purchase and accept from the
Stockholders, all of the right, title and interest of the Stockholders in and to
the Companies Shares.
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2.02 PURCHASE PRICE. In consideration for the sale of the Companies Shares
owned by the Stockholders to U.S. Concrete, U.S. Concrete shall pay to the
Stockholders at Closing an aggregate purchase price (the "Purchase Price") of
$17,247,308, consisting of (i) $13,797,846 in cash and (ii) an aggregate of
549,715 shares of U.S. Concrete Common Stock. Schedule 2.02 attached hereto
sets forth the portion of the Purchase Price that is to be paid to each
Stockholder.
2.03 DELIVERY OF CONSIDERATION. At the Closing, (a) the Stockholders shall
furnish to U.S. Concrete the certificates representing their Companies Shares,
duly endorsed in blank by each Stockholder or accompanied by duly executed blank
stock powers, and (b) U.S. Concrete shall deliver to each Stockholder his or her
portion of the cash portion of the Purchase Price (by wire transfer of
immediately available funds in accordance with the wiring instructions for such
Stockholder set forth on Schedule 2.02) and a copy of an irrevocable instruction
letter to U.S. Concrete's transfer agent directing that certificates
representing such Stockholder's portion of the U.S. Concrete Common Stock
portion of the Purchase Price be delivered to such Stockholder. Each
Stockholder agrees promptly to cure any deficiencies with respect to the
endorsement of the certificates or other documents of conveyance with respect to
the Companies Shares or with respect to the stock powers accompanying such
stock.
ARTICLE III
CLOSING
3.01 CLOSING. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of U.S. Concrete, 1300
Post Oak Blvd., Suite 1220, Houston, Texas 77056, concurrently with the
execution of this Agreement or at such other time and date as U.S. Concrete and
the Stockholders may mutually agree, which date is herein referred to as the
"Closing Date."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders, jointly and severally, represent and warrant to U.S.
Concrete as follows:
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4.01 DUE ORGANIZATION AND QUALIFICATION. Each Company is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Michigan and is duly authorized and qualified to do business under all
applicable Laws and to carry on its business in the places and in the manner as
now conducted. Each Company has the requisite power and authority to own, lease
and operate its assets and properties and to carry on its business as such
business is currently being conducted. Schedule 4.01 includes (a)
certificate(s) of existence and good standing for each Company issued by the
appropriate Governmental Authorities of the State of Michigan, (b) a list of all
jurisdictions in which each Company is authorized or qualified to do business
and (c) certificate(s) of qualification or authority to do business (or similar
certificates) for each Company issued by the appropriate Governmental
Authorities of each of the jurisdictions in which each Company is authorized or
qualified to do business. No Company owns, leases or operates any assets or
properties or carries on any business in any jurisdiction that Schedule 4.01
does not list. True, complete and correct copies of the Articles of
Incorporation and Bylaws, each as amended, of each Company are attached hereto
as Schedule 4.01, 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 each Company have been provided to U.S. Concrete.
4.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) Each Stockholder has the full legal right, power and authority to enter
into this Agreement. The execution, delivery and performance of this Agreement
and the transactions contemplated hereby have been approved. This Agreement has
been duly and validly executed and delivered by each Stockholder, and, assuming
the due authorization, execution and delivery hereof by U.S. Concrete,
constitutes a valid and binding agreement of each Stockholder, enforceable
against each of them in accordance with its terms, subject to (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting or relating to
the enforcement of creditors' rights generally and (b) general equitable
principles.
(b) The execution and delivery of this Agreement by the Stockholders does
not, and the consummation by each Company and the Stockholders of the
transactions contemplated hereby will not, violate or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any Encumbrance
upon any of the properties or assets of any Company under any of the terms,
conditions or provisions of, (i) the Articles of Incorporation or Bylaws of each
Company, (ii) any Law applicable to any Stockholder or any Company or any of the
properties or assets of any Stockholder or any Company, except for circumstances
that taken in the aggregate could not reasonably be expected to have a material
adverse effect on the Companies, or (iii) except as set forth in Schedule 4.02,
any agreement, note, bond, mortgage, indenture, deed of trust, license,
franchise, Permit, concession, lease or other instrument, obligation or
agreement of any kind to which any Stockholder or any Company is now a party or
by which any Company or any of its properties or assets may be bound or
affected.
(c) Except as set forth in Schedule 4.02, no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
Governmental Authority or other person or entity is necessary for the execution
and delivery of this Agreement by the Companies and the Stockholders or
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the consummation by them of the transactions contemplated hereby. Except as set
forth in Schedule 4.02, none of the contracts or agreements with Material
Customers or contracts providing for purchases or services individually in
excess of $25,000, or in the aggregate in excess of $50,000, or other
agreements, licenses or Permits to which any Company is a party requires notice
to, or the consent or approval of, any Governmental Authority or other person or
entity for the execution and delivery of this Agreement by any Company or any
Stockholder or to the consummation by any Company or any Stockholder of any of
the transactions contemplated hereby to remain in full force and effect
following such transaction.
4.03 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of Fendt
consists solely of 60,000 shares of Fendt Common Stock, of which 1,000 shares
are issued and outstanding. The authorized capital stock of AFTM consists
solely of 60,000 shares of AFTM Common Stock, of which 1,000 shares are issued
and outstanding. The authorized capital stock of Hunter consists solely of
60,000 shares of Hunter Common Stock, of which 1,000 shares are issued and
outstanding. The Fendt Common Stock, AFTM Common Stock and Hunter Common Stock
are collectively referred to herein as the "Companies Common Stock". All of the
issued and outstanding shares of the Companies Common Stocks are owned
beneficially and of record by the Stockholders as set forth in Schedule 4.03.
All of the issued and outstanding shares of the Companies Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable, and were
offered, issued, sold and delivered by the appropriate Company in compliance
with all applicable Laws, including, without limitation, those Laws concerning
the issuance of securities. None of such shares were issued in violation of the
preemptive rights of any past or present stockholder of any Company. Upon
consummation of the transactions contemplated hereby, U.S. Concrete will acquire
good, valid and marketable title to the Companies Shares, free and clear of all
Encumbrances except for those created by U.S. Concrete. Except as set forth in
Schedule 4.03, (a) no shares of the Companies Common Stock are held by any
Company as treasury shares, and (b) no subscription, option, warrant, call,
convertible or exchangeable security, other conversion right or commitment of
any kind exists which obligates any Company to issue any of its capital stock or
the Stockholders to transfer any of the capital stock of any Company.
4.04 SUBSIDIARIES. Except as set forth in Schedule 4.04, the Companies do
not own, of record or beneficially, or control, directly or indirectly, any
capital stock, securities convertible into or exchangeable for capital stock or
any other equity interest in any corporation, association or other business
entity. Except as set forth in Schedule 4.04, no Company is, directly or
indirectly, a participant in any joint venture, limited liability company,
partnership or other noncorporate entity.
4.05 FINANCIAL STATEMENTS.
(a) The Companies have delivered to U.S. Concrete true, complete and
correct copies of the following financial statements:
(i) the reviewed balance sheets of Fendt as of January 31, 1997,
December 31, 1997, and December 31, 1998 and the related reviewed
statements of income and retained earnings for the three-year period ended
December 31, 1998, together with the related notes, schedules and report of
Fendt's independent accountants (such balance sheets, the related
statements of income
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and retained earnings and the related notes, schedules and reports are
collectively referred to herein as the "Fendt Year-End Financial
Statements");
(ii) the unaudited balance sheet (the "Fendt Interim Balance Sheet")
of Fendt as of July 31, 1999 (the "Balance Sheet Date") and the related
unaudited statements of income and retained earnings for the seven-month
period ended on the Balance Sheet Date, together with the related notes and
schedules (such balance sheet, the related statements income and retained
earnings and the related notes and schedules are collectively referred to
herein as the "Fendt Interim Financial Statements"). The Fendt Year-End
Financial Statements and the Fendt Interim Financial Statements
(collectively, the "Fendt Financial Statements") are attached as Schedule
4.05 to this Agreement;
(iii) the reviewed balance sheets of AFTM as of January 31, 1997,
December 31, 1997, and December 31, 1998 and the related reviewed
statements of income and retained earnings for the three-year period ended
December 31, 1998, together with the related notes, schedules and report of
AFTM's independent accountants (such balance sheets, the related statements
of income and retained earnings and the related notes, schedules and
reports are collectively referred to herein as the "AFTM Year-End Financial
Statements");
(iv) the unaudited balance sheet (the "AFTM Interim Balance Sheet") of
AFTM as of the Balance Sheet Date and the related unaudited statements of
income and retained earnings for the seven-month period ended on the
Balance Sheet Date, together with the related notes and schedules (such
balance sheet, the related statements of income and retained earnings and
the related notes and schedules are referred to herein as the "AFTM Interim
Financial Statements"). The AFTM Year-End Financial Statements and the
AFTM Interim Financial Statements (collectively, the "AFTM Financial
Statements") are attached as Schedule 4.05 to this Agreement;
(v) the compiled balance sheets of Hunter as of December 31, 1996,
1997 and 1998 and the related compiled statements of income and retained
earnings for the three-year period ended December 31, 1998, together with
the report of Hunter's independent accountants (such balance sheets, the
related statements of income and retained earnings and the reports are
collectively referred to herein as the "Hunter Year-End Financial
Statements") (the Fendt Year-End Financial Statements, AFTM Financial
Statements and Hunter Year-End Financial Statements are collectively
referred to herein as the "Year-End Financial Statements"); and
(vi) the unaudited balance sheet (the "Hunter Interim Balance Sheet")
of Hunter as of the Balance Sheet Date (the Fendt Interim Balance Sheet,
AFTM Interim Balance Sheet and Hunter Interim Balance Sheet are
collectively referred to herein as the "Interim Balance Sheets") and the
related unaudited statements of income and retained earnings for the seven-
month period ended on the Balance Sheet Date (such balance sheet, the
related statements of income and retained earnings are referred to herein
as the "Hunter Interim Financial Statements") (the Fendt Interim Financial
Statements, AFTM Interim Financial Statements and Hunter Interim Financial
Statements are collectively referred to herein as the "Interim Financial
Statements"). The AFTM Year-End Financial Statements and the AFTM Interim
Financial Statements (collectively, the
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"AFTM Financial Statements") are attached as Schedule 4.05 to this
Agreement (the Fendt Financial Statements, AFTM Financial Statements and
Hunter Financial Statements are collectively referred to herein as the
"Financial Statements").
(b) Except as set forth in Schedule 4.05, the Financial Statements have
been prepared from the books and records of each Company substantially in
conformity with GAAP and present fairly the financial position and results of
operations of each respective Company as of the dates of such statements and for
the periods covered thereby. The books of account of each Company have been
kept accurately in all material respects in the ordinary course of business, the
transactions entered therein represent bona fide transactions, and the revenues,
expenses, assets and liabilities of each Company have been properly recorded
therein in all material respects.
4.06 LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule 4.06, as
of the Balance Sheet Date the Companies do not have, nor have they incurred
since that date, any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of any nature, except liabilities, obligations or
contingencies (a) that are reflected or accrued or reserved against in the
Financial Statements or reflected in the notes thereto, (b) that are of a nature
not required to be reflected in the Financial Statements and that do not exceed
or reasonably could be expected to exceed $10,000 individually or $25,000 in the
aggregate and (c) that were incurred after the Balance Sheet Date and were
incurred in the ordinary course of business, consistent with past practices.
Schedule 4.06 contains a reasonable estimate by each Company and the
Stockholders of the maximum amount that may be payable with respect to
liabilities which are not fixed. For each such liability for which the amount
is not fixed or is contested, each Company has provided a summary description of
the liability together with copies of all relevant documentation relating
thereto. Schedule 4.06 sets forth each Company's outstanding principal amount
of indebtedness for borrowed money (including overdrafts) as of the date hereof.
Except as set forth in Schedule 4.06, there are no prepayment penalties,
termination fees or other payments triggered by the prepayment or termination of
any loan or indebtedness of any Company.
4.07 ACCOUNTS AND NOTES RECEIVABLE. Schedule 4.07 sets forth an accurate
list of the accounts and notes receivable of each Company as of the Balance
Sheet Date and of those generated between the Balance Sheet Date and the second
business day preceding the Closing Date, including any such amounts which are
not reflected in the Interim Balance Sheet. Receivables from and advances to
employees, the Stockholders and any entities or persons related to or Affiliates
of the Stockholders are separately identified in Schedule 4.07. Schedule 4.07
also sets forth an accurate aging of all accounts and notes receivable of each
Company 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
Sheets, are bona fide receivables, were acquired in the ordinary course of
business, are stated in accordance with GAAP and, in the good faith belief of
the Stockholders, are collectible in the amounts shown on Schedule 4.07, net of
reserves reflected in the Interim Financial Statements with respect to the
accounts receivable as of the Balance Sheet Date, and net of reserves reflected
in the books and records of the Companies (consistent with the methods used in
the Interim Financial Statements) with respect to receivables of the Companies
after the Balance Sheet Date.
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4.08 PROPERTIES AND ASSETS.
(a) Schedule 4.08 sets forth an accurate list of all real and personal
property included in "property and equipment" on the Interim Balance Sheets and
all other tangible assets of the Companies with a book value in excess of
$10,000 (i) owned by the Companies as of the Balance Sheet Date and (ii)
acquired since the Balance Sheet Date. Schedule 4.08 also sets forth an
accurate list of all real and personal property currently leased by the
Companies, and includes complete and correct copies of 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
4.08 indicates which properties and assets used in the operation of the
businesses of the Companies are currently owned by the Stockholders or
Affiliates of the Companies or the Stockholders. Except as specifically
identified in Schedule 4.08, all of the tangible assets, plants, Structures,
vehicles and other significant machinery and equipment owned or leased by the
Companies listed in Schedule 4.08 are in satisfactory working order and
condition, ordinary wear and tear excepted, are in a commercially satisfactory
state of repair given the use to which they are put, ordinary wear and tear
excepted, and are adequate for the purpose for which they presently are being
used or held for use. Except as specifically described in Schedule 4.08, all
properties and fixed assets used by any Company in its business are either owned
by such Company or leased under agreements identified in Schedule 4.08 and are
affixed only to one or more of the real properties Schedule 4.08 lists. All
leases set forth in Schedule 4.08 are in full force and effect and constitute
valid and binding agreements of the Company that is a party thereto, and to the
knowledge of the Stockholders, the other parties thereto in accordance with
their respective terms, and all amounts currently payable thereunder have been
paid. No Company that is a party thereto, and to the knowledge of the
Stockholders, no the other party to the leases set forth in Schedule 4.08 is or
has been asserted to be in default, violation or breach of any such lease, and
no event has occurred and is continuing that constitutes or, with notice or the
passage of time or both, would constitute a default, violation or breach under
any such lease. Each Company has good, valid and marketable title to the
tangible and intangible assets, personal property and real property owned and
used in its business, including, without limitation, the properties identified
in Schedule 4.08 as owned real property (each of which such Company owns in
fee), free and clear of all Encumbrances other than Permitted Encumbrances and
those set forth in Schedule 4.08. Schedule 4.08 contains true, complete and
correct copies 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 4.08 includes a summary description of all commitments of
each Company involving the opening of new operations, expansion of existing
operations or the acquisition of any real property or existing business, to
which management of such Company has devoted any significant effort or
expenditure in the two-year period prior to the date of the Agreement.
(b) Except as specifically described in Schedule 4.08, all uses of the real
property owned and leased by the Companies conform in all material respects to
all applicable Laws and do not violate any instrument of record or agreement
affecting any such property. Except as specifically described on
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Schedule 4.08, neither any of the Companies nor the Stockholders have received
any notice or communication from any Governmental Authority or other person or
entity indicating that any condition exists with respect to any of the real
property owned or leased by any Company or with respect to the improvements
thereon that violates any Law, including without limitation, any Environmental
Law. No Companies nor the Stockholders have received from any insurance carrier
insuring or proposing to insure any of the real property owned or leased by any
Company or any other person or entity any notice or other communication noting
any dangerous or illegal condition at any such property or any other condition
at any of such properties otherwise requiring corrective action. Except as
otherwise described on Schedule 4.08, all of the real property owned and leased
by any Company is in satisfactory condition, and all such real properties can be
used for their intended purposes. No Companies nor the Stockholders have
received any notice nor have any knowledge that any of the real property owned
or leased by any Company 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 no writ, injunction,
decree, order or judgment outstanding, nor any action, claim, suit or
proceeding, pending or, to the knowledge of the Stockholders, threatened,
relating to the ownership, lease, use, occupancy or operation of any real
property owned or leased by any Company.
(c) There is ingress and egress to and from each of the real properties
owned and leased by any Company of record adequate for the use of such
properties as currently operated by such Company. Neither any of the Companies
nor the Stockholders have received any notice stating that any Company will not
be able to obtain adequate supplies of water to operate its business on any such
properties as presently conducted, or that the provision of utilities violates
any public or private easement. Except as otherwise described on Schedule 4.08,
neither any of the Companies nor the Stockholders have received notice that any
part of any improvements on the real property owned or leased by any Company
(including any of the Structures thereon) encroaches upon any property adjacent
thereto or upon any easement, nor is there any encroachment or overlap upon the
real property owned or leased by any Company. Each of the real property leases
listed in Schedule 4.08 grants the Company that is a party thereto the exclusive
right to use and occupy the demised premises thereunder, and such Company enjoys
peaceful and undisturbed possession under its respective real property leases
listed on Schedule 4.08 for the real property leased by such Company. No person
or entity is in possession of any of the real property owned or leased by any
Company other than such Company. Except as otherwise disclosed on Schedule
4.08, to the knowledge of the Stockholders there are no contracts outstanding
for the sale, exchange, lease or transfer of any of the real property owned or
leased by any Company, or any other right of a third party to acquire any
interest therein.
4.09 MATERIAL CUSTOMERS AND CONTRACTS.
(a) Schedule 4.09 (i) sets forth an accurate list of all customers
representing 5% or more of each Company's revenues for each of the fiscal year
ended in 1998 and the interim period ended on the Balance Sheet Date (the
"Material Customers"), and (ii) sets forth an accurate list and briefly
describes all of the following contracts, warranties, commitments and similar
agreements to which any Company is currently a party or by which it or any of
its properties is bound (collectively, the "Listed Agreements"): (A) all
customer contracts in excess of $10,000, individually, or $25,000 in the
aggregate, (B) contracts with any labor organizations, (C) leases providing for
annual rental payments in excess of $10,000, individually, or $25,000 in the
aggregate, (D) loan agreements, (E) pledge and
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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 any Company of assets or securities for more than $10,000,
individually, or $25,000 in the aggregate or which contain, or commit or will
commit such Company for a fixed term, (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 Company 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 each Company has made available to U.S.
Concrete true, complete and correct copies of all the Listed Agreements.
(b) Except as set forth in Schedule 4.09, since December 31, 1998 (i) no
Material Customer has canceled or substantially reduced or, to the knowledge of
the Companies and the Stockholders, is threatening to cancel or substantially
reduce its purchases of any Company's products or services, and (ii) no party to
any Listed Agreement is or has been asserted to be in default, violation or
breach of any such Listed Agreement and, to the knowledge of the Stockholders,
no event has occurred and is continuing that constitutes or with notice or the
passage of time or both, would constitute a default, violation or breach under
any such Listed Agreement. The Listed Agreements are in full force and effect
and constitute valid and binding agreements of the parties thereto in accordance
with their respective terms.
(c) Except as set forth in Schedule 4.09, no Company is a party to any
contracts subject to price redetermination or renegotiation. Except to the
extent set forth in Schedule 4.09, no Company is 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.
(d) Except as set forth in Schedule 4.09, neither any Company, the
Stockholders 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 such Company's customers for the
repurchase of products, sharing of fees, rebating of charges, bribes, kickbacks
or other similar arrangements.
(e) Except as set forth in Schedule 4.09, neither any of the Companies nor
the Stockholders 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 no Companies nor the Stockholders have any knowledge of any
condition or state of facts which would justify the exercise of such a right.
4.10 PERMITS. Except as specifically provided otherwise on Schedule 4.10,
Schedule 4.10 contains an accurate list, summary description and copies of all
licenses, franchises, permits, approvals, certificates, transportation
authorities and other governmental authorizations and intangible assets held by
any Company that are material to the conduct of its business, including, without
limitation, permits, licenses and operating authorizations, titles (including
motor vehicle titles and current registrations), fuel
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permits, franchises, certificates, trademarks, trade names, patents, patent
applications and copyrights owned or held by any Company (collectively, the
"Permits"). Except as specifically provided in Schedule 4.10, the Permits are
valid, and no Company has received any written notice that any Governmental
Authority intends to cancel, terminate or not renew any such Permit. Except as
specifically provided in Schedule 4.10, the Permits are all the permits,
licenses, operating authorizations, franchises, approvals, certificates,
transportation authorities and other governmental authorizations and intangible
assets that are required by Law for the operation of the businesses of the
Companies as conducted at the Balance Sheet Date and the ownership of the assets
and properties of the Companies. Except as specifically provided in Schedule
4.10, each Company has conducted and is conducting its business in substantial
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 is not in violation of any of the foregoing. Except as
specifically provided in Schedule 4.10, the transactions contemplated by this
Agreement will not result in a default under, a breach or violation of, a
termination of, or adversely affect the rights and benefits afforded to the
Companies by, any Permits.
4.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 4.11, (a)
each Company has complied with and is in compliance with all Environmental Laws,
(b) each Company has obtained and complied with all necessary permits, licenses,
authorizations and other approvals necessary to treat, transport, store, dispose
of and otherwise handle Hazardous Substances and has reported, to the extent
required by all Environmental Laws, all past and present sites owned or operated
by such Company where Hazardous Substances have been treated, stored, disposed
of or otherwise handled, (c) there have been no "releases" or threats of
"releases" (as defined in any Environmental Laws) at, from, in, to, under or on
any property currently or previously owned or operated by any Company at any
time during the period that any Company owned or operated any such property, (d)
there is no on-site or off-site location to which any Company has transported or
disposed of Hazardous Substances or arranged for the transportation or disposal
of Hazardous Substances which is the subject of any federal, state, local or
foreign enforcement action or any other known investigation that arose out of
any action or inaction that occurred on or after any Company's respective date
of incorporation and which could lead to any claim against any Company or U.S.
Concrete 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) no Company has any contingent liability in connection
with any release or disposal of any Hazardous Substance into the environment
occurring on or after its respective date of incorporation. None of the past or
present sites owned or operated by any Company is currently or has ever been
designated as a 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 treatment, storage and/or disposal facility, under any
Environmental Law. The Companies have provided U.S. Concrete with copies (or,
if not available, accurate written summaries) of all environmental
investigations, studies, audits and reviews which are in the possession, of any
Company respecting any facility site or other property previously or presently
owned or operated by any Company.
4.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS.
(a) Except as set forth in Schedule 4.12, no Company is bound by or subject
to any arrangement with any labor union. Except as set forth in Schedule 4.12,
no employees of the Companies are represented by any labor union or covered by
any collective bargaining agreement nor, to the
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Companies' or the Stockholders' 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
Companies' or the Stockholders' knowledge, threatened labor dispute involving
any Company and any group of its employees nor has any Company experienced any
significant labor interruptions over the past five years. No Company nor the
Stockholders have any knowledge of any significant issues or problems in
connection with the relationship of such Company with its employees. Each
Company considers its relationship with its employees to be good.
(b) Except as set forth in Schedule 4.12, (i) there is no unfair labor
practice charge or complaint pending or, to the knowledge of the Companies or
the Stockholders, threatened against or otherwise affecting any Company, (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 any Company's employees is pending or threatened
against such Company, (iii) no grievance is pending or, to the knowledge of the
Stockholders, threatened against any Company, (iv) to the knowledge of the
Stockholders, no Company is a party to, or otherwise bound by, any consent
decree with, or citation by, any Governmental Authority relating to employees or
employment practices, (v) each Company has paid in full to, or accrued in its
financial books and records, all employees of such Company 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 and (vi) each Company is in substantial compliance with its
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.
(c) Except as set forth in Schedule 4.12, all employees of each Company 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
such Company in their specific jobs.
4.13 INSURANCE. Schedule 4.13 sets forth an accurate list as of the
Balance Sheet Date of (a) all insurance policies carried by each Company, copies
of which are attached as Schedule 4.13, (b) all insurance loss runs or workmen's
compensation claims received for the past three policy years, and (c) the
following information with respect to all insurance policies currently carried
by each Company and previously carried by each Company within the last three
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 4.13, none of such policies are "claims made" policies. The Companies
do not carry environmental pollution insurance. The policies described in
Schedule 4.13 are in full force and effect. Any open claims as of the Closing
Date are recoverable under such policies, except to the extent of any applicable
deductible or loss retention as set forth on Schedule 4.13.
4.14 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 4.14 sets forth an
accurate schedule of all officers, directors and Stockholder employees of each
Company 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 (a) the
Balance Sheet Date
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and (b) the date hereof. No Company nor the Stockholders have any knowledge
that any of such individuals has any present intention of terminating his or her
employment or association with any Company. Attached to Schedule 4.14 are true,
complete and correct copies of each employment or consulting agreement with any
employee of a Company or any Stockholder. Except as set forth in Schedule 4.14,
no Company is a party to any agreement, nor has it 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.
4.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS;
EMPLOYEE POLICIES. Schedule 4.15 sets forth all agreements containing covenants
not to compete or solicit employees or to maintain the confidentiality of
information to which any Company or any of the Stockholders is bound or under
which any Company or any of the Stockholders has any rights or obligations.
4.16 EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.16 sets forth an accurate schedule of each "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and all deferred compensation or retirement
funding arrangements, whether formal or informal, that are currently in force or
under which any Company has any current or future obligation or liability or
under which any present or former employee of any Company, or such present or
former employee's dependents or beneficiaries, has any current or future right
to benefits (each such plan and arrangement referred to hereinafter as a
"Plan"), together with true and complete copies of such Plans (other than a
multiemployer plan), arrangements and any trusts related thereto. Except as set
forth in Schedule 4.16, no Company sponsors, maintains or contributes currently,
or sponsored, maintained or contributed at any time during the preceding five
years, to any plan, program, fund or arrangement that constitutes an employee
pension benefit plan. Each Plan other than a multiemployer plan may be
terminated by the respective Company at any time without any liability, cost or
expense, other than costs and expenses that are customary in connection with the
termination of a Plan. No present or past employee of any Company is or was
eligible to participate in any employee benefit plan (i) sponsored, maintained
or contributed to by an ERISA Affiliate currently or at any time in the past or
(ii) under which any ERISA Affiliate has any current or future obligation or
liability (each such plan described in (i) and (ii) of this sentence shall be
referred to hereinafter as an "ERISA Affiliate Plan"). Neither any Company nor
any ERISA Affiliate sponsors or sponsored a single-employer plan insured by the
Pension Benefit Guaranty Corporation. No Company has incurred nor will incur
any liability as a result of any ERISA Affiliate Plan maintained now or in the
past by any ERISA Affiliate. For purposes of this Agreement, the term "employee
pension benefit plan" shall have the meaning given that term in Section 3(2) of
ERISA, the term "ERISA Affiliate" means any corporation or trade or business
under common control with any Company as determined under Section 414(b), (c),
(m) or (o) of the Code and the term "multiemployer plan" shall have the meaning
given that term in Section 4001(a)(3) of ERISA.
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(b) Each Plan listed in Schedule 4.16 other than a multiemployer plan is in
compliance in all material respects with the applicable provisions of ERISA, the
Code and any other applicable Law. Except as set forth in Schedule 4.16, with
respect to each Plan of the Companies (other than a multiemployer plan), all
reports and other documents required under ERISA or other applicable Law to be
filed with any Governmental Authority, including without limitation all Forms
5500, or required to be distributed to participants or beneficiaries, have been
duly and timely filed or distributed, except for any failures to timely file or
distribute such reports and other documents as would not in the aggregate result
in a material liability to any Company or U.S. Concrete. True and complete
copies of all such reports and other documents with respect to the past five
years for each Plan have been provided to U.S. Concrete. No "accumulated
funding deficiency" (as defined in Section 412(a) of the Code) with respect to
any Plan has been incurred (without regard to any waiver granted under Section
412 of the Code), nor has any funding waiver from the Internal Revenue Service
been received or requested. Except as set forth in Schedule 4.16, each Plan
other than a multiemployer plan that is intended to be "qualified" within the
meaning of Section 401(a) of the Code (a "Qualified Plan") is so qualified and
has been determined by the Internal Revenue Service to be so qualified. To the
extent that any Qualified Plans have not been amended to comply with applicable
requirements of Governmental Authorities, the remedial amendment period
permitting retroactive amendment of these Qualified Plans has not expired and
will not expire within 120 days of after the Closing Date. Except as set forth
in Schedule 4.16, all accrued contribution obligations of each Company with
respect to any Plan have either been fulfilled in their entirety or are fully
reflected in the Financial Statements.
(c) No Plan has incurred or will incur (the foregoing representation being
made to the knowledge of the Companies and the Stockholders with respect only to
any multiemployer plan), and no Company has incurred or will incur, with respect
to any Plan, any liability for excise tax or penalty due to the Internal Revenue
Service. There have been no terminations, partial terminations or
discontinuances of contributions to any Qualified Plan during the preceding five
years without notice to and approval by the Internal Revenue Service and payment
of all obligations and liabilities attributable to such Qualified Plan.
(d) Except as set forth in Schedule 4.16, no Company has made any promises
of retirement or other benefits to employees, except as set forth in the Plans,
and no Company maintains or has established any Plan that is a "welfare benefit
plan" within the meaning of Section 3(1) of ERISA that provides for (i)
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, and at the expense of the participant or
the beneficiary of the participant, or (ii) retiree medical liabilities. Except
as set forth in Schedule 4.16, no Company maintains, has established or has ever
participated in a multiple employer welfare benefit arrangement as described in
Section 3(40)(A) of ERISA. Except as set forth in Schedule 4.16, no Company has
any current or future obligation or liability with respect to a Plan pursuant to
the provisions of a collective bargaining agreement.
(e) No Company has incurred, nor will it incur as a result of past
activities, any material liability under Title IV of ERISA in connection with
any Plan other than a multiemployer plan. The assets of each Plan other than a
multiemployer plan that are subject to Title IV of ERISA are sufficient to
provide the benefits under such Plan, the payment of which the Pension Benefit
Guaranty Corporation
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would guarantee if such Plan were terminated, and such assets are also
sufficient to provide all other "benefits liabilities" (as defined in ERISA
Section 4001(a)(16)) due under such Plan upon termination.
(f) No "reportable event" (as defined in Section 4043 of ERISA) has
occurred within the last four years with respect to any Plan (the foregoing
representation being made to the knowledge of the Companies and the Stockholders
with respect only to any multiemployer plan). There are no pending, or to the
Companies' and the Stockholders' knowledge, threatened claims, lawsuits or
actions (other than routine claims for benefits in the ordinary course) asserted
or instituted against, and no Company nor any ERISA Affiliate has knowledge of
any threatened litigation or claims against, the assets of any Plan or its
related trust or against any fiduciary of a Plan with respect to the operation
of such Plan. To the Companies' and the Stockholders' knowledge, there are no
investigations or audits of any 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 any Company that has not been fully
discharged. No Company has participated in any voluntary compliance or closing
agreement programs established with respect to the form or operation of a Plan.
(g) No Company has engaged in any prohibited transaction, within the
meaning of Section 406 of ERISA or Section 4975 of the Code, in connection with
any Plan for which exemption was not available. No person or entity that was
engaged by any Company as an independent contractor during the period beginning
on such Company's date of incorporation and ending on the Closing Date
reasonably can or will be characterized or deemed to be an employee of such
Company under applicable Laws for any purpose whatsoever, including, without
limitation, for purposes of federal, state and local income taxation, workers'
compensation and unemployment insurance and Plan eligibility.
(h) Except as set forth on Schedule 4.16, no Company is, or at any time
during the period beginning on its date of incorporation and ending on the
Closing Date was, obligated to contribute to a multiemployer plan. All
contributions required to be made by any Company to a multiemployer plan have
been timely made and each Company is, and at all times during the period
beginning on its date of incorporation and ending on the Closing Date has been,
in compliance with any obligation it has or has had with respect to its
participation in a multiemployer plan, except for violations which in the
aggregate could not reasonably be expected to have a material adverse effect on
such Company. No Company nor any ERISA Affiliate has made a complete or partial
withdrawal from a multiemployer plan so as to incur withdrawal liability as
defined in Section 4201 of ERISA. Schedule 4.16 states for each multiemployer
plan it lists or should list the Companies' best estimate of the amount of
withdrawal liability that would be incurred if any Company was to make a
complete withdrawal from that multiemployer plan as of the Closing Date.
Neither U.S. Concrete nor any Company will be responsible for any withdrawal or
other liability that may arise or has arisen with respect to any multiemployer
plan for which any ERISA Affiliate contributes, or at any time has contributed,
on behalf of such ERISA Affiliate's employees.
4.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in Schedule
4.17, there are no claims, actions, suits or proceedings, pending or, to the
knowledge of the Companies and the Stockholders, threatened against or affecting
any Company, at law or in equity, or before or by any Governmental Authority
having jurisdiction over such Company. Except as set forth on Schedule 4.17, no
written notice of any claim, action, suit or proceeding, whether pending or
threatened, has been received by any Company and, to the Stockholders'
knowledge, there is no basis therefor. Except to the
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extent set forth in Schedule 4.17, each Company has conducted and is conducting
its business in compliance with all Laws applicable to such Company, its assets
or the operation of its business, except for violations which in the aggregate
could not reasonably be expected to have a material adverse effect on such
Company.
4.18 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
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. Each Company has timely filed all
requisite federal, state, local and other tax returns for all fiscal periods
ended on or before the Closing, and has duly paid in full or made adequate
provision in the Financial Statements for the payment of all Taxes for all
periods ending at or prior to the Closing Date. Each Company has 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. Except for the
Internal Revenue Service audits for Fendt and AFTM for the years ending January
31, 1996 and a notice of a potential audit from the State of Michigan for AFTM,
there have not been during the past three years nor are there currently any
examinations, audits, proceedings, notices, waivers, asserted deficiencies or
disputed valuations in progress or claims against any Company relating to Taxes
for any period or periods prior to and including the Balance Sheet Date and no
notice of any claim for Taxes, whether pending or threatened, has been received.
No Company has granted or been requested to grant any extension of the
limitation period applicable to any claim for Taxes or assessments with respect
to Taxes. No Company is a party to any Tax allocation or sharing agreement or
is 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 Financial
Statements as of the Balance Sheet Date are sufficient for the payment of all
Taxes for all fiscal periods ended on or before that date. True, complete and
correct 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 U.S.
Concrete. There are no requests for ruling in respect of any Tax pending
between any Company and any Taxing authority. Each Company has been taxed under
the provisions of Subchapter S of the Code since February 1, 1997. Each Company
currently utilizes the accrual method of accounting for income tax purposes.
Such method of accounting has not changed in the past four years.
4.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
in Schedule 4.19, each Company has conducted its operations in the ordinary
course and there has not been:
(a) any material adverse change in the business, operations, properties,
condition (financial or other), assets, liabilities (contingent or otherwise),
results of operations or prospects of any Company;
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(b) any damage, destruction or loss (whether or not covered by insurance)
materially adversely affecting the assets, properties or business of any
Company;
(c) any change in the authorized capital stock of any Company or in its
outstanding securities or any change in the Stockholders' ownership interests in
any Company or any grant of any options, warrants, calls, conversion rights or
commitments;
(d) except for the pre-Closing distributions contemplated by Section 6.11,
any declaration or payment of any dividend or distribution in respect of the
capital stock or any direct or indirect redemption, purchase or other
acquisition of any of the capital stock of any Company;
(e) except for the pre-Closing distributions contemplated by Section 6.11,
any increase in the compensation payable or to become payable by any Company to
the Stockholders or any of its 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 4.19;
(f) any work interruptions, material labor grievances or claims filed;
(g) any proposed law, regulation or event or condition of any character
materially adversely affecting the assets, properties or business of any
Company;
(h) except for as contemplated by this Agreement or as set forth on
Schedule 4.19, any sale or transfer, or any agreement to sell or transfer, any
material assets, properties or rights of any Company to any person or entity,
including, without limitation, the Stockholders and their Affiliates;
(i) any cancellation, or agreement to cancel, any indebtedness or other
obligation owing to any Company;
(j) any increase in the indebtedness of any Company, 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;
(k) any plan, agreement or arrangement granting any preferential rights to
purchase or acquire any interest in any of the assets, properties or rights of
any Company or requiring consent of any party to the transfer and assignment of
any such assets, properties or rights;
(l) 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 any Company's business;
(m) any waiver of any material rights or claims of any Company;
(n) any material breach, amendment or termination of any Listed Agreement,
Permit or other right to which any Company is a party or any of its property is
subject; or
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(o) any other material transaction by any Company outside the ordinary
course of business.
4.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY. Schedule 4.20
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 Company has
accounts or safe deposit boxes; (b) the names in which the accounts or boxes are
held; (c) the type of account and the cash, cash equivalents and securities held
in such account as of the second business day prior to the Closing, none of
which assets have been withdrawn from such accounts since such date except for
bona fide business purposes in the ordinary course of the business of such
Company and except for the pre-Closing distributions of Cash contemplated by
Section 6.11; and (d) the name of each person authorized to draw thereon or have
access thereto. Schedule 4.20 also sets forth the name of each person,
corporation, firm or other entity holding a general or special power of attorney
from any Company and a description of the terms thereof.
4.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. No Company nor the
Stockholders 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.
4.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth in Schedule 4.22, neither the Stockholders nor any other Affiliate of
any Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
Competitive Business, lessor, lessee, customer or supplier of any Company.
Except as set forth in Schedule 4.22, no officer or director of the Company nor
the Stockholders have, nor had any interest in any tangible or intangible assets
or property, real or personal, used in or pertaining to the business of any
Company.
4.23 INTANGIBLE PROPERTY. Schedule 4.23 sets forth an accurate list of all
patents, patent applications, trademarks, service marks, technology, licenses,
trade names, copyrights and other intellectual property or proprietary property
rights owned or used by any Company. Each Company owns or possesses, and the
assets of each Company include, sufficient legal rights to use all of such items
without conflict with or infringement of the rights of others.
4.24 CAPITAL EXPENDITURES. Schedule 4.24 sets forth the total amount of
capital expenditures currently budgeted to be incurred by each Company in excess
of $25,000 in the aggregate during the balance of such Company's current fiscal
year.
4.25 INVENTORIES. Except as Schedule 4.25 sets forth: (i) all inventories
of each Company are salable or usable in the ordinary course of business of such
Company; and (ii) no Company depends on any single vendor for its inventories
the loss of which could have a material adverse effect on the business or
financial condition of such Company or during the past five years has sustained
a difficulty material to such Company in obtaining its inventories.
4.26 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of the Stockholders
and each Company that U.S. Concrete is
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not making any representation or warranty whatsoever, express or implied, other
than those representations and warranties of U.S. Concrete expressly set forth
in this Agreement.
4.27 DISCLOSURE. The Stockholders and each Company have fully provided to
U.S. Concrete or its representatives, to the extent reasonably available or
produceable, all material information that U.S. Concrete has requested in
analyzing whether to consummate the transactions contemplated by this Agreement.
No representation or warranty of the Stockholders to U.S. Concrete 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.
4.28 YEAR 2000 COMPLIANCE. To the knowledge of the Stockholders after
reasonable investigation, all devices, systems, machinery, information
technology, computer software and hardware, and other date sensitive technology
(jointly and severally its "systems") owned or leased or licensed by any Company
and used in its business as presently conducted are Year 2000 Compliant. For
purposes hereof, "Year 2000 Compliant" means that such systems are designed to
be used prior to, during and after the Gregorian calendar year 2000 A.D. and
will operate during each such time period without error relating to date data,
specifically including any error relating to, or the product of, date data which
represents or references different centuries or more than one century.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE
U.S. Concrete represents and warrants to the Stockholders as follows:
5.01 ORGANIZATION. U.S. Concrete is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware, and is
duly authorized and qualified under all applicable Laws to carry on its business
in the places and in the manner now conducted. U.S. Concrete has the requisite
power and authority to own, lease and operate its assets and properties and to
carry on its business as such business is currently being conducted.
5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) U.S. Concrete has the full legal right, power and authority to enter
into this Agreement and the ancillary documents and agreements described herein
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement has been approved by the board of directors of
U.S. Concrete. No additional corporate proceedings on the part of U.S. Concrete
are necessary to authorize the execution and delivery of this Agreement and the
consummation by U.S. Concrete of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by U.S. Concrete,
and, assuming the due authorization, execution and delivery by each Company and
the Stockholders, constitutes a valid and binding agreement of U.S. Concrete,
enforceable against U.S. Concrete in accordance with its terms, subject to (a)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (b)
general equitable principles.
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(b) The execution and delivery of this Agreement by U.S. Concrete does not,
and the consummation by U.S. Concrete of the transactions contemplated hereby
will not, violate or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under any of the terms, conditions or provisions of (i) the Certificate of
Incorporation or By-Laws of U.S. Concrete, (ii) any Law applicable to U.S.
Concrete or any of its properties or assets or (iii) any material note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which U.S. Concrete is now a party or by which U.S. Concrete or any of its
properties or assets may be bound or affected.
(c) Except for such filings as may be required under federal or state
securities Laws, no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any Governmental Authority is necessary
for the execution and delivery of this Agreement by U.S. Concrete or the
consummation by U.S. Concrete of the transactions contemplated hereby.
5.03 U.S. CONCRETE COMMON STOCK. The shares of U.S. Concrete Common Stock
to be issued to the Stockholders pursuant to the transactions contemplated
hereby 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 U.S. Concrete Common Stock pursuant to the transactions contemplated hereby
will transfer to the Stockholders valid title to such shares of U.S. Concrete
Common Stock, free and clear of all Encumbrances, except for any Encumbrances
created by the Stockholders.
5.04 SEC FILINGS; DISCLOSURE. U.S. Concrete has filed with the SEC all
material forms, statements, reports and documents required to be filed by it
prior to the date hereof under each of the 1933 Act and the 1934 Act and the
respective rules and regulations thereunder, (a) all of which, as amended, if
applicable, complied when filed in all material respects with all applicable
requirements of the appropriate Act and the rules and regulations thereunder,
and (b) none of which, as amended, if applicable, contains any untrue statement
of material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made and at the time they were made, not
misleading.
5.05 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of U.S. Concrete
that the Stockholders are not making any representation or warranty whatsoever,
express or implied, other than those representations and warranties of the
Stockholders expressly set forth in this Agreement.
5.06 DISCLOSURE. U.S. Concrete has fully provided the Stockholders or
their representatives with all the information that the Stockholders have
requested in analyzing whether to consummate the transactions contemplated by
this Agreement. None of the information so provided nor any representation or
warranty of U.S. Concrete contained 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 or therein, in light of the circumstances
under which they were made, not misleading.
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ARTICLE VI
CERTAIN COVENANTS
6.01 Release From Guarantees. At the Closing, U.S. Concrete shall use its
commercially reasonable efforts to have the Stockholders released from the
personal guarantees of the Companies' indebtedness identified in Schedule 6.01.
To the extent that U.S. Concrete is unable to secure such releases at Closing,
U.S. Concrete shall continue to use its commercially reasonable efforts to
secure such releases after Closing and in any event within 90 days after the
Closing Date. Without limiting the foregoing, U.S. Concrete hereby agrees to
indemnify and defend the Stockholders and hold each Stockholder harmless for any
amounts that such Stockholder is required to pay in connection with the
enforcement of any obligations under such personal guarantees after the Closing,
including without limitation any reasonable attorneys' fees and expenses
incurred in connection therewith.
6.02 FUTURE COOPERATION; TAX MATTERS. The Stockholders and U.S. Concrete
shall each deliver or cause to be delivered to the other following the Closing
such additional instruments as the other may reasonably request for the purpose
of fully carrying out this Agreement. The Stockholders will cooperate and use
their commercially reasonable best efforts to have the present officers,
directors and employees of the Companies cooperate with U.S. Concrete at and
after the Closing in furnishing information, evidence, testimony and other
assistance in connection with any actions, proceedings, arrangements or disputes
of any nature with respect to matters pertaining to all periods prior to the
Closing. In addition, U.S. Concrete will provide the Stockholders with access
to such of its books and records as may be reasonably requested by the
Stockholders in connection with federal, state and local tax matters relating to
periods prior to the Closing. The party requesting cooperation, information or
actions under this Section 6.02 shall reimburse the other party for all
reasonable out-of-pocket costs and expenses paid or incurred in connection
therewith, which costs and expenses shall not, however, include per diem charges
for employees or allocations of overhead charges.
6.03 EXPENSES. U.S. Concrete will pay the fees, expenses and disbursements
of U.S. Concrete and its agents, representatives, accountants and counsel
incurred in connection with the execution, delivery and performance of this
Agreement and any amendments hereto, including the fees and expenses of Arthur
Andersen LLP's audit or audit related procedures in connection with the
transactions contemplated hereby. The Stockholders will pay their fees,
expenses and disbursements and those of their and the Companies' agents,
representatives, financial advisors, accountants and counsel incurred in
connection with the execution, delivery and performance of this Agreement and
any amendments hereto and the consummation of the transactions contemplated
hereby, including, without limitation, accounting fees and related expenses
attributable to the final Tax returns of the Companies and the Stockholders for
periods through the Closing. The Stockholders will also pay any costs
associated with business brokers or other advisors engaged by any Stockholder or
any Company, including without limitation the fees and expenses of W.Y. Campbell
& Company.
6.04 LEGAL OPINION. At the Closing, the Companies and the Stockholders
shall cause their legal counsel, Dickinson Wright PLLC, to deliver to U.S.
Concrete a legal opinion substantially in the form of Exhibit A to this
Agreement.
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6.05 EMPLOYMENT AND CONSULTING AGREEMENTS. Concurrently with the Closing
under this Agreement, one or more of the Companies shall enter into a mutually
acceptable Employment Agreement with the individual identified on Schedule 6.05
and a mutually acceptable Consulting Agreement with the individual identified on
Schedule 6.05, substantially in the forms of Exhibit B and Exhibit C,
respectively, to this Agreement.
6.06 OTHER DOCUMENTS. At the Closing, U.S. Concrete shall receive the
following additional certificates, instruments and documents:
(a) The stock certificates representing the Companies Shares duly endorsed
in blank by the Stockholders, or accompanied by stock powers duly executed in
blank by the Stockholders, and otherwise in a form acceptable to U.S. Concrete
for transfer on the books of the Companies.
(b) The written resignations of all directors and all officers of each of
the Companies, such resignations to be effective concurrently with the Closing
on the Closing Date.
(c) Releases in form and substance satisfactory to U.S. Concrete executed
by the Stockholders releasing the Companies from any liability or obligation to
the Stockholders.
(d) All of the Companies' books and records, including without limitation,
minute books, corporate charters, by-laws, stock records, bank account records,
computer records and all contracts with third parties.
6.07 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the
execution of this Agreement, (a) the Stockholders shall repay to the Companies
all amounts outstanding as advances to or receivables from the Stockholders,
each of which advances or receivables is specifically reflected in Schedules
4.07, and (b) the Companies shall repay all amounts outstanding under loans to
the Company from the Stockholders, each of which loans to the Companies is
specifically reflected in Schedules 4.06.
6.08 STOCK OPTIONS. U.S. Concrete shall grant nonqualified options to
purchase an aggregate of 50,000 shares of U.S. Concrete Common Stock (the
"Options") as of the Closing Date under U.S. Concrete's 1999 Incentive Plan (the
"Incentive Plan") to certain key employees of the Company other than the
Stockholders, except for Jeffery Spahr who shall be granted 30,000 such Options,
all as set forth on Schedule 6.08 in the amounts listed thereon. Schedule 6.08
shall also include the social security number and home address of each
individual listed thereon. Such options shall vest in equal annual increments
for four years, commencing on the first anniversary of the Closing Date.
6.09 SECTION 338(H)(10) ELECTION. At U.S. Concrete's option, each of the
Companies and the Stockholders will join with U.S. Concrete in making an
election under Section 338(h)(10) of the Code (and any corresponding election
under state, local and foreign Tax law) with respect to the purchase and sale of
the Companies Shares pursuant to this Agreement (a "Section 338(h)(10)
Election"). If such election is made, the Stockholders and U.S. Concrete agree
to allocate the modified aggregate deemed sales price in accordance with
Schedule 6.09, which the parties agree is in accordance with Treasury
Regulations Section 1.338(b)-2T. The Stockholders will include any income,
gain, loss, deduction or other Tax item resulting from the Section 338(h)(10)
Election on their Tax returns and shall pay any Tax
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attributable to such items. The Stockholders shall also pay any Tax imposed on
the Companies attributable to the making of the Section 338(h)(10) Election with
respect to the Companies, including, but not limited to, (a) any Tax imposed
under Section 1374 of the Code, (b) any Tax imposed under Section 1.338(h)(10)-
1(e)(5) of the Treasury Regulations promulgated under the Code or (c) any state,
local or foreign Tax imposed on the Companies' gain, and the Stockholders shall
indemnify U.S. Concrete against any loss, cost or other adverse consequence
arising out of any failure of the Stockholders to pay any such Taxes.
6.10 WORKING CAPITAL ADJUSTMENT. As soon as practicable, and in any event
within 75 days after the Closing Date, U.S. Concrete shall cause to be prepared
and delivered to the Stockholders a balance sheet of the Companies as of the
Closing Date (the "Closing Date Balance Sheet") and a working capital adjustment
schedule (the "Adjustment Schedule") using the same policies and procedures as
those used by the Companies to prepare their May 31, 1999 balance sheet
consistently applied. The Adjustment Schedule will set forth the amount of net
working capital of the Company at the Closing Date (computed by subtracting
current liabilities net of current debt from current assets net of Cash listed
on the Closing Date Balance Sheet) (the "Adjusted Working Capital Amount"). If
the Adjusted Working Capital Amount (the "Adjusted Amount") is less than
$1,449,865, then the Stockholders shall, no later than 15 days after delivery of
the Adjustment Schedule by U.S. Concrete, pay to the Companies the amount by
which $1,449,865 exceeds the Adjusted Amount (the "Shortfall"). If the
Adjusted Amount is greater than $1,449,865, then the Companies shall, no later
than 15 days after delivery of the Adjustment Schedule, pay to the Stockholders,
on a pro rata basis in proportion to their percentage ownership of the Companies
Common Stock outstanding immediately prior to the Closing, the aggregate amount
by which the Adjusted Amount exceeds $1,449,865 (the "Excess"). The Closing
Date Balance Sheet and Adjustment Schedule will be final and binding on the
parties hereto unless, within 15 days following the delivery of the Adjustment
Schedule by U.S. Concrete, the Stockholders notify U.S. Concrete in writing that
the Stockholders disagree with all or any portion of the Closing Date Balance
Sheet and/or the Adjustment Schedule. If the Stockholders and U.S. Concrete
cannot mutually resolve any such disagreement within 15 days after the
expiration of the Stockholders' notice of disagreement, then the Stockholders
and U.S. Concrete shall submit the dispute to a mutually agreeable "Big Five"
independent certified public accountant (the "Accounting Firm") within 10 days
after the end of such 15-day period. If the Stockholders and U.S. Concrete are
unable to agree upon such an accountant within such 10-day period, then the
Stockholders and U.S. Concrete shall each select a "Big Five" accountant and
within five days after their selection, those two accountants shall select a
third "Big Five" accountant, which third accountant shall act as the Accounting
Firm. The Stockholders and U.S. Concrete shall request that the Accounting Firm
audit the Closing Date Balance Sheet and provide a computation of the Adjusted
Working Capital Amount within 30 days thereafter, and this computation will be
final and binding upon the parties hereto and used to compute the Shortfall or
the Excess, as the case may be, the payment of which shall be made within five
days of delivery by U.S. Concrete of the audited Closing Date Balance Sheet.
6.11 PRE-CLOSING DISTRIBUTIONS. Prior to the Closing, the Companies may
have distributed to the Stockholders the Cash and other assets set forth on
Schedule 6.11. Any such distributions shall have been authorized by the
respective Boards of Directors of the Companies prior to the Closing, and the
Companies and the Stockholders shall have used their respective best efforts to
complete such
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distributions prior to the Closing. Notwithstanding the foregoing, if any such
authorized distributions have not been completed prior to the Closing the
Companies shall use reasonable efforts to complete such authorized distributions
after the Closing. The Stockholders' sole recourse against the Companies with
respect to this Section 6.11 shall be to the assets distributed.
6.12 LEASE AGREEMENTS. Concurrently with the execution of this Agreement,
Fendt and AFTM shall enter into Lease Agreements with Hunter Development
Company, for the properties located in Novi, Michigan and Howell, Michigan,
respectively, substantially in the forms of Exhibit D and Exhibit E,
respectively.
6.13 Interest-Bearing Debt Adjustment. As soon as practicable, and in any
event within 75 days after the Closing Date, U.S. Concrete shall deliver to the
Stockholders a schedule (the "Debt Schedule") which sets forth the amount of the
Company's Interest Bearing Debt as of the Closing Date (the "Closing Date
Interest-Bearing Debt Amount"). If the Closing Date Interest Bearing Debt
Amount is greater than $0, then the Stockholders shall, no later than 15 days
after delivery of the Debt Schedule by U.S. Concrete, pay to the Companies the
amount by which the Closing Date Interest-Bearing Debt Amount exceeds $0.
6.14 Relocation Expenses. The Stockholders covenant and agree that if at
any time within five (5) years after the Closing Date Fendt is required by the
City of Novi, Michigan to move its existing operations from its existing site
having a street address of 43443 Flint Road, Novi, Michigan 48376, or is
otherwise unable to conduct its existing operations from such site, because such
existing operations constitute a nonconforming use under existing zoning
ordinances or other Laws governing land use, the Stockholders will provide or
make available to Fendt or an Affiliate of Fendt suitable real estate within
twenty (20) miles of the present Fendt site or, in the event Fendt determines in
its sole discretion that it does not desire to be located on such real estate
provided or made available by the Stockholders, Fendt or an Affiliate may lease
or purchase any real estate it deems suitable in its sole discretion within
twenty (20) miles of the present Fendt site, and, if the annual rental cost of
any such land (or 10% of the purchase price for any land purchased by Fendt or
an Affiliate) and establishment of a comparable batch plant, equipment and other
facilities thereon necessary for the continued operation of Fendt's business as
conducted immediately prior to the relocation (such batch plant, equipment and
other facilities amortized on a twenty (20) year straight-line basis) together
exceeds $85,000 per year, the Stockholders will pay to Fendt such excess amount,
not to exceed $50,000 per year for the remainder of such five (5) year period.
ARTICLE VII
INDEMNIFICATION
The Stockholders and U.S. Concrete each make the following covenants:
7.01 General Indemnification by the Stockholders. Subject to Section 7.05
and Section 7.06, the Stockholders covenant and agree that they will jointly and
severally (without any right of indemnification or contribution from the
Companies) indemnify, defend, protect and hold harmless U.S. Concrete and its
officers, directors, employees, stockholders, agents, representatives and
Affiliates (including, without limitation, the Companies), at all times from and
after the date of this Agreement from and against all Losses incurred by any of
such indemnified persons and entities to the extent such
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Losses result or arise from (a) until the Expiration Date any breach of the
representations and warranties of the Stockholders set forth herein or in the
Schedules attached hereto, (b) any breach or nonfulfillment of any covenant or
agreement on the part of the Stockholders under this Agreement, (c) all income
Taxes payable by the Company for all periods prior to and including the Closing
Date, (d) all transfer and other Taxes arising from the transactions
contemplated by this Agreement, (e) any debt, liability or obligation of, or any
claim, action, suit or proceeding against, All Star Circle Limited Partnership,
a Michigan limited partnership, or (f) the matters set forth on Schedule 7.01,
to the extent they exceed the respective threshold amounts specified on Schedule
7.01.
7.02 INDEMNIFICATION BY U.S. CONCRETE. Subject to Section 7.05 and Section
7.06, U.S. Concrete covenants and agrees that it will indemnify, defend, protect
and hold harmless the Stockholders and their respective agents, representatives,
Affiliates, beneficiaries and heirs and employees at all times from and after
the date of this Agreement from and against all Losses incurred by any of such
indemnified persons to the extent such Losses result or arise from (a) until the
Expiration Date, any breach of the representations and warranties of U.S.
Concrete set forth herein or in the Schedules attached hereto or (b) any breach
or nonfulfillment of any covenant or agreement on the part of U.S. Concrete
under this Agreement.
7.03 THIRD PERSON CLAIMS. Promptly after any party entitled to
indemnification under Sections 7.01 and 7.02 hereof (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person or entity not a party to this Agreement ("Third Person"), of the
commencement of any action or proceeding by a Third Person, which the
Indemnified Party believes in good faith is an indemnifiable claim under this
Agreement, the Indemnified Party shall give to the party obligated to provide
indemnification pursuant to Sections 7.01 or 7.02 hereof (hereinafter the
"Indemnifying Party") written notice of such claim or the commencement of such
action or proceeding. Such notice shall state the nature and the basis of such
claim and a reasonable estimate of the amount thereof. The Indemnifying Party
shall have the right to defend and settle, at its own expense and by its own
counsel reasonably acceptable to the Indemnified Party, any such matter so long
as the Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in all commercially
reasonable respects in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records and other information reasonably
requested by the Indemnifying Party and in the Indemnified Party's possession or
control. After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability, and for
so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability; provided, however, that the Indemnified Party shall
be entitled, at its expense, to participate in the defense of such asserted
liability and the negotiations of the settlement thereof. The Indemnifying
Party shall not settle any such Third Person claim without the consent of the
Indemnified Party, unless the settlement thereof imposes no liability or
obligation on, and includes a complete release from liability of, the
Indemnified Party. If the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person claim and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section with respect to such Third Person claim shall be limited to
the amount
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so offered in settlement by said Third Person; provided, however, that
notwithstanding the foregoing, the Indemnified Party shall be entitled to refuse
to consent to any such proposed settlement and the Indemnifying Party's
liability hereunder shall not be limited by the amount of the proposed
settlement if such settlement imposes any liability or obligation on, or does
not provide for the complete release of, the Indemnified Party. If, upon
receiving notice, the Indemnifying Party does not timely undertake to defend
such matter to which the Indemnified Party is entitled to indemnification
hereunder, or fails diligently to pursue such defense, the Indemnified Party may
undertake such defense through counsel of its choice, at the cost and expense of
the Indemnifying Party, and the Indemnified Party may settle such matter, in its
discretion, and the Indemnifying Party shall reimburse the Indemnified Party for
the amount paid in such settlement and any other liabilities or expenses
incurred by the Indemnified Party in connection therewith.
7.04 Non-Third Person Claims. In the event that any Indemnified Party
asserts the existence of a claim giving rise to Losses (but excluding claims
resulting from the assertion of liability by Third Persons), such party shall
give written notice to the Indemnifying Party. Such written notice shall state
that it is being given pursuant to this Section 7.04, specify the nature and
amount of the claim asserted, and indicate the date on which such assertion
shall be deemed accepted and the amount of the claim deemed a valid claim (such
date to be established in accordance with the next sentence). If such
Indemnifying Party, within 60 days after the mailing of notice by such
Indemnified Party, shall not give written notice to such Indemnified Party
announcing such Indemnifying Party's intent to contest such assertion of such
Indemnified Party, such assertion shall be deemed accepted and the amount of
such claim shall be deemed a valid claim. In the event, however, that such
Indemnifying Party contests such assertion of a claim by giving such written
notice to the Indemnified Party within said period, then the parties shall act
in good faith to reach agreement regarding such claim.
7.05 INDEMNIFICATION DEDUCTIBLE. Except as specifically provided in
Schedule 7.05, neither the Stockholders, on the one hand, nor U.S. Concrete, on
the other hand, shall be entitled to indemnification from the other under the
provisions of Section 7.01(a) or Section 7.02(a), as the case may be, until such
time as, and only to the extent that, the claims subject to indemnification by
such other party exceed, in the aggregate $172,473. Notwithstanding the
foregoing, the limitations set forth in this Section 7.05 shall not apply to
fraudulent misrepresentations.
7.06 INDEMNIFICATION LIMITATION. Except as specifically provided in
Schedule 7.06, and subject to Section 7.05, the aggregate indemnification
obligation of the Stockholders under Section 7.01(a) and of U.S. Concrete under
Section 7.02(a) shall be limited to $17,247,308. Notwithstanding the foregoing,
the limitations set forth in this Section 7.06 shall not apply to fraudulent
misrepresentations.
7.07 Indemnification for Negligence of Indemnified Party. THE RIGHTS TO
INDEMNIFICATION UNDER THIS ARTICLE VII INCLUDE RIGHTS TO INDEMNIFICATION FOR THE
RESULTS OF AN INDEMNIFIED PARTY'S ACTUAL OR ALLEGED NEGLIGENCE, IF SUCH
INDEMNIFIED PARTY WOULD OTHERWISE BE ENTITLED TO INDEMNIFICATION HEREUNDER.
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ARTICLE VIII
NONCOMPETITION COVENANTS
8.01 PROHIBITED ACTIVITIES.
(a) For no additional consideration, except as set forth in Schedule 8.01
each Stockholder will not for five years following the Closing Date and, if any
Stockholder is party to an Employment Agreement or Consulting Agreement, if
longer, one year following such Stockholder's termination of employment with or
engagement by any Company or its Affiliates (with the applicable period being
herein referred to as the "Noncompete Term"), directly or indirectly, for
himself or herself 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 Competitive Business
within any Territory surrounding any plant or other operating facility in
which any Company was engaged in business on the date immediately prior to
the Closing Date (for purposes of this ARTICLE VIII, the "Territory"
surrounding any plant or other operating facility will be: (A) the city,
town or village in which that plant or facility is located, (B) the county
or parish in which that plant or facility is located, (C) the counties or
parishes contiguous to the county or parish in which that plant or facility
is located, (D) the area located within 50 miles of that plant or facility,
(E) the area located within 100 miles of that plant or facility and (F) the
area in which that plant or facility regularly provides products or
services at the locations of its customers).
(ii) call upon or otherwise solicit any person, who is, at that time,
an employee or consultant of U.S. Concrete or any Company 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 U.S. Concrete or any Company 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 U.S. Concrete or any Company 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 which any Company or
U.S. Concrete 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 U.S. Concrete, for the purpose of acquiring that
entity or arranging the acquisition of that entity by any person or entity
other than U.S. Concrete.
(b) Notwithstanding the above, Section 8.01(a) shall not be deemed to
prohibit any Stockholder from acquiring, as a passive investor with no
involvement in the operations of the business,
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not more than one 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.
8.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to U.S. Concrete as a result of a breach of the foregoing covenant,
because a breach of such covenant 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 for
which the Companies and/or U.S. Concrete would have no other adequate remedy,
each Stockholder agrees that the foregoing covenant may be enforced against such
Stockholder by injunctions, restraining orders and other equitable actions.
8.03 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this ARTICLE VIII are necessary in terms of time,
activity and territory to protect U.S. Concrete's interest in the assets,
properties and business being acquired pursuant to the terms of this Agreement
and impose a reasonable restraint on the Stockholders in light of the activities
and businesses of the Companies on the date of the execution of this Agreement
and the current plans of the Companies.
8.04 SEVERABILITY; REFORMATION. The covenants in this ARTICLE VIII 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 VIII 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.
8.05 MATERIAL AND INDEPENDENT COVENANT. The Stockholders acknowledge that
their agreements and the covenants set forth in this ARTICLE VIII are material
conditions to U.S. Concrete's agreement to execute and deliver this Agreement
and to consummate the transactions contemplated hereby and that U.S. Concrete
would not have entered into this Agreement without such covenants. All of the
covenants in this ARTICLE VIII shall be construed as an agreement independent of
any other provision in this Agreement. The existence of any claim or cause of
action by any Stockholder against U.S. Concrete, whether predicated on this
Agreement or otherwise, will not constitute a defense to the enforcement by U.S.
Concrete of any of the covenants of this ARTICLE VIII. It is specifically
agreed that the time period Section 8.01 specifies will be computed in the case
of each Stockholder by excluding from that computation any time during which
that Stockholder is in violation of any provision of Section 8.01. The
covenants this ARTICLE VIII contains will not be affected by any breach of any
other provision hereof by any party hereto.
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ARTICLE IX
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
9.01 General. Each Stockholder recognizes and acknowledges that he or she
had in the past, currently has, and in the future will have, access to certain
confidential information relating to the businesses of the Companies, including,
without limitation, lists of customers, operational policies, and pricing and
cost policies that are, and following the Closing will be, valuable, special and
unique assets of the Companies and U.S. Concrete. Each Stockholder agrees that
he or she will not use or disclose such confidential information to any person,
firm, corporation, association or other entity for any purpose whatsoever,
except as is required in the course of performing his or her duties, if any, to
any of the Companies and/or U.S. Concrete, unless (a) such information becomes
known to the public generally through no fault of such Stockholder or (b)
disclosure is required by Law, provided that prior to disclosing any information
pursuant to this clause (b) such Stockholder shall give prior written notice
thereof to U.S. Concrete and the Companies and provide U.S. Concrete with the
opportunity to contest such disclosure. In the event of a breach or threatened
breach by any Stockholder of the provisions of this Section, U.S. Concrete shall
be entitled to an injunction restraining such Stockholder from disclosing, in
whole or in part, such confidential information. Nothing herein shall be
construed as prohibiting U.S. Concrete from pursuing any other available remedy
for such breach or threatened breach, including, without limitation, the
recovery of damages.
9.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to U.S. Concrete as a result of the breach of the foregoing covenant,
because a breach of such covenant 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 would be caused for
which the Companies and/or U.S. Concrete would have no other adequate remedy,
each Stockholder agrees that the foregoing covenants may be enforced against
such Stockholder by injunctions, restraining orders and other equitable actions.
ARTICLE X
FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON
STOCK
10.01 Compliance with Law. The Stockholders acknowledge the shares of
U.S. Concrete Common Stock issued in accordance with the terms of this Agreement
(the "Restricted Shares") will not be registered under the 1933 Act and
therefore may not be resold without compliance with the 1933 Act. The
Restricted Shares are being or will be acquired by the Stockholders 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. Each Stockholder covenants, warrants and represents that none of
the Restricted Shares held by such Stockholder 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 1933 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
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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.
10.02 ECONOMIC RISK; SOPHISTICATION; ACCREDITED INVESTORS. Each
Stockholder 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. Each
Stockholder has such knowledge and experience in financial and business matters
that he or she is capable of evaluating the merits and risks of the proposed
investment and therefore has the capacity to protect his or her own interests in
connection with the acquisition of the Restricted Shares pursuant hereto. Each
Stockholder represents to U.S. Concrete that he or she is an "accredited
investor," as that term is defined in Regulation D under the 1933 Act. Each
Stockholder or his or her representatives have had an adequate opportunity to
ask questions of, and receive answers from the appropriate officers and
representatives of U.S. Concrete concerning, among other matters, U.S. Concrete,
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 such Stockholder or his or her
representatives concerning such matters.
10.03 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 U.S.
Concrete Common Stock to the public without registration, for a period of two
years after the Closing, U.S. Concrete agrees to use its commercially reasonable
efforts to:
(a) make and keep public information (as such terms are defined in
Rule 144) regarding U.S. Concrete available;
(b) file with the SEC in a timely manner all reports and other
documents required of U.S. Concrete under the 1933 Act and the 1934 Act;
and
(c) furnish to a Stockholder upon written request a written statement
by U.S. Concrete as to its compliance with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, a copy of the most recent annual
or quarterly report of U.S. Concrete, and such other reports and documents
so filed as such Stockholder may reasonably request in availing himself or
herself of any rule or regulation of the SEC allowing such Stockholder to
sell any such shares without registration.
10.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES. The
Stockholders covenant, warrant and represent that (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 (the "Initial Lockup Period") and (ii) 50% of the
Restricted Shares will not be offered, sold, assigned, pledged, hypothecated,
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<PAGE>
transferred or otherwise disposed of, directly or indirectly, during the two-
year period commencing on the Closing Date (the "Secondary Lockup Period" and
together with the Initial Lockup Period, the "Lockup Periods") and, after the
applicable 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 1933 Act and the rules and regulations of the SEC; and, during the
applicable Lockup Period, the Stockholders shall not engage in put, call, short-
sale, hedge, straddle or similar transactions intended to reduce the
Stockholders' risk of owning the Restricted Shares subject to the applicable
Lockup Period. Certificates representing 50% of the Restricted Shares shall
bear the following legend, which shall reflect the Initial Lockup Period, in
addition to the legend under Section 10.01:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL
RESTRICTION ON TRANSFER THAT EXPIRES ON NOVEMBER 5, 2000 AND MAY NOT BE
OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE
PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC.
Certificates representing the remaining 50% of the Restricted Shares shall bear
the following legend, which shall reflect the Secondary Lockup Period, in
addition to the legend under Section 10.01:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL
RESTRICTION ON TRANSFER THAT EXPIRES ON NOVEMBER 5, 2001 AND MAY NOT BE
OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE
PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC.
ARTICLE XI
MISCELLANEOUS
11.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES. This Agreement and the
rights of the parties hereunder may not be assigned (except by operation of Law)
and shall be binding upon and shall inure to the benefit of the parties hereto,
the successors of U.S. Concrete and the Companies, and the heirs and legal
representatives of the Stockholders. Except as provided in ARTICLE VII or in
this Section 11.01, nothing in this Agreement is intended or will be construed
to confer upon or give any person or entity other than the parties hereto any
rights or remedies under or by reason of this Agreement or any transaction
contemplated hereby.
11.02 ENTIRE AGREEMENT. This Agreement (including the Schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders, the
Companies and U.S. Concrete and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement may be
modified or amended only by a written instrument executed by the Stockholders,
the Companies and U.S. Concrete, acting through their respective officers, duly
authorized by their respective Boards of Directors. Any right hereunder may be
waived only by a written instrument executed by the party waiving such right.
11.03 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. Facsimile
transmission of any signed original document and/or retransmission
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<PAGE>
of any signed facsimile transmission will be deemed the same as delivery of an
original. At the request of any party, the parties will confirm facsimile
transmission by signing a duplicate original document.
11.04 BROKERS AND AGENTS. Except for the Stockholders' engagement of W.Y.
Campbell and Company, whose fees and expenses are liabilities and obligations of
the Stockholders, each party hereto represents and warrants that it employed no
broker or agent in connection with the transactions contemplated by this
Agreement. Each party agrees to indemnify each other party against all loss,
cost, damages or expense arising out of claims for fees or commissions of
brokers employed or alleged to have been employed by such indemnifying party.
11.05 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested (which will be deemed
given three business days after deposit), or by delivering the same in person to
an officer or agent of such party (which will be deemed given when actually
received), as follows:
If to U.S. Concrete, addressed to it at:
U.S. Concrete, Inc.
1300 Post Oak Blvd., Suite 1200
Houston, Texas 77056
Attn: Corporate Secretary
If to the Stockholders, addressed as follows:
B. Thomas Stover, as Trustee under the Trust Agreement
dated February 20, 1986 for B Thomas Stover
5499 Mystic Lake Drive
Brighton, Michigan 48116
Sarah M. Stover, as Trustee under the Trust Agreement
dated February 27, 1990 for Sarah M. Stover
5499 Mystic Lake Drive
Brighton, Michigan 48116
B. Andrew Stover
5499 Mystic Lake Drive
Brighton, Michigan 48116
B. Thomas Stover, Custodian under the Michigan Uniform
Gifts to Minors Act for the benefit of Carolyn A.
Stover
5499 Mystic Lake Drive
Brighton, Michigan 48116
Jeffery D. Spahr
7851 Lee Road
Brighton, Michigan 48116
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Jeffery T. Stover
5499 Mystic Lake Drive
Brighton, Michigan 48116
Bradley C. Stover
5499 Mystic Lake Drive
Brighton, Michigan 48116
with a copy (which shall not constitute notice) to:
Dickinson Wright PLLC
Attn: Richard M. Bolton, Esq.
500 Woodward Avenue, Suite 4000
Detroit, Michigan 48226
or such other address as any party hereto shall specify pursuant to this Section
11.05 from time to time.
11.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in ARTICLE IV and ARTICLE V shall survive the Closing for a
period of two years from the Closing Date (the "Expiration Date"), except that
the representations and warranties set forth in Sections 4.03, 4.11, 4.16 and
4.18 hereof shall survive until such time as the applicable statute of
limitations period has run, which shall be deemed to be the Expiration Date for
Sections 4.03, 4.11, 4.16 and 4.18, as the case may be. The respective parties
shall remain liable after the Expiration Date for breaches of the
representations and warranties set forth in ARTICLE IV and ARTICLE V, provided
such breaches are asserted in good faith by notice in writing to the alleged
breaching party prior to the Expiration Date.
11.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE. Except as
otherwise provided herein, no delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of any similar breach or default occurring later; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default occurring before or after that waiver. No right, remedy or
election any term of this Agreement gives will be deemed exclusive, but each
will be cumulative with all other rights, remedies and elections available at
law or in equity.
11.08 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.
11.09 Section Headings; Gender. The Section headings contained in this
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this
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Agreement. Words of the masculine gender in this Agreement shall be deemed and
construed to include correlative words of the feminine and neuter genders and
words of the neuter gender shall be deemed and construed to include correlative
words of the masculine and feminine genders.
11.10 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Michigan (except for its principles governing conflicts
of laws).
11.11 DISPUTE RESOLUTION.
(a) Except with respect to injunctive relief as provided in Section 8.02
and Section 9.02 (which relief may be sought from any court or administrative
agency with jurisdiction with respect thereto), any unresolved dispute or
controversy arising out of or relating to this Agreement, or the breach thereof,
shall be settled exclusively by arbitration administered by the American
Arbitration Association under its Commercial Arbitration Rules then in effect.
(b) The arbitration proceedings shall be conducted before a single
arbitrator, unless any party's claim exceeds $500,000, exclusive of interest and
attorneys' fees, in which case the dispute shall be heard and determined by
three arbitrators. The arbitrator(s) shall be a practicing attorney or a
retired judge. The place of arbitration shall be Chicago, Illinois.
(c) The arbitrator(s) shall not have the authority to add to, detract from,
or modify any provision hereof nor to award punitive damages to any injured
party. A decision by the arbitrator shall be final and binding. Judgment may
be entered on the arbitrator's award in any court having jurisdiction thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
U.S. CONCRETE, INC.
By: /s/ Donald Wayne
---------------------------------
Donald Wayne, Vice President
39
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STOCKHOLDERS:
B. THOMAS STOVER, AS TRUSTEE UNDER THE TRUST
AGREEMENT DATED FEBRUARY 20, 1986 FOR B.
THOMAS STOVER
By: /s/ B. Thomas Stover
___________________________
B. Thomas Stover
SARAH M. STOVER, AS TRUSTEE UNDER THE TRUST
AGREEMENT DATED FEBRUARY 27, 1990 FOR SARAH
M. STOVER
By: /s/ Sarah M. Stover
___________________________
Sarah M. Stover
/s/ B. Andrew Stover
_______________________________
B. Andrew Stover
B. THOMAS STOVER, CUSTODIAN UNDER THE
MICHIGAN UNIFORM GIFTS TO MINORS ACT FOR THE
BENEFIT OF CAROLYN A. STOVER
By: /s/ B. Thomas Stover
___________________________
B. Thomas Stover
/s/ Jeffery D. Spahr
_______________________________
Jeffery D. Spahr
/s/ Jeffrey T. Stover
_______________________________
Jeffrey T. Stover
/s/ Bradley C. Stover
_______________________________
Bradley C. Stover
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EXHIBIT 2.13
ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
U.S. CONCRETE, INC.,
CONCRETE XIX ACQUISITION, INC.,
CORNILLIE FUEL & SUPPLY, INC.,
RICHARD A. DENEWETH
AND
JOSEPH C. CORNILLIE, TRUSTEE URTA OF
JOSEPH C. CORNILLIE, DATED OCTOBER 4, 1995
Dated as of February 8, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
ARTICLE I DEFINITIONS............................................................................ 1
1.01 Definitions............................................................................ 1
1.02 Interpretation......................................................................... 5
ARTICLE II THE MERGER AND THE SURVIVING CORPORATION............................................... 6
2.01 The Merger............................................................................. 6
2.02 Effective Time of the Merger........................................................... 6
2.03 Certificate of Incorporation, Bylaws and Board of Directors of Surviving Corporation... 6
ARTICLE III CONVERSION OF SHARES................................................................... 6
3.01 Conversion of Shares................................................................... 6
3.02 Newco Shares........................................................................... 7
3.03 Delivery of Merger Consideration....................................................... 7
ARTICLE IV CLOSING................................................................................ 7
4.01 Closing................................................................................ 7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS..................................... 7
5.01 Due Organization and Qualification..................................................... 7
5.02 Authorization; Non-Contravention; Approvals............................................ 8
5.03 Capitalization and Ownership........................................................... 9
5.04 Subsidiaries........................................................................... 9
5.05 Financial Statements................................................................... 9
5.06 Liabilities and Obligations............................................................ 10
5.07 Accounts and Notes Receivable.......................................................... 10
5.08 Properties and Assets.................................................................. 11
5.09 Material Customers and Contracts....................................................... 13
5.10 Permits................................................................................ 14
5.11 Environmental Matters.................................................................. 14
5.12 Labor and Employee Relations; Employment Matters....................................... 15
5.13 Insurance.............................................................................. 16
5.14 Compensation; Employment Agreements.................................................... 16
5.15 Noncompetition, Confidentiality and Nonsolicitation Agreements; Employee Policies...... 16
5.16 Employee Benefit Plans................................................................. 17
5.17 Litigation and Compliance with Law..................................................... 19
5.18 Taxes.................................................................................. 19
5.19 Absence of Changes..................................................................... 20
5.20 Accounts with Banks and Brokerages; Powers of Attorney................................. 21
5.21 Absence of Certain Business Practices.................................................. 21
5.22 Competing Lines of Business; Related-Party Transactions................................ 21
5.23 Intangible Property.................................................................... 21
5.24 Capital Expenditures................................................................... 22
5.25 Inventories............................................................................ 22
5.26 Tax Reorganization Representation...................................................... 22
5.27 Absence of Interest-Bearing Debt....................................................... 22
5.28 No Implied Representations............................................................. 22
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5.29 Disclosure............................................................................. 22
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND
NEWCO.................................................................................. 22
6.01 Organization........................................................................... 22
6.02 Authorization; Non-Contravention; Approvals............................................ 23
6.03 U.S. Concrete Common Stock............................................................. 23
6.04 Tax Reorganization Representations..................................................... 24
6.05 SEC Filings; Disclosure................................................................ 24
6.06 No Implied Representations............................................................. 25
6.07 Disclosure............................................................................. 25
ARTICLE VII CERTAIN COVENANTS...................................................................... 25
7.01 Release From Guarantees................................................................ 25
7.02 Future Cooperation; Tax Matters........................................................ 25
7.03 Expenses............................................................................... 26
7.04 Legal Opinion.......................................................................... 26
7.05 Employment Agreements.................................................................. 26
7.06 Repayment of Related Party Indebtedness................................................ 26
7.07 Stock Options.......................................................................... 26
7.08 Pre-Closing Distributions.............................................................. 26
7.09 Working Capital Adjustment............................................................. 27
7.10 Wastewater Discharge Permit............................................................ 28
7.11 Other Documents........................................................................ 28
7.12 Benefit Plans.......................................................................... 29
ARTICLE VIII INDEMNIFICATION........................................................................ 29
8.01 General Indemnification by the Stockholders............................................ 29
8.02 Indemnification by U.S. Concrete....................................................... 30
8.03 Third Person Claims.................................................................... 30
8.04 Non-Third Person Claims................................................................ 31
8.05 Indemnification Deductible............................................................. 31
8.06 Liability Limitation................................................................... 31
8.07 Form of Indemnity Payment.............................................................. 31
ARTICLE IX NONCOMPETITION COVENANTS............................................................... 32
9.01 Prohibited Activities.................................................................. 32
9.02 Equitable Relief....................................................................... 32
9.03 Reasonable Restraint................................................................... 33
9.04 Severability; Reformation.............................................................. 33
9.05 Material and Independent Covenant...................................................... 33
ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................................. 33
10.01 General................................................................................ 33
10.02 Equitable Relief....................................................................... 34
ARTICLE XI INTENDED TAX TREATMENT................................................................. 34
11.01 Tax-Free Reorganization................................................................ 34
ARTICLE XII FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON STOCK...... 34
12.01 Compliance with Law.................................................................... 34
12.02 Economic Risk; Sophistication; Accredited Investors.................................... 35
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12.03 Rule 144 Reporting..................................................................... 35
12.04 Restriction on Sale or Other Transfer of Restricted Shares............................. 35
12.05 Prospectus Delivery.................................................................... 36
12.06 Removal of Legends..................................................................... 36
ARTICLE XIII MISCELLANEOUS.......................................................................... 36
13.01 Successors and Assigns; Rights of Parties.............................................. 36
13.02 Entire Agreement....................................................................... 36
13.03 Counterparts........................................................................... 36
13.04 Brokers and Agents..................................................................... 37
13.05 Notices................................................................................ 37
13.06 Survival of Representations and Warranties............................................. 37
13.07 Exercise of Rights and Remedies; Remedies Cumulative................................... 38
13.08 Reformation and Severability........................................................... 38
13.09 Section Headings; Gender............................................................... 38
13.10 Governing Law.......................................................................... 38
13.11 Dispute Resolution..................................................................... 38
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ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is
made as of February 8, 2000, by and among U.S. Concrete, Inc., a Delaware
corporation ("U.S. Concrete"), Concrete XIX Acquisition, Inc., a Delaware
corporation that is a subsidiary of U.S. Concrete ("Newco"), Cornillie Fuel &
Supply, Inc., a Michigan corporation (the "Company") and Richard A. Deneweth
("Deneweth") and Joseph C. Cornillie, individually and as Trustee URTA of Joseph
C. Cornillie, Dated October 4, 1995 ("Cornillie") (Deneweth and Cornillie are
each referred to hereinafter as a "Stockholder" and collectively, the
"Stockholders"), with the Stockholders being all of the Company's Stockholders.
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively referred to as "Constituent Corporations") deem it advisable and
in the best interests of the Constituent Corporations and the stockholders of
the Constituent Corporations that Newco merge with and into the Company (the
"Merger");
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization within the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, the stockholders of the Constituent Corporations have approved the
Merger in accordance with the GCL and the MBCA; and
WHEREAS, U.S. Concrete is also, pursuant to separate written agreements,
acquiring the equity interests of Cornillie Leasing, Inc. (the "Leasing Merger
Agreement") and Dencor, Inc. (the "Dencor Stock Purchase Agreement");
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. Capitalized terms used in this Agreement shall have the
following meanings:
"Affiliate" of, or "Affiliated" with, a specified person or entity means a
person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the specified person or entity.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Balance Sheet Date" has the meaning set forth in Section 5.05.
"Broker" has the meaning set forth in Section 13.04.
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"Closing" has the meaning set forth in ARTICLE IV.
"Closing Date" has the meaning set forth in ARTICLE IV.
"Code" has the meaning set forth in the third paragraph of this Agreement.
"Company" has the meaning set forth in the first paragraph of this Agreement.
"Company Common Stock" means the Company's common stock, $10.00 par value per
share.
"Competitive Business" means any business that competes with any business of
U.S. Concrete existing on the date hereof, including, without limitation, any
business that involves the production and sale of ready-mixed concrete
(including truck-mixed concrete) and other cement mixtures; pre-cast concrete
products and slag products.
"Constituent Corporations" has the meaning set forth in the second paragraph
of this Agreement.
"Effective Time" has the meaning set forth in Section 2.02.
"Employee benefit plan" has the meaning set forth in Section 5.16.
"Employee pension benefit plan" has the meaning set forth in Section 5.16.
"Employment Agreements" has the meaning set forth in Section 7.05.
"Encumbrances" means all liens, encumbrances, mortgages, pledges, security
interests, conditional sales agreements, charges, options, preemptive rights,
rights of first refusal, reservations, restrictions or other encumbrances or
defects in title.
"Environmental Laws" means any and all Laws or agreements between Company and
any Governmental Authority 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) or human health or safety, (b) emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes (including, without
limitation, Hazardous Substances) or noxious noise or odor 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 pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes (including, without limitation, Hazardous
Substances), in each case as amended from time to time and as now or hereafter
in effect. The term "Environmental Laws" includes, without limitation, 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
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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, and any comparable or similar Michigan Law, in
each case as amended from time to time, and any other Laws now or hereafter
relating to any of the foregoing.
"ERISA" has the meaning set forth in Section 5.16.
"ERISA Affiliate" has the meaning set forth in Section 5.16.
"Expiration Date" has the meaning set forth in Section 13.06.
"Financial Statements" has the meaning set forth in Section 5.05.
"GAAP" means generally accepted accounting principles as currently applied by
the respective party on a basis consistent with preceding years and throughout
the periods involved.
"GCL" means the General Corporation Law of the State of Delaware, as amended.
"Governmental Authority" means any federal, state, local or foreign
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or quasi-
governmental authority.
"Hazardous Substances" means any and all substances presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law. The term "Hazardous
Substances" includes, without limitation, any substance to which exposure is
regulated by any Environmental Law including, without limitation, any toxic
waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous
waste, special waste, industrial substance or petroleum or any derivative or by-
product thereof, radon, radioactive material, asbestos or asbestos containing
material, urea formaldehyde foam insulation, lead or polychlorinated biphenyls.
"Incentive Plan" has the meaning set forth in Section 7.07.
"Indemnified Party" has the meaning set forth in Section 8.03.
"Indemnifying Party" has the meaning set forth in Section 8.03.
"Interest-Bearing Debt" means the total amount of outstanding indebtedness of
the Company for borrowed money (including, without limitation, bank debt,
equipment debt, capital lease obligations with non-affiliates of Company, bank
overdrafts and any other indebtedness for borrowed money).
"Interim Balance Sheet" has the meaning set forth in Section 5.05.
"Interim Financial Statements" has the meaning set forth in Section 5.05.
"IRCA" has the meaning set forth in Section 5.12.
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"JAMS" has the meaning set forth in Section 13.10.
"Judge List" has the meaning set forth in Section 13.10.
"Laws" means any and all federal, state, local or foreign statutes, laws,
ordinances, codes, rules, regulations, orders, decrees, judgments and
injunctions of any Governmental Authority, including, without limitation, those
covering, Tax, energy, safety, health, transportation, bribery, record keeping,
zoning, discrimination, antitrust and wage and hour matters, in each case as
amended and in effect from time to time.
"Letter of Intent" means that certain letter of intent dated December 15,
1999 by and among U.S. Concrete, the Company and the Stockholders, and the other
parties named therein, as amended or supplemented.
"Listed Agreements" has the meaning set forth in Section 5.09.
"Lockup Period" has the meaning set forth in Section 12.04.
"Losses" means any and all liabilities, losses, claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, fees, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees and
costs and expenses of investigation), net of (i) income Tax effects with respect
thereto (including, without limitation, income Tax benefits recognized in
connection therewith and income Taxes upon any indemnification recovery
thereof), and (ii) insurance proceeds related to such Losses actually received
by the Indemnified Party; provided, however, that no Indemnified Party shall be
under any obligation either to insure any particular risk or to make a claim
under an existing policy (except that the Surviving Corporation agrees to
continue to pursue the insurance claim made by Company in connection with the
litigation disclosed on Schedule 5.17).
"MBCA" means the Michigan Business Corporation Act, as amended.
"Material Customers" has the meaning set forth in Section 5.09.
"Merger" has the meaning set forth in the second paragraph of this Agreement.
"Merger Consideration" has the meaning set forth in Section 3.01.
"Merger Filings" has the meaning set forth in Section 2.02.
"Newco" has the meaning set forth in the first paragraph of this Agreement.
"Noncompete Term" has the meaning set forth in Section 9.01(a).
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
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"Permits" has the meaning set forth in Section 5.10.
"Permitted Encumbrances" means any and all (a) Encumbrances reserved against
in the Interim Balance Sheet, (b) Encumbrances for property or ad valorem Taxes
not yet due and payable or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are maintained
on the Company's books in accordance with GAAP, and (c) obligations described in
Schedule 5.08.
"Plan" has the meaning set forth in Section 5.16.
"Qualified Plan" has the meaning set forth in Section 5.16.
"Restricted Shares" has the meaning set forth in Section 12.01.
"Rule 144" means Rule 144 as promulgated under the 1933 Act.
"SEC" means the Securities and Exchange Commission.
"Stockholders" has the meaning set forth in the first paragraph of this
Agreement.
"Structures" has the meaning set forth in Section 5.08.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Taxes" has the meaning set forth in Section 5.18.
"Territory" has the meaning set forth in Section 9.01.
"Third Person" has the meaning set forth in Section 8.03.
"U.S. Concrete" has the meaning set forth in the first paragraph of this
Agreement.
"U.S. Concrete Common Stock" means U.S. Concrete's Common Stock, par value
$.001 per share.
"Year-End Financial Statements has the meaning set forth in Section 5.05.
1.02 INTERPRETATION. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in Section 1.01 and elsewhere in this Agreement include
the plural as well as the singular and vice versa;
(b) all accounting terms not otherwise defined herein have the meanings
ascribed to them in accordance with GAAP; and
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(c) the words "herein," "hereof," and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE II
THE MERGER AND THE SURVIVING CORPORATION
2.01 THE MERGER. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time in accordance with the MBCA and the GCL, Newco
shall be merged with and into the Company and the separate existence of Newco
shall thereupon cease. The Company shall be the surviving corporation in the
Merger (hereinafter sometimes referred to as the "Surviving Corporation").
2.02 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective at
such time (the "Effective Time") as (a) holders of all of the Company Common
Stock approve the Merger, and (b) a certificate of merger, in form mutually
acceptable to U.S. Concrete and the Company, is filed with the Secretary of
State of the State of Delaware and the Michigan Department of Consumer &
Industry Services, respectively (the "Merger Filings"). The Merger Filings
shall be made simultaneously with or as soon as practicable after the Closing.
2.03 CERTIFICATE OF INCORPORATION, BYLAWS AND BOARD OF DIRECTORS OF
SURVIVING CORPORATION. As a result of the Merger and at the Effective Time:
(a) The Certificate of Incorporation of the Company in effect immediately
prior to the Effective Time shall become the Certificate of Incorporation
of the Surviving Corporation. After the Effective Time, the Certificate of
Incorporation of the Surviving Corporation may be amended in accordance
with its terms and as provided in the MBCA.
(b) The Bylaws of the Company in effect immediately prior to the Effective
Time shall become the Bylaws of the Surviving Corporation, and thereafter
may be amended in accordance with their terms and as provided by the
Certificate of Incorporation of the Surviving Corporation and the MBCA.
(c) The Board of Directors of Newco as constituted immediately prior to the
Effective Time shall be the Board of Directors of the Surviving
Corporation.
ARTICLE III
CONVERSION OF SHARES
3.01 CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger, and without any action on the part of any holder of any capital stock of
the Company, the issued and outstanding shares of Company Common Stock as of the
Effective Time shall be cancelled and retired and converted into the right to
receive, and become exchangeable for an aggregate of $561,566 in cash and
329,546 shares of U.S. Concrete Common Stock (having an aggregate value of
$2,389,208 at $7.25 per share) at Closing (the cash and U.S. Concrete Common
Stock paid in exchange for the Company Common Stock being herein collectively
referred to as the
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"Merger Consideration"). The Merger Consideration shall be allocated between
Stockholders as set forth on Exhibit A, attached hereto and made a part hereof.
3.02 NEWCO SHARES. The outstanding shares of common stock, par value $.01
per share, of Newco shall be converted into the right to receive, and become
exchangeable for, 1,000 shares of Common Stock of the Surviving Corporation.
3.03 DELIVERY OF MERGER CONSIDERATION. At the Closing, (a) each
Stockholder shall furnish to U.S. Concrete the certificates representing his or
her Company Common Stock, duly endorsed in blank by such Stockholder or
accompanied by duly executed blank stock powers, and (b) U.S. Concrete shall
deliver to each Stockholder cash (by wire transfer in accordance with the wiring
instructions for such Stockholder set forth on Schedule 3.01) and a copy of an
irrevocable instruction letter to U.S. Concrete's transfer agent directing that
certificates representing the shares of U.S. Concrete Common Stock be delivered
to such Stockholder pursuant to Section 3.01. Each Stockholder agrees promptly
to cure any deficiencies with respect to the endorsement of the certificates or
other documents of conveyance with respect to the Company Common Stock or with
respect to the stock powers accompanying such stock. U.S. Concrete will take
all steps necessary to ensure that the stock certificates are promptly issued by
the transfer agent in accordance with the terms of this Agreement and the
irrevocable instruction letter.
ARTICLE IV
CLOSING
4.01 CLOSING. The consummation of the Merger and delivery of the Merger
Consideration and the other transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Baker & Hostetler LLP, 3200
National City Center, 1900 E. 9th Street, Cleveland, Ohio 44114, concurrently
with the execution of this Agreement or at such other time and date as U.S.
Concrete, the Company and the Stockholders may mutually agree, which date is
herein referred to as the "Closing Date."
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders, jointly and severally, represent and warrant to U.S.
Concrete as follows:
5.01 DUE ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Michigan and is duly authorized and qualified to do business under all
applicable Laws and to carry on its business in the places and in the manner as
now conducted. The Company has the requisite power and authority to own, lease
and operate its assets and properties and to carry on its business as such
business is currently being conducted. Schedule 5.01 includes (a)
certificate(s) of existence and good standing for the Company issued by the
appropriate Governmental Authorities of the State of Michigan, (b) a list of all
jurisdictions in which the Company is authorized or qualified to do business and
(c) certificate(s) of qualification or authority to do business (or similar
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certificates) for the Company issued by the appropriate Governmental Authorities
of each of the jurisdictions in which the Company is authorized or qualified to
do business. The Company does not own, lease or operate any assets or properties
or carry on any business in any jurisdiction that Schedule 5.01 does not list.
True, complete and correct copies of the Articles of Incorporation and Bylaws,
each as amended, of the Company are attached hereto as Schedule 5.01, 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 Company have been provided to U.S. Concrete.
5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) The Company has the requisite corporate power and authority to enter into
this Agreement and the ancillary documents and agreements described herein
and to effect the Merger. Each Stockholder has the full legal right, power
and authority to enter into this Agreement. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby have
been approved by the board of directors of the Company and by the
Stockholders. No additional corporate proceedings on the part of the
Company are necessary to authorize the execution and delivery of this
Agreement and the consummation by the Company of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and the Stockholders, and, assuming the due
authorization, execution and delivery hereof by U.S. Concrete and Newco,
constitutes a valid and binding agreement of the Company and the
Stockholders, enforceable against each of them in accordance with its
terms, subject to general principles of equity and bankruptcy, insolvency
and other similar laws relating to the enforcement of creditor's rights.
(b) The execution and delivery of this Agreement by the Company and the
Stockholders do not, and the consummation by the Company and the
Stockholders of the transactions contemplated hereby will not, violate or
result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Encumbrance upon any
of the properties or assets of the Company under any of the terms,
conditions or provisions of, (i) the Articles of Incorporation or Bylaws of
the Company, (ii) any Law applicable to the Stockholders or the Company or
any of the properties or assets of the Stockholders or the Company, or
(iii) except as set forth in Schedule 5.02, any agreement, note, bond,
mortgage, indenture, deed of trust, license, franchise, Permit, concession,
lease or other instrument, obligation or agreement of any kind to which any
Stockholder or the Company is now a party or by which the Company or any of
its properties or assets may be bound or affected, except for any of the
foregoing which would not have a material adverse effect on the financial
condition or results of operations of Company or the Surviving Corporation.
(c) Except for the Merger Filings and as set forth in Schedule 5.02, no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any Governmental Authority or other person or
entity is necessary for the execution and delivery of this Agreement by the
Company and the Stockholders or the consummation by the Company and the
Stockholders of the transactions contemplated
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hereby. Except as set forth in Schedule 5.02, none of the contracts or
agreements with Material Customers or contracts providing for purchases or
services individually in excess of $10,000, or in the aggregate in excess
of $25,000, or leases or Permits to which the Company is a party requires
notice to, or the consent or approval of, any Governmental Authority or
other person or entity to the execution and delivery of this Agreement by
the Company and the Stockholders or to any of the transactions contemplated
hereby to remain in full force and effect following such transaction.
5.03 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of the
Company consists solely of 5,000 shares of Company Common Stock, of which 138
shares are issued and outstanding. All of the issued and outstanding shares of
the Company Common Stock are owned beneficially and of record by the
Stockholders as set forth in Schedule 5.03. All of the issued and outstanding
shares of the Company Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, and were offered, issued, sold and delivered
by the Company in compliance with all applicable Laws, including, without
limitation, those Laws concerning the issuance of securities. None of such
shares were issued in violation of the preemptive rights of any past or present
stockholder of the Company. At the Effective Time, by virtue of the Merger
Filing in Michigan the Merger will become effective in Michigan. Except as set
forth in Schedule 5.03, (a) no shares of Company Common Stock are held by the
Company as treasury shares, and (b) no subscription, option, warrant, call,
convertible or exchangeable security, other conversion right or commitment of
any kind exists which obligates the Company to issue any of its capital stock or
the Stockholders to transfer any of the capital stock of the Company.
5.04 SUBSIDIARIES. Except as set forth in Schedule 5.04, the Company
owns, of record or beneficially, or controls, 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.
Except as set forth in Schedule 5.04, the Company is not, directly or
indirectly, a participant in any joint venture, limited liability company,
partnership or other noncorporate entity.
5.05 FINANCIAL STATEMENTS.
(a) The Company has delivered to U.S. Concrete true, complete and correct
copies of the following financial statements:
(i) the reviewed balance sheets of the Company as of March 31, 1997, 1998
and 1999 and the related reviewed statements of operations,
stockholders' equity and cash flows for the three-year period ended
March 31, 1999, together with the related notes, schedules and report
of the Company's independent accountants (such balance sheets, the
related statements of operations, stockholders' equity and cash flows
and the related notes and schedules are referred to herein as the
"Year-End Financial Statements"); and
(ii) the unaudited balance sheet (the "Interim Balance Sheet") of the
Company as of December 31, 1999 (the "Balance Sheet Date") and the
related unaudited statements of operations, for the nine-month period
ended on the Balance Sheet Date (such balance sheets, the related
statements of operations, and
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any related notes and schedules are referred to herein as the "Interim
Financial Statements"). The Year-End Financial Statements and the
Interim Financial Statements (collectively, the "Financial
Statements") are attached as Schedule 5.05 to this Agreement;
(b) Except as set forth in Schedule 5.05, the Financial Statements have been
prepared from the books and records of the Company in conformity with GAAP
and present fairly the financial position and results of operations of the
Company in all material respects as of the dates of such statements and for
the periods covered thereby; provided, however, that the Interim Financial
Statements are subject to normal year-end adjustments and lack footnotes
and other presentation items. The books of account of the Company have
been kept accurately in all material respects in the ordinary course of
business, the transactions entered therein represent bona fide
transactions, and the revenues, expenses, assets and liabilities of the
Company have been properly recorded therein in all material respects.
Within the past five fiscal years of the Company, the Company has not
received any correspondence with its accountants, including without
limitation, management letters, which have indicated or disclosed that
there is a "material weakness" in or "reportable condition" with respect to
(as those terms are defined under GAAP) the Company's financial condition.
5.06 LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule 5.06,
as of the Balance Sheet Date the Company did not have, nor has it incurred since
that date, any liabilities or obligations (whether absolute, accrued, contingent
or otherwise) of any nature, except liabilities, obligations or contingencies
(a) that are reflected or accrued or reserved against in the Financial
Statements or reflected in the notes thereto, (b) that are of a nature not
required to be reflected in the Financial Statements in accordance with GAAP, or
(c) that were incurred after the Balance Sheet Date and were incurred in the
ordinary course of business, consistent with past practices. For each such
liability for which the amount is not fixed or is contested, the Company has
provided a summary description of the liability together with copies of all
relevant documentation relating thereto. Except as set forth in Schedule 5.06,
there are no prepayment penalties, termination fees or other payments triggered
by the prepayment or termination of any loan or indebtedness of the Company.
5.07 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.07 sets forth an accurate
list of the accounts and notes receivable of the Company as of the Balance Sheet
Date and of those generated between the Balance Sheet Date and the second
business day preceding the Closing Date, including any such amounts which are
not reflected in the Interim Balance Sheet. Receivables from and advances to
employees, the Stockholders and any entities or persons related to or Affiliates
of the Stockholders are separately identified in Schedule 5.07. Schedule 5.07
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 Company, 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, are stated in
accordance with GAAP and are collectible in the amounts shown on Schedule 5.07,
net of reserves reflected in the Interim Financial Statements with respect to
the accounts receivable as of the Balance Sheet Date, and net of reserves
reflected in the books and records of the Company (consistent with the methods
used in the Interim Financial Statements) with respect to receivables of the
Company after the Balance Sheet Date.
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5.08 PROPERTIES AND ASSETS.
(a) Schedule 5.08 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 Company with a book value in excess of
$5,000 (i) owned by the Company as of the Balance Sheet Date and (ii)
acquired since the Balance Sheet Date. Schedule 5.08 also sets forth an
accurate list of all real and personal property currently leased by the
Company, and includes complete and correct copies of leases for significant
equipment and for all real property leased by the Company and descriptions
of all real property (as currently owned or leased by the Company) on which
plants, buildings, warehouses, workshops, garages and other structures
(collectively, the "Structures") and vehicles used in the operation of the
business of the Company 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 Company.
Schedule 5.08 indicates which properties and assets used in the operation
of the businesses of the Company are currently owned by the Stockholders or
Affiliates of either of the Company or the Stockholders. Except as
specifically identified in Schedule 5.08, all of the tangible assets,
plants, Structures, vehicles and other significant machinery and equipment
owned or leased by the Company listed in Schedule 5.08 have been maintained
by the Company in the ordinary course of business consistent with past
practice and are in such condition and repair as is suitable for the
purpose for which they presently are being used or held for use, ordinary
wear and tear excepted. Except as specifically described in Schedule 5.08,
all properties and fixed assets used by the Company in its business are
either owned by the Company or leased under agreements identified in
Schedule 5.08 and are affixed only to one or more of the real properties
Schedule 5.08 lists. All leases set forth in Schedule 5.08 are in full
force and effect and constitute valid and binding agreements of the Company
and the other parties thereto in accordance with their respective terms,
and all amounts currently due and payable thereunder have been paid.
Neither the Company nor any other party to the leases set forth in Schedule
5.08 is or has been asserted to be in default, violation or breach of any
such lease in any material respects, and no event has occurred and is
continuing that constitutes or, with notice or the passage of time or both,
would constitute such a default, violation or breach under any such lease.
The Company has good, valid and marketable title to the tangible and
intangible assets, personal property and real property owned and used in
its business, including, without limitation, the properties identified in
Schedule 5.08 as owned real property (each of which the Company owns in
fee), free and clear of all Encumbrances other than Permitted Encumbrances
and those set forth in Schedule 5.08. Schedule 5.08 contains true,
complete and correct copies of all title reports and title insurance
policies in the possession or control of the Company with respect to the
real property owned or leased by the Company. Schedule 5.08 includes a
summary description of all commitments of the Company 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 Company
has devoted any significant effort or expenditure in the two-year period
prior to the date of the Agreement and which the Surviving Corporation
would be obligated to continue after the Merger.
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(b) Except as specifically described in Schedule 5.08, all uses of the real
property owned and leased by the Company conform in all material respects
to all applicable Laws and do not violate any instrument of record or
agreement affecting any such property. Neither the Company nor the
Stockholders have received from any insurance carrier insuring or proposing
to insure any of the real property owned or leased by the Company or any
other person or entity any written notice or communication noting any
dangerous or illegal condition at any such property or any other condition
at any of such properties otherwise requiring corrective action as of the
Closing Date. Except as otherwise described on Schedule 5.08, all of the
real property owned and leased by the Company can be used by the Surviving
Corporation for their intended purposes without violating any conditional
use permit, variance or private restriction. Neither the Company nor the
Stockholders have received any written notice nor have any knowledge that
any of the real property owned or leased by the Company 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 no writ, injunction, decree, order or
judgment outstanding, nor any action, claim, suit or proceeding, pending
or, to the Stockholders' knowledge, threatened, relating to the ownership,
lease, use, occupancy or operation of any real property owned or leased by
the Company.
(c) There is ingress and egress to and from each of the real properties owned
and leased by the Company of record adequate for the use of such properties
as currently operated by the Company. Except as disclosed in Schedule
5.08, the Company has made no off-record agreements affecting the
ownership, use or occupation of any such properties. All public utilities,
including if applicable, without limitation, sewers, water, electric, gas
and telephone, required for the operation of each of the real properties
owned and leased by the Company as presently operated are installed and
operating, and all installation and connection charges therefor have been
paid in full. Neither the Company nor the Stockholders have received any
written notice stating that the Company will not be able to obtain adequate
supplies of water to operate its business on any such properties as
presently conducted, or that the provision of utilities violates any public
or private easement as of the Closing Date. Neither the Company nor the
Stockholders have received written notice that any part of any improvements
on the real property owned or leased by the Company (including any of the
structures thereon) encroaches upon any property adjacent thereto or upon
any easement, nor is there any encroachment or overlap upon the real
property owned or leased by the Company as of the Closing Date. Each of
the real property leases listed in Schedule 5.08 grants the Company the
exclusive right to use and occupy the demised premises thereunder, and the
Company enjoys peaceful and undisturbed possession under its respective
real property leases listed on Schedule 5.08 for the real property leased
by the Company. None of the real property leases requires the consent of
the applicable landlord to the Merger or the transactions contemplated by
this Agreement. Except as set forth on Schedule 5.08, no person or entity
other than the Company is in possession of any of the real property owned
or leased by the Company. Except as set forth on Schedule 5.08, to the
knowledge of the Company there are no contracts outstanding for the sale,
exchange, lease or transfer of any of the real property owned or leased by
the Company, or any other right of a third party to acquire any interest
therein. The heating, cooling, ventilation, electrical and plumbing
systems at all
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of the real property owned and leased by the Company is in good working
condition, in all material respects, ordinary wear and tear excepted.
5.09 MATERIAL CUSTOMERS AND CONTRACTS.
(a) Schedule 5.09 (i) sets forth an accurate list of all customers
representing 5% or more of the Company's revenues for each of the fiscal
year ended in 1999 and the interim period ended on the Balance Sheet Date
(the "Material Customers"), and (ii) sets forth an accurate list and
briefly describes all material contracts, warranties, commitments,
understandings, instruments and similar agreements and arrangements to
which the Company is currently a party or by which it or any of its
properties is bound (the "Listed Agreements"), including, but not limited
to, (A) all customer contracts in excess of $10,000, individually, or
$25,000 in the aggregate, (B) contracts with any labor organizations, (C)
leases providing for annual rental payments in excess of $5,000,
individually, or $10,000 in the aggregate, (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 Company of assets or
securities for more than $5,000, individually, or $10,000 in the aggregate,
(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 Company 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 Company has made available to
U.S. Concrete true, complete and correct copies of all the Listed
Agreements.
(b) Except as set forth in Schedule 5.09, since December 31, 1999 (i) no
Material Customer has canceled or substantially reduced or, to the
knowledge of the Company and the Stockholders, is threatening to cancel or
substantially reduce its purchases of the Company's products or services,
and (ii) neither the Company nor any other party to the Listed Agreements
is or has been asserted to be in default, violation or breach in any
material respect of any such Listed Agreement, and no event has occurred
and is continuing that constitutes or with notice or the passage of time or
both, would constitute such a default, violation or breach under any such
Listed Agreement. The Listed Agreements are in full force and effect and
constitute valid and binding agreements of the Company and the other
parties thereto in accordance with their respective terms.
(c) Except as set forth in Schedule 5.09, the Company is not a party to any
contracts subject to price redetermination or renegotiation. Except to the
extent set forth in Schedule 5.09, the Company is 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.
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(d) Except as set forth in Schedule 5.09, neither the Company, the
Stockholders nor, to the Stockholders' knowledge, 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 Company's customers for the repurchase of products, sharing of
fees, rebating of charges, bribes, kickbacks or other similar arrangements.
(e) Schedule 5.09 sets forth a summary of each outstanding bid or proposal by
the Company that, if awarded to the Company, contemplates payments to the
Company in excess of $50,000.
(f) Except as set forth in Schedule 5.09, neither the Company nor the
Stockholders 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 Company nor the Stockholders have any
knowledge of any condition or state of facts which would justify the
exercise of such a right.
5.10 PERMITS. Schedule 5.10 contains an accurate list, and copies of all
licenses, franchises, permits, approvals, certificates, transportation
authorities and other governmental authorizations and intangible assets held by
the Company that are material to the conduct of its business, including, without
limitation, permits, licenses and operating authorizations, fuel permits,
franchises and certificates owned or held by the Company (collectively, the
"Permits"). The Permits are valid, and the Company has not received any written
notice that any Governmental Authority intends to cancel, terminate or not renew
any such Permit. The Permits are all the permits, licenses, operating
authorizations, franchises, approvals, certificates, transportation authorities
and other governmental authorizations and intangible assets that are required by
Law for the operation of the businesses of the Company as conducted at the
Balance Sheet Date and the ownership of the assets and properties of the
Company. The Company has conducted and is conducting its business in
substantial 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 is not in substantial violation of any of the
foregoing. Except as specifically provided in Schedule 5.10, the transactions
contemplated by this Agreement will not result in a default under, a breach or
violation of, a termination of, or adversely affect the rights and benefits
afforded to the Company by, any Permits.
5.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5.11, (a)
the Company has complied with and is in compliance with all Environmental Laws,
(b) the Company has obtained and complied with all necessary permits, licenses,
authorizations and other approvals necessary to treat, transport, store, dispose
of and otherwise handle Hazardous Substances and has reported, to the extent
required by all Environmental Laws, all past and present sites owned or operated
by the Company where Hazardous Substances have been treated, stored, disposed of
or otherwise handled, (c) there have been no "releases" or threats of "releases"
(as defined in any Environmental Laws) by the Company, its agents, employees or
representatives at, from, in, to, under or on any property currently or
previously owned or operated by the Company, (d) there is no on-site or off-site
location to which the Company has transported or disposed of Hazardous
Substances or arranged for the transportation or disposal of Hazardous
Substances which, to the Stockholders' knowledge, is the subject of any federal,
state, local or foreign enforcement action
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or any other investigation which could lead to any claim against the Surviving
Corporation, U.S. Concrete or Newco 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 Company has no contingent
liability in connection with any release or disposal of any Hazardous Substance
by the Company, its agents, employees or representatives into the environment.
None of the past or present sites owned or operated by the Company is currently
or has during Stockholders' ownership of Company been designated as a treatment,
storage and/or disposal facility, nor, to the Stockholders' knowledge, has any
such facility ever applied for a permit, license, authorization or other
approval designating it as a treatment, storage and/or disposal facility, under
any Environmental Law. The Company has provided U.S. Concrete with copies (or,
if not available, accurate written summaries) of all environmental
investigations, studies, audits, reviews and other analyses conducted by or on
behalf, or which otherwise are in the possession, of the Company respecting any
facility site or other property previously or presently owned or operated by the
Company.
5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS.
(a) Except as set forth in Schedule 5.12, the Company is not bound by or
subject to any arrangement with any labor union. Except as set forth in
Schedule 5.12, no employees of the Company are represented by any labor
union or covered by any collective bargaining agreement nor, to the
Company's or the Stockholders' 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 Company's or the Stockholders' knowledge, threatened labor dispute
involving the Company and any group of its employees nor has the Company
experienced any significant labor interruptions over the past five years.
Neither the Company nor the Stockholders have any knowledge of any
significant issues or problems in connection with the relationship of the
Company with its employees. The Company considers its relationship with
its employees to be good.
(b) Except as set forth in Schedule 5.12, (i) there is no unfair labor
practice charge or complaint pending or, to the knowledge of the
Stockholders, threatened against or otherwise affecting the Company, (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 Company's employees is
pending or, to the Stockholders' knowledge, threatened against the Company,
(iii) no grievance is pending or threatened against the Company, (iv) the
Company is 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 Company is in substantial compliance with all
applicable Laws, agreements, contracts and policies relating to employment,
employment practices, wages, hours and terms and conditions of employment,
(vi) the Company has paid in full to, or accrued in its financial books and
records, all employees of the Company 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 and (vii) the Company is in substantial compliance with its
obligations pursuant to the Worker Adjustment and Retraining
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Notification Act of 1988, and all other notification and bargaining
obligations arising under any collective bargaining agreement, statute or
otherwise.
(c) Except as set forth in Schedule 5.12, to the Stockholders' knowledge, all
employees of the company 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) non-
immigrants authorized to work in the United States for the Company in their
specific jobs.
5.13 INSURANCE. Schedule 5.13 sets forth an accurate list as of the
Balance Sheet Date of (a) all insurance policies carried by the Company, copies
of which are attached as Schedule 5.13, (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 Company and previously carried by the Company 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
5.13, none of such policies are "claims made" policies. The policies described
in Schedule 5.13 for the current policy year provide adequate coverage against
the risks customarily involved in the Company's business based on historical
experiences and are currently in full force and effect. Any open claims as of
the Closing Date are recoverable under such policies, except to the extent of
any applicable deductible or loss retention as set forth on Schedule 5.13.
5.14 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 5.14 sets forth an
accurate schedule of all officers, directors and Stockholder employees of the
Company 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 (a) the
Balance Sheet Date and (b) the date hereof. Neither the Company nor the
Stockholders have any knowledge that any of such individuals has any present
intention of terminating his or her employment or association with the Company.
Attached to Schedule 5.14 are true, complete and correct copies of each
employment or consulting agreement with any employee of the Company or the
Stockholders. Except as set forth in Schedule 5.14, the Company is not a party
to any agreement, nor has it 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 the Company or other person performing services for the 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.
5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS;
EMPLOYEE POLICIES. Schedule 5.15 sets forth all agreements containing
covenants not to compete or solicit employees or to maintain the confidentiality
of information to which the Company or any of the Stockholders is bound or under
which the Company or any of the Stockholders has any rights or obligations.
Schedule 5.15 lists all employee manuals and all material policies, procedures
and work-related rules that apply to any employee, director or officer of, or
any other individual performing consulting or other independent contractor
services for, the Company. The Company has provided U.S. Concrete with a copy
of all such written policies and procedures and a written description of all
such unwritten policies and procedures.
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5.16 EMPLOYEE BENEFIT PLANS.
(a) Schedule 5.16 sets forth an accurate schedule of each "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (other than a "multiemployer
plan", as defined in Section 3(37) of ERISA), and all deferred compensation
or retirement funding arrangements, whether formal or informal and whether
legally binding or not, under which the Company or an ERISA Affiliate has
any current or future obligation or liability or under which any present or
former employee of the Company or an ERISA Affiliate, or such present or
former employee's dependents or beneficiaries, has any current or future
right to benefits (each such plan and arrangement referred to hereinafter
as a "Plan"). Company has provided to U.S. Concrete true and complete
copies of such Plans, arrangements and any trusts related thereto, and
classifications of employees covered thereby as of the Balance Sheet Date.
Except as set forth in Schedule 5.16, neither the Company nor any ERISA
Affiliate sponsors, maintains or contributes currently, or sponsored,
maintained or contributed at any time during the preceding five years, to
any plan, program, fund or arrangement that constitutes an employee pension
benefit plan. Except as set forth in Schedule 5.16, each Plan may be
terminated by the Company, 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 Plan. For
purposes of this Agreement, the term "employee pension benefit plan" shall
have the meaning given that term in Section 3(2) of ERISA (other than a
multiemployer plan), and the term "ERISA Affiliate" means any corporation
or trade or business under common control with the Company as determined
under Section 414(b), (c), (m) or (o) of the Code.
(b) Each Plan listed in Schedule 5.16 is in compliance in all material
respects with the applicable provisions of ERISA, the Code and any other
applicable Law. Except as set forth in Schedule 5.16, with respect to each
Plan of the Company and each ERISA Affiliate, all reports and other
documents required under ERISA or other applicable Law to be filed with any
Governmental Authority, including without limitation all Forms 5500, or
required to be distributed to participants or beneficiaries, have been duly
and timely filed or distributed. True and complete copies of all such
reports and other documents with respect to the past three years for each
Plan have been provided to U.S. Concrete. No "accumulated funding
deficiency" (as defined in Section 412(a) of the Code) with respect to any
Plan has been incurred (without regard to any waiver granted under Section
412 of the Code), nor has any funding waiver from the Internal Revenue
Service been received or requested. Except as set forth in Schedule 5.16,
each Plan that is intended to be "qualified" within the meaning of Section
401(a) of the Code (a "Qualified Plan") is, and has been during the period
from its adoption to the date hereof, so qualified, both as to form and
operation and all necessary approvals of Governmental Authorities,
including a favorable determination as to the qualification under the Code
of each of such Qualified Plans and each amendment thereto, have been
timely obtained. Except as set forth in Schedule 5.16, all accrued
contribution obligations of the Company with respect to any Plan have
either been fulfilled in their entirety or are fully reflected in the
Financial Statements.
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(c) No Plan has incurred or will incur, and neither the Company nor any ERISA
Affiliate has incurred or will incur, with respect to any Plan, any
liability for excise tax or penalty due to the Internal Revenue Service.
There have been no terminations, partial terminations or discontinuances of
contributions to any Qualified Plan during the preceding five years without
notice to and approval by the Internal Revenue Service and payment of all
obligations and liabilities attributable to such Qualified Plan.
(d) Except as set forth in Schedule 5.16, neither the Company nor any ERISA
Affiliate has made any promises of retirement or other benefits to
employees, except as set forth in the Plans, and neither the Company nor
any ERISA Affiliate maintains or has established any 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, and
at the expense of the participant or the beneficiary of the participant, or
retiree medical liabilities. Neither the Company 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.
Except as set forth in Schedule 5.16, neither the Company nor any ERISA
Affiliate has any current or future obligation or liability with respect to
a Plan pursuant to the provisions of a collective bargaining agreement.
(e) Neither the Company nor any ERISA Affiliate has incurred, nor will it
incur as a result of past activities, any material liability to the Pension
Benefit Guaranty Corporation in connection with any Plan. Except as set
forth on Schedule 5.16, the assets of each Plan that are subject to Title
IV of ERISA are sufficient to provide the benefits under such Plan, the
payment of which the Pension Benefit Guaranty Corporation would guarantee
if such Plan were terminated, and such assets are also sufficient to
provide all other "benefits liabilities" (as defined in ERISA Section
4001(a)(16)) due under such Plan upon termination.
(f) No "reportable event" (as defined in Section 4043 of ERISA) has occurred
and is continuing with respect to any Plan. There are no pending, or to
the Company's and the Stockholders' knowledge, threatened claims, lawsuits
or actions (other than routine claims for benefits in the ordinary course)
asserted or instituted against, and neither the Company nor any ERISA
Affiliate has knowledge of any threatened litigation or claims against, the
assets of any Plan or its related trust or against any fiduciary of a Plan
with respect to the operation of such Plan. To the Company's and the
Stockholders' knowledge, there are no investigations or audits of any 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 Company or any ERISA Affiliate that has not been fully
discharged. Neither the Company nor any ERISA Affiliate has participated
in any voluntary compliance or closing agreement programs established with
respect to the form or operation of a Plan.
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(g) Neither the Company 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 Plan for which exemption was not
available. No person or entity that was engaged by the Company or an ERISA
Affiliate as an independent contractor within the last five years
reasonably can or will be characterized or deemed to be an employee of the
Company or an ERISA Affiliate under applicable Laws for any purpose
whatsoever, including, without limitation, for purposes of federal, state
and local income taxation, workers' compensation and unemployment insurance
and Plan eligibility.
(h) Schedule 5.16 also sets forth an accurate schedule of each multiemployer
plan to which the Company or any ERISA Affiliate is, or ever has been, a
participant in or obligated to make any payment. With respect to each such
multiemployer plan: (i) none of the foregoing representations and
warranties of this Section 5.16 shall apply; and (ii) except as set forth
on Schedule 5.16, all contributions required to be made by the Company or
any ERISA Affiliate to such multiemployer plan have been made or are
accrued and fully reflected in the Financial Statements.
5.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in Schedule
5.17, there are no claims, actions, suits or proceedings, pending or, to the
knowledge of the Company and the Stockholders, threatened against or affecting
the Company, at law or in equity, or before or by any Governmental Authority
having jurisdiction over the Company. No written notice of any claim, action,
suit or proceeding, whether pending or threatened, has been received by the
Company and, to the Stockholders' and the Company's knowledge, there are no
facts or circumstances existing which, with delivery of notice or passage of
time or both would constitute such a claim, action, suit or proceeding. Except
to the extent set forth in Schedule 5.17, the Company has conducted and is
conducting its business in substantial compliance with all Laws applicable to
the Company, its assets or the operation of its business. Also listed on
Schedule 5.17 are all other instances where the Company is a plaintiff or
complaining or moving party, under any of the above types of proceedings.
5.18 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
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. The Company has timely filed all
requisite federal, state, local and other tax returns for all fiscal periods
ended on or before the Closing, and has duly paid in full or made adequate
provision in the year-end Financial Statements for the payment of all Taxes for
all periods ending at or prior to the Closing Date. The Company has 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
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progress any examinations, audits, proceedings, notices, waivers, asserted
deficiencies or disputed valuations or other claims against the Company relating
to Taxes for any period or periods prior to and including the Balance Sheet Date
and no notice of any claim for Taxes has been received. The Company has 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
Company is not a party to any Tax allocation or sharing agreement and is not
otherwise liable or obligated to indemnify any person or entity with respect to
any Taxes. 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 Company for the last three fiscal years have been previously
provided to U.S. Concrete. There are no requests for ruling in respect of any
Tax pending between the Company and any Taxing authority. The Company has been
taxed under the provisions of Subchapter S of the Code since April 1, 1999. The
Company currently utilizes the accrual method of accounting for income tax
purposes. Such method of accounting has not changed in the past five years.
5.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set
forth in Schedule 5.19, the Company has conducted its operations in the ordinary
course and there has not been:
(a) any material adverse change in the business, operations, properties,
condition (financial or other), assets, liabilities (contingent or
otherwise), or results of operations of the Company;
(b) any damage, destruction or loss (whether or not coVered by insurance)
materially adversely affecting the assets, properties or business of the
Company;
(c) any change in the authorized capital stock of the Company or in its
outstanding securities or any change in the Stockholders' ownership
interests in the Company or any grant of any options, warrants, calls,
conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution in respect of
the capital stock or any direct or indirect redemption, purchase or other
acquisition of any of the capital stock of the Company;
(e) any increase in the compensation payable or to become payable by the
Company to the Stockholders or any of its 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 5.19;
(f) any work interruptions, labor grievances or claims filed;
(g) except for the Merger, any sale or transfer, or any agreement to sell or
transfer, any material assets, properties or rights of the Company to any
person or entity, including, without limitation, the Stockholders and their
Affiliates;
(h) any cancellation, or agreement to cancel, any indebtedness or other
obligation owing to the Company;
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(i) any increase in the indebtedness of the Company, 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;
(j) 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;
(k) 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 Company's business;
(l) any waiver of any material rights or claims of the Company; or
(m) any other material transaction by the Company outside the ordinary course
of business.
5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY. Schedule
5.20 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 the Company
has accounts or safe deposit boxes; (b) the names in which the accounts or boxes
are held; (c) the type of account and the cash, cash equivalents and securities
held in such account as of the second business day prior to the Closing, none of
which assets have been withdrawn from such accounts since such date except for
bona fide business purposes in the ordinary course of the business of the
Company; and (d) the name of each person authorized to draw thereon or have
access thereto. Schedule 5.20 also sets forth the name of each person,
corporation, firm or other entity holding a general or special power of attorney
from the Company and a description of the terms thereof.
5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor the
Stockholders 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.
5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth in Schedule 5.22, neither the Stockholders nor any other Affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
Competitive Business, lessor, lessee, customer or supplier of the Company.
Except as set forth in Schedule 5.22, no officer or director of the Company nor
the Stockholders 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
Company.
5.23 INTANGIBLE PROPERTY. Schedule 5.23 sets forth an accurate list of
all patents, patent applications, trademarks, service marks, technology,
licenses, trade names, copyrights and other intellectual property or
proprietary property rights owned or used by the Company.
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The Company owns or possesses, and the assets of the Company include, sufficient
legal rights to use all of such items without conflict with or infringement of
the rights of others.
5.24 CAPITAL EXPENDITURES. Schedule 5.24 sets forth the total amount of
capital expenditures currently budgeted to be incurred by the company in excess
of $25,000 in the aggregate during the balance of the Company's current fiscal
year.
5.25 INVENTORIES. Except as Schedule 5.25 sets forth: (i) all
inventories, net of reserves determined in accordance with GAAP, of the Company
which are classified as such on the Interim Balance Sheet are merchantable and
salable or usable in the ordinary course of business of the Company; and (ii)
the Company does 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 Company or during the past five years has sustained a
difficulty material to the Company in obtaining its inventories.
5.26 TAX REORGANIZATION REPRESENTATION. The Surviving Corporation will
acquire substantially all of the properties of the Company within the meaning of
Section 368(a)(2)(D) of the Code.
5.27 ABSENCE OF INTEREST-BEARING DEBT. As of the Closing Date, Company
shall have no Interest-Bearing Debt and no Interest-Bearing Debt shall be
assumed by the Surviving Corporation.
5.28 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of the Stockholders
and the Company that U.S. Concrete and Newco are not making any representation
or warranty whatsoever, express or implied, other than those representations and
warranties of U.S. Concrete and Newco expressly set forth in this Agreement.
5.29 DISCLOSURE. The Stockholders and the Company have fully provided
U.S. Concrete or its representatives with all the information that U.S. Concrete
has requested in analyzing whether to consummate the Merger and the other
transactions contemplated by this Agreement. None of the information so
provided nor any representation or warranty of the Stockholders to U.S. Concrete
or Newco 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.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO
U.S. Concrete and Newco jointly and severally represent and warrant to the
Stockholders as follows:
6.01 ORGANIZATION. Each of U.S. Concrete and Newco is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, and is duly authorized and qualified under all applicable Laws to
carry on its business in the places and in the manner now conducted. Each of
U.S. Concrete and Newco has the requisite power and
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authority to own, lease and operate its assets and properties and to carry on
its business as such business is currently being conducted.
6.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) Each of U.S. Concrete and Newco has the full legal right, power and
authority to enter into this Agreement and the ancillary documents and
agreements described herein and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement has been
approved by the boards of directors of U.S. Concrete and Newco and by U.S.
Concrete, as the sole stockholder of Newco. No additional corporate or
shareholder proceedings on the part of U.S. Concrete or Newco are necessary
to authorize the execution and delivery of this Agreement and the
consummation by U.S. Concrete and Newco of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
U.S. Concrete and Newco, and, assuming the due authorization, execution and
delivery by the Company and the Stockholders, constitutes valid and binding
agreements of U.S. Concrete and Newco, enforceable against U.S. Concrete
and Newco in accordance with its terms.
(b) The execution and delivery of this Agreement by U.S. Concrete and Newco
do not, and the consummation by U.S. Concrete and Newco of the transactions
contemplated hereby will not, violate or result in a breach of any
provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under any of the terms, conditions or
provisions of (i) the Certificate of Incorporation or By-Laws of U.S.
Concrete or Newco, (ii) any Law applicable to either U.S. Concrete or Newco
or any of its properties or assets or (iii) any material agreement, note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of
any kind to which U.S. Concrete or Newco is now a party or by which either
U.S. Concrete or Newco or any of its properties or assets may be bound or
affected.
(c) Except for the Merger Filings and such filings as may be required under
federal or state securities Laws, no declaration, filing or registration
with, or notice to, or authorization, consent or approval of, any
Governmental Authority or other person or entity is necessary for the
execution and delivery of this Agreement by U.S. Concrete and Newco or the
consummation by U.S. Concrete and Newco of the transactions contemplated
hereby.
6.03 U.S. CONCRETE COMMON STOCK. The shares of U.S. Concrete Common
Stock to be issued and delivered to the Stockholders pursuant to the Merger are
duly authorized and, when issued in accordance with the terms of the irrevocable
instruction letter contemplated by Section 3.03, will be validly issued, fully
paid and nonassessable. The issuance of U.S. Concrete Common Stock pursuant to
the Merger will transfer to the Stockholders valid title to such shares of U.S.
Concrete Common Stock, free and clear of all Encumbrances, except for any
Encumbrances created by the Stockholders.
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6.04 TAX REORGANIZATION REPRESENTATIONS.
(a) Prior to the Merger, U.S. Concrete will be in control of Newco within the
meaning of Section 368(c) of the Code.
(b) U.S. Concrete has no plan or intention to cause the Surviving Corporation
to issue additional shares of its stock that would result in U.S. Concrete
losing control of the Surviving Corporation within the meaning of Section
368(c) of the Code.
(c) U.S. Concrete has no plan or intention to reacquire any of its stock
issued in the Merger.
(d) U.S. Concrete has no plan or intention to liquidate the Surviving
Corporation; to merge the Surviving Corporation with or into another
corporation; to sell or otherwise dispose of the stock of the Surviving
Corporation except for transfers of stock to another corporation controlled
by U.S. Concrete; or to cause the Surviving Corporation to sell or
otherwise dispose of any of its assets, except for dispositions made in the
ordinary course of business or transfers of assets to a corporation
controlled by U.S. Concrete.
(e) Following the Closing, U.S. Concrete's intention is that the Surviving
Corporation will continue the historic business of the Company or use a
significant portion of the historic business assets of the Company in a
business, all as required to satisfy the "continuity of business
enterprise" requirement under Section 368 of the Code.
(f) U.S. Concrete does not own, nor has it owned during the past five years,
any shares of the stock of the Company.
(g) Each of U.S. Concrete and Newco is undertaking the Merger for a bona fide
business purpose and not merely for the avoidance of federal income tax.
(h) Neither U.S. Concrete nor Newco is an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
(i) As of the Closing Date, the fair market value of the assets of Newco will
exceed the sum of Newco's liabilities plus the amount of other liabilities,
if any, to which Newco's assets are subject.
6.05 SEC FILINGS; DISCLOSURE. U.S. Concrete has filed with the SEC all
material forms, statements, reports and documents required to be filed by it
prior to the date hereof under each of the 1933 Act and the 1934 Act and the
respective rules and regulations thereunder, (a) all of which, as amended, if
applicable, complied when filed in all material respects with all applicable
requirements of the appropriate Act and the rules and regulations thereunder,
and (b) none of which, as amended, if applicable, contains any untrue statement
of material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made and at the time they were made, not
misleading. Since the date of the information provided in the most recent
filing,
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there has been no material adverse change in the financial condition or
results of operations of U.S. Concrete, taken as a whole.
6.06 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of U.S. Concrete
and Newco that the Stockholders are not making any representation or warranty
whatsoever, express or implied, other than those representations and warranties
of the Stockholders expressly set forth in this Agreement.
6.07 DISCLOSURE. U.S. Concrete has fully provided the Stockholders or
their representatives with all the information that the Stockholders have
requested in analyzing whether to consummate the Merger. None of the
information so provided nor any representation or warranty of U.S. Concrete
contained 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
or therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE VII
CERTAIN COVENANTS
7.01 Release From Guarantees. U.S. Concrete shall use its commercially
reasonable efforts to have the Stockholders released from the personal
guarantees of the Company's indebtedness identified in Schedule 7.01 on the
Closing Date and will continue such efforts after the Closing Date if not
released prior thereto. U.S. Concrete hereby agrees to indemnify and defend the
Stockholders and hold each Stockholder harmless for any amounts that such
Stockholder is required to pay in connection with the enforcement of any
obligations under such personal guarantees after the Closing, including without
limitation any reasonable attorneys' fees and expenses incurred in connection
therewith.
7.02 FUTURE COOPERATION; TAX MATTERS. The Stockholders and U.S. Concrete
shall each deliver or cause to be delivered to the other following the Closing
such additional instruments as the other may reasonably request for the purpose
of fully carrying out this Agreement. The Stockholders shall be responsible for
the payment of all Taxes attributable to all periods prior to and including the
Closing Date, including without limitation the period from the beginning of the
Company's current Tax year through the Closing Date. The Stockholders shall be
responsible for the preparation of all Tax returns covering the period from the
beginning of the Company's current Tax year through the Closing Date, and shall
be responsible for all costs and expenses incurred in connection with the
preparation of such Tax returns. The Surviving Corporation will cooperate with
the Stockholders in their preparation of all Tax returns covering the period
from the beginning of the Company's current Tax year through the Closing. In
addition, U.S. Concrete will provide the Stockholders with access to such of its
books and records as may be reasonably requested by the Stockholders in
connection with federal, state and local tax matters relating to periods prior
to the Closing. The Stockholders will cooperate and use their commercially
reasonable efforts to encourage the present officers, directors and employees of
the Company to cooperate with U.S. Concrete and the Surviving Corporation at and
after the Closing in furnishing information, evidence, testimony and other
assistance in connection with any actions, proceedings, arrangements or disputes
of any nature with respect to matters pertaining to all periods prior to the
Closing. The party requesting cooperation,
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information or actions under this Section 7.02 shall reimburse the other party
for all reasonable out-of-pocket costs and expenses paid or incurred in
connection therewith, which costs and expenses shall not, however, include per
diem charges for employees or allocations of overhead charges.
7.03 EXPENSES. U.S. Concrete will pay the fees, expenses and
disbursements of U.S. Concrete and its agents, representatives, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement and any amendments hereto. The Company (as owned by U.S.
Concrete after Closing) will be responsible for the fees and expenses of Arthur
Andersen LLP's audit or audit related procedures in connection with the
transactions contemplated hereby. The Stockholders will pay their fees,
expenses and disbursements and those of their and the Company's agents,
representatives, financial advisors, accountants and counsel incurred in
connection with the execution, delivery and performance of this Agreement and
any amendments hereto and the consummation of the transactions contemplated
hereby, including, without limitation, accounting fees and related expenses
attributable to the final Tax returns of the Company and the Stockholders for
periods through the Closing. The Stockholders will also pay any costs
associated with business brokers or other advisors engaged by the Stockholders
or the Company.
7.04 LEGAL OPINION. At the Closing, the Company and the Stockholders
shall cause their legal counsel, Dykema Gossett PLLC, to deliver to U.S.
Concrete a legal opinion in form and substance acceptable to U.S. Concrete.
7.05 EMPLOYMENT AGREEMENTS. Concurrently with the execution of this
Agreement, the Surviving Corporation shall enter into a mutually acceptable
Employment Agreements with each of Cornillie and Deneweth (collectively, the
"Employment Agreements").
7.06 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the
execution of this Agreement, (a) the Stockholders shall repay to the Company all
amounts outstanding as advances to or receivables from the Stockholders, each of
which advances or receivables is specifically reflected in Schedule 5.07, and
(b) the Company shall repay all amounts outstanding under loans to the Company
from the Stockholders, each of which loans to the Company is specifically
reflected in Schedule 5.06.
7.07 STOCK OPTIONS. U.S. Concrete shall grant nonqualified options to
purchase an aggregate of 12,500 shares of U.S. Concrete Common Stock as of the
Closing Date under U.S. Concrete's 1999 Incentive Plan (the "Incentive Plan") to
certain key employees of the Company (other than the Stockholders), as set forth
on Schedule 7.07 in the amounts listed thereon. Schedule 7.07 shall also
include the social security number and home address of each individual listed
thereon. Such options shall vest in equal annual increments for four years,
commencing on the first anniversary of the Closing Date.
7.08 PRE-CLOSING DISTRIBUTIONS. Prior to the Closing, the Company may
have distributed to the Stockholders the cash and other assets set forth on
Schedule 7.08. Any such distributions shall have been authorized by the Board
of Directors of the Company prior to the Closing, and the Company and the
Stockholders shall have used the respective best efforts to complete such
distributions prior to the Closing. Notwithstanding the foregoing, if any such
authorized distributions have not been completed prior to the Closing the
Surviving Corporation
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shall use reasonable efforts to complete such authorized distributions after the
Closing. The Stockholders' sole recourse against the Surviving Corporation and
U.S. Concrete with respect to this Section 7.08 shall be to the assets to be
distributed.
7.09 WORKING CAPITAL ADJUSTMENT.
(a) As soon as practicable after the Closing Date, U.S. Concrete shall cause
to be prepared and delivered to the Stockholders a consolidated balance
sheet of Cornillie Leasing, Inc., Dencor, Inc. and the Company
(collectively, the "Consolidated Companies") as of the Closing Date (the
"Closing Date Balance Sheet Date"), which has been prepared from the books
and records of the Consolidated Companies in conformity with GAAP (the
"Final Balance Sheet"), and a working capital adjustment schedule (the
"Adjustment Schedule"). The Adjustment Schedule will set forth the
computation of the Adjusted Working Capital Amount. As used in this
Section 7.09, capitalized terms not otherwise defined in this Agreement
shall have the following meanings:
"Adjusted Current Assets" means the amount of current assets of the
Consolidated Companies as set forth on the Closing Date Balance Sheet;
"Adjusted Current Liabilities" means the amount of current liabilities of the
Consolidated Companies as set forth on the Closing Date Balance Sheet less
the current portion of Interest-Bearing Debt (if any) as set forth on the
Closing Date Balance Sheet; and
"Adjusted Working Capital Amount" means the amount computed by subtracting
Adjusted Current Liabilities from Adjusted Current Assets as finally
determined in accordance with Section 7.09(c). Adjusted Working Capital
will exclude amounts relating to the 1999 Ross Portable Plant and the
upgrade of the aggregate section of the Detroit batch plant (bins).
(b) If the Adjusted Working Capital Amount is less than $250,000, then the
Stockholders shall, no later than 15 days after delivery of the Adjustment
Schedule as finally determined in accordance with Section 7.09(c) by U.S.
Concrete, pay to the Surviving Corporation the amount by which $250,000
exceeds the Adjusted Working Capital Amount (the "Adjusted Working Capital
Shortfall"). If the Adjusted Working Capital Amount is greater than
$250,000, then the Surviving Corporation shall, no later than 15 days after
delivery of the Adjustment Schedule as finally determined in accordance
with Section 7.09(c), pay to the Stockholders, on a pro rata basis in
proportion to their percentage ownership of the Company Common Stock
outstanding immediately prior to the Closing, the amount by which the
Adjusted Working Capital Amount exceeds $250,000 (the "Adjusted Working
Capital Excess").
(c) The Closing Date Balance Sheet and Adjustment Schedule will be final and
binding on the parties hereto unless, within 30 days following the delivery
of the Adjustment Schedule by U.S. Concrete, the Stockholders notify U.S.
Concrete in writing that the Stockholders disagree with all or any portion
of the Closing Date Balance Sheet and/or the Adjustment Schedule. If the
Stockholders and U.S. Concrete cannot mutually resolve any such
disagreement within 30 days after the receipt by U.S. Concrete of the
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Stockholders' notice of disagreement, then the Stockholders and U.S.
Concrete shall submit the dispute to a mutually agreeable certified public
accounting firm (the "Accountant") within 20 days after the end of such 30-
day period. If the Stockholders and U.S. Concrete are unable to agree upon
such an accounting firm within such 20-day period, then the Stockholders
and U.S. Concrete shall select a "Big Five" accounting firm by lot (after
excluding any of their respective regular Big Five accounting firms), which
accounting firm shall act as the Accountant. The Stockholders and U.S.
Concrete shall request that the Accountant audit the Closing Date Balance
Sheet and provide a computation of the Adjusted Working Capital Amount
within 30 days thereafter, and this computation will be final and binding
upon the parties hereto and used to compute the Adjusted Working Capital
Shortfall or Adjusted Working Capital Excess, as the case may be, the
payment of any of which shall be made within five days of delivery by U.S.
Concrete of the audited Closing Date Balance Sheet. In the event the
Stockholders and U.S. Concrete submit any unresolved objections to an
Accountant for resolution as provided in this Section 7.09, the
Stockholders and U.S. Concrete will each pay one-half of the fees and
expenses of the Accountant.
7.10 WASTEWATER DISCHARGE PERMIT. As soon as practicable following the
Closing, the Stockholders shall obtain for the benefit of the Surviving
Corporation, its successors and permitted assigns, at Stockholders' sole risk,
cost and expense, the City of Detroit Wastewater Discharge Permit (the
"Wastewater Permit") if finally determined by the City of Detroit to be
necessary for the legal operation of the Detroit facility. U.S. Concrete and
the Surviving Corporation agree to reasonably cooperate with Stockholders in
connection therewith; provided, however, U.S. Concrete shall not be required to
incur any expense and shall have no responsibility or liability in connection
with the absence or lack of the Wastewater Permit.
7.11 OTHER DOCUMENTS. At the Closing, U.S. Concrete shall receive the
following additional certificates, instruments and documents:
(a) Stock certificates representing all Company Common Stock duly
endorsed in blank by the Stockholders, or accompanied by stock powers duly
executed in blank by the Stockholders, and otherwise in a form acceptable
to U.S. Concrete.
(b) Written resignations of all directors and all officers of the
Company, such resignations to be effective concurrently with the Closing on
the Closing Date.
(c) Releases in form and substance satisfactory to U.S. Concrete
executed by the Stockholders releasing the Company from any liability or
obligation to the Stockholders.
(d) All of the Company's books and records, including, without
limitation, minute books, corporate charters, by-laws, stock records, bank
account records, computer records and all contracts with third parties;
provided, however, that all of the foregoing, other than the minute books,
corporate charters, by-laws and stock records, shall remain at the business
location of Company where they are currently maintained.
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7.12 BENEFIT PLANS.
(a) U.S. Concrete shall not , and shall cause the Surviving Corporation not
to at any time prior to 60 days after the Closing Date, effectuate a "plant
closing" or "mass layoff" as those terms are defined in the Worker Adjustment
and Restraining Notification Act of 1988 ("WARN") affecting in whole or in part
any facility, site of employment, operating unit or employee of Company or any
Company Subsidiary without complying fully with the requirements of WARN.
(b) All health and welfare benefit plans of U.S. Concrete or the
Surviving Corporation in which the employees of Company or any Company
Subsidiary participate after the Effective Time shall (i) recognize
expenses and claims that were incurred by such employees in the year in
which the Effective Time occurs for purposes of computing deductible
amounts and co-payments under such health and welfare plans as of the
Effective Time, (ii) provide coverage for pre-existing health conditions to
the extent covered under the applicable plans or programs as of the
Effective Time, and (iii) credit any deductibles paid or co-payments made
by employees of Company or any Company Subsidiary prior to the Effective
Time for purposes of paying deductibles or making co-payments pursuant to
the health and welfare benefit plans of U.S. Concrete or the Surviving
Corporation. In addition, employees of the Surviving Corporation and its
subsidiaries shall receive credit for their prior service with Company for
eligibility and vesting purposes and for vacation accrual purposes under
all health and welfare, pension, 401(k) and other benefit programs.
ARTICLE VIII
INDEMNIFICATION
The Stockholders, U.S. Concrete and Newco each make the following
covenants:
8.01 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. Subject to
Section 8.05 and Section 8.06, the Stockholders covenant and agree that they
will jointly and severally (without any right of indemnification or contribution
from the Company) indemnify, defend, protect and hold harmless U.S. Concrete,
Newco and the Surviving Corporation, and their respective officers, directors,
employees, stockholders, agents, representatives and Affiliates, at all times
from and after the date of this Agreement from and against all Losses incurred
by any of such indemnified persons and entities as a result of or arising from
(a) until the Expiration Date any breach of the representations and warranties
of the Stockholders set forth herein or in the Schedules attached hereto, (b)
any breach or nonfulfillment of any covenant or agreement on the part of the
Stockholders under this Agreement, (c) all income Taxes payable by the Company
for all periods prior to and including the Closing Date, (d) all transfer Taxes
arising from the transactions contemplated by Section 7.08 of this Agreement,
(e) any litigation listed on Schedule 5.17, or (f) any failure of Company to
have obtained the Wastewater Permit prior to Closing or any inability of
Stockholders to obtain the Wastewater Permit after the Closing if finally
determined by the City of Detroit to be required for the legal operation of the
Detroit facility.
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8.02 INDEMNIFICATION BY U.S. CONCRETE. Subject to Section 8.06,
U.S. Concrete covenants and agrees that it will indemnify, defend, protect and
hold harmless the Stockholders and their respective agents, representatives,
Affiliates, beneficiaries and heirs and employees at all times from and after
the date of this Agreement from and against all Losses incurred by any of such
indemnified persons as a result of or arising from (a) until the Expiration
Date, any breach of the representations and warranties of U.S. Concrete or Newco
set forth herein or in the Schedules attached hereto or certificates delivered
in connection herewith or (b) any breach or nonfulfillment of any covenant or
agreement on the part of U.S. Concrete or Newco under this Agreement.
8.03 THIRD PERSON CLAIMS. Promptly after any party entitled to
indemnification under Sections 8.01 and 8.02 hereof (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person or entity not a party to this Agreement ("Third Person"), or the
commencement of any action or proceeding by a Third Person, which the
Indemnified Party believes in good faith is an indemnifiable claim under this
Agreement, the Indemnified Party shall give to the party obligated to provide
indemnification pursuant to Sections 8.01 or 8.02 hereof (hereinafter the
"Indemnifying Party") written notice of such claim or the commencement of such
action or proceeding. Such notice shall state the nature and the basis of such
claim and a reasonable estimate of the amount thereof. The Indemnifying Party
shall have the right to defend and settle, at its own expense and by its own
counsel reasonably acceptable to the Indemnified Party, any such matter so long
as the Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in all commercially
reasonable respects in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records and other information reasonably
requested by the Indemnifying Party and in the Indemnified Party's possession or
control. After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability, and for
so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability; provided, however, that the Indemnified Party shall
be entitled, at its expense, to participate in the defense of such asserted
liability and the negotiations of the settlement thereof. The Indemnifying
Party shall not settle any such Third Person claim without the consent of the
Indemnified Party (which consent shall not be unreasonably withheld), unless the
settlement thereof imposes no liability or obligation on, and includes a
complete release from liability of, the Indemnified Party. If the Indemnifying
Party desires to accept a final and complete settlement of any such Third Person
claim and the Indemnified Party refuses to consent to such settlement, then the
Indemnifying Party's liability under this Section with respect to such Third
Person claim shall be limited to the amount so offered in settlement by said
Third Person; provided, however, that notwithstanding the foregoing, the
Indemnified Party shall be entitled to refuse to consent to any such proposed
settlement and the Indemnifying Party's liability hereunder shall not be limited
by the amount of the proposed settlement if such settlement imposes any
liability or obligation on, or does not provide for the complete release of, the
Indemnified Party. If, upon receiving notice, the Indemnifying Party does not
timely undertake to defend such matter to which the Indemnified Party is
entitled to indemnification hereunder, or fails diligently to pursue such
defense, the Indemnified Party may undertake such defense through counsel of its
choice, at the cost and expense of the Indemnifying Party, and the
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Indemnified Party may settle such matter, in its discretion, and the
Indemnifying Party shall reimburse the Indemnified Party for the amount paid in
such settlement and any other liabilities or expenses incurred by the
Indemnified Party in connection therewith.
8.04 NON-THIRD PERSON CLAIMS. In the event that any Indemnified
Party asserts the existence of a claim giving rise to Losses (but excluding
claims resulting from the assertion of liability by Third Persons), such party
shall give written notice to the Indemnifying Party. Such written notice shall
state that it is being given pursuant to this Section 8.04, specify the nature
and amount of the claim asserted, and indicate the date on which such assertion
shall be deemed accepted and the amount of the claim deemed a valid claim (such
date to be established in accordance with the next sentence). If such
Indemnifying Party, within 60 days after the mailing of notice by such
Indemnified Party, shall not give written notice to such Indemnified Party
announcing such Indemnifying Party's intent to contest such assertion of such
Indemnified Party, such assertion shall be deemed accepted and the amount of
such claim shall be deemed a valid claim. In the event, however, that such
Indemnifying Party contests such assertion of a claim by giving such written
notice to the Indemnified Party within said period, then the parties shall act
in good faith to reach agreement regarding such claim. If the parties cannot
resolve such dispute after good faith negotiations with respect thereto within
60 days after the notice provided by the Indemnifying Party, such dispute shall
be submitted to arbitration in accordance with the provisions of Section 13.11.
In the event that arbitration shall arise with respect to any such claim, the
prevailing party shall be entitled to reimbursement of costs and expenses
incurred in connection with such arbitration including reasonable attorneys'
fees.
8.05 INDEMNIFICATION DEDUCTIBLE. Neither U.S. Concrete, Newco nor
the Surviving Corporation shall be entitled to indemnification or other relief
from the Stockholders under the provisions of Section 8.01(a) until such time
as, and only to the extent that, the claims subject to indemnification by such
other party exceed, in the aggregate, $100,760 when combined with the Leasing
Merger Agreement and Dencor Stock Purchase Agreement. Notwithstanding the
foregoing, the limitations set forth in this Section 8.05 shall not apply to
fraudulent misrepresentations, the representation contained in Section 5.27 or
the covenant contained in Section 7.10.
8.06 LIABILITY LIMITATION. Subject to Section 8.05, the aggregate
obligation of the Stockholders, on the one hand, and of U.S. Concrete and the
Surviving Corporation (exclusive of the Merger Consideration), on the other
hand, for any and all claims arising under this Agreement, the Leasing Merger
Agreement, Dencor Stock Purchase Agreement, or under Sections 3 or 7 of the
Employment Agreements shall be limited to $10,076,029. Notwithstanding the
foregoing, the limitations set forth in this Section 8.06 shall not apply to
fraudulent misrepresentations, the representation contained in Section 5.27 or
the covenant contained in Section 7.10.
8.07 FORM OF INDEMNITY PAYMENT. Any payment required to be made by
the Stockholders pursuant to this Agreement shall first be made from the cash
portion of the Merger Consideration. In the event of a payment obligation which
exceeds such cash portion, then Stockholders may make payment by delivering to
U.S. Concrete such required number of shares of U.S. Concrete Common Stock
valued at the Average Closing Price.
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ARTICLE IX
NONCOMPETITION COVENANTS
9.01 PROHIBITED ACTIVITIES.
(a) For no additional consideration, each Stockholder will not
for five years following the Closing Date (the "Noncompete Term"),
directly or indirectly, for himself 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, lender, guarantor, 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 Competitive Business within a radius of
100 air miles of any plant or other operating facility in which the
Company was engaged in business on the date immediately prior to the
Closing Date;
(ii) call upon or otherwise solicit any person, who is, at
that time, within the Territory, an employee or consultant of the
Cornillie Companies, U.S. Concrete, the Surviving Corporation or any
of their respective subsidiaries, for the purpose or with the intent
of enticing such employee or consultant out of the employ or contract
with the Cornillie Companies, the Surviving Corporation 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 one year prior to
that time, a customer of the Cornillie Companies, U.S. Concrete or the
Surviving Corporation 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 which the
Company or U.S. Concrete 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 U.S. Concrete, for the
purpose of (A) acquiring that entity or arranging the acquisition of
that entity by any person or entity other than U.S. Concrete; and (B)
engaging in a Competitive Business within the Territory.
(b) Notwithstanding the above, Section 9.01(a) shall not be
deemed to prohibit any Stockholder from acquiring, as a passive investor
with no involvement in the operations of the business, not more than three
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.
9.02 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses to U.S. Concrete and the Surviving Corporation as a result of a
breach of the foregoing covenant, because a breach of such covenant would
diminish the value of the assets, properties and
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business of the Company being sold pursuant to this Agreement, and because of
the immediate and irreparable damage that could be caused to U.S. Concrete and
the Surviving Corporation for which it would have no other adequate remedy,
since monetary damages alone may not be an adequate remedy, each Stockholder
agrees that the foregoing covenant may be enforced against such individual by,
without limitation, injunctions, restraining orders and other equitable actions.
9.03 REASONABLE RESTRAINT. It is agreed by the parties hereto that
the foregoing covenants in this ARTICLE IX are necessary in terms of time,
activity and territory to protect U.S. Concrete's and the Surviving
Corporation's interest in the assets, properties and business being acquired
pursuant to the terms of this Agreement and impose a reasonable restraint on the
Stockholders in light of the activities and businesses of U.S. Concrete on the
date of the execution of this Agreement and the current plans of U.S. Concrete.
9.04 SEVERABILITY; REFORMATION. The covenants in this ARTICLE IX 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 IX 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.
9.05 MATERIAL AND INDEPENDENT COVENANT. The Stockholders acknowledge that
their agreements and the covenants set forth in this ARTICLE IX are material
conditions to U.S. Concrete's and Newco's agreements to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and that U.S.
Concrete and Newco would not have entered into this Agreement without such
covenants. All of the covenants in this ARTICLE IX shall be construed as an
agreement independent of any other provision in this Agreement. The existence of
any claim or cause of action by any Stockholder against U.S. Concrete, whether
predicated on this Agreement or otherwise, will not constitute a defense to the
enforcement by U.S. Concrete of any of the covenants of this ARTICLE IX.
ARTICLE X
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
10.01 GENERAL. The Stockholders recognize and acknowledge that they had in
the past, currently have, and in the future will have, access to certain
confidential information relating to the businesses of the Company, the
Surviving Corporation and/or U.S. Concrete, including, without limitation, lists
of customers, operational policies, and pricing and cost policies that are, and
following the Closing will be, valuable, special and unique assets of the
Surviving Corporation and U.S. Concrete. Each Stockholder agrees that he or she
will not use or disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose whatsoever, except as
is required in the course of performing his or her duties, if any, to the
Surviving Corporation and/or U.S. Concrete, unless (a) such information becomes
known to the public generally through no fault of the Stockholder or (b)
disclosure is required by Law, provided that prior to disclosing any information
pursuant to this clause (b) the disclosing Stockholder(s) shall give prior
written notice thereof to U.S. Concrete and the Surviving Corporation and
provide U.S. Concrete with the opportunity to contest such disclosure. In the
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event of a breach or threatened breach by any Stockholder of the provisions of
this Section, U.S. Concrete shall be entitled to an injunction restraining such
Stockholder from disclosing, in whole or in part, such confidential information.
Nothing herein shall be construed as prohibiting U.S. Concrete from pursuing any
other available remedy for such breach or threatened breach, including, without
limitation, the recovery of damages.
10.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to U.S. Concrete and the Surviving Corporation as a result of the breach
of the foregoing covenant, because a breach of such covenant would diminish the
value of the assets, properties and business of the Company being sold pursuant
to this Agreement, and because of the immediate and irreparable damage that
would be caused for which the Surviving Corporation and/or U.S. Concrete would
have no other adequate remedy, since monetary damages alone may not be an
adequate remedy, each Stockholder agrees that the foregoing covenants may be
enforced against such individual by, without limitation, injunctions,
restraining orders and other equitable actions.
ARTICLE XI
INTENDED TAX TREATMENT
11.01 TAX-FREE REORGANIZATION. U.S. Concrete and the Stockholders are
entering into this Agreement with the intention that the Merger qualify as a
tax-free reorganization for federal income tax purposes, except to the extent of
any "boot" received, and neither U.S. Concrete nor the Stockholders will take
any actions that disqualify the Merger for such treatment.
ARTICLE XII
FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON
U.S. CONCRETE COMMON STOCK
12.01 Compliance with Law. The Stockholders acknowledge the shares
of U.S. Concrete Common Stock issued in accordance with the terms of this
Agreement (the "Restricted Shares") will not be registered under the 1933 Act
and therefore may not be resold without compliance with the 1933 Act. The
Restricted Shares are being or will be acquired by the Stockholders 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. Each Stockholder covenants, warrants and represents that none of
the Restricted Shares held by such Stockholder 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 1933 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
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COUNSEL TO THE ISSUER, IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH LAWS.
12.02 ECONOMIC RISK; SOPHISTICATION; ACCREDITED INVESTORS. Each Stockholder
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. Each Stockholder has such
knowledge and experience in financial and business matters that he or she is
capable of evaluating the merits and risks of the proposed investment and
therefore has the capacity to protect his or her own interests in connection
with the acquisition of the Restricted Shares pursuant hereto. Each Stockholder
represents to U.S. Concrete and Newco that he or she is an "accredited
investor," as that term is defined in Regulation D under the 1933 Act. Each
Stockholder or his or her representatives have had an adequate opportunity to
ask questions of, and receive answers from the appropriate officers and
representatives of U.S. Concrete and Newco concerning, among other matters, U.S.
Concrete, 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 such Stockholder or his or
her representatives concerning such matters.
12.03 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 U.S. Concrete Common Stock to the public without registration, for a period
of two years after the Closing, U.S. Concrete agrees to use its commercially
reasonable efforts to:
(a) make and keep public information (as such terms are defined
in Rule 144) regarding U.S. Concrete available;
(b) file with the SEC in a timely manner all reports and other
documents required of U.S. Concrete under the 1933 Act and the 1934 Act;
and
(c) furnish to a Stockholder upon written request a written
statement by U.S. Concrete as to its compliance with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, a copy of the most
recent annual or quarterly report of U.S. Concrete, and such other reports
and documents so filed as such Stockholder may reasonably request in
availing himself or herself of any rule or regulation of the SEC allowing
such Stockholder to sell any such shares without registration.
12.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES. The
Stockholders covenant, warrant and represent that (i) none of the Restricted
Shares will be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of, directly or indirectly, during the two-year period
commencing on the Closing Date (the "Lockup Period"); (ii) 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 1933 Act and
the rules and regulations of the SEC; (iii) during the one-year period
commencing on the Closing Date, the Stockholders 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 the Stockholders' risk of owning
such Restricted Shares; and (iv) following the one-year period described in
clause (iii) and for the remainder of the Lockup Period, the Stockholders shall
not engage in put, call, short-sale, hedge, straddle, collar or similar
transactions with respect to 50% or more of the Restricted Shares intended to
reduce
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the Stockholders' 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 12.01:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL
RESTRICTION ON TRANSFER THAT EXPIRES ON FEBRUARY 7, 2002, AND MAY NOT BE
OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE
PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC.
12.05 PROSPECTUS DELIVERY. Each Stockholder represents and
acknowledges that he or she has been provided with the most current prospectus
of U.S. Concrete, dated May 25, 1999, at least 20 days prior to the date hereof.
12.06 REMOVAL OF LEGENDS. Upon expiration of the Lockup Period,
U.S. Concrete will cause its transfer agent to issue one or more certificates
without such legend as to any Restricted Shares that are no longer subject to
the legends set forth in Section 12.01 and 12.04, respectively; provided,
however, that U.S. Concrete shall not be deemed to be in breach of this Section
unless it fails to cause its transfer agent to issue such certificates after
receipt of written request from a Stockholder.
ARTICLE XIII
MISCELLANEOUS
13.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES. This Agreement
and the rights of the parties hereunder may not be assigned (except by operation
of Law) and shall be binding upon and shall inure to the benefit of the parties
hereto, the successors of U.S. Concrete, Newco, the Surviving Corporation and
the Company, and the heirs and legal representatives of the Stockholders.
Except as provided in ARTICLE VIII or in this Section 13.01, nothing in this
Agreement is intended or will be construed to confer upon or give any person or
entity other than the parties hereto any rights or remedies under or by reason
of this Agreement or any transaction contemplated hereby.
13.02 ENTIRE AGREEMENT. This Agreement (including the Schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the Stockholders,
the Company, Newco and U.S. Concrete and supersede any prior agreement and
understanding relating to the subject matter of this Agreement, including,
without limitation, the Letter of Intent. This Agreement may be modified or
amended only by a written instrument executed by the Stockholders, the Company,
Newco and U.S. Concrete. Any right hereunder may be waived only by a written
instrument executed by the party waiving such right.
13.03 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument. Facsimile
transmission of any signed original document and/or retransmission of any signed
facsimile transmission will be deemed the same as delivery of an
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original. At the request of any party, the parties will confirm facsimile
transmission by signing a duplicate original document.
13.04 BROKERS AND AGENTS. Except for a fee payable to Stockholders' agent,
W.Y. Campbell, which Stockholders will pay, each party hereto represents and
warrants that it employed no broker or agent in connection with the transactions
contemplated by this Agreement. Each party agrees to indemnify each other party
against all loss, cost, damages or expense arising out of claims for fees or
commissions of brokers employed or alleged to have been employed by such
indemnifying party.
13.05 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested (which will be deemed
given three business days after deposit), or by delivering the same in person to
an officer or agent of such party (which will be deemed given when actually
received), as follows:
If to U.S. Concrete, Newco or the Surviving Corporation, addressed to them
at:
U.S. Concrete, Inc.
1300 Post Oak Blvd., Suite 1200
Houston, Texas 77056
Attn: Corporate Secretary
If to the Stockholders, addressed as follows:
Richard A. Deneweth
9940 Edgewood
Traverse City, Michigan 49648
Joseph C. Cornillie, Trustee URTA of
Joseph C. Cornillie, Dated October 4, 1995
3279 Wendover
Troy, Michigan 48084
with a copy (which shall not constitute notice) to:
D. Richard McDonald, Esq.
Dykema Gossett PLLC
1577 N. Woodward Ave., Suite 300
Bloomfield Hills, Michigan 48304
or such other address as any party hereto shall specify pursuant to this Section
13.05 from time to time.
13.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in ARTICLE V and ARTICLE VI shall survive the Closing for a
period of two years from the Closing Date (the "Expiration Date"), except that
the representations and
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warranties set forth in Sections 5.03, 5.11, 5.16 and 5.18 hereof shall survive
until such time as the applicable statute of limitations period has run, which
shall be deemed to be the Expiration Date for Sections 5.03, 5.11, 5.16 and
5.18, as the case may be. The respective parties shall remain liable after the
Expiration Date for breaches of the representations and warranties set forth in
ARTICLE V and ARTICLE VI, provided such breaches are asserted in good faith by
notice in writing to the alleged breaching party prior to the Expiration Date.
13.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE. Except
as otherwise provided herein, no delay of or omission in the exercise of any
right, power or remedy accruing to any party as a result of any breach or
default by any other party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed as a waiver of or acquiescence in any
such breach or default, or of any similar breach or default occurring later; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default occurring before or after that waiver. No right, remedy or
election any term of this Agreement gives will be deemed exclusive, but each
will be cumulative with all other rights, remedies and elections available at
law or in equity, subject to the limitations set forth in Sections 8.05 and
8.06.
13.08 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.
13.09 SECTION HEADINGS; GENDER. The Section headings contained in
this Agreement are inserted for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement. Words of the masculine
gender in this Agreement shall be deemed and construed to include correlative
words of the feminine and neuter genders and words of the neuter gender shall be
deemed and construed to include correlative words of the masculine and feminine
genders.
13.10 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware (except for its principles governing conflicts
of laws).
13.11 DISPUTE RESOLUTION.
(a) Except with respect to injunctive relief as provided in
Section 9.02 and Section 10.02 (which relief may be sought from any court
or administrative agency with jurisdiction with respect thereto), any
unresolved dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in accordance with
the rules of the American Arbitration Association then in effect. The
arbitration shall be conducted by a retired judge employed by the Chicago,
Illinois office of J.A.M.S./Endispute, Inc. ("JAMS"). The arbitration
shall be held in JAMS' Chicago, Illinois office.
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(b) The parties shall obtain from JAMS a list of the retired judges
available to conduct the arbitration. The parties shall use their
reasonable efforts to agree upon a judge to conduct the arbitration. If the
parties cannot agree upon a judge to conduct the arbitration within 10 days
after receipt of the list of available judges, the parties shall ask JAMS
to provide the parties a list of three available judges (the "Judge List").
Within five days after receipt of the Judge List, each party shall strike
one of the names of the available judges from the Judge List and return a
copy of such list to JAMS and the other party. If two different judges are
stricken from the Judge List, the remaining judge shall conduct the
arbitration. If only one judge is stricken from the Judge List, JAMS shall
select a judge from the remaining two judges on the Judge List to conduct
the arbitration.
(c) The arbitrator shall not have the authority to add to, detract
from, or modify any provision hereof nor to award punitive damages to any
injured party. The arbitrator shall have the authority to order payment of
damages, reimbursement of costs, including those incurred to enforce this
Agreement, and interest thereon in the event the arbitrator determines that
a material breach of this Agreement has occurred. A decision by the
arbitrator shall be final and binding. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
U.S. CONCRETE, INC.
By: /s/ Donald Wayne
________________________________
Donald Wayne, Vice President
CONCRETE XIX ACQUISITION, INC.
By: /s/ Donald Wayne
________________________________
Donald Wayne, President
CORNILLIE FUEL & SUPPLY, INC.
By: /s/ Joseph C. Cornillie
________________________________
Joseph C. Cornillie, President
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STOCKHOLDERS:
/s/ Richard A. Deneweth
_____________________________________
Richard A. Deneweth, Individually
/s/ Joseph C. Cornillie
_____________________________________
Joseph C. Cornillie, Individually and
As Trustee URTA of Joseph C. Cornillie
Dated October 4, 1995
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EXHIBIT A
ALLOCATION OF CONSIDERATION
Stock Cash
----- ----
Joseph C. Cornillie $1,194,604* $280,783
Richard A. Deneweth $1,194,604* $280,783
* 164,773 shares
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EXHIBIT 2.14
STOCK PURCHASE AGREEMENT
BY AND AMONG
U.S. CONCRETE, INC.,
CORNILLIE FUEL & SUPPLY, INC.,
DENCOR, INC.
RICHARD A. DENEWETH
AND
JOSEPH C. CORNILLIE, TRUSTEE URTA OF
JOSEPH C. CORNILLIE, DATED OCTOBER 4, 1995
Dated as of February 8, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
ARTICLE I DEFINITIONS......................................................................... 1
1.01 Definitions......................................................................... 1
1.02 Interpretation...................................................................... 5
DELIVERY OF SHARES; ENDORSEMENT OF COMPANY STOCK 5
2.01 Delivery of Shares.................................................................. 5
2.02 Endorsement of Company Stock........................................................ 5
ARTICLE III CONVERSION OF SHARES................................................................ 5
3.01 Consideration....................................................................... 5
ARTICLE IV CLOSING............................................................................. 6
4.01 Closing............................................................................. 6
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.................................. 6
5.01 Due Organization and Qualification.................................................. 6
5.02 Authorization; Non-Contravention; Approvals......................................... 6
5.03 Capitalization and Ownership........................................................ 7
5.04 Subsidiaries........................................................................ 8
5.05 Financial Statements................................................................ 8
5.06 Liabilities and Obligations......................................................... 9
5.07 Accounts and Notes Receivable....................................................... 9
5.08 Properties and Assets............................................................... 9
5.09 Material Customers and Contracts.................................................... 11
5.10 Permits............................................................................. 13
5.11 Environmental Matters............................................................... 13
5.12 Labor and Employee Relations; Employment Matters.................................... 14
5.13 Insurance........................................................................... 14
5.14 Compensation; Employment Agreements................................................. 15
5.15 Noncompetition, Confidentiality and Nonsolicitation Agreements; Employee Policies... 15
5.16 Employee Benefit Plans.............................................................. 15
5.17 Litigation and Compliance with Law.................................................. 18
5.18 Taxes............................................................................... 18
5.19 Absence of Changes.................................................................. 18
5.20 Accounts with Banks and Brokerages; Powers of Attorney.............................. 20
5.21 Absence of Certain Business Practices............................................... 20
5.22 Competing Lines of Business; Related-Party Transactions............................. 20
5.23 Intangible Property................................................................. 20
5.24 Capital Expenditures................................................................ 20
5.25 Inventories......................................................................... 20
5.26 No Implied Representations.......................................................... 21
5.27 Absence of Interest-Bearing Debt.................................................... 21
5.28 Disclosure.......................................................................... 21
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE..................................... 21
6.01 Organization........................................................................ 21
6.02 Authorization; Non-Contravention; Approvals......................................... 21
6.03 No Implied Representations.......................................................... 22
6.04 Disclosure.......................................................................... 22
</TABLE>
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<TABLE>
<C> <S>
ARTICLE VII CERTAIN COVENANTS................................................................... 22
7.01 Release From Guarantees............................................................. 22
7.02 Future Cooperation; Tax Matters..................................................... 22
7.03 Expenses............................................................................ 23
7.04 Internal Revenue Code Election...................................................... 23
7.05 Legal Opinion....................................................................... 24
7.06 Employment Agreements............................................................... 24
7.07 Repayment of Related Party Indebtedness............................................. 24
7.08 Stock Options....................................................................... 24
7.09 Pre-Closing Distributions........................................................... 24
7.10 Working Capital Adjustment.......................................................... 24
7.11 Other Documents..................................................................... 26
7.12 Benefit Plans....................................................................... 26
ARTICLE VIII INDEMNIFICATION 27
8.01 General Indemnification by the Stockholders......................................... 27
8.02 Indemnification by U.S. Concrete.................................................... 27
8.03 Third Person Claims................................................................. 27
8.04 Non-Third Person Claims............................................................. 28
8.05 Indemnification Deductible.......................................................... 28
8.06 Indemnification Limitation.......................................................... 29
ARTICLE IX NONCOMPETITION COVENANTS............................................................ 29
9.01 Prohibited Activities............................................................... 29
9.02 Equitable Relief.................................................................... 30
9.03 Reasonable Restraint................................................................ 30
9.04 Severability; Reformation........................................................... 30
9.05 Material and Independent Covenant................................................... 30
ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION........................................... 31
10.01 General............................................................................. 31
10.02 Equitable Relief.................................................................... 31
ARTICLE XII MISCELLANEOUS....................................................................... 31
12.01 Successors and Assigns; Rights of Parties........................................... 31
12.02 Entire Agreement.................................................................... 31
12.03 Counterparts........................................................................ 32
12.04 Brokers and Agents.................................................................. 32
12.05 Notices............................................................................. 32
12.06 Survival of Representations and Warranties.......................................... 33
12.07 Exercise of Rights and Remedies; Remedies Cumulative................................ 33
12.08 Reformation and Severability........................................................ 33
12.09 Section Headings; Gender............................................................ 33
12.10 Governing Law....................................................................... 33
12.11 Dispute Resolution.................................................................. 33
</TABLE>
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of February 8,
2000, by and among U.S. Concrete, Inc., a Delaware corporation ("U.S.
Concrete"), Cornillie Fuel & Supply, Inc., a Michigan corporation and wholly
owned subsidiary of U.S. Concrete ("Buyer"), Dencor, Inc., a Michigan
corporation (the "Company"), and Richard A. Deneweth ("Deneweth") and Joseph C.
Cornillie, individually and as Trustee URTA of Joseph C. Cornillie, Dated
October 4, 1995 ("Cornillie") (Deneweth and Cornillie are each referred to
hereinafter as a "Stockholder" and collectively, the "Stockholders"), with the
Stockholders being all of the Company's Stockholders.
WHEREAS, Stockholders own all of the issued and outstanding shares of the
capital stock of Company;
WHEREAS, Buyer desires to acquire all of the issued and outstanding shares of
the capital stock of Company from Stockholders and Stockholders desire to sell
such Company Stock to Buyer as set forth herein; and
WHEREAS, U.S. Concrete is also, pursuant to separate written agreements,
acquiring the equity interests of Cornillie Leasing, Inc. (the "Leasing Merger
Agreement") and Cornillie Fuel & Supply, Inc. (the "Fuel Merger Agreement");
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. Capitalized terms used in this Agreement shall have the
following meanings:
"Affiliate" of, or "Affiliated" with, a specified person or entity means a
person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the specified person or entity.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Balance Sheet Date" has the meaning set forth in Section 5.05.
"Broker" has the meaning set forth in Section 11.04.
"Closing" has the meaning set forth in ARTICLE IV.
"Closing Date" has the meaning set forth in ARTICLE IV.
"Company" has the meaning set forth in the first paragraph of this Agreement.
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"Company Common Stock" means the Company's common stock, $1.00 par value per
share.
"Competitive Business" means any business that competes with any business of
U.S. Concrete existing on the date hereof, including, without limitation, any
business that involves the production and sale of ready-mixed concrete
(including truck-mixed concrete) and other cement mixtures; pre-cast concrete
products and slag products.
"Employee benefit plan" has the meaning set forth in Section 5.16.
"Employee pension benefit plan" has the meaning set forth in Section 5.16.
"Employment Agreements" has the meaning set forth in Section 7.05.
"Encumbrances" means all liens, encumbrances, mortgages, pledges, security
interests, conditional sales agreements, charges, options, preemptive rights,
rights of first refusal, reservations, restrictions or other encumbrances or
defects in title.
"Environmental Laws" means any and all Laws or agreements between Company and
any Governmental Authority 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) or human health or safety, (b) emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes (including, without
limitation, Hazardous Substances) or noxious noise or odor 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 pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes (including, without limitation, Hazardous
Substances), in each case as amended from time to time and as now or hereafter
in effect. The term "Environmental Laws" includes, without limitation, 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, and any comparable or similar Michigan
Law, in each case as amended from time to time, and any other Laws now or
hereafter relating to any of the foregoing.
"ERISA" has the meaning set forth in Section 5.16.
"ERISA Affiliate" has the meaning set forth in Section 5.16.
"Expiration Date" has the meaning set forth in Section 11.06.
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"Financial Statements" has the meaning set forth in Section 5.05.
"GAAP" means generally accepted accounting principles as currently applied by
the respective party on a basis consistent with preceding years and throughout
the periods involved.
"GCL" means the General Corporation Law of the State of Delaware, as amended.
"Governmental Authority" means any federal, state, local or foreign
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or quasi-
governmental authority.
"Hazardous Substances" means any and all substances presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law. The term "Hazardous
Substances" includes, without limitation, any substance to which exposure is
regulated by any Environmental Law including, without limitation, any toxic
waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous
waste, special waste, industrial substance or petroleum or any derivative or by-
product thereof, radon, radioactive material, asbestos or asbestos containing
material, urea formaldehyde foam insulation, lead or polychlorinated biphenyls.
"Incentive Plan" has the meaning set forth in Section 7.07.
"Indemnified Party" has the meaning set forth in Section 8.03.
"Indemnifying Party" has the meaning set forth in Section 8.03.
"Interest-Bearing Debt" means the total amount of outstanding indebtedness of
the Company for borrowed money (including, without limitation, bank debt,
equipment debt, capital lease obligations with non-affiliates of Company, bank
overdrafts and any other indebtedness for borrowed money).
"Interim Balance Sheet" has the meaning set forth in Section 5.05.
"Interim Financial Statements" has the meaning set forth in Section 5.05.
"IRCA" has the meaning set forth in Section 5.11.
"JAMS" has the meaning set forth in Section 11.10.
"Judge List" has the meaning set forth in Section 11.10.
"Laws" means any and all federal, state, local or foreign statutes, laws,
ordinances, codes, rules, regulations, orders, decrees, judgments and
injunctions of any Governmental Authority, including, without limitation, those
covering Tax, energy, safety, health, transportation, bribery, record keeping,
zoning, discrimination, antitrust and wage and hour matters, in each case as
amended and in effect from time to time.
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"Letter of Intent" means that certain letter of intent dated December 15,
1999 by and among U.S. Concrete, the Company and the Stockholders, and the other
parties named therein, as amended or supplemented.
"Listed Agreements" has the meaning set forth in Section 5.09.
"Losses" means any and all liabilities, losses, claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, fees, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees and
costs and expenses of investigation), net of (i) income Tax effects with respect
thereto (including, without limitation, income Tax benefits recognized in
connection therewith and income Taxes upon any indemnification recovery
thereof), and (ii) insurance proceeds related to such Losses actually received
by the Indemnified Party; provided, however, that no Indemnified Party shall be
under any obligation either to insure any particular risk or to make a claim
under an existing policy.
"MBCA" means the Michigan Business Corporation Act, as amended.
"Material Customers" has the meaning set forth in Section 5.09.
"Noncompete Term" has the meaning set forth in Section 9.01(a).
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Permits" has the meaning set forth in Section 5.10.
"Permitted Encumbrances" means any and all (a) Encumbrances reserved against
in the Interim Balance Sheet, (b) Encumbrances for property or ad valorem Taxes
not yet due and payable or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are maintained
on the Company's books in accordance with GAAP, and (c) obligations described in
Schedule 5.08.
"Plan" has the meaning set forth in Section 5.16.
"Qualified Plan" has the meaning set forth in Section 5.16.
"Rule 144" means Rule 144 as promulgated under the 1933 Act.
"SEC" means the Securities and Exchange Commission.
"Stockholders" has the meaning set forth in the first paragraph of this
Agreement.
"Structures" has the meaning set forth in Section 5.08.
"Taxes" has the meaning set forth in Section 5.18.
"Territory" has the meaning set forth in Section 9.01.
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"Third Person" has the meaning set forth in Section 8.03.
"U.S. Concrete" has the meaning set forth in the first paragraph of this
Agreement.
"U.S. Concrete Common Stock" means U.S. Concrete's Common Stock, par value
$.001 per share.
"Year-End Financial Statements has the meaning set forth in Section 5.05.
1.02 INTERPRETATION. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in Section 1.01 and elsewhere in this Agreement
include the plural as well as the singular and vice versa;
(b) all accounting terms not otherwise defined herein have the meanings
ascribed to them in accordance with GAAP; and
(c) the words "herein," "hereof," and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE II
DELIVERY OF SHARES; ENDORSEMENT OF COMPANY STOCK
2.01 DELIVERY OF SHARES. Upon the terms and subject to the conditions set
forth in this Agreement, Stockholders shall, at the Closing, deliver to Buyer
certificate(s) representing the number of shares set forth opposite each
Stockholder's name on Exhibit A attached hereto and made a part hereof, which
certificates represent all of the issued and outstanding capital stock of
Company (the "Company Stock"). Stockholders shall deliver the Company Stock to
Buyer free and clear of all Encumbrances.
2.02 ENDORSEMENT OF COMPANY STOCK. Stockholders shall deliver at Closing
the certificates representing the Company Stock, duly endorsed in blank by
Stockholders or accompanied by stock powers duly endorsed in blank and with all
necessary transfer tax and other revenue stamps, acquired at Stockholders'
expense, affixed and cancelled. Stockholders, at their sole expense, agree to
cure (both before and after Closing) any deficiencies with respect to the
endorsement of the certificates or other documents of conveyance with respect to
the Company Stock or with respect to the stock powers accompanying the Company
Stock.
ARTICLE III
CONVERSION OF SHARES
3.01 CONSIDERATION. In consideration of the sale to Buyer in accordance
with this Agreement of the certificates representing the Company Stock, Buyer
shall pay to Stockholders
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on the Closing Date an aggregate of: $6,493,255 in cash (the "Consideration").
The Consideration shall be allocated between Stockholders as set forth on
Exhibit A, attached hereto and made a part hereof.
ARTICLE IV
CLOSING
4.01 CLOSING. The delivery of the Company Common Stock and the
Consideration and the other transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Baker & Hostetler LLP, 3200
National City Center, 1900 E. 9th Street, Cleveland, Ohio 44114, concurrently
with the execution of this Agreement or at such other time and date as U.S.
Concrete, the Company and the Stockholders may mutually agree, which date is
herein referred to as the "Closing Date."
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders, jointly and severally, represent and warrant to U.S.
Concrete as follows (For purposes of these representations and warranties, the
term "Company" shall include Company and each of Company's subsidiaries):
5.01 DUE ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Michigan and is duly authorized and qualified to do business under all
applicable Laws and to carry on its business in the places and in the manner as
now conducted. The Company has the requisite power and authority to own, lease
and operate its assets and properties and to carry on its business as such
business is currently being conducted. Schedule 5.01 includes (a)
certificate(s) of existence and good standing for the Company issued by the
appropriate Governmental Authorities of the State of Michigan, (b) a list of all
jurisdictions in which the Company is authorized or qualified to do business and
(c) certificate(s) of qualification or authority to do business (or similar
certificates) for the Company issued by the appropriate Governmental Authorities
of each of the jurisdictions in which the Company is authorized or qualified to
do business. The Company does not own, lease or operate any assets or
properties or carry on any business in any jurisdiction that Schedule 5.01 does
not list. True, complete and correct copies of the Articles of Incorporation
and Bylaws, each as amended, of the Company are attached hereto as Schedule
5.01, 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 Company have been provided to U.S. Concrete.
5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) The Company has the requisite corporate power and authority to
enter into this Agreement and the ancillary documents and agreements
described herein and to effect the transactions contemplated by this
Agreement. Each Stockholder has the full legal right, power and authority
to enter into this Agreement. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been
6
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approved by the board of directors of the Company and by the Stockholders.
No additional corporate proceedings on the part of the Company are
necessary to authorize the execution and delivery of this Agreement and the
consummation by the Company of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company
and the Stockholders, and, assuming the due authorization, execution and
delivery hereof by U.S. Concrete and Buyer, constitutes a valid and binding
agreement of the Company and the Stockholders, enforceable against each of
them in accordance with its terms, subject to general principles of equity
and bankruptcy, insolvency and other similar laws relating to the
enforcement of creditor's rights.
(b) The execution and delivery of this Agreement by the Company and the
Stockholders do not, and the consummation by the Company and the
Stockholders of the transactions contemplated hereby will not, violate or
result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Encumbrance upon any
of the properties or assets of the Company under any of the terms,
conditions or provisions of, (i) the Articles of Incorporation or Bylaws of
the Company, (ii) any Law applicable to the Stockholders or the Company or
any of the properties or assets of the Stockholders or the Company, or
(iii) except as set forth in Schedule 5.02, any agreement, note, bond,
mortgage, indenture, deed of trust, license, franchise, Permit, concession,
lease or other instrument, obligation or agreement of any kind to which any
Stockholder or the Company is now a party or by which the Company or any of
its properties or assets may be bound or affected, except for any of the
foregoing which would not have a material adverse effect on the financial
condition or results of operations of Company or Buyer.
(c) Except as set forth in Schedule 5.02, no declaration, filing or
registration with, or notice to, or authorization, consent or approval of,
any Governmental Authority or other person or entity is necessary for the
execution and delivery of this Agreement by the Company and the
Stockholders or the consummation by the Company and the Stockholders of the
transactions contemplated hereby. Except as set forth in Schedule 5.02,
none of the contracts or agreements with Material Customers or contracts
providing for purchases or services individually in excess of $10,000, or
in the aggregate in excess of $25,000, or leases or Permits to which the
Company is a party requires notice to, or the consent or approval of, any
Governmental Authority or other person or entity to the execution and
delivery of this Agreement by the Company and the Stockholders or to any of
the transactions contemplated hereby to remain in full force and effect
following such transaction.
5.03 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of the
Company consists solely of 50,000 shares of Company Common Stock, of which
20,000 shares are issued and outstanding. All of the issued and outstanding
shares of the Company Common Stock are owned beneficially and of record by the
Stockholders as set forth in Schedule 5.03. All of the issued and outstanding
shares of the Company Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, and were offered, issued, sold and delivered
by the Company in compliance with all applicable Laws, including, without
limitation, those Laws
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concerning the issuance of securities. None of such shares were issued in
violation of the preemptive rights of any past or present stockholder of the
Company. Except as set forth in Schedule 5.03, (a) no shares of Company Common
Stock are held by the Company as treasury shares, and (b) no subscription,
option, warrant, call, convertible or exchangeable security, other conversion
right or commitment of any kind exists which obligates the Company to issue any
of its capital stock or the Stockholders to transfer any of the capital stock of
the Company.
5.04 SUBSIDIARIES. Except as set forth in Schedule 5.04, the Company
owns, of record or beneficially, or controls, 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.
Except as set forth in Schedule 5.04, the Company is not, directly or
indirectly, a participant in any joint venture, limited liability company,
partnership or other noncorporate entity.
5.05 FINANCIAL STATEMENTS.
(a) The Company has delivered to U.S. Concrete true, complete and
correct copies of the following financial statements:
(i) the reviewed balance sheets of the Company as of December 31,
1996, 1997 and 1998, and the related reviewed statements of
operations, stockholders' equity and cash flows for the three-year
period ended December 31, 1998, together with the related notes,
schedules and report of the Company's independent accountants (such
balance sheets, the related statements of operations, stockholders'
equity and cash flows and the related notes and schedules are referred
to herein as the "Year-End Financial Statements"); and
(ii) the unaudited balance sheet (the "Interim Balance Sheet") of
the Company as of December 31, 1999 (the "Balance Sheet Date") and the
related unaudited statements of operations, for the year ended on the
Balance Sheet Date (such balance sheets, the related statements of
operations, and any related notes and schedules are referred to herein
as the "Interim Financial Statements"). The Year-End Financial
Statements and the Interim Financial Statements (collectively, the
"Financial Statements") are attached as Schedule 5.05 to this
Agreement;
(b) Except as set forth in Schedule 5.05, the Financial Statements
have been prepared from the books and records of the Company in conformity
with GAAP and present fairly the financial position and results of
operations of the Company in all material respects as of the dates of such
statements and for the periods covered thereby; provided, however, that the
Interim Financial Statements are subject to normal year-end adjustments and
lack footnotes and other presentation items. The books of account of the
Company have been kept accurately in all material respects in the ordinary
course of business, the transactions entered therein represent bona fide
transactions, and the revenues, expenses, assets and liabilities of the
Company have been properly recorded therein in all material respects.
Within the past five fiscal years of the Company, the Company has not
received any correspondence with its accountants, including without
limitation, management letters, which have indicated or disclosed that
there is a "material
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weakness" in or "reportable condition" with respect to (as those terms are
defined under GAAP) the Company's financial condition.
5.06 LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule 5.06,
as of the Balance Sheet Date the Company did not have, nor has it incurred since
that date, any liabilities or obligations (whether absolute, accrued, contingent
or otherwise) of any nature, except liabilities, obligations or contingencies
(a) that are reflected or accrued or reserved against in the Financial
Statements or reflected in the notes thereto, (b) that are of a nature not
required to be reflected in the Financial Statements in accordance with GAAP, or
(c) that were incurred after the Balance Sheet Date and were incurred in the
ordinary course of business, consistent with past practices. For each such
liability for which the amount is not fixed or is contested, the Company has
provided a summary description of the liability together with copies of all
relevant documentation relating thereto. Except as set forth in Schedule 5.06,
there are no prepayment penalties, termination fees or other payments triggered
by the prepayment or termination of any loan or indebtedness of the Company.
5.07 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.07 sets forth an accurate
list of the accounts and notes receivable of the Company as of the Balance Sheet
Date and of those generated between the Balance Sheet Date and the second
business day preceding the Closing Date, including any such amounts which are
not reflected in the Interim Balance Sheet. Receivables from and advances to
employees, the Stockholders and any entities or persons related to or Affiliates
of the Stockholders are separately identified in Schedule 5.07. Schedule 5.07
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 Company, 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, are stated in
accordance with GAAP and are collectible in the amounts shown on Schedule 5.07,
net of reserves reflected in the Interim Financial Statements with respect to
the accounts receivable as of the Balance Sheet Date, and net of reserves
reflected in the books and records of the Company (consistent with the methods
used in the Interim Financial Statements) with respect to receivables of the
Company after the Balance Sheet Date.
5.08 PROPERTIES AND ASSETS.
(a) Schedule 5.08 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 Company with a book value in excess of
$5,000 (i) owned by the Company as of the Balance Sheet Date and (ii)
acquired since the Balance Sheet Date. Schedule 5.08 also sets forth an
accurate list of all real and personal property currently leased by the
Company, and includes complete and correct copies of leases for significant
equipment and for all real property leased by the Company and descriptions
of all real property (as currently owned or leased by the Company) on which
plants, buildings, warehouses, workshops, garages and other structures
(collectively, the "Structures") and vehicles used in the operation of the
business of the Company 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 Company.
Schedule 5.08 indicates which properties and assets used in the operation
of the businesses of the Company are currently owned by the Stockholders or
Affiliates of either of the Company
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or the Stockholders. Except as specifically identified in Schedule 5.08,
all of the tangible assets, plants, Structures, vehicles and other
significant machinery and equipment owned or leased by the Company listed
in Schedule 5.08 have been maintained by the Company in the ordinary course
of business consistent with past practice and are in such condition and
repair as is suitable for the purpose for which they presently are being
used or held for use, ordinary wear and tear excepted. Except as
specifically described in Schedule 5.08, all properties and fixed assets
used by the Company in its business are either owned by the Company or
leased under agreements identified in Schedule 5.08 and are affixed only to
one or more of the real properties Schedule 5.08 lists. All leases set
forth in Schedule 5.08 are in full force and effect and constitute valid
and binding agreements of the Company and the other parties thereto in
accordance with their respective terms, and all amounts currently due and
payable thereunder have been paid. Neither the Company nor any other party
to the leases set forth in Schedule 5.08 is or has been asserted to be in
default, violation or breach of any such lease in any material respects,
and no event has occurred and is continuing that constitutes or, with
notice or the passage of time or both, would constitute such a default,
violation or breach under any such lease. The Company has good, valid and
marketable title to the tangible and intangible assets, personal property
and real property owned and used in its business, including, without
limitation, the properties identified in Schedule 5.08 as owned real
property (each of which the Company owns in fee), free and clear of all
Encumbrances other than Permitted Encumbrances and those set forth in
Schedule 5.08. Schedule 5.08 contains true, complete and correct copies of
all title reports and title insurance policies in the possession or control
of the Company with respect to the real property owned or leased by the
Company. Schedule 5.08 includes a summary description of all commitments of
the Company 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 Company has devoted any significant effort or
expenditure in the two-year period prior to the date of the Agreement and
which Buyer would be obligated to continue after the Closing.
(b) Except as specifically described in Schedule 5.08, all uses of the
real property owned and leased by the Company conform in all material
respects to all applicable Laws and do not violate any instrument of record
or agreement affecting any such property. Neither the Company nor the
Stockholders have received from any insurance carrier insuring or proposing
to insure any of the real property owned or leased by the Company or any
other person or entity any written notice or communication noting any
dangerous or illegal condition at any such property or any other condition
at any of such properties otherwise requiring corrective action as of the
Closing Date. Except as otherwise described on Schedule 5.08, all of the
real property owned and leased by the Company can be used by Buyer for
their intended purposes without violating any conditional use permit,
variance or private restriction. Neither the Company nor the Stockholders
have received any written notice nor have any knowledge that any of the
real property owned or leased by the Company 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 no writ, injunction, decree, order or judgment outstanding, nor
any action, claim, suit or proceeding, pending or, to the Stockholders'
knowledge, threatened, relating to the
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ownership, lease, use, occupancy or operation of any real property owned or
leased by the Company.
(c) There is ingress and egress to and from each of the real properties
owned and leased by the Company of record adequate for the use of such
properties as currently operated by the Company. Except as disclosed in
Schedule 5.08, the Company has made no off-record agreements affecting the
ownership, use or occupation of any such properties. All public utilities,
including if applicable, without limitation, sewers, water, electric, gas
and telephone, required for the operation of each of the real properties
owned and leased by the Company as presently operated are installed and
operating, and all installation and connection charges therefor have been
paid in full. Neither the Company nor the Stockholders have received any
written notice stating that the Company will not be able to obtain adequate
supplies of water to operate its business on any such properties as
presently conducted, or that the provision of utilities violates any public
or private easement as of the Closing Date. Neither the Company nor the
Stockholders have received written notice that any part of any improvements
on the real property owned or leased by the Company (including any of the
structures thereon) encroaches upon any property adjacent thereto or upon
any easement, nor is there any encroachment or overlap upon the real
property owned or leased by the Company as of the Closing Date. Each of the
real property leases listed in Schedule 5.08 grants the Company the
exclusive right to use and occupy the demised premises thereunder, and the
Company enjoys peaceful and undisturbed possession under its respective
real property leases listed on Schedule 5.08 for the real property leased
by the Company. None of the real property leases requires the consent of
the applicable landlord to the transactions contemplated by this Agreement.
Except as set forth on Schedule 5.08, no person or entity other than the
Company is in possession of any of the real property owned or leased by the
Company. Except as set forth on Schedule 5.08, to the knowledge of the
Company there are no contracts outstanding for the sale, exchange, lease or
transfer of any of the real property owned or leased by the Company, or any
other right of a third party to acquire any interest therein. The heating,
cooling, ventilation, electrical and plumbing systems at all of the real
property owned and leased by the Company is in good working condition, in
all material respects, ordinary wear and tear excepted.
5.09 MATERIAL CUSTOMERS AND CONTRACTS.
(a) Schedule 5.09 (i) sets forth an accurate list of all customers
representing 5% or more of the Company's revenues for each of the fiscal
year ended in 1999 and the interim period ended on the Balance Sheet Date
(the "Material Customers"), and (ii) sets forth an accurate list and
briefly describes all material contracts, warranties, commitments,
understandings, instruments and similar agreements and arrangements to
which the Company is currently a party or by which it or any of its
properties is bound (the "Listed Agreements"), including, but not limited
to, (A) all customer contracts in excess of $10,000, individually, or
$25,000 in the aggregate, (B) contracts with any labor organizations, (C)
leases providing for annual rental payments in excess of $5,000,
individually, or $10,000 in the aggregate, (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
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property, (M) agreements relating to the purchase or sale by the Company of
assets or securities for more than $5,000, individually, or $10,000 in the
aggregate, (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 Company 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 Company has made
available to U.S. Concrete true, complete and correct copies of all the
Listed Agreements.
(b) Except as set forth in Schedule 5.09, since December 31, 1999 (i)
no Material Customer has canceled or substantially reduced or, to the
knowledge of the Company and the Stockholders, is threatening to cancel or
substantially reduce its purchases of the Company's products or services,
and (ii) neither the Company nor any other party to the Listed Agreements
is or has been asserted to be in default, violation or breach in any
material respect of any such Listed Agreement, and no event has occurred
and is continuing that constitutes or with notice or the passage of time or
both, would constitute such a default, violation or breach under any such
Listed Agreement. The Listed Agreements are in full force and effect and
constitute valid and binding agreements of the Company and the other
parties thereto in accordance with their respective terms.
(c) Except as set forth in Schedule 5.09, the Company is not a party to
any contracts subject to price redetermination or renegotiation. Except to
the extent set forth in Schedule 5.09, the Company is 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.
(d) Except as set forth in Schedule 5.09, neither the Company, the
Stockholders nor, to the Stockholders' knowledge, 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 Company's customers for the repurchase of products, sharing of
fees, rebating of charges, bribes, kickbacks or other similar arrangements.
(e) Schedule 5.09 sets forth a summary of each outstanding bid or
proposal by the Company that, if awarded to the Company, contemplates
payments to the Company in excess of $50,000.
(f) Except as set forth in Schedule 5.09, neither the Company nor the
Stockholders 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 Company nor the Stockholders have any
knowledge of any condition or state of facts which would justify the
exercise of such a right.
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5.10 PERMITS. Schedule 5.10 contains an accurate list, and copies of all
licenses, franchises, permits, approvals, certificates, transportation
authorities and other governmental authorizations and intangible assets held by
the Company that are material to the conduct of its business, including, without
limitation, permits, licenses and operating authorizations, fuel permits,
franchises and certificates owned or held by the Company (collectively, the
"Permits"). The Permits are valid, and the Company has not received any written
notice that any Governmental Authority intends to cancel, terminate or not renew
any such Permit. The Permits are all the permits, licenses, operating
authorizations, franchises, approvals, certificates, transportation authorities
and other governmental authorizations and intangible assets that are required by
Law for the operation of the businesses of the Company as conducted at the
Balance Sheet Date and the ownership of the assets and properties of the
Company. The Company has conducted and is conducting its business in substantial
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 is not in substantial violation of any of the foregoing.
Except as specifically provided in Schedule 5.10, the transactions contemplated
by this Agreement will not result in a default under, a breach or violation of,
a termination of, or adversely affect the rights and benefits afforded to the
Company by, any Permits.
5.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5.11, (a) the
Company has complied with and is in compliance with all Environmental Laws, (b)
the Company has obtained and complied with all necessary permits, licenses,
authorizations and other approvals necessary to treat, transport, store, dispose
of and otherwise handle Hazardous Substances and has reported, to the extent
required by all Environmental Laws, all past and present sites owned or operated
by the Company where Hazardous Substances have been treated, stored, disposed of
or otherwise handled, (c) there have been no "releases" or threats of "releases"
(as defined in any Environmental Laws) by the Company, its agents, employees or
representatives at, from, in, to, under or on any property currently or
previously owned or operated by the Company, (d) there is no on-site or off-site
location to which the Company has transported or disposed of Hazardous
Substances or arranged for the transportation or disposal of Hazardous
Substances which, to the Stockholders' knowledge, is the subject of any federal,
state, local or foreign enforcement action or any other investigation which
could lead to any claim against Buyer, U.S. Concrete or Buyer 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 Company
has no contingent liability in connection with any release or disposal of any
Hazardous Substance by the Company, its agents, employees or representatives
into the environment. None of the past or present sites owned or operated by the
Company is currently or has during Stockholders' ownership of Company been
designated as a treatment, storage and/or disposal facility, nor, to the
Stockholders' knowledge, has any such facility ever applied for a permit,
license, authorization or other approval designating it as a treatment, storage
and/or disposal facility, under any Environmental Law. The Company has provided
U.S. Concrete with copies (or, if not available, accurate written summaries) of
all environmental investigations, studies, audits, reviews and other analyses
conducted by or on behalf, or which otherwise are in the possession, of the
Company respecting any facility site or other property previously or presently
owned or operated by the Company.
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5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS.
(a) Except as set forth in Schedule 5.12, the Company is not bound by
or subject to any arrangement with any labor union. Except as set forth in
Schedule 5.12, no employees of the Company are represented by any labor
union or covered by any collective bargaining agreement nor, to the
Company's or the Stockholders' 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 Company's or the Stockholders' knowledge, threatened labor dispute
involving the Company and any group of its employees nor has the Company
experienced any significant labor interruptions over the past five years.
Neither the Company nor the Stockholders have any knowledge of any
significant issues or problems in connection with the relationship of the
Company with its employees. The Company considers its relationship with its
employees to be good.
(b) Except as set forth in Schedule 5.12, (i) there is no unfair labor
practice charge or complaint pending or, to the knowledge of the
Stockholders, threatened against or otherwise affecting the Company, (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 Company's employees is
pending or, to the Stockholders' knowledge, threatened against the Company,
(iii) no grievance is pending or threatened against the Company, (iv) the
Company is 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 Company is in substantial compliance with all
applicable Laws, agreements, contracts and policies relating to employment,
employment practices, wages, hours and terms and conditions of employment,
(vi) the Company has paid in full to, or accrued in its financial books and
records, all employees of the Company 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 and (vii) the Company is in substantial compliance with its
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.
(c) Except as set forth in Schedule 5.12, to the Stockholders' knowledge,
all employees of the company 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) non-
immigrants authorized to work in the United States for the Company in their
specific jobs.
5.13 INSURANCE. Schedule 5.13 sets forth an accurate list as of the
Balance Sheet Date of (a) all insurance policies carried by the Company, copies
of which are attached as Schedule 5.13, (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 Company and previously carried by the Company within the last five years:
(i) insurer, (ii) type of policy, (iii) coverage period, and (iv) policy limits
and amount of deductible
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or loss retention. Except as set forth in Schedule 5.13, none of such policies
are "claims made" policies. The policies described in Schedule 5.13 for the
current policy year provide adequate coverage against the risks customarily
involved in the Company's business based on historical experience and are
currently in full force and effect. Any open claims as of the Closing Date are
recoverable under such policies, except to the extent of any applicable
deductible or loss retention as set forth on Schedule 5.11.
5.14 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 5.14 sets forth an
accurate schedule of all officers, directors and Stockholder employees of the
Company 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 (a) the
Balance Sheet Date and (b) the date hereof. Neither the Company nor the
Stockholders have any knowledge that any of such individuals has any present
intention of terminating his or her employment or association with the Company.
Attached to Schedule 5.14 are true, complete and correct copies of each
employment or consulting agreement with any employee of the Company or the
Stockholders. Except as set forth in Schedule 5.14, the Company is not a party
to any agreement, nor has it 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 the Company or other person performing services for the 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 Internal Revenue Code of 1986, as amended (the
"Code").
5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS;
EMPLOYEE POLICIES. Schedule 5.15 sets forth all agreements containing covenants
not to compete or solicit employees or to maintain the confidentiality of
information to which the Company or any of the Stockholders is bound or under
which the Company or any of the Stockholders has any rights or obligations.
Schedule 5.15 lists all employee manuals and all material policies, procedures
and work-related rules that apply to any employee, director or officer of, or
any other individual performing consulting or other independent contractor
services for, the Company. The Company has provided U.S. Concrete with a copy of
all such written policies and procedures and a written description of all such
unwritten policies and procedures.
5.16 EMPLOYEE BENEFIT PLANS.
(a) Schedule 5.16 sets forth an accurate schedule of each "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (other than a "multiemployer
plan", as defined in Section 3(37) of ERISA), and all deferred compensation
or retirement funding arrangements, whether formal or informal and whether
legally binding or not, under which the Company or an ERISA Affiliate has
any current or future obligation or liability or under which any present or
former employee of the Company or an ERISA Affiliate, or such present or
former employee's dependents or beneficiaries, has any current or future
right to benefits (each such plan and arrangement referred to hereinafter
as a "Plan"). Company has provided to U.S. Concrete true and complete
copies of such Plans, arrangements and any trusts related thereto, and
classifications of employees covered thereby as of the Balance Sheet Date.
Except as set forth in Schedule 5.16, neither the Company nor any ERISA
Affiliate sponsors, maintains or contributes currently, or
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sponsored, maintained or contributed at any time during the preceding five
years, to any plan, program, fund or arrangement that constitutes an
employee pension benefit plan. Except as set forth in Schedule 5.16, each
Plan may be terminated by the Company, 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 Plan. For purposes of this Agreement, the term "employee pension benefit
plan" shall have the meaning given that term in Section 3(2) of ERISA
(other than a multiemployer plan), and the term "ERISA Affiliate" means any
corporation or trade or business under common control with the Company as
determined under Section 414(b), (c), (m) or (o) of the Code.
(b) Each Plan listed in Schedule 5.16 is in compliance in all material
respects with the applicable provisions of ERISA, the Code and any other
applicable Law. Except as set forth in Schedule 5.16, with respect to each
Plan of the Company and each ERISA Affiliate, all reports and other
documents required under ERISA or other applicable Law to be filed with any
Governmental Authority, including without limitation all Forms 5500, or
required to be distributed to participants or beneficiaries, have been duly
and timely filed or distributed. True and complete copies of all such
reports and other documents with respect to the past three years for each
Plan have been provided to U.S. Concrete. No "accumulated funding
deficiency" (as defined in Section 412(a) of the Code) with respect to any
Plan has been incurred (without regard to any waiver granted under Section
412 of the Code), nor has any funding waiver from the Internal Revenue
Service been received or requested. Except as set forth in Schedule 5.16,
each Plan that is intended to be "qualified" within the meaning of Section
401(a) of the Code (a "Qualified Plan") is, and has been during the period
from its adoption to the date hereof, so qualified, both as to form and
operation and all necessary approvals of Governmental Authorities,
including a favorable determination as to the qualification under the Code
of each of such Qualified Plans and each amendment thereto, have been
timely obtained. Except as set forth in Schedule 5.16, all accrued
contribution obligations of the Company with respect to any Plan have
either been fulfilled in their entirety or are fully reflected in the
Financial Statements.
(c) No Plan has incurred or will incur, and neither the Company nor any
ERISA Affiliate has incurred or will incur, with respect to any Plan, any
liability for excise tax or penalty due to the Internal Revenue Service.
There have been no terminations, partial terminations or discontinuances of
contributions to any Qualified Plan during the preceding five years without
notice to and approval by the Internal Revenue Service and payment of all
obligations and liabilities attributable to such Qualified Plan.
(d) Except as set forth in Schedule 5.16, neither the Company nor any
ERISA Affiliate has made any promises of retirement or other benefits to
employees, except as set forth in the Plans, and neither the Company nor
any ERISA Affiliate maintains or has established any 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, and
at the expense of the participant or the
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beneficiary of the participant, or retiree medical liabilities. Neither the
Company 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. Except as set forth in Schedule
5.16, neither the Company nor any ERISA Affiliate has any current or future
obligation or liability with respect to a Plan pursuant to the provisions
of a collective bargaining agreement.
(e) Neither the Company nor any ERISA Affiliate has incurred, nor will
it incur as a result of past activities, any material liability to the
Pension Benefit Guaranty Corporation in connection with any Plan. Except as
set forth on Schedule 5.16, the assets of each Plan that are subject to
Title IV of ERISA are sufficient to provide the benefits under such Plan,
the payment of which the Pension Benefit Guaranty Corporation would
guarantee if such Plan were terminated, and such assets are also sufficient
to provide all other "benefits liabilities" (as defined in ERISA Section
4001(a)(16)) due under such Plan upon termination.
(f) No "reportable event" (as defined in Section 4043 of ERISA) has
occurred and is continuing with respect to any Plan. There are no pending,
or to the Company's and the Stockholders' knowledge, threatened claims,
lawsuits or actions (other than routine claims for benefits in the ordinary
course) asserted or instituted against, and neither the Company nor any
ERISA Affiliate has knowledge of any threatened litigation or claims
against, the assets of any Plan or its related trust or against any
fiduciary of a Plan with respect to the operation of such Plan. To the
Company's and the Stockholders' knowledge, there are no investigations or
audits of any 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 Company or any ERISA Affiliate that
has not been fully discharged. Neither the Company nor any ERISA Affiliate
has participated in any voluntary compliance or closing agreement programs
established with respect to the form or operation of a Plan.
(g) Neither the Company 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 Plan for which exemption
was not available. No person or entity that was engaged by the Company or
an ERISA Affiliate as an independent contractor within the last five years
reasonably can or will be characterized or deemed to be an employee of the
Company or an ERISA Affiliate under applicable Laws for any purpose
whatsoever, including, without limitation, for purposes of federal, state
and local income taxation, workers' compensation and unemployment insurance
and Plan eligibility.
(h) Schedule 5.16 also sets forth an accurate schedule of each
multiemployer plan to which the Company or any ERISA Affiliate is, or ever
has been, a participant in or obligated to make any payment. With respect
to each such multiemployer plan: (i) none of the foregoing representations
and warranties of this Section 5.16 shall apply; and (ii) except as set
forth on Schedule 5.16, all contributions required to be made by the
Company or any ERISA Affiliate to such multiemployer plan have been made or
are accrued and fully reflected in the Financial Statements.
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5.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in Schedule
5.17, there are no claims, actions, suits or proceedings, pending or, to the
knowledge of the Company and the Stockholders, threatened against or affecting
the Company, at law or in equity, or before or by any Governmental Authority
having jurisdiction over the Company. No written notice of any claim, action,
suit or proceeding, whether pending or threatened, has been received by the
Company and, to the Stockholders' and the Company's knowledge, there are no
facts or circumstances existing which, with delivery of notice or passage of
time or both would constitute such a claim, action, suit or proceeding. Except
to the extent set forth in Schedule 5.17, the Company has conducted and is
conducting its business in substantial compliance with all Laws applicable to
the Company, its assets or the operation of its business. Also listed on
Schedule 5.17 are all other instances where the Company is a plaintiff or
complaining or moving party, under any of the above types of proceedings.
5.18 TAXES. For purposes of this Agreement, the term "Taxes" shall mean 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. The Company has timely filed all
requisite federal, state, local and other tax returns for all fiscal periods
ended on or before the Closing, and has duly paid in full or made adequate
provision in the year-end Financial Statements for the payment of all Taxes for
all periods ending at or prior to the Closing Date. The Company has 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 Company relating to Taxes for
any period or periods prior to and including the Balance Sheet Date and no
notice of any claim for Taxes has been received. The Company has 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 Company is not a party
to any Tax allocation or sharing agreement and is not otherwise liable or
obligated to indemnify any person or entity with respect to any Taxes. 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
Company for the last three fiscal years have been previously provided to U.S.
Concrete. There are no requests for ruling in respect of any Tax pending between
the Company and any Taxing authority. The Company has been taxed under the
provisions of Subchapter S of the Code since March 28, 1990. The Company
currently utilizes the accrual method of accounting for income tax purposes.
Such method of accounting has not changed in the past five years.
5.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set
forth in Schedule 5.19, the Company has conducted its operations in the ordinary
course and there has not been:
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(a) any material adverse change in the business, operations,
properties, condition (financial or other), assets, liabilities (contingent
or otherwise), or results of operations of the Company;
(b) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the assets, properties or business
of the Company;
(c) any change in the authorized capital stock of the Company or in its
outstanding securities or any change in the Stockholders' ownership
interests in the Company or any grant of any options, warrants, calls,
conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption, purchase
or other acquisition of any of the capital stock of the Company;
(e) any increase in the compensation payable or to become payable by
the Company to the Stockholders or any of its 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 5.19;
(f) any work interruptions, labor grievances or claims filed;
(g) 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 Company to any person or entity,
including, without limitation, the Stockholders and their Affiliates;
(h) any cancellation, or agreement to cancel, any indebtedness or other
obligation owing to the Company;
(i) any increase in the indebtedness of the Company, 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;
(j) 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;
(k) 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 Company's business;
(l) any waiver of any material rights or claims of the Company; or
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(m) any other material transaction by the Company outside the ordinary
course of business.
5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY. Schedule 5.20
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 the Company has
accounts or safe deposit boxes; (b) the names in which the accounts or boxes are
held; (c) the type of account and the cash, cash equivalents and securities held
in such account as of the second business day prior to the Closing, none of
which assets have been withdrawn from such accounts since such date except for
bona fide business purposes in the ordinary course of the business of the
Company; and (d) the name of each person authorized to draw thereon or have
access thereto. Schedule 5.20 also sets forth the name of each person,
corporation, firm or other entity holding a general or special power of attorney
from the Company and a description of the terms thereof.
5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor the
Stockholders 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.
5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as set
forth in Schedule 5.22, neither the Stockholders nor any other Affiliate of the
Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
Competitive Business, lessor, lessee, customer or supplier of the Company.
Except as set forth in Schedule 5.22, no officer or director of the Company nor
the Stockholders 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
Company.
5.23 INTANGIBLE PROPERTY. Schedule 5.23 sets forth an accurate list of all
patents, patent applications, trademarks, service marks, technology, licenses,
trade names, copyrights and other intellectual property or proprietary property
rights owned or used by the Company. The Company owns or possesses, and the
assets of the Company include, sufficient legal rights to use all of such items
without conflict with or infringement of the rights of others.
5.24 CAPITAL EXPENDITURES. Schedule 5.24 sets forth the total amount of
capital expenditures currently budgeted to be incurred by the company in excess
of $25,000 in the aggregate during the balance of the Company's current fiscal
year.
5.25 INVENTORIES. Except as Schedule 5.25 sets forth: (i) all inventories,
net of reserves determined in accordance with GAAP, of the Company which are
classified as such on the Interim Balance Sheet are merchantable and salable or
usable in the ordinary course of business of the Company; and (ii) the Company
does 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
Company or during the past five years has sustained a difficulty material to the
Company in obtaining its inventories.
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5.26 No Implied Representations. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of the Stockholders
and the Company that U.S. Concrete and Buyer are not making any representation
or warranty whatsoever, express or implied, other than those representations and
warranties of U.S. Concrete and Buyer expressly set forth in this Agreement.
5.27 ABSENCE OF INTEREST-BEARING DEBT. As of the Closing Date, Company
shall have no Interest-Bearing Debt and no Interest-Bearing Debt shall be
assumed by the Surviving Corporation.
5.28 DISCLOSURE. The Stockholders and the Company have fully provided U.S.
Concrete or its representatives with all the information that U.S. Concrete has
requested in analyzing whether to consummate the transactions contemplated by
this Agreement. None of the information so provided nor any representation or
warranty of the Stockholders to U.S. Concrete or Buyer 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.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE
U.S. Concrete represents and warrants to the Stockholders as follows:
6.01 ORGANIZATION. U.S. Concrete is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware, and is
duly authorized and qualified under all applicable Laws to carry on its business
in the places and in the manner now conducted. U.S. Concrete has the requisite
power and authority to own, lease and operate its assets and properties and to
carry on its business as such business is currently being conducted.
6.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) U.S. Concrete has the full legal right, power and authority to
enter into this Agreement and the ancillary documents and agreements
described herein and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement has been approved
by the boards of directors of U.S. Concrete and by U.S. Concrete, as the
sole stockholder of Buyer. No additional corporate or shareholder
proceedings on the part of U.S. Concrete or Buyer are necessary to
authorize the execution and delivery of this Agreement and the consummation
by U.S. Concrete and Buyer of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by U.S. Concrete
and Buyer, and, assuming the due authorization, execution and delivery by
the Company and the Stockholders, constitutes valid and binding agreements
of U.S. Concrete and Buyer, enforceable against U.S. Concrete and Buyer in
accordance with its terms.
(b) The execution and delivery of this Agreement by U.S. Concrete and
Buyer do not, and the consummation by U.S. Concrete and Buyer of the
transactions contemplated hereby will not, violate or result in a breach of
any provision of, or
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constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of,
or accelerate the performance required by, or result in a right of
termination or acceleration under any of the terms, conditions or
provisions of (i) the Certificate of Incorporation or By-Laws of U.S.
Concrete or Buyer, (ii) any Law applicable to either U.S. Concrete or Buyer
or any of its properties or assets or (iii) any material agreement, note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of
any kind to which U.S. Concrete or Buyer is now a party or by which either
U.S. Concrete or Buyer or any of its properties or assets may be bound or
affected.
(c) Except for such filings as may be required under federal or state
securities Laws, no declaration, filing or registration with, or notice to,
or authorization, consent or approval of, any Governmental Authority or
other person or entity is necessary for the execution and delivery of this
Agreement by U.S. Concrete and Buyer or the consummation by U.S. Concrete
and Buyer of the transactions contemplated hereby.
6.03 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of U.S. Concrete
and Buyer that the Stockholders are not making any representation or warranty
whatsoever, express or implied, other than those representations and warranties
of the Stockholders expressly set forth in this Agreement.
6.04 DISCLOSURE. U.S. Concrete has fully provided the Stockholders or their
representatives with all the information that the Stockholders have requested in
analyzing whether to consummate the transactions contemplated by this Agreement.
None of the information so provided nor any representation or warranty of U.S.
Concrete contained 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 or therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE VII
CERTAIN COVENANTS
7.01 Release From Guarantees. U.S. Concrete shall use its commercially
reasonable efforts to have the Stockholders released from the personal
guarantees of the Company's indebtedness identified in Schedule 7.01 on the
Closing Date and will continue such efforts after the Closing if not released
prior thereto. U.S. Concrete hereby agrees to indemnify and defend the
Stockholders and hold each Stockholder harmless for any amounts that such
Stockholder is required to pay in connection with the enforcement of any
obligations under such personal guarantees after the Closing, including without
limitation any reasonable attorneys' fees and expenses incurred in connection
therewith.
7.02 FUTURE COOPERATION; TAX MATTERS. The Stockholders and U.S. Concrete
shall each deliver or cause to be delivered to the other following the Closing
such additional instruments as the other may reasonably request for the purpose
of fully carrying out this Agreement. The Stockholders shall be responsible for
the payment of all Taxes attributable to all
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periods prior to and including the Closing Date, including without limitation
the period from the beginning of the Company's current Tax year through the
Closing Date. The Stockholders shall be responsible for the preparation of all
Tax returns covering the period from the beginning of the Company's current Tax
year through the Closing Date, and shall be responsible for all costs and
expenses incurred in connection with the preparation of such Tax returns. Buyer
will cooperate with the Stockholders in their preparation of all Tax returns
covering the period from the beginning of the Company's current Tax year through
the Closing. In addition, U.S. Concrete will provide the Stockholders with
access to such of its books and records as may be reasonably requested by the
Stockholders in connection with federal, state and local tax matters relating to
periods prior to the Closing. The Stockholders will cooperate and use their
commercially reasonable efforts to encourage the present officers, directors and
employees of the Company to cooperate with U.S. Concrete and Buyer at and after
the Closing in furnishing information, evidence, testimony and other assistance
in connection with any actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to the Closing.
The party requesting cooperation, information or actions under this Section 7.02
shall reimburse the other party for all reasonable out-of-pocket costs and
expenses paid or incurred in connection therewith, which costs and expenses
shall not, however, include per diem charges for employees or allocations of
overhead charges.
7.03 EXPENSES. U.S. Concrete will pay the fees, expenses and disbursements
of U.S. Concrete and its agents, representatives, accountants and counsel
incurred in connection with the execution, delivery and performance of this
Agreement and any amendments hereto. The Company (as owned by U.S. Concrete
after Closing) will be responsible for the fees and expenses of Arthur Andersen
LLP's audit or audit related procedures in connection with the transactions
contemplated hereby. The Stockholders will pay their fees, expenses and
disbursements and those of their and the Company's agents, representatives,
financial advisors, accountants and counsel incurred in connection with the
execution, delivery and performance of this Agreement and any amendments hereto
and the consummation of the transactions contemplated hereby, including, without
limitation, accounting fees and related expenses attributable to the final Tax
returns of the Company and the Stockholders for periods through the Closing. The
Stockholders will also pay any costs associated with business brokers or other
advisors engaged by the Stockholders or the Company.
7.04 INTERNAL REVENUE CODE ELECTION.
(a) Each of the Stockholders agrees that, at Buyer's election, such
Stockholder will consent to the treatment of this transaction in accordance
with Section 338(h)(10) of the Code (the "Election").
(b) In connection with the Election, not later than 90 days after the
Closing Date, each of the Stockholders and Buyer shall act together in good
faith to (a) determine and agree upon the "Modified Aggregate Deemed Sale
Price" of the assets of Company deemed attributable to "Section 751
Property" within the meaning of Section 751 of the Code (within that
meaning of, and in accordance with, Treasury Regulation Section
1.338(h)(10)-1(f)) and (b) determine and agree upon the property
allocations (the "Allocations") of the "Modified Aggregate Deemed Sale
Price" among such assets (in accordance with Section 338(b)(5) of the Code
and the Treasury Regulations promulgated thereunder). The Stockholders and
Buyer shall (A) be bound by such
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determination and such Allocations for purposes of determining any taxes,
(B) prepare and file their tax returns on a basis consistent with such
determination of the "Modified Aggregate Deemed Sale Price" and such
Allocations and (C) take no position inconsistent with such determination
and Allocations on any applicable tax return, in any proceeding before any
taxing authority or otherwise. In the event that any such Allocations are
disputed by any taxing authority, the party receiving notice of the dispute
shall promptly notify the other party hereto concerning resolution of the
dispute.
7.05 LEGAL OPINION. At the Closing, the Company and the Stockholders shall
cause their legal counsel, Dykema Gossett PLLC, to deliver to U.S. Concrete a
legal opinion in form and substance acceptable to U.S. Concrete.
7.06 EMPLOYMENT AGREEMENTS. Concurrently with the execution of this
Agreement, Buyer, pursuant to the Fuel Merger Agreement, shall enter into a
mutually acceptable Employment Agreements with each of Cornillie and Deneweth
(collectively, the "Employment Agreements").
7.07 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the
execution of this Agreement, (a) the Stockholders shall repay to the Company all
amounts outstanding as advances to or receivables from the Stockholders, each of
which advances or receivables is specifically reflected in Schedule 5.07, and
(b) the Company shall repay all amounts outstanding under loans to the Company
from the Stockholders, each of which loans to the Company is specifically
reflected in Schedule 5.06.
7.08 STOCK OPTIONS. U.S. Concrete shall grant nonqualified options to
purchase an aggregate of 37,500 shares of U.S. Concrete Common Stock as of the
Closing Date under U.S. Concrete's 1999 Incentive Plan (the "Incentive Plan") to
certain key employees of the Company (other than the Stockholders), as set forth
on Schedule 7.08 in the amounts listed thereon. Schedule 7.08 shall also include
the social security number and home address of each individual listed thereon.
Such options shall vest in equal annual increments for four years, commencing on
the first anniversary of the Closing Date.
7.09 PRE-CLOSING DISTRIBUTIONS. Prior to the Closing, the Company may have
distributed to the Stockholders the cash and other assets set forth on Schedule
7.09. Any such distributions shall have been authorized by the Board of
Directors of the Company prior to the Closing, and the Company and the
Stockholders shall have used the respective best efforts to complete such
distributions prior to the Closing. Notwithstanding the foregoing, if any such
authorized distributions have not been completed prior to the Closing Buyer
shall use reasonable efforts to complete such authorized distributions after the
Closing. The Stockholders' sole recourse against Buyer and U.S. Concrete with
respect to this Section 7.09 shall be to the assets to be distributed.
7.10 WORKING CAPITAL ADJUSTMENT.
(a) As soon as practicable after the Closing Date, U.S. Concrete shall
cause to be prepared and delivered to the Stockholders a consolidated
balance sheet of Cornillie Leasing, Inc., Cornillie Fuel & Supply Inc. and
the Company (collectively, the "Consolidated Companies") as of the Closing
Date (the "Closing Date Balance Sheet
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Date"), which has been prepared from the books and records of the
Consolidated Companies in conformity with GAAP (the "Final Balance Sheet"),
and a working capital adjustment schedule (the "Adjustment Schedule"). The
Adjustment Schedule will set forth the computation of the Adjusted Working
Capital Amount. As used in this Section 7.09, capitalized terms not
otherwise defined in this Agreement shall have the following meanings:
"Adjusted Current Assets" means the amount of current assets of the
Consolidated Companies as set forth on the Closing Date Balance Sheet;
"Adjusted Current Liabilities" means the amount of current liabilities
of the Consolidated Companies as set forth on the Closing Date Balance
Sheet less the current portion of Interest-Bearing Debt (if any) as set
forth on the Closing Date Balance Sheet; and
"Adjusted Working Capital Amount" means the amount computed by
subtracting Adjusted Current Liabilities from Adjusted Current Assets as
finally determined in accordance with Section 7.09(c). Adjusted Working
Capital will exclude amounts relating to the 1999 Ross Portable Plant and
the upgrade of the aggregate section of the Detroit batch plant (bins).
(b) If the Adjusted Working Capital Amount is less than $250,000, then
the Stockholders shall, no later than 15 days after delivery of the
Adjustment Schedule as finally determined in accordance with Section
7.09(c) by U.S. Concrete, pay to the Surviving Corporation the amount by
which $250,000 exceeds the Adjusted Working Capital Amount (the "Adjusted
Working Capital Shortfall"). If the Adjusted Working Capital Amount is
greater than $250,000, then the Surviving Corporation shall, no later than
15 days after delivery of the Adjustment Schedule as finally determined in
accordance with Section 7.09(c), pay to the Stockholders, on a pro rata
basis in proportion to their percentage ownership of the Company Common
Stock outstanding immediately prior to the Closing, the amount by which the
Adjusted Working Capital Amount exceeds $250,000 (the "Adjusted Working
Capital Excess").
(c) The Closing Date Balance Sheet and Adjustment Schedule will be
final and binding on the parties hereto unless, within 30 days following
the delivery of the Adjustment Schedule by U.S. Concrete, the Stockholders
notify U.S. Concrete in writing that the Stockholders disagree with all or
any portion of the Closing Date Balance Sheet and/or the Adjustment
Schedule. If the Stockholders and U.S. Concrete cannot mutually resolve any
such disagreement within 30 days after the receipt by U.S. Concrete of the
Stockholders' notice of disagreement, then the Stockholders and U.S.
Concrete shall submit the dispute to a mutually agreeable certified public
accounting firm (the "Accountant") within 20 days after the end of such 30-
day period. If the Stockholders and U.S. Concrete are unable to agree upon
such an accounting firm within such 20-day period, then the Stockholders
and U.S. Concrete shall select a "Big Five" accounting firm by lot (after
excluding any of their respective regular Big Five accounting firms), which
accounting firm shall act as the Accountant. The Stockholders and U.S.
Concrete shall request that the Accountant audit the Closing Date Balance
Sheet and provide a computation of the Adjusted Working Capital Amount
within 30 days thereafter, and this
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computation will be final and binding upon the parties hereto and used to
compute the Adjusted Working Capital Shortfall or Adjusted Working Capital
Excess, as the case may be, the payment of any of which shall be made
within five days of delivery by U.S. Concrete of the audited Closing Date
Balance Sheet. In the event the Stockholders and U.S. Concrete submit any
unresolved objections to an Accountant for resolution as provided in this
Section 7.09, the Stockholders and U.S. Concrete will each pay one-half of
the fees and expenses of the Accountant.
7.11 OTHER DOCUMENTS. At the Closing, U.S. Concrete shall receive the
following additional certificates, instruments and documents:
(a) Stock certificates representing all Company Common Stock duly
endorsed in blank by the Stockholders, or accompanied by stock powers duly
executed in blank by the Stockholders, and otherwise in a form acceptable
to U.S. Concrete.
(b) Written resignations of all directors and all officers of
the Company, such resignations to be effective concurrently with the
Closing on the Closing Date.
(c) Releases in form and substance satisfactory to U.S. Concrete
executed by the Stockholders releasing the Company from any liability or
obligation to the Stockholders.
(d) All of the Company's books and records, including, without
limitation, minute books, corporate charters, by-laws, stock records, bank
account records, computer records and all contracts with third parties;
provided, however, that all of the foregoing, other than the minute books,
corporate charters, by-laws and stock records, shall remain at the business
location of Company where they are currently maintained.
7.12 BENEFIT PLANS.
(a) U.S. Concrete shall not, and shall cause the Surviving
Corporation not to at any time prior to 60 days after the Closing Date,
effectuate a "plant closing" or "mass layoff" as those terms are defined in
the Worker Adjustment and Restraining Notification Act of 1988 ("WARN")
affecting in whole or in part any facility, site of employment, operating
unit or employee of Company or any Company Subsidiary without complying
fully with the requirements of WARN.
(b) All health and welfare benefit plans of U.S. Concrete or the
Surviving Corporation in which the employees of Company or any Company
Subsidiary participate after the Effective Time shall (i) recognize
expenses and claims that were incurred by such employees in the year in
which the Effective Time occurs for purposes of computing deductible
amounts and co-payments under such health and welfare plans as of the
Effective Time, (ii) provide coverage for pre-existing health conditions to
the extent covered under the applicable plans or programs as of the
Effective Time, and (iii) credit any deductibles paid or co-payments made
by employees of Company or any Company Subsidiary prior to the Effective
Time for purposes of paying deductibles or making co-payments pursuant to
the health and welfare benefit plans of U.S. Concrete or the Surviving
Corporation. In addition, employees of the Surviving Corporation and its
subsidiaries shall receive credit for their prior service with Company for
eligibility and
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vesting purposes and for vacation accrual purposes under all health and
welfare, pension, 401(k) and other benefit programs.
ARTICLE VIII
INDEMNIFICATION
The Stockholders, U.S. Concrete and Buyer each make the following covenants:
8.01 General Indemnification by the Stockholders. Subject to Section 8.05
and Section 8.06, the Stockholders covenant and agree that they will jointly and
severally (without any right of indemnification or contribution from the
Company) indemnify, defend, protect and hold harmless U.S. Concrete, Buyer and
Buyer, and their respective officers, directors, employees, stockholders,
agents, representatives and Affiliates, at all times from and after the date of
this Agreement from and against all Losses incurred by any of such indemnified
persons and entities as a result of or arising from (a) until the Expiration
Date any breach of the representations and warranties of the Stockholders set
forth herein or in the Schedules attached hereto, (b) any breach or
nonfulfillment of any covenant or agreement on the part of the Stockholders
under this Agreement, (c) all income Taxes payable by the Company for all
periods prior to and including the Closing Date, (d) all transfer Taxes arising
from the transactions contemplated by Section 7.08 of this Agreement, or (e) any
litigation listed on Schedule 5.17.
8.02 INDEMNIFICATION BY U.S. CONCRETE. Subject to Section 8.06, U.S.
Concrete covenants and agrees that it will indemnify, defend, protect and hold
harmless the Stockholders and their respective agents, representatives,
Affiliates, beneficiaries and heirs and employees at all times from and after
the date of this Agreement from and against all Losses incurred by any of such
indemnified persons as a result of or arising from (a) until the Expiration
Date, any breach of the representations and warranties of U.S. Concrete or Buyer
set forth herein or in the Schedules attached hereto or certificates delivered
in connection herewith or (b) any breach or nonfulfillment of any covenant or
agreement on the part of U.S. Concrete or Buyer under this Agreement.
8.03 THIRD PERSON CLAIMS. Promptly after any party entitled to
indemnification under Sections 8.01 and 8.02 hereof (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person or entity not a party to this Agreement ("Third Person"), or the
commencement of any action or proceeding by a Third Person, which the
Indemnified Party believes in good faith is an indemnifiable claim under this
Agreement, the Indemnified Party shall give to the party obligated to provide
indemnification pursuant to Sections 8.01 or 8.02 hereof (hereinafter the
"Indemnifying Party") written notice of such claim or the commencement of such
action or proceeding. Such notice shall state the nature and the basis of such
claim and a reasonable estimate of the amount thereof. The Indemnifying Party
shall have the right to defend and settle, at its own expense and by its own
counsel reasonably acceptable to the Indemnified Party, any such matter so long
as the Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in all commercially
reasonable respects in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records and other information reasonably
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requested by the Indemnifying Party and in the Indemnified Party's possession or
control. After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability, and for
so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability; provided, however, that the Indemnified Party shall
be entitled, at its expense, to participate in the defense of such asserted
liability and the negotiations of the settlement thereof. The Indemnifying Party
shall not settle any such Third Person claim without the consent of the
Indemnified Party (which consent shall not be unreasonably withheld), unless the
settlement thereof imposes no liability or obligation on, and includes a
complete release from liability of, the Indemnified Party. If the Indemnifying
Party desires to accept a final and complete settlement of any such Third Person
claim and the Indemnified Party refuses to consent to such settlement, then the
Indemnifying Party's liability under this Section with respect to such Third
Person claim shall be limited to the amount so offered in settlement by said
Third Person; provided, however, that notwithstanding the foregoing, the
Indemnified Party shall be entitled to refuse to consent to any such proposed
settlement and the Indemnifying Party's liability hereunder shall not be limited
by the amount of the proposed settlement if such settlement imposes any
liability or obligation on, or does not provide for the complete release of, the
Indemnified Party. If, upon receiving notice, the Indemnifying Party does not
timely undertake to defend such matter to which the Indemnified Party is
entitled to indemnification hereunder, or fails diligently to pursue such
defense, the Indemnified Party may undertake such defense through counsel of its
choice, at the cost and expense of the Indemnifying Party, and the Indemnified
Party may settle such matter, in its discretion, and the Indemnifying Party
shall reimburse the Indemnified Party for the amount paid in such settlement and
any other liabilities or expenses incurred by the Indemnified Party in
connection therewith.
8.04 Non-Third Person Claims. In the event that any Indemnified Party
asserts the existence of a claim giving rise to Losses (but excluding claims
resulting from the assertion of liability by Third Persons), such party shall
give written notice to the Indemnifying Party. Such written notice shall state
that it is being given pursuant to this Section 8.04, specify the nature and
amount of the claim asserted, and indicate the date on which such assertion
shall be deemed accepted and the amount of the claim deemed a valid claim (such
date to be established in accordance with the next sentence). If such
Indemnifying Party, within 60 days after the mailing of notice by such
Indemnified Party, shall not give written notice to such Indemnified Party
announcing such Indemnifying Party's intent to contest such assertion of such
Indemnified Party, such assertion shall be deemed accepted and the amount of
such claim shall be deemed a valid claim. In the event, however, that such
Indemnifying Party contests such assertion of a claim by giving such written
notice to the Indemnified Party within said period, then the parties shall act
in good faith to reach agreement regarding such claim. If the parties cannot
resolve such dispute after good faith negotiations with respect thereto within
60 days after the notice provided by the Indemnifying Party, such dispute shall
be submitted to arbitration in accordance with the provisions of Section 11.11.
In the event that arbitration shall arise with respect to any such claim, the
prevailing party shall be entitled to reimbursement of costs and expenses
incurred in connection with such arbitration including reasonable attorneys'
fees.
8.05 Indemnification Deductible. Neither U.S. Concrete, Buyer nor Buyer
shall be entitled to indemnification or other relief from the Stockholders under
the provisions of Section 8.01(a) until such time as, and only to the extent
that, the claims subject to indemnification by
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such other party exceed, in the aggregate, $100,760 when combined with the
Leasing Merger Agreement and Fuel Merger Agreement. Notwithstanding the
foregoing, the limitations set forth in this Section 8.05 shall not apply to
fraudulent misrepresentations or the representation contained in Section 5.27.
8.06 INDEMNIFICATION LIMITATION. Subject to Section 8.05, the
aggregate obligation of the Stockholders, on the one hand, and of U.S. Concrete
and the Surviving Corporation, on the other hand, for any and all claims arising
under this Agreement, the Leasing Merger Agreement, Fuel Merger Agreement or
under Sections 3 or 7 of the Employment Agreements, shall be limited to
$10,076,029. Notwithstanding the foregoing, the limitations set forth in this
Section 8.06 shall not apply to fraudulent misrepresentations or the
representation contained in Section 5.27.
ARTICLE IX
NONCOMPETITION COVENANTS
9.01 PROHIBITED ACTIVITIES.
(a) For no additional consideration, each Stockholder will not
for five years following the Closing Date (the "Noncompete Term"),
directly or indirectly, for himself 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, lender, guarantor, 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 Competitive Business within a radius of
100 air miles of any plant or other operating facility in which the
Company was engaged in business on the date immediately prior to the
Closing Date;
(ii) call upon or otherwise solicit any person, who is, at
that time, within the Territory, an employee or consultant of the
Cornillie Companies, U.S. Concrete, Buyer or any of their respective
subsidiaries, for the purpose or with the intent of enticing such
employee or consultant out of the employ or contract with the
Cornillie Companies, Buyer 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 one year prior to
that time, a customer of the Cornillie Companies, U.S. Concrete or
Buyer 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 which the
Company or U.S. Concrete 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
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analysis, with the knowledge of that entity's status as an acquisition
candidate of U.S. Concrete, for the purpose of (A) acquiring that
entity or arranging the acquisition of that entity by any person or
entity other than U.S. Concrete; and (B) engaging in a Competitive
Business within the Territory.
(b) Notwithstanding the above, Section 9.01(a) shall not be
deemed to prohibit any Stockholder from acquiring, as a passive investor
with no involvement in the operations of the business, not more than three
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.
9.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to U.S. Concrete and Buyer as a result of a breach of the foregoing
covenant, because a breach of such covenant would diminish the value of the
assets, properties and business of the Company being sold pursuant to this
Agreement, and because of the immediate and irreparable damage that could be
caused to U.S. Concrete and Buyer for which it would have no other adequate
remedy, since monetary damages alone may not be an adequate remedy, each
Stockholder agrees that the foregoing covenant may be enforced against such
individual by, without limitation, injunctions, restraining orders and other
equitable actions.
9.03 REASONABLE RESTRAINT. It is agreed by the parties hereto that
the foregoing covenants in this ARTICLE IX are necessary in terms of time,
activity and territory to protect U.S. Concrete's and Buyer's interest in the
assets, properties and business being acquired pursuant to the terms of this
Agreement and impose a reasonable restraint on the Stockholders in light of the
activities and businesses of U.S. Concrete on the date of the execution of this
Agreement and the current plans of U.S. Concrete.
9.04 SEVERABILITY; REFORMATION. The covenants in this ARTICLE IX
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 IX 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.
9.05 MATERIAL AND INDEPENDENT COVENANT. The Stockholders acknowledge that
their agreements and the covenants set forth in this ARTICLE IX are material
conditions to U.S. Concrete's and Buyer's agreements to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and that U.S.
Concrete and Buyer would not have entered into this Agreement without such
covenants. All of the covenants in this ARTICLE IX shall be construed as an
agreement independent of any other provision in this Agreement. The existence of
any claim or cause of action by any Stockholder against U.S. Concrete, whether
predicated on this Agreement or otherwise, will not constitute a defense to the
enforcement by U.S. Concrete of any of the covenants of this ARTICLE IX. The
covenants this ARTICLE IX contains will not be affected by any breach of any
other provision hereof by any party hereto.
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ARTICLE X
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
10.01 GENERAL. The Stockholders recognize and acknowledge that they had in
the past, currently have, and in the future will have, access to certain
confidential information relating to the businesses of the Company, Buyer and/or
U.S. Concrete, including, without limitation, lists of customers, operational
policies, and pricing and cost policies that are, and following the Closing will
be, valuable, special and unique assets of Buyer and U.S. Concrete. Each
Stockholder agrees that he or she will not use or disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose whatsoever, except as is required in the course of performing his or
her duties, if any, to Buyer and/or U.S. Concrete, unless (a) such information
becomes known to the public generally through no fault of the Stockholder or (b)
disclosure is required by Law, provided that prior to disclosing any information
pursuant to this clause (b) the disclosing Stockholder(s) shall give prior
written notice thereof to U.S. Concrete and Buyer and provide U.S. Concrete with
the opportunity to contest such disclosure. In the event of a breach or
threatened breach by any Stockholder of the provisions of this Section, U.S.
Concrete shall be entitled to an injunction restraining such Stockholder from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting U.S. Concrete from pursuing any other
available remedy for such breach or threatened breach, including, without
limitation, the recovery of damages.
10.02 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses to U.S. Concrete and Buyer as a result of the breach of the
foregoing covenant, because a breach of such covenant would diminish the value
of the assets, properties and business of the Company being sold pursuant to
this Agreement, and because of the immediate and irreparable damage that would
be caused for which Buyer and/or U.S. Concrete would have no other adequate
remedy, since monetary damages alone may not be an adequate remedy, each
Stockholder agrees that the foregoing covenants may be enforced against such
individual by, without limitation, injunctions, restraining orders and other
equitable actions.
ARTICLE XI
MISCELLANEOUS
11.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES. This Agreement and the
rights of the parties hereunder may not be assigned (except by operation of Law)
and shall be binding upon and shall inure to the benefit of the parties hereto,
the successors of U.S. Concrete, Buyer, Buyer and the Company, and the heirs and
legal representatives of the Stockholders. Except as provided in ARTICLE VIII or
in this Section 11.01, nothing in this Agreement is intended or will be
construed to confer upon or give any person or entity other than the parties
hereto any rights or remedies under or by reason of this Agreement or any
transaction contemplated hereby.
11.02 ENTIRE AGREEMENT. This Agreement (including the Schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders, the
Company, Buyer and U.S. Concrete and supersede any prior agreement and
understanding relating to the subject matter of this Agreement, including,
without limitation, the Letter of Intent. This Agreement may be modified or
amended only by a written instrument executed by the Stockholders, the Company,
Buyer and
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U.S. Concrete. Any right hereunder may be waived only by a written
instrument executed by the party waiving such right.
11.03 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument. Facsimile
transmission of any signed original document and/or retransmission of any signed
facsimile transmission will be deemed the same as delivery of an original. At
the request of any party, the parties will confirm facsimile transmission by
signing a duplicate original document.
11.04 BROKERS AND AGENTS. Except for a fee payable to Stockholders' agent,
W.Y. Campbell, which Stockholders will pay, each party hereto represents and
warrants that it employed no broker or agent in connection with the transactions
contemplated by this Agreement. Each party agrees to indemnify each other party
against all loss, cost, damages or expense arising out of claims for fees or
commissions of brokers employed or alleged to have been employed by such
indemnifying party.
11.05 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested (which will be deemed
given three business days after deposit), or by delivering the same in person to
an officer or agent of such party (which will be deemed given when actually
received), as follows:
If to U.S. Concrete, Buyer or Buyer, addressed to them at:
U.S. Concrete, Inc.
1300 Post Oak Blvd., Suite 1200
Houston, Texas 77056
Attn: Corporate Secretary
If to the Stockholders, addressed as follows:
Richard A. Deneweth
9940 Edgewood
Traverse City, Michigan 49648
Joseph C. Cornillie, Trustee URTA of
Joseph C. Cornillie, Dated October 4, 1995
3279 Wendover
Troy, Michigan 48084
with a copy (which shall not constitute notice) to:
D. Richard McDonald, Esq.
Dykema Gossett PLLC
1577 N. Woodward Ave., Suite 300
Bloomfield Hills, Michigan 48304
32
<PAGE>
or such other address as any party hereto shall specify pursuant to this Section
11.05 from time to time.
11.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in ARTICLE V and ARTICLE VI shall survive the Closing for a
period of two years from the Closing Date (the "Expiration Date"), except that
the representations and warranties set forth in Sections 5.03, 5.11, 5.16 and
5.18 hereof shall survive until such time as the applicable statute of
limitations period has run, which shall be deemed to be the Expiration Date for
Sections 5.03, 5.11, 5.16 and 5.18, as the case may be. The respective parties
shall remain liable after the Expiration Date for breaches of the
representations and warranties set forth in ARTICLE V and ARTICLE VI, provided
such breaches are asserted in good faith by notice in writing to the alleged
breaching party prior to the Expiration Date.
11.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE. Except as
otherwise provided herein, no delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of any similar breach or default occurring later; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default occurring before or after that waiver. No right, remedy or
election any term of this Agreement gives will be deemed exclusive, but each
will be cumulative with all other rights, remedies and elections available at
law or in equity, subject to the limitations set forth in Sections 8.05 and
8.06.
11.08 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.
11.09 Section Headings; Gender. The Section headings contained in
this Agreement are inserted for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement. Words of the masculine
gender in this Agreement shall be deemed and construed to include correlative
words of the feminine and neuter genders and words of the neuter gender shall be
deemed and construed to include correlative words of the masculine and feminine
genders.
11.10 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware (except for its principles governing conflicts
of laws).
11.11 DISPUTE RESOLUTION.
(a) Except with respect to injunctive relief as provided in
Section 9.02 and Section 10.02 (which relief may be sought from any court
or administrative agency with jurisdiction with respect thereto), any
unresolved dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in
33
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accordance with the rules of the American Arbitration Association then in
effect. The arbitration shall be conducted by a retired judge employed by
the Chicago, Illinois office of J.A.M.S./Endispute, Inc. ("JAMS"). The
arbitration shall be held in JAMS' Chicago, Illinois office.
(b) The parties shall obtain from JAMS a list of the retired judges
available to conduct the arbitration. The parties shall use their
reasonable efforts to agree upon a judge to conduct the arbitration. If the
parties cannot agree upon a judge to conduct the arbitration within 10 days
after receipt of the list of available judges, the parties shall ask JAMS
to provide the parties a list of three available judges (the "Judge List").
Within five days after receipt of the Judge List, each party shall strike
one of the names of the available judges from the Judge List and return a
copy of such list to JAMS and the other party. If two different judges are
stricken from the Judge List, the remaining judge shall conduct the
arbitration. If only one judge is stricken from the Judge List, JAMS shall
select a judge from the remaining two judges on the Judge List to conduct
the arbitration.
(c) The arbitrator shall not have the authority to add to, detract
from, or modify any provision hereof nor to award punitive damages to any
injured party. The arbitrator shall have the authority to order payment of
damages, reimbursement of costs, including those incurred to enforce this
Agreement, and interest thereon in the event the arbitrator determines that
a material breach of this Agreement has occurred. A decision by the
arbitrator shall be final and binding. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
U.S. CONCRETE, INC.
By: /s/ Donald Wayne
_____________________________
Donald Wayne, Vice President
CORNILLIE FUEL & SUPPLY, INC.
By: /s/ Donald Wayne
_____________________________
Donald Wayne, Vice President
DENCOR, INC.
By: /s/ Joseph C. Cornillie
_____________________________
Joseph C. Cornillie, President
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STOCKHOLDERS:
/s/ Richard A. Deneweth
-------------------------------------
Richard A. Deneweth, Individually
/s/ Joseph C. Cornillie
--------------------------------------
Joseph C. Cornillie, Individually and
As Trustee URTA of Joseph C. Cornillie
Dated October 4, 1995
35
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EXHIBIT A
ALLOCATION OF CONSIDERATION
Cash
----
Joseph C. Cornillie $3,246,627.50
Richard A. Deneweth $3,246,627.50
36
<PAGE>
EXHIBIT 2.15
ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
U.S. CONCRETE, INC.,
CONCRETE XVIII ACQUISITION, INC.,
CORNILLIE LEASING, INC.,
RICHARD A. DENEWETH,
AND
JOSEPH C. CORNILLIE, TRUSTEE URTA OF
JOSEPH C. CORNILLIE, DATED OCTOBER 4, 1995
Dated as of February 8, 2000
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................... 1
1.01 Definitions.................................................... 1
1.02 Interpretation................................................. 5
ARTICLE II THE MERGER AND THE SURVIVING CORPORATION....................... 6
2.01 The Merger..................................................... 6
2.02 Effective Time of the Merger................................... 6
2.03 Certificate of Incorporation, Bylaws and Board of Directors
of Surviving Corporation..................................... 6
ARTICLE III CONVERSION OF SHARES........................................... 6
3.01 Conversion of Shares........................................... 6
3.02 Newco Shares................................................... 7
3.03 Delivery of Merger Consideration............................... 7
ARTICLE IV CLOSING........................................................ 7
4.01 Closing........................................................ 7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS............. 7
5.01 Due Organization and Qualification............................. 7
5.02 Authorization; Non-Contravention; Approvals.................... 8
5.03 Capitalization and Ownership................................... 9
5.04 Subsidiaries................................................... 9
5.05 Financial Statements........................................... 9
5.06 Liabilities and Obligations.................................... 10
5.07 Accounts and Notes Receivable.................................. 10
5.08 Properties and Assets.......................................... 10
5.09 Material Customers and Contracts............................... 12
5.10 Permits........................................................ 14
5.11 Environmental Matters.......................................... 14
5.12 Labor and Employee Relations; Employment Matters............... 15
5.13 Insurance...................................................... 15
5.14 Compensation; Employment Agreements............................ 15
5.15 Noncompetition, Confidentiality and Nonsolicitation
Agreements; Employee Policies................................ 16
5.16 Employee Benefit Plans......................................... 16
5.17 Litigation and Compliance with Law............................. 18
5.18 Taxes.......................................................... 18
5.19 Absence of Changes............................................. 19
5.20 Accounts with Banks and Brokerages; Powers of Attorney......... 20
5.21 Absence of Certain Business Practices.......................... 20
5.22 Competing Lines of Business; Related-Party Transactions........ 20
5.23 Intangible Property............................................ 21
5.24 Capital Expenditures........................................... 21
5.25 Inventories.................................................... 21
5.26 Tax Reorganization Representation.............................. 21
5.27 Absence of Interest-Bearing Debt............................... 21
5.28 No Implied Representations..................................... 21
5.29 Disclosure..................................................... 21
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO...... 22
6.01 Organization................................................... 22
6.02 Authorization; Non-Contravention; Approvals.................... 22
6.03 U.S. Concrete Common Stock..................................... 23
6.04 Tax Reorganization Representations............................. 23
6.05 SEC Filings; Disclosure........................................ 24
6.06 No Implied Representations..................................... 24
6.07 Disclosure..................................................... 24
ARTICLE VII CERTAIN COVENANTS.............................................. 24
7.01 Release From Guarantees........................................ 24
7.02 Future Cooperation; Tax Matters................................ 24
7.03 Expenses....................................................... 25
7.04 Legal Opinion.................................................. 25
7.05 Employment Agreements.......................................... 25
7.06 Repayment of Related Party Indebtedness........................ 25
7.07 Stock Options.................................................. 25
7.08 Pre-Closing Distributions...................................... 26
7.09 Working Capital Adjustment..................................... 26
7.10 Other Documents................................................ 27
7.11 Benefit Plans.................................................. 28
ARTICLE VIII INDEMNIFICATION................................................ 28
8.01 General Indemnification by the Stockholders.................... 28
8.02 Indemnification by U.S. Concrete............................... 29
8.03 Third Person Claims............................................ 29
8.04 Non-Third Person Claims........................................ 30
8.05 Indemnification Deductible..................................... 30
8.06 Liability Limitation........................................... 30
8.07 Form of Indemnity Payment...................................... 30
ARTICLE IX NONCOMPETITION COVENANTS....................................... 31
9.01 Prohibited Activities.......................................... 31
9.02 Equitable Relief............................................... 31
9.03 Reasonable Restraint........................................... 32
9.04 Severability; Reformation...................................... 32
9.05 Material and Independent Covenant.............................. 32
ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION...................... 32
10.01 General........................................................ 32
10.02 Equitable Relief............................................... 33
ARTICLE XI INTENDED TAX TREATMENT......................................... 33
11.01 Tax-Free Reorganization........................................ 33
ARTICLE XII FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON
U.S. CONCRETE COMMON STOCK................................... 33
12.01 Compliance with Law............................................ 33
12.02 Economic Risk; Sophistication; Accredited Investors............ 34
12.03 Rule 144 Reporting............................................. 34
12.04 Restriction on Sale or Other Transfer of Restricted Shares..... 34
12.05 Prospectus Delivery............................................ 35
12.06 Removal of Legends............................................. 35
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ARTICLE XIII MISCELLANEOUS.................................................. 35
13.01 Successors and Assigns; Rights of Parties...................... 35
13.02 Entire Agreement............................................... 35
13.03 Counterparts................................................... 35
13.04 Brokers and Agents............................................. 36
13.05 Notices........................................................ 36
13.06 Survival of Representations and Warranties..................... 37
13.07 Exercise of Rights and Remedies; Remedies Cumulative........... 37
13.08 Reformation and Severability................................... 37
13.09 Section Headings; Gender....................................... 37
13.10 Governing Law.................................................. 37
13.11 Dispute Resolution............................................. 37
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ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is
made as of February 8, 2000, by and among U.S. Concrete, Inc., a Delaware
corporation ("U.S. Concrete"), Concrete XVIII Acquisition, Inc., a Delaware
corporation that is a subsidiary of U.S. Concrete ("Newco"), Cornillie Leasing,
Inc., a Michigan corporation (the "Company"), and Richard A. Deneweth
("Deneweth") and Joseph C. Cornillie, individually and as Trustee URTA of Joseph
C. Cornillie, Dated October 4, 1995 ("Cornillie") (Deneweth and Cornillie are
each referred to hereinafter as a "Stockholder" and collectively, the
"Stockholders"), with the Stockholders being all of the Company's Stockholders.
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively referred to as "Constituent Corporations") deem it advisable and
in the best interests of the Constituent Corporations and the stockholders of
the Constituent Corporations that Newco merge with and into the Company (the
"Merger");
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization within the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, all of the stockholders of the Constituent Corporations have
approved the Merger in accordance with the GCL and the MBCA; and
WHEREAS, U.S. Concrete is also, pursuant to separate written agreements,
acquiring the equity interests of Cornillie Fuel & Supply, Inc. (the "Fuel
Merger Agreement") and Dencor, Inc. (the "Dencor Stock Purchase Agreement");
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. Capitalized terms used in this Agreement shall have the
following meanings:
"Affiliate" of, or "Affiliated" with, a specified person or entity means a
person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the specified person or entity.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Balance Sheet Date" has the meaning set forth in Section 5.05.
"Broker" has the meaning set forth in Section 13.04.
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"Closing" has the meaning set forth in ARTICLE IV.
"Closing Date" has the meaning set forth in ARTICLE IV.
"Code" has the meaning set forth in the third paragraph of this Agreement.
"Company" has the meaning set forth in the first paragraph of this Agreement.
"Company Common Stock" means the Company's common stock, $10.00 par value per
share.
"Competitive Business" means any business that competes with any business of
U.S. Concrete existing on the date hereof, including, without limitation, any
business that involves the production and sale of ready-mixed concrete
(including truck-mixed concrete) and other cement mixtures; pre-cast concrete
products and slag products.
"Constituent Corporations" has the meaning set forth in the second paragraph
of this Agreement.
"Effective Time" has the meaning set forth in Section 2.02.
"Employee benefit plan" has the meaning set forth in Section 5.16.
"Employee pension benefit plan" has the meaning set forth in Section 5.16.
"Employment Agreements" has the meaning set forth in Section 7.05.
"Encumbrances" means all liens, encumbrances, mortgages, pledges, security
interests, conditional sales agreements, charges, options, preemptive rights,
rights of first refusal, reservations, restrictions or other encumbrances or
defects in title.
"Environmental Laws" means any and all Laws or agreements between Company and
any Governmental Authority 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) or human health or safety, (b) emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes (including, without
limitation, Hazardous Substances) or noxious noise or odor 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 pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes (including, without limitation, Hazardous
Substances), in each case as amended from time to time and as now or hereafter
in effect. The term "Environmental Laws" includes, without limitation, 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
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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, and any comparable or similar Michigan Law, in
each case as amended from time to time, and any other Laws now or hereafter
relating to any of the foregoing.
"ERISA" has the meaning set forth in Section 5.16.
"ERISA Affiliate" has the meaning set forth in Section 5.16.
"Expiration Date" has the meaning set forth in Section 13.06.
"Financial Statements" has the meaning set forth in Section 5.05.
"GAAP" means generally accepted accounting principles as currently applied by
the respective party on a basis consistent with preceding years and throughout
the periods involved.
"GCL" means the General Corporation Law of the State of Delaware, as amended.
"Governmental Authority" means any federal, state, local or foreign
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or quasi-
governmental authority.
"Hazardous Substances" means any and all substances presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law. The term "Hazardous
Substances" includes, without limitation, any substance to which exposure is
regulated by any Environmental Law including, without limitation, any toxic
waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous
waste, special waste, industrial substance or petroleum or any derivative or by-
product thereof, radon, radioactive material, asbestos or asbestos containing
material, urea formaldehyde foam insulation, lead or polychlorinated biphenyls.
"Incentive Plan" has the meaning set forth in Section 7.07.
"Indemnified Party" has the meaning set forth in Section 8.03.
"Indemnifying Party" has the meaning set forth in Section 8.03.
"Interest-Bearing Debt" means the total amount of outstanding indebtedness of
the Company for borrowed money (including, without limitation, bank debt,
equipment debt, capital lease obligations with non-affiliates of Company, bank
overdrafts and any other indebtedness for borrowed money).
"Interim Balance Sheet" has the meaning set forth in Section 5.05.
"Interim Financial Statements" has the meaning set forth in Section 5.05.
"IRCA" has the meaning set forth in Section 5.12.
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"JAMS" has the meaning set forth in Section 13.10.
"Judge List" has the meaning set forth in Section 13.10.
"Laws" means any and all federal, state, local or foreign statutes, laws,
ordinances, codes, rules, regulations, orders, decrees, judgments and
injunctions of any Governmental Authority, including, without limitation, those
covering Tax, energy, safety, health, transportation, bribery, record keeping,
zoning, discrimination, antitrust and wage and hour matters, in each case as
amended and in effect from time to time.
"Letter of Intent" means that certain letter of intent dated December 15,
1999 by and among U.S. Concrete, the Company and the Stockholders, and the other
parties named therein, as amended or supplemented.
"Listed Agreements" has the meaning set forth in Section 5.09.
"Lockup Period" has the meaning set forth in Section 12.04.
"Losses" means any and all liabilities, losses, claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, fees, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees and
costs and expenses of investigation), net of (i) income Tax effects with respect
thereto (including, without limitation, income Tax benefits recognized in
connection therewith and income Taxes upon any indemnification recovery
thereof), and (ii) insurance proceeds related to such Losses actually received
by the Indemnified Party; provided, however, that no Indemnified Party shall be
under any obligation either to insure any particular risk or to make a claim
under an existing policy.
"MBCA" means the Michigan Business Corporation Act, as amended.
"Material Customers" has the meaning set forth in Section 5.09.
"Merger" has the meaning set forth in the second paragraph of this Agreement.
"Merger Consideration" has the meaning set forth in Section 3.01.
"Merger Filings" has the meaning set forth in Section 2.02.
"Newco" has the meaning set forth in the first paragraph of this Agreement.
"Noncompete Term" has the meaning set forth in Section 9.01(a).
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Permits" has the meaning set forth in Section 5.10.
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"Permitted Encumbrances" means any and all (a) Encumbrances reserved against
in the Interim Balance Sheet, (b) Encumbrances for property or ad valorem Taxes
not yet due and payable or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are maintained
on the Company's books in accordance with GAAP, and (c) obligations described in
Schedule 5.08.
"Plan" has the meaning set forth in Section 5.16.
"Qualified Plan" has the meaning set forth in Section 5.16.
"Restricted Shares" has the meaning set forth in Section 12.01.
"Rule 144" means Rule 144 as promulgated under the 1933 Act.
"SEC" means the Securities and Exchange Commission.
"Stockholders" has the meaning set forth in the first paragraph of this
Agreement.
"Structures" has the meaning set forth in Section 5.08.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Taxes" has the meaning set forth in Section 5.18.
"Territory" has the meaning set forth in Section 9.01.
"Third Person" has the meaning set forth in Section 8.03.
"U.S. Concrete" has the meaning set forth in the first paragraph of this
Agreement.
"U.S. Concrete Common Stock" means U.S. Concrete's Common Stock, par value
$.001 per share.
"Year-End Financial Statements has the meaning set forth in Section 5.05.
1.02 INTERPRETATION . For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in Section 1.01 and elsewhere in this Agreement
include the plural as well as the singular and vice versa;
(b) all accounting terms not otherwise defined herein have the meanings
ascribed to them in accordance with GAAP; and
(c) the words "herein," "hereof," and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
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ARTICLE II
THE MERGER AND THE SURVIVING CORPORATION
2.01 THE MERGER. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time in accordance with the MBCA and the GCL, Newco
shall be merged with and into the Company and the separate existence of Newco
shall thereupon cease. The Company shall be the surviving corporation in the
Merger (hereinafter sometimes referred to as the "Surviving Corporation").
2.02 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective at
such time (the "Effective Time") as (a) holders of all of the Company Common
Stock approve the Merger, and (b) a certificate of merger, in form mutually
acceptable to U.S. Concrete and the Company, is filed with the Secretary of
State of the State of Delaware and the Michigan Department of Consumer &
Industry Services, respectively (the "Merger Filings"). The Merger Filings
shall be made simultaneously with or as soon as practicable after the Closing.
2.03 CERTIFICATE OF INCORPORATION, BYLAWS AND BOARD OF DIRECTORS OF
SURVIVING CORPORATION. As a result of the Merger and at the Effective Time:
(a) The Certificate of Incorporation of the Company in effect
immediately prior to the Effective Time shall become the Certificate of
Incorporation of the Surviving Corporation. After the Effective Time, the
Certificate of Incorporation of the Surviving Corporation may be amended in
accordance with its terms and as provided in the MBCA.
(b) The Bylaws of the Company in effect immediately prior to the
Effective Time shall become the Bylaws of the Surviving Corporation, and
thereafter may be amended in accordance with their terms and as provided by
the Certificate of Incorporation of the Surviving Corporation and the MBCA.
(c) The Board of Directors of Newco as constituted immediately prior to
the Effective Time shall be the Board of Directors of the Surviving
Corporation.
ARTICLE III
CONVERSION OF SHARES
3.01 CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger, and without any action on the part of any holder of any capital stock of
the Company, the issued and outstanding shares of Company Common Stock as of the
Effective Time shall be cancelled and retired and converted into the right to
receive, and become exchangeable for an aggregate of $158,400 in cash and 87,394
shares of U.S. Concrete Common Stock (having an aggregate value of $633,600 at
$7.25 per share) at Closing (the cash and U.S. Concrete Common Stock paid in
exchange for the Company Common Stock being herein collectively referred to as
the "Merger Consideration"). The Merger Consideration shall be allocated
between Stockholders as set forth on Exhibit A, attached hereto and made a part
hereof.
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3.02 NEWCO SHARES. The outstanding shares of common stock, par value $.01
per share, of Newco shall be converted into the right to receive, and become
exchangeable for, 1,000 shares of Common Stock of the Surviving Corporation.
3.03 DELIVERY OF MERGER CONSIDERATION. At the Closing, (a) Stockholders
shall cause each shareholder of Company to furnish to U.S. Concrete the
certificates representing his or her Company Common Stock, duly endorsed in
blank by such shareholder or accompanied by duly executed blank stock powers,
and (b) U.S. Concrete shall deliver to each Stockholder cash (by wire transfer
in accordance with the wiring instructions for such Stockholder set forth on
Schedule 3.01) and a copy of an irrevocable instruction letter to U.S.
Concrete's transfer agent directing that certificates representing the shares of
U.S. Concrete Common Stock be delivered to such Stockholder pursuant to Section
3.01. Each Stockholder agrees promptly to cure any deficiencies with respect to
the endorsement of the certificates or other documents of conveyance with
respect to the Company Common Stock or with respect to the stock powers
accompanying such stock. U.S. Concrete will take all steps necessary to ensure
that the stock certificates are promptly issued by the transfer agent in
accordance with the terms of this Agreement and the irrevocable instruction
letter.
ARTICLE IV
CLOSING
4.01 CLOSING. The consummation of the Merger and delivery of the Merger
Consideration and the other transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Baker & Hostetler LLP, 3200
National City Center, 1900 E. 9th Street, Cleveland, Ohio 44114, concurrently
with the execution of this Agreement or at such other time and date as U.S.
Concrete, the Company and the Stockholders may mutually agree, which date is
herein referred to as the "Closing Date."
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders, jointly and severally, represent and warrant to U.S.
Concrete as follows:
5.01 DUE ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Michigan and is duly authorized and qualified to do business under all
applicable Laws and to carry on its business in the places and in the manner as
now conducted. The Company has the requisite power and authority to own, lease
and operate its assets and properties and to carry on its business as such
business is currently being conducted. Schedule 5.01 includes (a)
certificate(s) of existence and good standing for the Company issued by the
appropriate Governmental Authorities of the State of Michigan, (b) a list of all
jurisdictions in which the Company is authorized or qualified to do business and
(c) certificate(s) of qualification or authority to do business (or similar
certificates) for the Company issued by the appropriate Governmental Authorities
of each of the jurisdictions in which the Company is authorized or qualified to
do business. The Company does not own, lease or operate any assets or
properties or carry on any business in any jurisdiction that
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Schedule 5.01 does not list. True, complete and correct copies of the Articles
of Incorporation and Bylaws, each as amended, of the Company are attached hereto
as Schedule 5.01, 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 Company have been provided to U.S. Concrete.
5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) The Company has the requisite corporate power and authority to
enter into this Agreement and the ancillary documents and agreements
described herein and to effect the Merger. Each Stockholder has the full
legal right, power and authority to enter into this Agreement. The
execution, delivery and performance of this Agreement and the transactions
contemplated hereby have been approved by the board of directors of the
Company and each of the shareholders of Company. No additional corporate
proceedings on the part of the Company are necessary to authorize the
execution and delivery of this Agreement and the consummation by the
Company of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company and the
Stockholders, and, assuming the due authorization, execution and delivery
hereof by U.S. Concrete and Newco, constitutes a valid and binding
agreement of the Company and the Stockholders, enforceable against each of
them in accordance with its terms, subject to general principles of equity
and bankruptcy, insolvency and other similar laws relating to the
enforcement of creditor's rights.
(b) The execution and delivery of this Agreement by the Company and the
Stockholders do not, and the consummation by the Company and the
Stockholders of the transactions contemplated hereby will not, violate or
result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Encumbrance upon any
of the properties or assets of the Company under any of the terms,
conditions or provisions of, (i) the Articles of Incorporation or Bylaws of
the Company, (ii) any Law applicable to the Stockholders or the Company or
any of the properties or assets of the Stockholders or the Company, or
(iii) except as set forth in Schedule 5.02, any agreement, note, bond,
mortgage, indenture, deed of trust, license, franchise, Permit, concession,
lease or other instrument, obligation or agreement of any kind to which any
Stockholder or the Company is now a party or by which the Company or any of
its properties or assets may be bound or affected, except for any of the
foregoing which would not have a material adverse effect on the financial
condition or results of operations of Company or the Surviving Corporation.
(c) Except for the Merger Filings and as set forth in Schedule 5.02, no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any Governmental Authority or other person or
entity is necessary for the execution and delivery of this Agreement by the
Company and the Stockholders or the consummation by the Company and the
Stockholders of the transactions contemplated hereby. Except as set forth
in Schedule 5.02, none of the contracts or agreements with Material
Customers or contracts providing for purchases or services individually in
excess of $10,000, or in the aggregate in excess of $25,000, or leases or
Permits to which
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the Company is a party requires notice to, or the consent or approval of,
any Governmental Authority or other person or entity to the execution and
delivery of this Agreement by the Company and the Stockholders or to any of
the transactions contemplated hereby to remain in full force and effect
following such transaction.
5.03 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of the
Company consists solely of 60,000 shares of Company Common Stock, of which 9,200
shares are issued and outstanding. All of the issued and outstanding shares of
the Company Common Stock are owned beneficially and of record as set forth in
Schedule 5.03. All of the issued and outstanding shares of the Company Common
Stock have been duly authorized and validly issued, are fully paid and
nonassessable, and were offered, issued, sold and delivered by the Company in
compliance with all applicable Laws, including, without limitation, those Laws
concerning the issuance of securities. None of such shares were issued in
violation of the preemptive rights of any past or present stockholder of the
Company. At the Effective Time, by virtue of the Merger Filing in Michigan the
Merger will become effective in Michigan. Except as set forth in Schedule 5.03,
(a) no shares of Company Common Stock are held by the Company as treasury
shares, and (b) no subscription, option, warrant, call, convertible or
exchangeable security, other conversion right or commitment of any kind exists
which obligates the Company to issue any of its capital stock or the
Stockholders to transfer any of the capital stock of the Company.
5.04 SUBSIDIARIES. Except as set forth in Schedule 5.04, the Company
owns, of record or beneficially, or controls, 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.
Except as set forth in Schedule 5.04, the Company is not, directly or
indirectly, a participant in any joint venture, limited liability company,
partnership or other noncorporate entity.
5.05 FINANCIAL STATEMENTS.
(a) The Company has delivered to U.S. Concrete true, complete and
correct copies of the following financial statements:
(i) the reviewed balance sheets of the Company as of December
31, 1996, 1997 and 1998, and the related reviewed statements of
operations, stockholders' equity and cash flows for the three-year
period ended December 31, 1998, together with the related notes,
schedules and report of the Company's independent accountants (such
balance sheets, the related statements of operations, stockholders'
equity and cash flows and the related notes and schedules are referred
to herein as the "Year-End Financial Statements"); and
(ii) the unaudited balance sheet (the "Interim Balance Sheet") of
the Company as of December 31, 1999 (the "Balance Sheet Date") and the
related unaudited statements of operations, for the year ended on the
Balance Sheet Date (such balance sheets, the related statements of
operations, and any related notes and schedules are referred to herein
as the "Interim Financial Statements"). The Year-End Financial
Statements and the Interim Financial Statements (collectively, the
"Financial Statements") are attached as Schedule 5.05 to this
Agreement;
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(b) Except as set forth in Schedule 5.05, the Financial Statements have
been prepared from the books and records of the Company in conformity with
GAAP and present fairly the financial position and results of operations of
the Company in all material respects as of the dates of such statements and
for the periods covered thereby; provided, however, that the Interim
Financial Statements are subject to normal year-end adjustments and lack
footnotes and other presentation items. The books of account of the Company
have been kept accurately in all material respects in the ordinary course
of business, the transactions entered therein represent bona fide
transactions, and the revenues, expenses, assets and liabilities of the
Company have been properly recorded therein in all material respects.
Within the past five fiscal years of the Company, the Company has not
received any correspondence with its accountants, including without
limitation, management letters, which have indicated or disclosed that
there is a "material weakness" in or "reportable condition" with respect to
(as those terms are defined under GAAP) the Company's financial condition.
5.06 LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule 5.06,
as of the Balance Sheet Date the Company did not have, nor has it incurred since
that date, any liabilities or obligations (whether absolute, accrued, contingent
or otherwise) of any nature, except liabilities, obligations or contingencies
(a) that are reflected or accrued or reserved against in the Financial
Statements or reflected in the notes thereto, (b) that are of a nature not
required to be reflected in the Financial Statements in accordance with GAAP, or
(c) that were incurred after the Balance Sheet Date and were incurred in the
ordinary course of business, consistent with past practices. For each such
liability for which the amount is not fixed or is contested, the Company has
provided a summary description of the liability together with copies of all
relevant documentation relating thereto. Except as set forth in Schedule 5.06,
there are no prepayment penalties, termination fees or other payments triggered
by the prepayment or termination of any loan or indebtedness of the Company.
5.07 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.07 sets forth an accurate
list of the accounts and notes receivable of the Company as of the Balance Sheet
Date and of those generated between the Balance Sheet Date and the second
business day preceding the Closing Date, including any such amounts which are
not reflected in the Interim Balance Sheet. Receivables from and advances to
employees, the Stockholders and any entities or persons related to or Affiliates
of the Stockholders are separately identified in Schedule 5.07. Schedule 5.07
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 Company, 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, are stated in
accordance with GAAP and are collectible in the amounts shown on Schedule 5.07,
net of reserves reflected in the Interim Financial Statements with respect to
the accounts receivable as of the Balance Sheet Date, and net of reserves
reflected in the books and records of the Company (consistent with the methods
used in the Interim Financial Statements) with respect to receivables of the
Company after the Balance Sheet Date.
5.08 PROPERTIES AND ASSETS.
(a) Schedule 5.08 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
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assets of the Company with a book value in excess of $5,000 (i) owned by
the Company as of the Balance Sheet Date and (ii) acquired since the
Balance Sheet Date. Schedule 5.08 also sets forth an accurate list of all
real and personal property currently leased by the Company, and includes
complete and correct copies of leases for significant equipment and for all
real property leased by the Company and descriptions of all real property
(as currently owned or leased by the Company) on which plants, buildings,
warehouses, workshops, garages and other structures (collectively, the
"Structures") and vehicles used in the operation of the business of the
Company 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 Company. Schedule 5.08
indicates which properties and assets used in the operation of the
businesses of the Company are currently owned by the Stockholders or
Affiliates of either of the Company or the Stockholders. Except as
specifically identified in Schedule 5.08, all of the tangible assets,
plants, Structures, vehicles and other significant machinery and equipment
owned or leased by the Company listed in Schedule 5.08 have been maintained
by the Company in the ordinary course of business consistent with past
practice and are in such condition and repair as is suitable for the
purpose for which they presently are being used or held for use, ordinary
wear and tear excepted. Except as specifically described in Schedule 5.08,
all properties and fixed assets used by the Company in its business are
either owned by the Company or leased under agreements identified in
Schedule 5.08 and are affixed only to one or more of the real properties
Schedule 5.08 lists. All leases set forth in Schedule 5.08 are in full
force and effect and constitute valid and binding agreements of the Company
and the other parties thereto in accordance with their respective terms,
and all amounts currently due and payable thereunder have been paid.
Neither the Company nor any other party to the leases set forth in Schedule
5.08 is or has been asserted to be in default, violation or breach of any
such lease in any material respects, and no event has occurred and is
continuing that constitutes or, with notice or the passage of time or both,
would constitute such a default, violation or breach under any such lease.
The Company has good, valid and marketable title to the tangible and
intangible assets, personal property and real property owned and used in
its business, including, without limitation, the properties identified in
Schedule 5.08 as owned real property (each of which the Company owns in
fee), free and clear of all Encumbrances other than Permitted Encumbrances
and those set forth in Schedule 5.08. Schedule 5.08 contains true, complete
and correct copies of all title reports and title insurance policies in the
possession or control of the Company with respect to the real property
owned or leased by the Company. Schedule 5.08 includes a summary
description of all commitments of the Company 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 Company has
devoted any significant effort or expenditure in the two-year period prior
to the date of the Agreement and which the Surviving Corporation would be
obligated to continue after the Merger.
(b) Except as specifically described in Schedule 5.08, all uses of the
real property owned and leased by the Company conform in all material
respects to all applicable Laws and do not violate any instrument of record
or agreement affecting any such property. Neither the Company nor the
Stockholders have received from any insurance carrier insuring or proposing
to insure any of the real property owned or leased by the Company or any
other person or entity any written notice or communication
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noting any dangerous or illegal condition at any such property or any other
condition at any of such properties otherwise requiring corrective action
as of the Closing Date. Except as otherwise described on Schedule 5.08, all
of the real property owned and leased by the Company can be used by the
Surviving Corporation for their intended purposes without violating any
conditional use permit, variance or private restriction. Neither the
Company nor the Stockholders have received any written notice nor have any
knowledge that any of the real property owned or leased by the Company 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 no writ, injunction, decree, order
or judgment outstanding, nor any action, claim, suit or proceeding, pending
or, to the Stockholders' knowledge, threatened, relating to the ownership,
lease, use, occupancy or operation of any real property owned or leased by
the Company.
(c) There is ingress and egress to and from each of the real properties
owned and leased by the Company of record adequate for the use of such
properties as currently operated by the Company. Except as disclosed in
Schedule 5.08, the Company has made no off-record agreements affecting the
ownership, use or occupation of any such properties. All public utilities,
including if applicable, without limitation, sewers, water, electric, gas
and telephone, required for the operation of each of the real properties
owned and leased by the Company as presently operated are installed and
operating, and all installation and connection charges therefor have been
paid in full. Neither the Company nor the Stockholders have received any
written notice stating that the Company will not be able to obtain adequate
supplies of water to operate its business on any such properties as
presently conducted, or that the provision of utilities violates any public
or private easement as of the Closing Date. Neither the Company nor the
Stockholders have received written notice that any part of any improvements
on the real property owned or leased by the Company (including any of the
structures thereon) encroaches upon any property adjacent thereto or upon
any easement, nor is there any encroachment or overlap upon the real
property owned or leased by the Company as of the Closing Date. Each of the
real property leases listed in Schedule 5.08 grants the Company the
exclusive right to use and occupy the demised premises thereunder, and the
Company enjoys peaceful and undisturbed possession under its respective
real property leases listed on Schedule 5.08 for the real property leased
by the Company. None of the real property leases requires the consent of
the applicable landlord to the Merger or the transactions contemplated by
this Agreement. Except as set forth on Schedule 5.08, no person or entity
other than the Company is in possession of any of the real property owned
or leased by the Company. Except as set forth on Schedule 5.08, to the
knowledge of the Company there are no contracts outstanding for the sale,
exchange, lease or transfer of any of the real property owned or leased by
the Company, or any other right of a third party to acquire any interest
therein. The heating, cooling, ventilation, electrical and plumbing systems
at all of the real property owned and leased by the Company is in good
working condition, in all material respects, ordinary wear and tear
excepted.
5.09 MATERIAL CUSTOMERS AND CONTRACTS.
(a) Schedule 5.09 (i) sets forth an accurate list of all customers
representing 5% or more of the Company's revenues for each of the fiscal
year ended in 1999 and the
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interim period ended on the Balance Sheet Date (the "Material Customers"),
and (ii) sets forth an accurate list and briefly describes all material
contracts, warranties, commitments, understandings, instruments and similar
agreements and arrangements to which the Company is currently a party or by
which it or any of its properties is bound (the "Listed Agreements"),
including, but not limited to, (A) all customer contracts in excess of
$10,000, individually, or $25,000 in the aggregate, (B) contracts with any
labor organizations, (C) leases providing for annual rental payments in
excess of $5,000, individually, or $10,000 in the aggregate, (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 Company of assets or
securities for more than $5,000, individually, or $10,000 in the aggregate,
(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 Company 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 Company has made available to U.S.
Concrete true, complete and correct copies of all the Listed Agreements.
(b) Except as set forth in Schedule 5.09, since December 31, 1999 (i)
no Material Customer has canceled or substantially reduced or, to the
knowledge of the Company and the Stockholders, is threatening to cancel or
substantially reduce its purchases of the Company's products or services,
and (ii) neither the Company nor any other party to the Listed Agreements
is or has been asserted to be in default, violation or breach in any
material respect of any such Listed Agreement, and no event has occurred
and is continuing that constitutes or with notice or the passage of time or
both, would constitute such a default, violation or breach under any such
Listed Agreement. The Listed Agreements are in full force and effect and
constitute valid and binding agreements of the Company and the other
parties thereto in accordance with their respective terms.
(c) Except as set forth in Schedule 5.09, the Company is not a party to
any contracts subject to price redetermination or renegotiation. Except to
the extent set forth in Schedule 5.09, the Company is 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.
(d) Except as set forth in Schedule 5.09, neither the Company, the
Stockholders nor, to the Stockholders' knowledge, 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 Company's customers for the repurchase of products, sharing of
fees, rebating of charges, bribes, kickbacks or other similar arrangements.
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(e) Schedule 5.09 sets forth a summary of each outstanding bid or
proposal by the Company that, if awarded to the Company, contemplates
payments to the Company in excess of $50,000.
(f) Except as set forth in Schedule 5.09, neither the Company nor the
Stockholders 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 Company nor the Stockholders have any
knowledge of any condition or state of facts which would justify the
exercise of such a right.
5.10 PERMITS. Schedule 5.10 contains an accurate list, and copies of all
licenses, franchises, permits, approvals, certificates, transportation
authorities and other governmental authorizations and intangible assets held by
the Company that are material to the conduct of its business, including, without
limitation, permits, licenses and operating authorizations, fuel permits,
franchises and certificates owned or held by the Company (collectively, the
"Permits"). The Permits are valid, and the Company has not received any written
notice that any Governmental Authority intends to cancel, terminate or not renew
any such Permit. The Permits are all the permits, licenses, operating
authorizations, franchises, approvals, certificates, transportation authorities
and other governmental authorizations and intangible assets that are required by
Law for the operation of the businesses of the Company as conducted at the
Balance Sheet Date and the ownership of the assets and properties of the
Company. The Company has conducted and is conducting its business in
substantial 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 is not in substantial violation of any of the
foregoing. Except as specifically provided in Schedule 5.10, the transactions
contemplated by this Agreement will not result in a default under, a breach or
violation of, a termination of, or adversely affect the rights and benefits
afforded to the Company by, any Permits.
5.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5.11, (a)
the Company has complied with and is in compliance with all Environmental Laws,
(b) the Company has obtained and complied with all necessary permits, licenses,
authorizations and other approvals necessary to treat, transport, store, dispose
of and otherwise handle Hazardous Substances and has reported, to the extent
required by all Environmental Laws, all past and present sites owned or operated
by the Company where Hazardous Substances have been treated, stored, disposed of
or otherwise handled, (c) there have been no "releases" or threats of "releases"
(as defined in any Environmental Laws) by the Company, its agents, employees or
representatives at, from, in, to, under or on any property currently or
previously owned or operated by the Company, (d) there is no on-site or off-site
location to which the Company has transported or disposed of Hazardous
Substances or arranged for the transportation or disposal of Hazardous
Substances which, to the Stockholders' knowledge, is the subject of any federal,
state, local or foreign enforcement action or any other investigation which
could lead to any claim against the Surviving Corporation, U.S. Concrete or
Newco 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 Company has no contingent liability in connection
with any release or disposal of any Hazardous Substance by the Company, its
agents, employees or representatives into the environment. None of the past or
present sites owned or operated by the Company is currently or has during
Stockholders' ownership of Company been designated as a treatment, storage
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and/or disposal facility, nor, to the Stockholders' knowledge, has any such
facility ever applied for a permit, license, authorization or other approval
designating it as a treatment, storage and/or disposal facility, under any
Environmental Law. The Company has provided U.S. Concrete with copies (or, if
not available, accurate written summaries) of all environmental investigations,
studies, audits, reviews and other analyses conducted by or on behalf, or which
otherwise are in the possession, of the Company respecting any facility site or
other property previously or presently owned or operated by the Company.
5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS.
(a) Company has no employees.
(b) Except as set forth in Schedule 5.12, (i) no action, suit,
complaint, charge, arbitration, inquiry, proceeding or investigation by or
before any Governmental Authority brought by or on behalf of any
prospective employee, former employee, retiree, labor organization or other
representative is pending or, to the Stockholders' knowledge, threatened
against the Company, (ii) no grievance is pending or threatened against the
Company, (iii) the Company is not a party to, or otherwise bound by, any
consent decree with, or citation by, any Governmental Authority relating to
employees or employment practices.
5.13 INSURANCE. Schedule 5.13 sets forth an accurate list as of the
Balance Sheet Date of (a) all insurance policies carried by the Company, copies
of which are attached as Schedule 5.13, (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 Company and previously carried by the Company 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
5.13, none of such policies are "claims made" policies. The policies described
in Schedule 5.13 for the current policy year provide adequate coverage against
the risks customarily involved in the Company's business based on historical
experiences and are currently in full force and effect. Any open claims as of
the Closing Date are recoverable under such policies, except to the extent of
any applicable deductible or loss retention as set forth on Schedule 5.13.
5.14 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 5.14 sets forth an
accurate schedule of all officers and directors of the Company 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 (a)
the Balance Sheet Date and (b) the date hereof. Neither the Company nor the
Stockholders have any knowledge that any of such individuals has any present
intention of terminating his or her association with the Company. Company has
no employment or consulting agreements with any person or entity. Except as set
forth in Schedule 5.14, the Company is not a party to any agreement, nor has it
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 or stockholder of the Company or other person
performing services for the 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.
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5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS;
EMPLOYEE POLICIES. Schedule 5.15 sets forth all agreements containing
covenants not to compete or solicit employees or to maintain the confidentiality
of information to which the Company or any of the Stockholders is bound or under
which the Company or any of the Stockholders has any rights or obligations.
Schedule 5.15 lists all employee manuals and all material policies, procedures
and work-related rules that apply to any employee, director or officer of, or
any other individual performing consulting or other independent contractor
services for, the Company. The Company has provided U.S. Concrete with a copy
of all such written policies and procedures and a written description of all
such unwritten policies and procedures.
5.16 EMPLOYEE BENEFIT PLANS.
(a) Schedule 5.16 sets forth an accurate schedule of each "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (other than a "multiemployer
plan", as defined in Section 3(37) of ERISA), and all deferred compensation
or retirement funding arrangements, whether formal or informal and whether
legally binding or not, under which the Company or an ERISA Affiliate has
any current or future obligation or liability or under which any present or
former employee of the Company or an ERISA Affiliate, or such present or
former employee's dependents or beneficiaries, has any current or future
right to benefits (each such plan and arrangement referred to hereinafter
as a "Plan"). Company has provided to U.S. Concrete true and complete
copies of such Plans, arrangements and any trusts related thereto, and
classifications of employees covered thereby as of the Balance Sheet Date.
Except as set forth in Schedule 5.16, neither the Company nor any ERISA
Affiliate sponsors, maintains or contributes currently, or sponsored,
maintained or contributed at any time during the preceding five years, to
any plan, program, fund or arrangement that constitutes an employee pension
benefit plan. Except as set forth in Schedule 5.16, each Plan may be
terminated by the Company, 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 Plan. For
purposes of this Agreement, the term "employee pension benefit plan" shall
have the meaning given that term in Section 3(2) of ERISA (other than a
multiemployer plan), and the term "ERISA Affiliate" means any corporation
or trade or business under common control with the Company as determined
under Section 414(b), (c), (m) or (o) of the Code.
(b) Each Plan listed in Schedule 5.16 is in compliance in all material
respects with the applicable provisions of ERISA, the Code and any other
applicable Law. Except as set forth in Schedule 5.16, with respect to each
Plan of the Company and each ERISA Affiliate, all reports and other
documents required under ERISA or other applicable Law to be filed with any
Governmental Authority, including without limitation all Forms 5500, or
required to be distributed to participants or beneficiaries, have been duly
and timely filed or distributed. True and complete copies of all such
reports and other documents with respect to the past three years for each
Plan have been provided to U.S. Concrete. No "accumulated funding
deficiency" (as defined in Section 412(a) of the Code) with respect to any
Plan has been incurred (without regard to any waiver granted under Section
412 of the Code), nor has any funding waiver from the Internal Revenue
Service been received or requested. Except as set forth in Schedule 5.16,
each Plan that
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is intended to be "qualified" within the meaning of Section 401(a) of the
Code (a "Qualified Plan") is, and has been during the period from its
adoption to the date hereof, so qualified, both as to form and operation
and all necessary approvals of Governmental Authorities, including a
favorable determination as to the qualification under the Code of each of
such Qualified Plans and each amendment thereto, have been timely obtained.
Except as set forth in Schedule 5.16, all accrued contribution obligations
of the Company with respect to any Plan have either been fulfilled in their
entirety or are fully reflected in the Financial Statements.
(c) No Plan has incurred or will incur, and neither the Company nor any
ERISA Affiliate has incurred or will incur, with respect to any Plan, any
liability for excise tax or penalty due to the Internal Revenue Service.
There have been no terminations, partial terminations or discontinuances of
contributions to any Qualified Plan during the preceding five years without
notice to and approval by the Internal Revenue Service and payment of all
obligations and liabilities attributable to such Qualified Plan.
(d) Except as set forth in Schedule 5.16, neither the Company nor any
ERISA Affiliate has made any promises of retirement or other benefits to
employees, except as set forth in the Plans, and neither the Company nor
any ERISA Affiliate maintains or has established any 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, and
at the expense of the participant or the beneficiary of the participant, or
retiree medical liabilities. Neither the Company 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.
Except as set forth in Schedule 5.16, neither the Company nor any ERISA
Affiliate has any current or future obligation or liability with respect to
a Plan pursuant to the provisions of a collective bargaining agreement.
(e) Neither the Company nor any ERISA Affiliate has incurred, nor will
it incur as a result of past activities, any material liability to the
Pension Benefit Guaranty Corporation in connection with any Plan. Except as
set forth on Schedule 5.16, the assets of each Plan that are subject to
Title IV of ERISA are sufficient to provide the benefits under such Plan,
the payment of which the Pension Benefit Guaranty Corporation would
guarantee if such Plan were terminated, and such assets are also sufficient
to provide all other "benefits liabilities" (as defined in ERISA Section
4001(a)(16)) due under such Plan upon termination.
(f) No "reportable event" (as defined in Section 4043 of ERISA) has
occurred and is continuing with respect to any Plan. There are no pending,
or to the Company's and the Stockholders' knowledge, threatened claims,
lawsuits or actions (other than routine claims for benefits in the ordinary
course) asserted or instituted against, and neither the Company nor any
ERISA Affiliate has knowledge of any threatened litigation or claims
against, the assets of any Plan or its related trust or against any
fiduciary of a Plan with respect to the operation of such Plan. To the
Company's and the Stockholders'
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knowledge, there are no investigations or audits of any 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 Company or any ERISA Affiliate that has not been fully
discharged. Neither the Company nor any ERISA Affiliate has participated in
any voluntary compliance or closing agreement programs established with
respect to the form or operation of a Plan.
(g) Neither the Company 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 Plan for which exemption
was not available. No person or entity that was engaged by the Company or
an ERISA Affiliate as an independent contractor within the last five years
reasonably can or will be characterized or deemed to be an employee of the
Company or an ERISA Affiliate under applicable Laws for any purpose
whatsoever, including, without limitation, for purposes of federal, state
and local income taxation, workers' compensation and unemployment insurance
and Plan eligibility.
(h) Schedule 5.16 also sets forth an accurate schedule of each
multiemployer plan to which the Company or any ERISA Affiliate is, or ever
has been, a participant in or obligated to make any payment. With respect
to each such multiemployer plan: (i) none of the foregoing representations
and warranties of this Section 5.16 shall apply; and (ii) except as set
forth on Schedule 5.16, all contributions required to be made by the
Company or any ERISA Affiliate to such multiemployer plan have been made or
are accrued and fully reflected in the Financial Statements.
5.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in Schedule
5.17, there are no claims, actions, suits or proceedings, pending or, to the
knowledge of the Company and the Stockholders, threatened against or affecting
the Company, at law or in equity, or before or by any Governmental Authority
having jurisdiction over the Company. No written notice of any claim, action,
suit or proceeding, whether pending or threatened, has been received by the
Company and, to the Stockholders' and the Company's knowledge, there are no
facts or circumstances existing which, with delivery of notice or passage of
time or both would constitute such a claim, action, suit or proceeding. Except
to the extent set forth in Schedule 5.17, the Company has conducted and is
conducting its business in substantial compliance with all Laws applicable to
the Company, its assets or the operation of its business. Also listed on
Schedule 5.17 are all other instances where the Company is a plaintiff or
complaining or moving party, under any of the above types of proceedings.
5.18 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
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. The Company has timely filed all
requisite federal, state, local and other tax returns for all fiscal periods
ended on or before the Closing, and has duly paid in full or made adequate
provision in the year-end
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Financial Statements for the payment of all Taxes for all periods ending at or
prior to the Closing Date. The Company has 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 Company relating to Taxes for any period or periods prior to and including
the Balance Sheet Date and no notice of any claim for Taxes has been received.
The Company has 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 Company is not a party to any Tax allocation or sharing agreement
and is not otherwise liable or obligated to indemnify any person or entity with
respect to any Taxes. 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 Company for the last three fiscal years have been
previously provided to U.S. Concrete. There are no requests for ruling in
respect of any Tax pending between the Company and any Taxing authority. The
Company is taxed under the provisions of Subchapter C of the Code. The Company
currently utilizes the accrual method of accounting for income tax purposes.
Such method of accounting has not changed in the past five years.
5.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set
forth in Schedule 5.19, the Company has conducted its operations in the ordinary
course and there has not been:
(a) any material adverse change in the business, operations,
properties, condition (financial or other), assets, liabilities (contingent
or otherwise), or results of operations of the Company;
(b) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the assets, properties or
business of the Company;
(c) any change in the authorized capital stock of the Company or in its
outstanding securities or any change in the Stockholders' ownership
interests in the Company or any grant of any options, warrants, calls,
conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption, purchase
or other acquisition of any of the capital stock of the Company;
(e) any increase in the compensation payable or to become payable by
the Company to the Stockholders or any of its 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 5.19;
(f) any work interruptions, labor grievances or claims filed;
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(g) except for the Merger, any sale or transfer, or any agreement to
sell or transfer, any material assets, properties or rights of the Company
to any person or entity, including, without limitation, the Stockholders
and their Affiliates;
(h) any cancellation, or agreement to cancel, any indebtedness or other
obligation owing to the Company;
(i) any increase in the indebtedness of the Company, 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;
(j) 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;
(k) 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 Company's business;
(l) any waiver of any material rights or claims of the Company; or
(m) any other material transaction by the Company outside the ordinary
course of business.
5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY. Schedule
5.20 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 the Company
has accounts or safe deposit boxes; (b) the names in which the accounts or boxes
are held; (c) the type of account and the cash, cash equivalents and securities
held in such account as of the second business day prior to the Closing, none of
which assets have been withdrawn from such accounts since such date except for
bona fide business purposes in the ordinary course of the business of the
Company; and (d) the name of each person authorized to draw thereon or have
access thereto. Schedule 5.20 also sets forth the name of each person,
corporation, firm or other entity holding a general or special power of attorney
from the Company and a description of the terms thereof.
5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor the
Stockholders 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.
5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth in Schedule 5.22, neither the Stockholders nor any other Affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
Competitive Business, lessor, lessee, customer or supplier of the Company.
Except as set forth in Schedule 5.22, no officer or director of the Company nor
the
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Stockholders 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 Company.
5.23 INTANGIBLE PROPERTY. Schedule 5.23 sets forth an accurate list of
all patents, patent applications, trademarks, service marks, technology,
licenses, trade names, copyrights and other intellectual property or
proprietary property rights owned or used by the Company. The Company owns or
possesses, and the assets of the Company include, sufficient legal rights to use
all of such items without conflict with or infringement of the rights of others.
5.24 CAPITAL EXPENDITURES. Schedule 5.24 sets forth the total amount of
capital expenditures currently budgeted to be incurred by the company in excess
of $25,000 in the aggregate during the balance of the Company's current fiscal
year.
5.25 INVENTORIES. Except as Schedule 5.25 sets forth: (i) all
inventories, net of reserves determined in accordance with GAAP, of the Company
which are classified as such on the Interim Balance Sheet are merchantable and
salable or usable in the ordinary course of business of the Company; and (ii)
the Company does 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 Company or during the past five years has sustained a
difficulty material to the Company in obtaining its inventories.
5.26 TAX REORGANIZATION REPRESENTATION. The Surviving Corporation will
acquire substantially all of the properties of the Company within the meaning of
Section 368(a)(2)(D) of the Code.
5.27 ABSENCE OF INTEREST-BEARING DEBT. As of the Closing Date, Company
shall have no Interest-Bearing Debt and no Interest-Bearing Debt shall be
assumed by the Surviving Corporation.
5.28 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of the Stockholders
and the Company that U.S. Concrete and Newco are not making any representation
or warranty whatsoever, express or implied, other than those representations and
warranties of U.S. Concrete and Newco expressly set forth in this Agreement.
5.29 DISCLOSURE. The Stockholders and the Company have fully provided
U.S. Concrete or its representatives with all the information that U.S. Concrete
has requested in analyzing whether to consummate the Merger and the other
transactions contemplated by this Agreement. None of the information so
provided nor any representation or warranty of the Stockholders to U.S. Concrete
or Newco 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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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO
U.S. Concrete and Newco jointly and severally represent and warrant to the
Stockholders as follows:
6.01 ORGANIZATION. Each of U.S. Concrete and Newco is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, and is duly authorized and qualified under all applicable Laws to
carry on its business in the places and in the manner now conducted. Each of
U.S. Concrete and Newco has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as such business
is currently being conducted.
6.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) Each of U.S. Concrete and Newco has the full legal right, power and
authority to enter into this Agreement and the ancillary documents and
agreements described herein and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement has been
approved by the boards of directors of U.S. Concrete and Newco and by U.S.
Concrete, as the sole stockholder of Newco. No additional corporate or
shareholder proceedings on the part of U.S. Concrete or Newco are necessary
to authorize the execution and delivery of this Agreement and the
consummation by U.S. Concrete and Newco of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
U.S. Concrete and Newco, and, assuming the due authorization, execution and
delivery by the Company and the Stockholders, constitutes valid and binding
agreements of U.S. Concrete and Newco, enforceable against U.S. Concrete
and Newco in accordance with its terms.
(b) The execution and delivery of this Agreement by U.S. Concrete and
Newco do not, and the consummation by U.S. Concrete and Newco of the
transactions contemplated hereby will not, violate or result in a breach of
any provision of, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in
a right of termination or acceleration under any of the terms, conditions
or provisions of (i) the Certificate of Incorporation or By-Laws of U.S.
Concrete or Newco, (ii) any Law applicable to either U.S. Concrete or Newco
or any of its properties or assets or (iii) any material agreement, note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of
any kind to which U.S. Concrete or Newco is now a party or by which either
U.S. Concrete or Newco or any of its properties or assets may be bound or
affected.
(c) Except for the Merger Filings and such filings as may be required
under federal or state securities Laws, no declaration, filing or
registration with, or notice to, or authorization, consent or approval of,
any Governmental Authority or other person or entity is necessary for the
execution and delivery of this Agreement by U.S. Concrete and Newco or the
consummation by U.S. Concrete and Newco of the transactions contemplated
hereby.
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6.03 U.S. CONCRETE COMMON STOCK. The shares of U.S. Concrete Common
Stock to be issued and delivered to the Stockholders pursuant to the Merger are
duly authorized and, when issued in accordance with the terms of the irrevocable
instruction letter contemplated by Section 3.03, will be validly issued, fully
paid and nonassessable. The issuance of U.S. Concrete Common Stock pursuant to
the Merger will transfer to the Stockholders valid title to such shares of U.S.
Concrete Common Stock, free and clear of all Encumbrances, except for any
Encumbrances created by the Stockholders.
6.04 TAX REORGANIZATION REPRESENTATIONS.
(a) Prior to the Merger, U.S. Concrete will be in control of Newco
within the meaning of Section 368(c) of the Code.
(b) U.S. Concrete has no plan or intention to cause the Surviving
Corporation to issue additional shares of its stock that would result in
U.S. Concrete losing control of the Surviving Corporation within the
meaning of Section 368(c) of the Code.
(c) U.S. Concrete has no plan or intention to reacquire any of its
stock issued in the Merger.
(d) U.S. Concrete has no plan or intention to liquidate the Surviving
Corporation; to merge the Surviving Corporation with or into another
corporation; to sell or otherwise dispose of the stock of the Surviving
Corporation except for transfers of stock to another corporation controlled
by U.S. Concrete; or to cause the Surviving Corporation to sell or
otherwise dispose of any of its assets, except for dispositions made in the
ordinary course of business or transfers of assets to a corporation
controlled by U.S. Concrete.
(e) Following the Closing, U.S. Concrete's intention is that the
Surviving Corporation will continue the historic business of the Company or
use a significant portion of the historic business assets of the Company in
a business, all as required to satisfy the "continuity of business
enterprise" requirement under Section 368 of the Code.
(f) U.S. Concrete does not own, nor has it owned during the past five
years, any shares of the stock of the Company.
(g) Each of U.S. Concrete and Newco is undertaking the Merger for a
bona fide business purpose and not merely for the avoidance of federal
income tax.
(h) Neither U.S. Concrete nor Newco is an investment company as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.
(i) As of the Closing Date, the fair market value of the assets of
Newco will exceed the sum of Newco's liabilities plus the amount of other
liabilities, if any, to which Newco's assets are subject.
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6.05 SEC FILINGS; DISCLOSURE. U.S. Concrete has filed with the SEC all
material forms, statements, reports and documents required to be filed by it
prior to the date hereof under each of the 1933 Act and the 1934 Act and the
respective rules and regulations thereunder, (a) all of which, as amended, if
applicable, complied when filed in all material respects with all applicable
requirements of the appropriate Act and the rules and regulations thereunder,
and (b) none of which, as amended, if applicable, contains any untrue statement
of material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made and at the time they were made, not
misleading. Since the date of the information provided in the most recent
filing, there has been no material adverse change in the financial condition or
results of operations of U.S. Concrete, taken as a whole.
6.06 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of U.S. Concrete
and Newco that the Stockholders are not making any representation or warranty
whatsoever, express or implied, other than those representations and warranties
of the Stockholders expressly set forth in this Agreement.
6.07 DISCLOSURE. U.S. Concrete has fully provided the Stockholders or
their representatives with all the information that the Stockholders have
requested in analyzing whether to consummate the Merger. None of the
information so provided nor any representation or warranty of U.S. Concrete
contained 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
or therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE VII
CERTAIN COVENANTS
7.01 RELEASE FROM GUARANTEES. U.S. Concrete shall use its commercially
reasonable efforts to have the Stockholders released from the personal
guarantees of the Company's indebtedness identified in Schedule 7.01 on the
Closing Date and will continue such efforts after the Closing if not released
prior thereto. U.S. Concrete hereby agrees to indemnify and defend the
Stockholders and hold each Stockholder harmless for any amounts that such
Stockholder is required to pay in connection with the enforcement of any
obligations under such personal guarantees after the Closing, including without
limitation any reasonable attorneys' fees and expenses incurred in connection
therewith.
7.02 FUTURE COOPERATION; TAX MATTERS. The Stockholders and U.S. Concrete
shall each deliver or cause to be delivered to the other following the Closing
such additional instruments as the other may reasonably request for the purpose
of fully carrying out this Agreement. The Stockholders shall be responsible for
the payment of all Taxes attributable to all periods prior to and including the
Closing Date, including without limitation the period from the beginning of the
Company's current Tax year through the Closing Date. The Stockholders shall be
responsible for the preparation of all Tax returns covering the period from the
beginning of the Company's current Tax year through the Closing Date, and shall
be responsible for all costs and expenses incurred in connection with the
preparation of such Tax returns. The Surviving Corporation will cooperate with
the Stockholders in their preparation of all Tax returns covering
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the period from the beginning of the Company's current Tax year through
the Closing. In addition, U.S. Concrete will provide the Stockholders with
access to such of its books and records as may be reasonably requested by the
Stockholders in connection with federal, state and local tax matters relating to
periods prior to the Closing. The Stockholders will cooperate and use their
commercially reasonable efforts to encourage the present officers, directors and
employees of the Company to cooperate with U.S. Concrete and the Surviving
Corporation at and after the Closing in furnishing information, evidence,
testimony and other assistance in connection with any actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to all
periods prior to the Closing. The party requesting cooperation, information or
actions under this Section 7.02 shall reimburse the other party for all
reasonable out-of-pocket costs and expenses paid or incurred in connection
therewith, which costs and expenses shall not, however, include per diem charges
for employees or allocations of overhead charges.
7.03 EXPENSES. U.S. Concrete will pay the fees, expenses and
disbursements of U.S. Concrete and its agents, representatives, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement and any amendments hereto. The Company (as owned by U.S.
Concrete after Closing) will be responsible for the fees and expenses of Arthur
Andersen LLP's audit or audit related procedures in connection with the
transactions contemplated hereby. The Stockholders will pay their fees,
expenses and disbursements and those of their and the Company's agents,
representatives, financial advisors, accountants and counsel incurred in
connection with the execution, delivery and performance of this Agreement and
any amendments hereto and the consummation of the transactions contemplated
hereby, including, without limitation, accounting fees and related expenses
attributable to the final Tax returns of the Company and the Stockholders for
periods through the Closing. The Stockholders will also pay any costs
associated with business brokers or other advisors engaged by the Stockholders
or the Company.
7.04 LEGAL OPINION. At the Closing, the Company and the Stockholders
shall cause their legal counsel, Dykema Gossett PLLC, to deliver to U.S.
Concrete a legal opinion in form and substance acceptable to U.S. Concrete.
7.05 EMPLOYMENT AGREEMENTS. Concurrently with the execution of this
Agreement, the Surviving Corporation pursuant to the Fuel Merger Agreement shall
enter into a mutually acceptable Employment Agreements with each of Cornillie
and Deneweth (collectively, the "Employment Agreements").
7.06 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the
execution of this Agreement, (a) the Stockholders shall repay to the Company all
amounts outstanding as advances to or receivables from the Stockholders, each of
which advances or receivables is specifically reflected in Schedule 5.07, and
(b) the Company shall repay all amounts outstanding under loans to the Company
from the Stockholders, each of which loans to the Company is specifically
reflected in Schedule 5.06.
7.07 STOCK OPTIONS. U.S. Concrete shall grant nonqualified options to
purchase an aggregate of zero shares of U.S. Concrete Common Stock as of the
Closing Date under U.S. Concrete's 1999 Incentive Plan (the "Incentive Plan") to
certain key employees of the Company (other than the Stockholders), as set forth
on Schedule 7.07 in the amounts listed
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thereon. Schedule 7.07 shall also include the social security number and home
address of each individual listed thereon. Such options shall vest in equal
annual increments for four years, commencing on the first anniversary of the
Closing Date.
7.08 PRE-CLOSING DISTRIBUTIONS. Prior to the Closing, the Company may
have distributed to the Stockholders the cash and other assets set forth on
Schedule 7.08. Any such distributions shall have been authorized by the Board
of Directors of the Company prior to the Closing, and the Company and the
Stockholders shall have used the respective best efforts to complete such
distributions prior to the Closing. Notwithstanding the foregoing, if any such
authorized distributions have not been completed prior to the Closing the
Surviving Corporation shall use reasonable efforts to complete such authorized
distributions after the Closing. The Stockholders' sole recourse against the
Surviving Corporation and U.S. Concrete with respect to this Section 7.08 shall
be to the assets to be distributed.
7.09 WORKING CAPITAL ADJUSTMENT.
(a) As soon as practicable after the Closing Date, U.S. Concrete shall
cause to be prepared and delivered to the Stockholders a consolidated
balance sheet of Cornillie Fuel & Supply Inc., Dencor, Inc. and the Company
(collectively, the "Consolidated Companies") as of the Closing Date (the
"Closing Date Balance Sheet Date"), which has been prepared from the books
and records of the Consolidated Companies in conformity with GAAP (the
"Final Balance Sheet"), and a working capital adjustment schedule (the
"Adjustment Schedule"). The Adjustment Schedule will set forth the
computation of the Adjusted Working Capital Amount. As used in this Section
7.09, capitalized terms not otherwise defined in this Agreement shall have
the following meanings:
"Adjusted Current Assets" means the amount of current assets of the
Consolidated Companies as set forth on the Closing Date Balance Sheet;
"Adjusted Current Liabilities" means the amount of current liabilities
of the Consolidated Companies as set forth on the Closing Date Balance
Sheet less the current portion of Interest-Bearing Debt (if any) as set
forth on the Closing Date Balance Sheet; and
"Adjusted Working Capital Amount" means the amount computed by
subtracting Adjusted Current Liabilities from Adjusted Current Assets as
finally determined in accordance with Section 7.09(c). Adjusted Working
Capital will exclude amounts relating to the 1999 Ross Portable Plant and
the upgrade of the aggregate section of the Detroit batch plant (bins).
(b) If the Adjusted Working Capital Amount is less than $250,000, then
the Stockholders shall, no later than 15 days after delivery of the
Adjustment Schedule as finally determined in accordance with Section
7.09(c) by U.S. Concrete, pay to the Surviving Corporation the amount by
which $250,000 exceeds the Adjusted Working Capital Amount (the "Adjusted
Working Capital Shortfall"). If the Adjusted Working Capital Amount is
greater than $250,000, then the Surviving Corporation shall, no later than
15 days after delivery of the Adjustment Schedule as finally determined in
accordance with Section 7.09(c), pay to the Stockholders, on a pro rata
basis in
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proportion to their percentage ownership of the Company Common Stock
outstanding immediately prior to the Closing, the amount by which the
Adjusted Working Capital Amount exceeds $250,000 (the "Adjusted Working
Capital Excess").
(c) The Closing Date Balance Sheet and Adjustment Schedule will be
final and binding on the parties hereto unless, within 30 days following
the delivery of the Adjustment Schedule by U.S. Concrete, the Stockholders
notify U.S. Concrete in writing that the Stockholders disagree with all or
any portion of the Closing Date Balance Sheet and/or the Adjustment
Schedule. If the Stockholders and U.S. Concrete cannot mutually resolve any
such disagreement within 30 days after the receipt by U.S. Concrete of the
Stockholders' notice of disagreement, then the Stockholders and U.S.
Concrete shall submit the dispute to a mutually agreeable certified public
accounting firm (the "Accountant") within 20 days after the end of such 30-
day period. If the Stockholders and U.S. Concrete are unable to agree upon
such an accounting firm within such 20-day period, then the Stockholders
and U.S. Concrete shall select a "Big Five" accounting firm by lot (after
excluding any of their respective regular Big Five accounting firms), which
accounting firm shall act as the Accountant. The Stockholders and U.S.
Concrete shall request that the Accountant audit the Closing Date Balance
Sheet and provide a computation of the Adjusted Working Capital Amount
within 30 days thereafter, and this computation will be final and binding
upon the parties hereto and used to compute the Adjusted Working Capital
Shortfall or Adjusted Working Capital Excess, as the case may be, the
payment of any of which shall be made within five days of delivery by U.S.
Concrete of the audited Closing Date Balance Sheet. In the event the
Stockholders and U.S. Concrete submit any unresolved objections to an
Accountant for resolution as provided in this Section 7.09, the
Stockholders and U.S. Concrete will each pay one-half of the fees and
expenses of the Accountant.
7.10 OTHER DOCUMENTS. At the Closing, U.S. Concrete shall receive the
following additional certificates, instruments and documents:
(a) Stock certificates representing all Company Common Stock duly
endorsed in blank by the Stockholders, or accompanied by stock powers duly
executed in blank by the Stockholders, and otherwise in a form acceptable
to U.S. Concrete.
(b) Written resignations of all directors and all officers of
the Company, such resignations to be effective concurrently with the
Closing on the Closing Date.
(c) Releases in form and substance satisfactory to U.S. Concrete
executed by the Stockholders releasing the Company from any liability or
obligation to the Stockholders.
(d) All of the Company's books and records, including, without
limitation, minute books, corporate charters, by-laws, stock records, bank
account records, computer records and all contracts with third parties;
provided, however, that all of the foregoing, other than the minute books,
corporate charters, by-laws and stock records, shall remain at the business
location of Company where they are currently maintained.
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7.11 BENEFIT PLANS.
(a) U.S. Concrete shall not , and shall cause the Surviving
Corporation not to at any time prior to 60 days after the Closing Date,
effectuate a "plant closing" or "mass layoff" as those terms are defined in
the Worker Adjustment and Restraining Notification Act of 1988 ("WARN")
affecting in whole or in part any facility, site of employment, operating
unit or employee of Company or any Company Subsidiary without complying
fully with the requirements of WARN.
(b) All health and welfare benefit plans of U.S. Concrete or the
Surviving Corporation in which the employees of Company or any Company
Subsidiary participate after the Effective Time shall (i) recognize
expenses and claims that were incurred by such employees in the year in
which the Effective Time occurs for purposes of computing deductible
amounts and co-payments under such health and welfare plans as of the
Effective Time, (ii) provide coverage for pre-existing health conditions to
the extent covered under the applicable plans or programs as of the
Effective Time, and (iii) credit any deductibles paid or co-payments made
by employees of Company or any Company Subsidiary prior to the Effective
Time for purposes of paying deductibles or making co-payments pursuant to
the health and welfare benefit plans of U.S. Concrete or the Surviving
Corporation. In addition, employees of the Surviving Corporation and its
subsidiaries shall receive credit for their prior service with Company for
eligibility and vesting purposes and for vacation accrual purposes under
all health and welfare, pension, 401(k) and other benefit programs.
ARTICLE VIII
INDEMNIFICATION
The Stockholders, U.S. Concrete and Newco each make the following covenants:
8.01 General Indemnification by the Stockholders. Subject to Section 8.05 and
Section 8.06, the Stockholders covenant and agree that they will jointly and
severally (without any right of indemnification or contribution from the
Company) indemnify, defend, protect and hold harmless U.S. Concrete, Newco and
the Surviving Corporation, and their respective officers, directors, employees,
stockholders, agents, representatives and Affiliates, at all times from and
after the date of this Agreement from and against all Losses incurred by any of
such indemnified persons and entities as a result of or arising from (a) until
the Expiration Date any breach of the representations and warranties of the
Stockholders set forth herein or in the Schedules attached hereto, (b) any
breach or nonfulfillment of any covenant or agreement on the part of the
Stockholders under this Agreement, (c) all income Taxes payable by the Company
for all periods prior to and including the Closing Date, (d) all transfer Taxes
arising from the transactions contemplated by Section 7.08 of this Agreement,
(e) any litigation listed on Schedule 5.17, or (f) any claim by David Klepac for
fraud, misrepresentation, failure to disclose information or any other basis
whatsoever relating to his redemption of shares of Company by Company on
February 7, 2000.
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8.02 INDEMNIFICATION BY U.S. CONCRETE. Subject to Section 8.06, U.S. Concrete
covenants and agrees that it will indemnify, defend, protect and hold harmless
the Stockholders and their respective agents, representatives, Affiliates,
beneficiaries and heirs and employees at all times from and after the date of
this Agreement from and against all Losses incurred by any of such indemnified
persons as a result of or arising from (a) until the Expiration Date, any breach
of the representations and warranties of U.S. Concrete or Newco set forth herein
or in the Schedules attached hereto or certificates delivered in connection
herewith or (b) any breach or nonfulfillment of any covenant or agreement on the
part of U.S. Concrete or Newco under this Agreement.
8.03 THIRD PERSON CLAIMS. Promptly after any party entitled to
indemnification under Sections 8.01 and 8.02 hereof (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person or entity not a party to this Agreement ("Third Person"), or the
commencement of any action or proceeding by a Third Person, which the
Indemnified Party believes in good faith is an indemnifiable claim under this
Agreement, the Indemnified Party shall give to the party obligated to provide
indemnification pursuant to Sections 8.01 or 8.02 hereof (hereinafter the
"Indemnifying Party") written notice of such claim or the commencement of such
action or proceeding. Such notice shall state the nature and the basis of such
claim and a reasonable estimate of the amount thereof. The Indemnifying Party
shall have the right to defend and settle, at its own expense and by its own
counsel reasonably acceptable to the Indemnified Party, any such matter so long
as the Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in all commercially
reasonable respects in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records and other information reasonably
requested by the Indemnifying Party and in the Indemnified Party's possession or
control. After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability, and for
so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability; provided, however, that the Indemnified Party shall
be entitled, at its expense, to participate in the defense of such asserted
liability and the negotiations of the settlement thereof. The Indemnifying
Party shall not settle any such Third Person claim without the consent of the
Indemnified Party (which consent shall not be unreasonably withheld), unless the
settlement thereof imposes no liability or obligation on, and includes a
complete release from liability of, the Indemnified Party. If the Indemnifying
Party desires to accept a final and complete settlement of any such Third Person
claim and the Indemnified Party refuses to consent to such settlement, then the
Indemnifying Party's liability under this Section with respect to such Third
Person claim shall be limited to the amount so offered in settlement by said
Third Person; provided, however, that notwithstanding the foregoing, the
Indemnified Party shall be entitled to refuse to consent to any such proposed
settlement and the Indemnifying Party's liability hereunder shall not be limited
by the amount of the proposed settlement if such settlement imposes any
liability or obligation on, or does not provide for the complete release of, the
Indemnified Party. If, upon receiving notice, the Indemnifying Party does not
timely undertake to defend such matter to which the Indemnified Party is
entitled to indemnification hereunder, or fails diligently to pursue such
defense, the Indemnified Party may undertake such defense through counsel of its
choice, at the cost and expense of the Indemnifying Party, and the
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Indemnified Party may settle such matter, in its discretion, and the
Indemnifying Party shall reimburse the Indemnified Party for the amount paid in
such settlement and any other liabilities or expenses incurred by the
Indemnified Party in connection therewith.
8.04 NON-THIRD PERSON CLAIMS. In the event that any Indemnified
Party asserts the existence of a claim giving rise to Losses (but excluding
claims resulting from the assertion of liability by Third Persons), such party
shall give written notice to the Indemnifying Party. Such written notice shall
state that it is being given pursuant to this Section 8.04, specify the nature
and amount of the claim asserted, and indicate the date on which such assertion
shall be deemed accepted and the amount of the claim deemed a valid claim (such
date to be established in accordance with the next sentence). If such
Indemnifying Party, within 60 days after the mailing of notice by such
Indemnified Party, shall not give written notice to such Indemnified Party
announcing such Indemnifying Party's intent to contest such assertion of such
Indemnified Party, such assertion shall be deemed accepted and the amount of
such claim shall be deemed a valid claim. In the event, however, that such
Indemnifying Party contests such assertion of a claim by giving such written
notice to the Indemnified Party within said period, then the parties shall act
in good faith to reach agreement regarding such claim. If the parties cannot
resolve such dispute after good faith negotiations with respect thereto within
60 days after the notice provided by the Indemnifying Party, such dispute shall
be submitted to arbitration in accordance with the provisions of Section 13.11.
In the event that arbitration shall arise with respect to any such claim, the
prevailing party shall be entitled to reimbursement of costs and expenses
incurred in connection with such arbitration including reasonable attorneys'
fees.
8.05 INDEMNIFICATION DEDUCTIBLE. Neither U.S. Concrete, Newco nor
the Surviving Corporation shall be entitled to indemnification or other relief
from the Stockholders under the provisions of Section 8.01(a) until such time
as, and only to the extent that, the claims subject to indemnification by such
other party exceed, in the aggregate, $100,760 when combined with the Fuel
Merger Agreement and Dencor Stock Purchase Agreement. Notwithstanding the
foregoing, the limitations set forth in this Section 8.05 shall not apply to
fraudulent misrepresentations or the representation contained in Section 5.27,
the representation contained in Section 5.27, or the obligation to indemnify set
forth in Section 8.01(f).
8.06 LIABILITY LIMITATION. Subject to Section 8.05, the aggregate
obligation of the Stockholders, on the one hand, and of U.S. Concrete and the
Surviving Corporation, on the other hand, for any and all claims arising under
this Agreement, the Fuel Merger Agreement, Dencor Stock Purchase Agreement, or
under Sections 3 or 7 of the Employment Agreements, shall be limited to
$10,076,029. Notwithstanding the foregoing, the limitations set forth in this
Section 8.06 shall not apply to fraudulent misrepresentations or the
representation contained in Section 5.27, or the obligation to indemnify set
forth in Section 8.01(f).
8.07 FORM OF INDEMNITY PAYMENT. Any payment required to be made by
the Stockholders pursuant to this Agreement shall first be made from the cash
portion of the Merger Consideration. In the event of a payment obligation which
exceeds such cash portion, then Stockholders may make payment by delivering to
U.S. Concrete such required number of shares of U.S. Concrete Common Stock
valued at the Average Closing Price.
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ARTICLE IX
NONCOMPETITION COVENANTS
9.01 PROHIBITED ACTIVITIES.
(a) For no additional consideration, each Stockholder will not
for five years following the Closing Date (the "Noncompete Term"),
directly or indirectly, for himself 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, lender, guarantor, 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 Competitive Business within a radius of 100 air
miles of any plant or other operating facility in which the Company was
engaged in business on the date immediately prior to the Closing Date;
(ii) call upon or otherwise solicit any person, who is, at that
time, within the Territory, an employee or consultant of the Cornillie
Companies, U.S. Concrete, the Surviving Corporation or any of their
respective subsidiaries, for the purpose or with the intent of enticing
such employee or consultant out of the employ or contract with the
Cornillie Companies, the Surviving Corporation 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 one year prior to that time, a
customer of the Cornillie Companies, U.S. Concrete or the Surviving
Corporation 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 which the Company or
U.S. Concrete 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 U.S. Concrete, for the purpose of (A)
acquiring that entity or arranging the acquisition of that entity by
any person or entity other than U.S. Concrete; and (B) engaging in a
Competitive Business within the Territory.
(b) Notwithstanding the above, Section 9.01(a) shall not be deemed to
prohibit any Stockholder from acquiring, as a passive investor with no
involvement in the operations of the business, not more than three 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.
9.02 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses to U.S. Concrete and the Surviving Corporation as a result of a
breach of the foregoing covenant, because a breach of such covenant would
diminish the value of the assets, properties and
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business of the Company being sold pursuant to this Agreement, and because of
the immediate and irreparable damage that could be caused to U.S. Concrete and
the Surviving Corporation for which it would have no other adequate remedy,
since monetary damages alone may not be an adequate remedy, each Stockholder
agrees that the foregoing covenant may be enforced against such individual by,
without limitation, injunctions, restraining orders and other equitable actions.
9.03 REASONABLE RESTRAINT. It is agreed by the parties hereto that
the foregoing covenants in this ARTICLE IX are necessary in terms of time,
activity and territory to protect U.S. Concrete's and the Surviving
Corporation's interest in the assets, properties and business being acquired
pursuant to the terms of this Agreement and impose a reasonable restraint on the
Stockholders in light of the activities and businesses of U.S. Concrete on the
date of the execution of this Agreement and the current plans of U.S. Concrete.
9.04 SEVERABILITY; REFORMATION. The covenants in this ARTICLE IX
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 IX 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.
9.05 MATERIAL AND INDEPENDENT COVENANT. The Stockholders acknowledge that
their agreements and the covenants set forth in this ARTICLE IX are material
conditions to U.S. Concrete's and Newco's agreements to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and that U.S.
Concrete and Newco would not have entered into this Agreement without such
covenants. All of the covenants in this ARTICLE IX shall be construed as an
agreement independent of any other provision in this Agreement. The existence of
any claim or cause of action by any Stockholder against U.S. Concrete, whether
predicated on this Agreement or otherwise, will not constitute a defense to the
enforcement by U.S. Concrete of any of the covenants of this ARTICLE IX. The
covenants this ARTICLE IX contains will not be affected by any breach of any
other provision hereof by any party hereto.
ARTICLE X
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
10.01 GENERAL. The Stockholders recognize and acknowledge that
they had in the past, currently have, and in the future will have, access to
certain confidential information relating to the businesses of the Company, the
Surviving Corporation and/or U.S. Concrete, including, without limitation, lists
of customers, operational policies, and pricing and cost policies that are, and
following the Closing will be, valuable, special and unique assets of the
Surviving Corporation and U.S. Concrete. Each Stockholder agrees that he or she
will not use or disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose whatsoever, except as
is required in the course of performing his or her duties, if any, to the
Surviving Corporation and/or U.S. Concrete, unless (a) such information becomes
known to the public generally through no fault of the Stockholder or (b)
disclosure is required by Law, provided that prior to disclosing any information
pursuant to this clause (b) the disclosing Stockholder(s) shall give prior
written notice thereof to U.S. Concrete and the Surviving
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Corporation and provide U.S. Concrete with the opportunity to contest such
disclosure. In the event of a breach or threatened breach by any Stockholder of
the provisions of this Section, U.S. Concrete shall be entitled to an injunction
restraining such Stockholder from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting U.S.
Concrete from pursuing any other available remedy for such breach or threatened
breach, including, without limitation, the recovery of damages.
10.02 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses to U.S. Concrete and the Surviving Corporation as a result of
the breach of the foregoing covenant, because a breach of such covenant would
diminish the value of the assets, properties and business of the Company being
sold pursuant to this Agreement, and because of the immediate and irreparable
damage that would be caused for which the Surviving Corporation and/or U.S.
Concrete would have no other adequate remedy, since monetary damages alone may
not be an adequate remedy, each Stockholder agrees that the foregoing covenants
may be enforced against such individual by, without limitation, injunctions,
restraining orders and other equitable actions.
ARTICLE XI
INTENDED TAX TREATMENT
11.01 TAX-FREE REORGANIZATION. U.S. Concrete and the Stockholders
are entering into this Agreement with the intention that the Merger qualify as a
tax-free reorganization for federal income tax purposes, except to the extent of
any "boot" received, and neither U.S. Concrete nor the Stockholders will take
any actions that disqualify the Merger for such treatment.
ARTICLE XII
FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON
U.S. CONCRETE COMMON STOCK
12.01 COMPLIANCE WITH LAW. The Stockholders acknowledge the shares
of U.S. Concrete Common Stock issued in accordance with the terms of this
Agreement (the "Restricted Shares") will not be registered under the 1933 Act
and therefore may not be resold without compliance with the 1933 Act. The
Restricted Shares are being or will be acquired by the Stockholders 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. Each Stockholder covenants, warrants and represents that none of
the Restricted Shares held by such Stockholder 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 1933 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
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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.
12.02 ECONOMIC RISK; SOPHISTICATION; ACCREDITED INVESTORS. Each
Stockholder 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. Each
Stockholder has such knowledge and experience in financial and business matters
that he or she is capable of evaluating the merits and risks of the proposed
investment and therefore has the capacity to protect his or her own interests in
connection with the acquisition of the Restricted Shares pursuant hereto. Each
Stockholder represents to U.S. Concrete and Newco that he or she is an
"accredited investor," as that term is defined in Regulation D under the 1933
Act. Each Stockholder or his or her representatives have had an adequate
opportunity to ask questions of, and receive answers from the appropriate
officers and representatives of U.S. Concrete and Newco concerning, among other
matters, U.S. Concrete, 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 such
Stockholder or his or her representatives concerning such matters.
12.03 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 U.S.
Concrete Common Stock to the public without registration, for a period of two
years after the Closing, U.S. Concrete agrees to use its commercially reasonable
efforts to:
(a) make and keep public information (as such terms are defined
in Rule 144) regarding U.S. Concrete available;
(b) file with the SEC in a timely manner all reports and other
documents required of U.S. Concrete under the 1933 Act and the 1934 Act;
and
(c) furnish to a Stockholder upon written request a written
statement by U.S. Concrete as to its compliance with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, a copy of the most
recent annual or quarterly report of U.S. Concrete, and such other reports
and documents so filed as such Stockholder may reasonably request in
availing himself or herself of any rule or regulation of the SEC allowing
such Stockholder to sell any such shares without registration.
12.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES.
The Stockholders covenant, warrant and represent that (i) none of the Restricted
Shares will be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of, directly or indirectly, during the two-year period
commencing on the Closing Date (the "Lockup Period"); (ii) 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 1933 Act and
the rules and regulations of the SEC; (iii) during the one-year period
commencing on the Closing Date, the Stockholders shall not engage in put, call,
short-sale, hedge, straddle, collar or similar
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transactions with respect to any of the Restricted Shares intended to reduce the
Stockholders' risk of owning such Restricted Shares; and (iv) following the one-
year period described in clause (iii) and for the remainder of the Lockup
Period, the Stockholders shall not engage in put, call, short-sale, hedge,
straddle, collar or similar transactions with respect to 50% or more of the
Restricted Shares intended to reduce the Stockholders' 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 12.01:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL
RESTRICTION ON TRANSFER THAT EXPIRES ON FEBRUARY 7, 2002 AND MAY NOT BE
OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE
PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC.
12.05 PROSPECTUS DELIVERY. Each Stockholder represents and acknowledges that
he or she has been provided with the most current prospectus of U.S. Concrete,
dated May 25, 1999, at least 20 days prior to the date hereof.
12.06 REMOVAL OF LEGENDS. Upon expiration of the Lockup Period, U.S. Concrete
will cause its transfer agent to issue one or more certificates without such
legend as to any Restricted Shares that are no longer subject to the legends set
forth in Section 12.01 and 12.04, respectively; provided, however, that U.S.
Concrete shall not be deemed to be in breach of this Section unless it fails to
cause its transfer agent to issue such certificates after receipt of written
request from a Stockholder.
ARTICLE XIII
MISCELLANEOUS
13.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES. This Agreement and the
rights of the parties hereunder may not be assigned (except by operation of Law)
and shall be binding upon and shall inure to the benefit of the parties hereto,
the successors of U.S. Concrete, Newco, the Surviving Corporation and the
Company, and the heirs and legal representatives of the Stockholders. Except as
provided in ARTICLE VIII or in this Section 13.01, nothing in this Agreement is
intended or will be construed to confer upon or give any person or entity other
than the parties hereto any rights or remedies under or by reason of this
Agreement or any transaction contemplated hereby.
13.02 ENTIRE AGREEMENT. This Agreement (including the Schedules, exhibits and
annexes attached hereto) and the documents delivered pursuant hereto constitute
the entire agreement and understanding among the Stockholders, the Company,
Newco and U.S. Concrete and supersede any prior agreement and understanding
relating to the subject matter of this Agreement, including, without limitation,
the Letter of Intent. This Agreement may be modified or amended only by a
written instrument executed by the Stockholders, the Company, Newco and U.S.
Concrete. Any right hereunder may be waived only by a written instrument
executed by the party waiving such right.
13.03 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. Facsimile
transmission of any signed original document and/or retransmission of any signed
facsimile transmission will be deemed the same as delivery of an
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original. At the request of any party, the parties will confirm facsimile
transmission by signing a duplicate original document.
13.04 BROKERS AND AGENTS. Except for a fee payable to Stockholders' agent,
W.Y. Campbell, which Stockholders will pay, each party hereto represents and
warrants that it employed no broker or agent in connection with the transactions
contemplated by this Agreement. Each party agrees to indemnify each other party
against all loss, cost, damages or expense arising out of claims for fees or
commissions of brokers employed or alleged to have been employed by such
indemnifying party.
13.05 NOTICES. All notices and communications required or permitted hereunder
shall be in writing and may be given by depositing the same in the United States
mail, addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested (which will be deemed given three
business days after deposit), or by delivering the same in person to an officer
or agent of such party (which will be deemed given when actually received), as
follows:
If to U.S. Concrete, Newco or the Surviving Corporation, addressed to them
at:
U.S. Concrete, Inc.
1300 Post Oak Blvd.
Suite 1200
Houston, Texas 77056
Attn: Corporate Secretary
If to the Stockholders, addressed as follows:
Richard A. Deneweth
9940 Edgewood
Traverse City, Michigan 49648
Joseph C. Cornillie, Trustee URTA of
Joseph C. Cornillie, Dated October 4, 1995
3279 Wendover
Troy, Michigan 48084
David Klepac
879 Carver St.
Traverse City, Michigan 49696
with a copy (which shall not constitute notice) to:
D. Richard McDonald, Esq.
Dykema Gossett PLLC
1577 N. Woodward Ave.
Suite 300
Bloomfield Hills, Michigan 48304
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or such other address as any party hereto shall specify pursuant to this Section
13.05 from time to time.
13.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in ARTICLE V and ARTICLE VI shall survive the Closing for a
period of two years from the Closing Date (the "Expiration Date"), except that
the representations and warranties set forth in Sections 5.03, 5.11, 5.16 and
5.18 hereof shall survive until such time as the applicable statute of
limitations period has run, which shall be deemed to be the Expiration Date for
Sections 5.03, 5.11, 5.16 and 5.18, as the case may be. The respective parties
shall remain liable after the Expiration Date for breaches of the
representations and warranties set forth in ARTICLE V and ARTICLE VI, provided
such breaches are asserted in good faith by notice in writing to the alleged
breaching party prior to the Expiration Date.
13.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE. Except as
otherwise provided herein, no delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of any similar breach or default occurring later; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default occurring before or after that waiver. No right, remedy or
election any term of this Agreement gives will be deemed exclusive, but each
will be cumulative with all other rights, remedies and elections available at
law or in equity, subject to the limitations set forth in Sections 8.05 and
8.06.
13.08 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.
13.09 Section Headings; Gender. The Section headings contained in this
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement. Words of the masculine gender
in this Agreement shall be deemed and construed to include correlative words of
the feminine and neuter genders and words of the neuter gender shall be deemed
and construed to include correlative words of the masculine and feminine
genders.
13.10 GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of Delaware (except for its principles governing conflicts of
laws).
13.11 DISPUTE RESOLUTION.
(a) Except with respect to injunctive relief as provided in Section
9.02 and Section 10.02 (which relief may be sought from any court or
administrative agency with jurisdiction with respect thereto), any unresolved
dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration in accordance with the rules of
the American Arbitration Association then in effect. The
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arbitration shall be conducted by a retired judge employed by the Chicago,
Illinois office of J.A.M.S./Endispute, Inc. ("JAMS"). The arbitration shall
be held in JAMS' Chicago, Illinois office.
(b) The parties shall obtain from JAMS a list of the retired judges
available to conduct the arbitration. The parties shall use their reasonable
efforts to agree upon a judge to conduct the arbitration. If the parties
cannot agree upon a judge to conduct the arbitration within 10 days after
receipt of the list of available judges, the parties shall ask JAMS to
provide the parties a list of three available judges (the "Judge List").
Within five days after receipt of the Judge List, each party shall strike one
of the names of the available judges from the Judge List and return a copy of
such list to JAMS and the other party. If two different judges are stricken
from the Judge List, the remaining judge shall conduct the arbitration. If
only one judge is stricken from the Judge List, JAMS shall select a judge
from the remaining two judges on the Judge List to conduct the arbitration.
(c) The arbitrator shall not have the authority to add to, detract
from, or modify any provision hereof nor to award punitive damages to any
injured party. The arbitrator shall have the authority to order payment of
damages, reimbursement of costs, including those incurred to enforce this
Agreement, and interest thereon in the event the arbitrator determines that a
material breach of this Agreement has occurred. A decision by the arbitrator
shall be final and binding. Judgment may be entered on the arbitrator's award
in any court having jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
U.S. CONCRETE, INC.
By:/s/ Donald Wayne
--------------------------------
Donald Wayne, Vice President
CONCRETE XVIII ACQUISITION, INC.
By:/s/ Donald Wayne
--------------------------------
Donald Wayne, President
CORNILLIE LEASING, INC.
By:/s/ Joseph C. Cornillie
--------------------------------
Joseph C. Cornillie, President
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STOCKHOLDERS:
/s/ Richard A. Deneweth
--------------------------------
Richard A. Deneweth, Individually
/s/ Joseph C. Cornillie
--------------------------------
Joseph C. Cornillie, Individually and
As Trustee URTA of Joseph C. Cornillie
Dated October 4, 1995
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EXHIBIT A
ALLOCATION OF CONSIDERATION
Stock Cash
----- ----
Joseph C. Cornillie $316,800* $79,200
Richard A. Deneweth $316,800* $79,200
* 43,697 shares
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EXHIBIT 2.16
ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
by and among
U.S. CONCRETE, INC.,
CONCRETE XXIV ACQUISITION, INC.,
STANCON INC.
AND
DONALD S. BUTLER AND JOHN GRACE
Dated as of March 2, 2000
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................... 1
1.01 Definitions.......................................................... 1
1.02 Interpretation....................................................... 6
ARTICLE II THE MERGER AND THE SURVIVING CORPORATION....................... 6
2.01 The Merger........................................................... 6
2.02 Effective Time of the Merger......................................... 6
2.03 Certificate of Incorporation, Bylaws and Board of Directors of
Surviving Corporation.............................................. 6
2.04 Tax Treatment........................................................ 7
ARTICLE III CONVERSION OF SHARES........................................... 7
3.01 Conversion of Shares................................................. 7
3.02 Newco Shares......................................................... 8
3.03 Delivery of Merger Consideration..................................... 8
ARTICLE IV CLOSING........................................................ 8
4.01 Closing.............................................................. 8
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS............. 8
5.01 Due Organization and Qualification................................... 8
5.02 Authorization; Non-Contravention; Approvals.......................... 9
5.03 Capitalization and Ownership......................................... 10
5.04 Subsidiaries......................................................... 10
5.05 Financial Statements................................................. 10
5.06 Liabilities and Obligations.......................................... 11
5.07 Accounts and Notes Receivable........................................ 11
5.08 Properties and Assets................................................ 12
5.09 Material Customers and Contracts..................................... 14
5.10 Permits.............................................................. 15
5.11 Environmental Matters................................................ 16
5.12 Labor and Employee Relations; Employment Matters..................... 16
5.13 Insurance............................................................ 17
5.14 Compensation; Employment Agreements.................................. 18
5.15 Noncompetition, Confidentiality and Nonsolicitation Agreements;
Employee Policies.................................................. 18
5.16 Employee Benefit Plans............................................... 18
5.17 Litigation and Compliance with Law................................... 21
5.18 Taxes................................................................ 21
5.19 Absence of Changes................................................... 22
5.20 Accounts with Banks and Brokerages; Powers of Attorney............... 23
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5.21 Absence of Certain Business Practices................................ 23
5.22 Competing Lines of Business; Related-Party Transactions.............. 23
5.23 Intangible Property.................................................. 24
5.24 Capital Expenditures................................................. 24
5.25 Inventories.......................................................... 24
5.26 Backlog.............................................................. 24
5.27 Product Warranties................................................... 24
5.28 No Implied Representations........................................... 24
5.29 Disclosure........................................................... 24
5.30 Year 2000 Compliance................................................. 25
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO... 25
6.01 Organization......................................................... 25
6.02 Authorization; Non-Contravention; Approvals.......................... 25
6.03 U.S. Concrete Common Stock........................................... 26
6.04 SEC Filings; Disclosure.............................................. 26
6.05 No Implied Representations........................................... 26
6.06 Disclosure........................................................... 27
ARTICLE VII CERTAIN COVENANTS........................................... 27
7.01 Release From Guarantees.............................................. 27
7.02 Future Cooperation; Tax Matters...................................... 27
7.03 Expenses............................................................. 28
7.04 Legal Opinion........................................................ 28
7.05 Employment Agreements................................................ 28
7.06 Repayment of Related Party Indebtedness.............................. 28
7.07 Stock Options........................................................ 29
7.08 Pre-Closing Distributions............................................ 29
7.09 Working Capital Adjustment........................................... 29
7.10 Interest-Bearing Debt Adjustment..................................... 30
ARTICLE VIII INDEMNIFICATION............................................. 31
8.01 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS.......................... 31
8.02 Indemnification by U.S. Concrete..................................... 31
8.03 Third Person Claims.................................................. 32
8.04 Non-Third Person Claims.............................................. 33
8.05 Indemnification Deductible........................................... 33
8.06 Indemnification Limitation........................................... 33
8.07 Indemnification for Negligence of Indemnified Party.................. 34
ARTICLE IX NONCOMPETITION COVENANTS.................................... 34
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9.01 Prohibited Activities................................................ 34
9.02 Equitable Relief..................................................... 35
9.03 Reasonable Restraint................................................. 35
9.04 Severability; Reformation............................................ 35
9.05 Material and Independent Covenant.................................... 35
ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION................... 36
10.01 General............................................................. 36
10.02 Equitable Relief.................................................... 36
ARTICLE XI FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S.
CONCRETE COMMON STOCK....................................... 37
11.01 Compliance with Law................................................. 37
11.02 Economic Risk; Sophistication; Accredited Investors................. 37
11.03 Rule 144 Reporting.................................................. 37
11.04 Restriction on Sale or Other Transfer of Restricted Shares.......... 38
11.05 Prospectus Delivery................................................. 38
ARTICLE XII MISCELLANEOUS............................................... 39
12.01 Successors and Assigns; Rights of Parties........................... 39
12.02 Entire Agreement.................................................... 39
12.03 Counterparts........................................................ 39
12.04 Brokers and Agents.................................................. 39
12.05 Notices............................................................. 39
12.06 Survival of Representations and Warranties.......................... 40
12.07 Exercise of Rights and Remedies; Remedies Cumulative................ 40
12.08 Reformation and Severability........................................ 41
12.09 Section Headings; Gender............................................ 41
12.10 Governing Law....................................................... 41
12.11 Dispute Resolution.................................................. 41
12.12 Integration of Operations........................................... 42
12.13 Exceptions regarding Lewisville Lease............................... 42
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ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is
made as of March 2, 2000, by and among U.S. Concrete, Inc., a Delaware
corporation ("U.S. Concrete"), Concrete XXIV Acquisition, Inc., a Delaware
corporation that is a subsidiary of U.S. Concrete ("Newco"), Stancon Inc., d/b/a
Butler Ready Mix Concrete, a Texas corporation, including its subsidiaries set
forth on Schedule 5.04 (the "Company") and Donald S. Butler and John Grace (each
a "Stockholder" and collectively, the "Stockholders"), with the Stockholders
being all of the Company's Stockholders.
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively referred to as "Constituent Corporations") deem it advisable and
in the best interests of the Constituent Corporations and the stockholders of
the Constituent Corporations that Newco merge with and into the Company (the
"Merger"); and
WHEREAS, the stockholders of the Constituent Corporations have approved the
Merger in accordance with the GCL (as herein defined) and the TBCA (as herein
defined).
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. Capitalized terms used in this Agreement shall have the
following meanings:
"Accountant" has the meaning set forth in Section 7.09.
"Adjustment Schedule" has the meaning set forth in Section 7.09.
"Affiliate" of, or "Affiliated" with, a specified person or entity means a
person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the specified person or entity.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Balance Sheet Date" has the meaning set forth in Section 5.05.
"Best of the Stockholders' Knowledge" means knowledge of facts actually
possessed by such Stockholders after reasonable inquiry of the Company's other
senior executives, principals, accounting personnel and unit or plant managers
who might reasonably be expected to have knowledge of the specific matter in
issue.
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"Closing" has the meaning set forth in ARTICLE IV.
"Closing Date" has the meaning set forth in ARTICLE IV.
"Closing Date Balance Sheet Date" has the meaning set forth in Section
7.09.
"Closing Date Interest-Bearing Debt Amount" has the meaning set forth in
Section 7.10.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Common Stock" means the Company's common stock, $0.10 par value
per share.
"Competitive Business" means any business that competes with the Company or
the Surviving Corporation, including, without limitation, any business that
involves the production and sale of ready-mixed concrete (including truck-mixed
concrete) and other cement mixtures and the manufacture and sale of pre-cast
concrete products and any logical extension of or business activity reasonably
related to any of the foregoing ("Concrete Manufacturing Operations"), but
excluding any business activity, other than Concrete Manufacturing Operations,
involving the job-site installation, placement or finishing of ready-mixed
concrete mixed and delivered to the site by others or the job-site pumping of
ready-mixed concrete mixed and delivered to the site by others.
"Constituent Corporations" has the meaning set forth in the second
paragraph of this Agreement.
"Debt Schedule" has the meaning set forth in Section 7.10.
"Determination Date" has the meaning set forth in Section 7.09.
"Effective Time" has the meaning set forth in Section 2.02.
"Employee benefit plan" has the meaning set forth in Section 5.16.
"Employee pension benefit plan" has the meaning set forth in Section 5.16.
"Employment Agreements" has the meaning set forth in Section 7.05.
"Encumbrances" means all liens, encumbrances, mortgages, pledges, security
interests, conditional sales agreements, charges, options, preemptive rights,
rights of first refusal, reservations, restrictions or other encumbrances or
defects in title.
"Environmental Laws" means any and all Laws or agreements with any
Governmental Authority 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
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strata, plant and animal life or any other natural resource) or human health or
safety, (b) emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes (including, without limitation, Hazardous Substances) or noxious noise
or odor 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 pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes (including,
without limitation, Hazardous Substances), in each case as amended from time to
time and as now or hereafter 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 from time to time, and any other Laws now or hereafter
relating to any of the foregoing, and (ii) any common law or equitable doctrine
(including, without limitation, injunctive relief and tort doctrines such as
negligence, nuisance, trespass and strict liability) that may impose liability
or obligations for injuries or damages due to, or threatened as a result of, the
presence of, effects of or exposure to any Hazardous Substance.
"ERISA" has the meaning set forth in Section 5.16.
"ERISA Affiliate" has the meaning set forth in Section 5.16.
"Expiration Date" has the meaning set forth in Section 12.06.
"Final Balance Sheet" has the meaning set forth in Section 7.09.
"Financial Statements" has the meaning set forth in Section 5.05.
"GAAP" means generally accepted accounting principles as currently applied
by the respective party on a basis consistent with preceding years and
throughout the periods involved.
"GCL" means the General Corporation Law of the State of Delaware, as
amended.
"Governmental Authority" means any federal, state, local or foreign
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or quasi-
governmental authority.
"Hazardous Substances" means any and all substances presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law. The term "Hazardous
Substances" includes,
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without limitation, any substance to which exposure is regulated by any
Governmental Authority or any Environmental Law including, without limitation,
any toxic waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance or petroleum or any
derivative or by-product thereof, radon, radioactive material, asbestos or
asbestos containing material, urea formaldehyde foam insulation, lead or
polychlorinated biphenyls.
"Incentive Plan" has the meaning set forth in Section 7.07.
"Indemnified Party" has the meaning set forth in Section 8.03.
"Indemnifying Party" has the meaning set forth in Section 8.03.
"Interest-Bearing Debt" means the total amount of outstanding indebtedness
of the Company for borrowed money (including, without limitation, bank debt,
equipment debt, capital lease obligations, bank overdrafts and any other
indebtedness for borrowed money).
"IRCA" has the meaning set forth in Section 5.12.
"Judge List" has the meaning set forth in Section 12.11.
"Laws" means any and all federal, state, local or foreign statutes, laws,
ordinances, proclamations, codes, regulations, licenses, permits,
authorizations, rulings, approvals, consents, legal doctrines, 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 amended and in effect from time to time.
"Letter of Intent" means that certain letter of intent dated January 8,
2000 by and among U.S. Concrete, the Company and the Stockholders, and the other
parties named therein, as amended or supplemented.
"Listed Agreements" has the meaning set forth in Section 5.09.
"Lockup Period" has the meaning set forth in Section 11.04.
"Losses" means any and all liabilities, losses, claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, 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).
"Material Customers" has the meaning set forth in Section 5.09.
"Merger" has the meaning set forth in the second paragraph of this
Agreement.
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"Merger Consideration" has the meaning set forth in Section 3.01.
"Merger Filings" has the meaning set forth in Section 2.02.
"Newco" has the meaning set forth in the first paragraph of this Agreement.
"Noncompete Term" has the meaning set forth in Section 9.01(a).
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"1999 Financial Statements" has the meaning set forth in Section 5.05.
"Permits" has the meaning set forth in Section 5.10.
"Permitted Encumbrances" means any and all (a) Encumbrances reserved
against in the balance sheet included in the 1999 Financial Statements, (b)
Encumbrances for property or ad valorem Taxes not yet due and payable or which
are being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the Company's books in
accordance with GAAP, and (c) obligations under operating and capital leases
described in Schedule 5.08.
"Plan" has the meaning set forth in Section 5.16.
"Prior Years' Financial Statements" has the meaning set forth in Section
5.09.
"Qualified Plan" has the meaning set forth in Section 5.16.
"Restricted Shares" has the meaning set forth in Section 12.01.
"Rule 144" means Rule 144 as promulgated under the 1933 Act.
"SEC" means the Securities and Exchange Commission.
"Section 338(h)(10) Election" has the meaning set forth in Section 2.04.
"Stockholders" has the meaning set forth in the first paragraph of this
Agreement.
"Structures" has the meaning set forth in Section 5.08.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Taxes" has the meaning set forth in Section 5.18.
"TBCA" means the Texas Business Corporation Act, as amended.
"Territory" has the meaning set forth in Section 9.01.
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"Third Person" has the meaning set forth in Section 8.03.
"U.S. Concrete" has the meaning set forth in the first paragraph of this
Agreement.
"U.S. Concrete Common Stock" means U.S. Concrete's Common Stock, par value
$.001 per share.
"Working Capital Adjustment" has the meaning set forth in Section 7.09.
"Year 2000 Compliant" has the meaning set forth in Section 5.30.
1.02 Interpretation. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in Section 1.01 and elsewhere in this Agreement
include the plural as well as the singular and vice versa;
(b) all accounting terms not otherwise defined herein have the meanings
ascribed to them in accordance with GAAP; and
(c) the words "herein," "hereof," and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE II
THE MERGER AND THE SURVIVING CORPORATION
2.01 The Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time in accordance with the TBCA and the GCL, Newco
shall be merged with and into the Company and the separate existence of Newco
shall thereupon cease. The Company shall be the surviving corporation in the
Merger (hereinafter sometimes referred to as the "Surviving Corporation").
2.02 Effective Time of the Merger. The Merger shall become effective at
such time (the "Effective Time") as (a) holders of all of the Company Common
Stock approve the Merger, and (b) a certificate of merger, in form mutually
acceptable to U.S. Concrete and the Company, is filed with the Secretaries of
State of the States of Delaware and Texas, respectively (the "Merger Filings").
The Merger Filings shall be made simultaneously with or as soon as practicable
after the Closing.
2.03 Certificate of Incorporation, Bylaws and Board of Directors of
Surviving Corporation. As a result of the Merger and at the Effective Time:
(a) The Certificate of Incorporation of the Company in effect immediately
prior to the Effective Time shall become the Certificate of Incorporation of the
Surviving
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Corporation. After the Effective Time, the Certificate of Incorporation of the
Surviving Corporation may be amended in accordance with its terms and as
provided in the TBCA.
(b) The Bylaws of the Company in effect immediately prior to the
Effective Time shall become the Bylaws of the Surviving Corporation, and
thereafter may be amended in accordance with their terms and as provided by the
Certificate of Incorporati on of the Surviving Corporation and the TBCA.
(c) The Board of Directors of Newco as constituted immediately prior
to the Effective Time shall be the Board of Directors of the Surviving
Corporation.
2.04 TAX TREATMENT.
(a) U.S. Concrete and each Stockholder 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. (S)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 transactions contemplated by
this Agreement, such that the Company will be treated as having sold all of its
assets in a single transaction on the Closing Date before Closing and while an S
corporation pursuant to Section 1361 of the Code. U.S. Concrete will prepare the
election forms and provide them to each Stockholder for their review within a
reasonable time after the Closing Date. Each Stockholder will within five days
of receipt execute and return the election forms to U.S. Concrete, and U.S.
Concrete will file such election forms on or before the respective due dates for
each such election form. U.S. Concrete and the Stockholders shall agree to an
allocation of the deemed purchase price among the assets of the Company in
compliance with Temp. Treas. Reg. (S)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 Merger Consideration (as
herein defined) (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 2.04 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.
ARTICLE III
CONVERSION OF SHARES
3.01 Conversion of Shares. At the Effective Time, by virtue of the Merger,
and without any action on the part of any holder of any capital stock of the
Company, the issued and outstanding shares of Company Common Stock as of the
Effective Time shall be converted into the right to receive, and become
exchangeable for $10,603,000 in cash (subject to reduction for payment at
Closing of Interest-Bearing Debt) and 339,119 shares of U.S. Concrete Common
Stock at Closing (the cash (inclusive of amounts paid to reduce Interest-Bearing
Debt) and U.S. Concrete Common Stock paid in exchange for the
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Company Common Stock being herein collectively referred to as the "Merger
Consideration").
3.02 NEWCO SHARES. The outstanding shares of common stock, par value $.01
per share, of Newco shall be converted into the right to receive, and become
exchangeable for, 1,000 shares of Company Common Stock.
3.03 DELIVERY OF MERGER CONSIDERATION. At the Closing, (a) each Stockholder
shall furnish to U.S. Concrete the certificates representing his Company Common
Stock, duly endorsed in blank by such Stockholder or accompanied by duly
executed blank stock powers, and (b) U.S. Concrete shall deliver to each
Stockholder cash (by wire transfer in accordance with the wiring instructions
for such Stockholder set forth on Schedule 3.01) and a copy of an irrevocable
instruction letter to U.S. Concrete's transfer agent directing that certificates
representing the shares of U.S. Concrete Common Stock be delivered to such
Stockholder pursuant to Section 3.01. Each Stockholder agrees promptly to cure
any deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to the Company Common Stock or with respect
to the stock powers accompanying such stock.
ARTICLE IV
CLOSING
4.01 CLOSING. The consummation of the Merger and delivery of the Merger
Consideration and the other transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of U.S. Concrete, 1300 Post Oak
Blvd., Suite 1220, Houston, Texas 77056, concurrently with the execution of this
Agreement or at such other time and date as U.S. Concrete, the Company and the
Stockholders may mutually agree, which date is herein referred to as the
"Closing Date."
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders, jointly and severally, represent and warrant to U.S.
Concrete as follows:
5.01 DUE ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Texas and is duly authorized and qualified to do business under all applicable
Laws and to carry on its business in the places and in the manner as now
conducted. The Company has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as such business
is currently being conducted. Schedule 5.01 includes (a) certificate(s) of
existence and good standing for the Company issued by the appropriate
Governmental Authorities of the State of Texas, (b) a list of all jurisdictions
in which the Company is authorized or qualified to do business and (c)
certificate(s) of qualification or authority to do business (or similar
certificates) for the Company issued by the appropriate Governmental Authorities
of each of the jurisdictions in which the
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Company is authorized or qualified to do business. The Company does not own,
lease or operate any assets or properties or carry on any business in any
jurisdiction that Schedule 5.01 does not list. Schedule 5.01 also contains a
list of each county in Texas in which the Company conducts business or has
conducted business within the past three years. True, complete and correct
copies of the Articles of Incorporation and Bylaws, each as amended, of the
Company are attached hereto as Schedule 5.01, 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 Company have been
provided to U.S. Concrete.
5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) The Company has the requisite corporate power and authority to
enter into this Agreement and the ancillary documents and agreements described
herein and to effect the Merger. Each Stockholder has the full legal right,
power and authority to enter into this Agreement. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby have been
approved by the board of directors of the Company and by the Stockholders. No
additional corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement and the consummation by
the Company of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company and the Stockholders,
and, assuming the due authorization, execution and delivery hereof by U.S.
Concrete and Newco, constitutes a valid and binding agreement of the Company and
the Stockholders, enforceable against each of them in accordance with its terms.
(b) The execution and delivery of this Agreement by the Company and
the Stockholders do not, and the consummation by the Company and the
Stockholders of the transactions contemplated hereby will not, violate or result
in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any Encumbrance upon any of the properties or assets of the Company
under any of the terms, conditions or provisions of, (i) the Articles of
Incorporation or Bylaws of the Company, (ii) any Law applicable to the
Stockholders or the Company or any of the properties or assets of the
Stockholders or the Company, or (iii) except as set forth in Schedule 5.02, any
agreement, note, bond, mortgage, indenture, deed of trust, license, franchise,
Permit, concession, lease or other instrument, obligation or agreement of any
kind to which any Stockholder or the Company is now a party or by which the
Company or any of its properties or assets may be bound or affected.
(c) Except for the Merger Filings and as set forth in Schedule 5.02,
no declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any Governmental Authority or other person or entity is
necessary for the execution and delivery of this Agreement by the Company and
the Stockholders or the consummation by the Company and the Stockholders of the
transactions contemplated hereby. Except as set forth in Schedule 5.02, none of
the contracts or agreements with Material Customers or contracts providing for
purchases or services individually in
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excess of $10,000, or in the aggregate in excess of $25,000, or other
agreements, licenses or Permits to which the Company is a party requires notice
to, or the consent or approval of, any Governmental Authority or other person or
entity to the execution and delivery of this Agreement by the Company and the
Stockholders or to any of the transactions contemplated hereby to remain in full
force and effect following such transaction.
5.03 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of the
Company consists solely of 100,000 shares of Company Common Stock, of which
9,000 shares are issued and outstanding. All of the issued and outstanding
shares of the Company Common Stock are owned beneficially and of record by the
Stockholders as set forth in Schedule 5.03. All of the issued and outstanding
shares of the Company Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, and were offered, issued, sold and delivered
by the Company in compliance with all applicable Laws, including, without
limitation, those Laws concerning the issuance of securities. None of such
shares were issued in violation of the preemptive rights of any past or present
stockholder of the Company. The exchange of Company Common Stock for U.S.
Concrete Common Stock pursuant to the Merger will transfer to U.S. Concrete
good, valid and marketable title in the shares of the Company Common Stock owned
by the Stockholders, free and clear of all Encumbrances except for those created
by U.S. Concrete. At the Effective Time, by virtue of the Merger Filing in Texas
the Merger will become effective in Texas. Except as set forth in Schedule 5.03,
(a) no shares of Company Common Stock are held by the Company as treasury
shares, and (b) no subscription, option, warrant, call, convertible or
exchangeable security, other conversion right or commitment of any kind exists
which obligates the Company to issue any of its capital stock or the
Stockholders to transfer any of the capital stock of the Company.
5.04 SUBSIDIARIES. Except as set forth in Schedule 5.04, the Company owns,
of record or beneficially, or controls, 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.
Except as set forth in Schedule 5.04, the Company is not, directly or
indirectly, a participant in any joint venture, limited liability company,
partnership or other noncorporate entity.
5.05 FINANCIAL STATEMENTS.
(a) The Company has delivered to U.S. Concrete true, complete and correct
copies of the following financial statements:
(i) the unaudited balance sheets of the Company as of December 31, 1997
and 1998 and the related unaudited statements of operations, for the years
then ended, prepared on an income tax basis (such balance sheets and the
related statements of operations are referred to herein as the "Prior Years
Financial Statements"); and
(ii) the audited balance sheet of the Company as of December 31, 1999
(the "Balance Sheet Date") and the related audited statements of
operations,
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stockholders' equity and cash flows for the twelve-month period ended on
the Balance Sheet Date, together with the related notes and schedules (such
balance sheets, the related statements of operations, stockholders' equity
and cash flows and the related notes and schedules are referred to herein
as the "1999 Financial Statements"). The Prior Years' Financial Statements
and the 1999 Financial Statements (collectively, the "Financial
Statements") are attached as Schedule 5.05 to this Agreement;
(b) Except as set forth in Schedule 5.05, the Financial Statements have
been prepared from the books and records of the Company in conformity with
income tax preparation requirements for the Prior Years' Financial Statements,
and in conformity with GAAP for the 1999 Financial Statements and in each case
present fairly the financial position and results of operations of the Company
as of the dates of such statements and for the periods covered thereby. The
books of account of the Company have been kept accurately in all material
respects in the ordinary course of business, the transactions entered therein
represent bona fide transactions, and the revenues, expenses, assets and
liabilities of the Company have been properly recorded therein in all material
respects. Within the past three fiscal years of the Company, the Company has not
received any written correspondence from its accountants, including without
limitation, management letters, which have indicated or disclosed that there is
a "material weakness" in or "reportable condition" with respect to (as those
terms are defined under GAAP) the Company's financial condition.
5.06 LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule 5.06, as
of the Balance Sheet Date the Company does not have, nor has it incurred since
that date, any liabilities or obligations (whether absolute, accrued, contingent
or otherwise) of any nature, except liabilities, obligations or contingencies
(a) that are reflected or accrued or reserved against in the Financial
Statements or reflected in the notes thereto, (b) that are of a nature not
required to be reflected in the Financial Statements and that do not exceed and
could not reasonably be expected to exceed $5,000 individually or $10,000 in the
aggregate or (c) that were incurred after the Balance Sheet Date and were
incurred in the ordinary course of business, consistent with past practices.
Schedule 5.06 contains a reasonable estimate by the Company and the Stockholders
of the maximum amount that may be payable with respect to liabilities which are
not fixed as of January 31, 2000. For each such liability for which the amount
is not fixed or is contested, the Company has provided a summary description of
the liability together with copies of all relevant documentation relating
thereto. Except as set forth in Schedule 5.06, there are no prepayment
penalties, termination fees or other payments triggered by the prepayment or
termination of any loan or indebtedness of the Company.
5.07 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.07 sets forth an accurate
list of the accounts and notes receivable of the Company as of January 31, 2000,
including any such amounts which are not reflected in the Balance Sheet.
Receivables from and advances to employees, the Stockholders and any entities or
persons related to or Affiliates of the Stockholders are separately identified
in Schedule 5.07. Schedule 5.07 also sets forth an accurate aging of all
accounts and notes receivable as of January 31, 2000, showing amounts due in 30-
day aging categories. The trade and other accounts
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receivable of the Company, including without limitation those classified as
current assets on the Balance Sheet and as of January 31, 2000, are bona fide
receivables, were acquired in the ordinary course of business, are stated in
accordance with GAAP and are collectible in the amounts shown on Schedule 5.07,
net of reserves reflected in the 1999 Financial Statements with respect to the
accounts receivable as of the Balance Sheet Date, and net of reserves reflected
in the books and records of the Company (consistent with the methods used in the
1999 Financial Statements) with respect to receivables of the Company after the
Balance Sheet Date.
5.08 PROPERTIES AND ASSETS.
(a) Schedule 5.08 sets forth an accurate list of all real and personal
property included in "property and equipment" on the balance sheet included in
the 1999 Financial Statements and all other tangible assets of the Company with
a book value in excess of $5,000 (i) owned by the Company as of the Balance
Sheet Date and (ii) acquired since the Balance Sheet Date. Schedule 5.08 also
sets forth an accurate list of all real and personal property currently leased
by the Company, and includes complete and correct copies of leases for
significant equipment and for all real property leased by the Company and
descriptions of all real property (as currently owned or leased by the Company)
on which plants, buildings, warehouses, workshops, garages and other structures
(collectively, the "Structures") and vehicles used in the operation of the
business of the Company 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 Company. Schedule
5.08 indicates which properties and assets used in the operation of the
businesses of the Company are currently owned by the Stockholders or Affiliates
of either of the Company or the Stockholders. Except as specifically identified
in Schedule 5.08, all of the tangible assets, plants, Structures, vehicles and
other significant machinery and equipment owned or leased by the Company listed
in Schedule 5.08 are in good working order and condition, ordinary wear and tear
excepted, have been maintained in accordance with standard industry practice and
are adequate for the purpose for which they presently are being used or held for
use. Except as specifically described in Schedule 5.08, all properties and fixed
assets used by the Company in its business are either owned by the Company or
leased under agreements identified in Schedule 5.08 and are affixed only to one
or more of the real properties Schedule 5.08 lists. All leases set forth in
Schedule 5.08 are in full force and effect and constitute valid and binding
agreements of the Company and the other parties thereto in accordance with their
respective terms, and all amounts currently payable thereunder have been paid.
Neither the Company nor any other party to the leases set forth in Schedule 5.08
is or has received written notice or, to the Best of the Stockholders'
Knowledge, verbal notice to the effect that it is in default, violation or
breach of any such lease, and no event has occurred and is continuing that
constitutes or, with notice or the passage of time or both, would constitute a
default, violation or breach under any such lease. The Company has good, valid
and marketable title to the tangible and intangible assets, personal property
and real property owned and used in its business, including, without limitation,
the properties identified in Schedule 5.08 as owned real property (each of which
the Company owns in fee), free and clear of all Encumbrances other than
Permitted Encumbrances and those set forth in Schedule 5.08. Schedule 5.08
contains
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true, complete and correct copies of all title reports and title insurance
policies received or owned by the Company with respect to the real property
owned or leased by the Company. Schedule 5.08 includes a summary description of
all commitments of the Company 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 Company has devoted any
significant effort or expenditure in the two-year period prior to the date of
the Agreement.
(b) Except as specifically described in Schedule 5.08, all uses of the real
property owned and leased by the Company conform in all material respects to all
applicable Laws (other than Environmental Laws, which are dealt with elsewhere
in Section 5.11 of this Agreement) and do not violate any instrument of record
or agreement affecting any such property. Neither the Company nor the
Stockholders have received any written notice or communication or, to the Best
of the Stockholders' Knowledge, verbal notice from any Governmental Authority or
other person or entity indicating that any condition exists with respect to any
of the real property owned or leased by the Company or with respect to the
improvements thereon that violates any Law, including without limitation, any
Environmental Law. Neither the Company nor the Stockholders have received from
any insurance carrier insuring or proposing to insure any of the real property
owned or leased by the Company or any other person or entity any written notice
or other communication or, to the Best of the Stockholders' Knowledge, verbal
notice, noting any dangerous or illegal condition at any such property or any
other condition at any of such properties otherwise requiring corrective action.
Except as otherwise described on Schedule 5.08, all of the real property owned
and leased by the Company is in good, usable and operating condition without the
necessity of any major repairs, and all such real properties can be used by the
Surviving Corporation for the purposes currently used and operated by the
Company without violating any conditional use permit, variance or private
restriction. Neither the Company nor the Stockholders have received any written
notice or, to the Best of the Stockholders' Knowledge, verbal notice of, nor do
they have any knowledge that any of the real property owned or leased by the
Company 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 no writ, injunction, decree, order or
judgment outstanding, nor any action, claim, suit or proceeding, pending or
threatened, relating to the ownership, lease, use, occupancy or operation of any
real property owned or leased by the Company.
(c) There is ingress and egress to and from each of the real properties
owned and leased by the Company of record adequate for the use of such
properties as currently operated by the Company. Except as disclosed in Schedule
5.08, the Company has made no off-record agreements affecting the ownership, use
or occupation of any such properties. 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 Company as
presently operated are installed and operating, and all installation and
connection charges therefor have been paid in full. Neither the Company nor the
Stockholders have received any written notice or, to the Best of the
Stockholders' Knowledge, verbal notice stating that the Company will not be able
to obtain adequate
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supplies of water to operate its business on any such properties as presently
conducted, or that the provision of utilities violates any public or private
easement. Neither the Company nor the Stockholders have received written notice
or, to the Best of the Stockholders' Knowledge, verbal notice that any part of
any improvements on the real property owned or leased by the Company (including
any of the structures thereon) encroaches upon any property adjacent thereto or
upon any easement, nor is there any encroachment or overlap upon the real
property owned or leased by the Company. Each of the real property leases listed
in Schedule 5.08 grants the Company the exclusive right to use and occupy the
demised premises thereunder, and the Company enjoys peaceful and undisturbed
possession under its respective real property leases listed on Schedule 5.08 for
the real property leased by the Company. None of the real property leases
requires the consent of the applicable landlord to the Merger or the
transactions contemplated by this Agreement. No person or entity other than the
Company is in possession of any of the real property owned or leased by the
Company. To the Best of the Stockholders' Knowledge, there are no contracts
outstanding for the sale, exchange, lease or transfer of any of the real
property owned or leased by the Company, or any other right of a third party to
acquire any interest therein. To the Best of the Stockholders' Knowledge, the
heating, cooling, ventilation, electrical and plumbing systems at all of the
real property owned and leased by the Company is in good working condition.
5.09 MATERIAL CUSTOMERS AND CONTRACTS.
(a) Schedule 5.09 (i) sets forth an accurate list containing the Company's
five top customers with respect to the Company's revenues for the 1999 fiscal
year (the "Material Customers"), and (ii) sets forth an accurate list and
briefly describes all material contracts, warranties, commitments,
understandings, instruments and similar agreements and arrangements to which the
Company is currently a party or by which it or any of its properties is bound
(the "Listed Agreements"), including, but not limited to, (A) all customer
unexpired executory contracts in excess of $10,000, individually, or $25,000 in
the aggregate, (B) unexpired executory contracts with any labor organizations,
(C) unexpired leases providing for annual rental payments in excess of $5,000,
individually, or $10,000 in the aggregate, (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) existing 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 Company of assets or securities for more than
$5,000, individually, or $10,000 in the aggregate or which contain, or commit or
will commit the Company for a fixed term, (N) unexpired executory 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
Company of a particular product, material or service and (Q) any other unexpired
executory 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
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date hereof, the Company has made available to U.S. Concrete true, complete and
correct copies and complete written descriptions of all the Listed Agreements.
(b) Except as set forth in Schedule 5.09, since December 31, 1999 (i) no
Material Customer has canceled or substantially reduced or, to the Best of the
Stockholders' Knowledge, is threatening to cancel or substantially reduce its
purchases of the Company's products or services, and (ii) neither the Company
nor any other party to the Listed Agreements is, or has received written notice
or, to the Best of the Stockholders' Knowledge, verbal notice of any default,
violation or breach of any such Listed Agreement, and no event has occurred and
is continuing that constitutes or with notice or the passage of time or both,
would constitute a default, violation or breach under any such Listed Agreement.
The Listed Agreements are in full force and effect and constitute valid and
binding agreements of the Company and the other parties thereto in accordance
with their respective terms.
(c) Except as set forth in Schedule 5.09, the Company is not a party to any
contracts subject to price redetermination or renegotiation. Except to the
extent set forth in Schedule 5.09, the Company is 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.
(d) Except as set forth in Schedule 5.09, neither the Company, the
Stockholders nor any officer, stockholder, director, representative, agent or,
to the Best of the Stockholders' Knowledge, employee thereof is a party to any
contract, arrangement, commitment or understanding among themselves or with any
of the Company's customers for the repurchase of products, sharing of fees,
rebating of charges, bribes, kickbacks or other similar arrangements.
(e) Schedule 5.09 sets forth a summary of each outstanding bid or proposal
by the Company that, if awarded to the Company, contemplates payments to the
Company in excess of $150,000.
(f) Except as set forth in Schedule 5.09, to the Best of the Stockholders'
Knowledge, there is no plan or intention of any other party to any Listed
Agreement to exercise any right to cancel or terminate that Listed Agreement,
nor any condition or state of facts which would justify the exercise of such a
right.
5.10 PERMITS. Schedule 5.10 contains an accurate list, summary description
and copies of all licenses, franchises, permits, approvals, certificates,
transportation authorities and other governmental authorizations and intangible
assets held by the Company that are material to the conduct of its business,
including, without limitation, permits, licenses and operating authorizations,
titles (including motor vehicle titles and current registrations but excluding
vehicle licenses and drivers' licenses possessed by the Company, but which need
not be scheduled), fuel permits, franchises, certificates, trademarks, trade
names, patents, patent applications and copyrights owned or held by the Company
(collectively, the "Permits"). The Permits are valid, and the Company has not
received any written notice that any Governmental Authority intends to cancel,
terminate
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or not renew any such Permit. The Permits are all the permits, licenses,
operating authorizations, franchises, approvals, certificates, transportation
authorities and other governmental authorizations and intangible assets that are
required by Law for the operation of the businesses of the Company as conducted
at the Balance Sheet Date and the ownership of the assets and properties of the
Company. The Company has conducted and is conducting its business in substantial
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 is not in violation of any of the foregoing. Except as
specifically provided in Schedule 5.10, the transactions contemplated by this
Agreement will not result in a default under, a breach or violation of, a
termination of, or adversely affect the rights and benefits afforded to the
Company by, any Permits. None of the Permits require notice to, or the consent
or approval of, any Governmental Authority to the Merger or to the use of such
Permit by the Surviving Corporation after the Merger.
5.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5.11: (a) the
Company has complied with and is in compliance with all Environmental Laws, (b)
the Company has obtained and complied with all necessary permits, licenses,
authorizations and other approvals necessary to treat, transport, store, dispose
of and otherwise handle Hazardous Substances and has reported, to the extent
required by all Environmental Laws, all past and present sites owned or operated
by the Company where Hazardous Substances have been treated, stored, disposed of
or otherwise handled, (c) there have been no "releases" or threats of "releases"
(as defined in any Environmental Laws) at, from, in, to, under or on any
property currently or previously owned or operated by the Company, (d) there is
no on-site or off-site location to which the Company has transported or disposed
of Hazardous Substances or arranged for the transportation or disposal of
Hazardous Substances which is or could be the subject of any federal, state,
local or foreign enforcement action or any other investigation which could lead
to any claim against the Surviving Corporation, U.S. Concrete or Newco 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
Company has no contingent liability in connection with any release or disposal
of any Hazardous Substance into the environment; provided, however, that
notwithstanding any such disclosure on Schedule 5.11, the Stockholders shall be
responsible for the costs and expense of appropriate remedial action with
respect to the matters disclosed on Schedule 5.11 (subject to the provisions of
Sections 8.01(a), 8.05 and 8.06 below). None of the past or present sites owned
or operated by the Company is currently or has ever been designated as a
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 treatment, storage and/or disposal facility, under any Environmental Law. The
Company has provided U.S. Concrete with copies (or, if not available, accurate
written summaries) of all environmental investigations, studies, audits, reviews
and other analyses conducted by or on behalf, or which otherwise are in the
possession, of the Company respecting any facility site or other property
previously or presently owned or operated by the Company.
5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS.
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(a) Except as set forth in Schedule 5.12: (i) the Company is not bound by
or subject to any arrangement with any labor union and (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement nor, to the Best of the Stockholders' 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 Best of the Stockholders' Knowledge, threatened labor
dispute involving the Company and any group of its employees nor has the Company
experienced any significant labor interruptions over the past five years.
Neither the Company nor the Stockholders have any knowledge of any significant
issues or problems in connection with the relationship of the Company with its
employees. The Company considers its relationship with its employees to be good.
(b) Except as set forth in Schedule 5.12: (i) there is no unfair labor
practice charge or complaint pending or, to the Best of the Stockholders
Knowledge, threatened against or otherwise affecting the Company, (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 Company's employees is pending or, to the Best of
the Stockholders' Knowledge, threatened against the Company, (iii) no grievance
is pending or, to the Best of the Stockholders' Knowledge, threatened against
the Company, (iv) the Company is 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 Company is in compliance with and has
complied with all applicable Laws, agreements, contracts and policies relating
to employment, employment practices, wages, hours and terms and conditions of
employment, (vi) the Company has paid in full to, or accrued in its financial
books and records, all employees of the Company 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 and (vii) the Company is in substantial compliance with its
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.
(c) Except as set forth in Schedule 5.12, all employees of the company 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 Company in their specific jobs.
5.13 INSURANCE. Schedule 5.13 sets forth an accurate list as of the Balance
Sheet Date of (a) all insurance policies carried by the Company, copies of which
are attached as Schedule 5.13, (b) all insurance loss runs or workmen's
compensation claims received for the past policy year, and (c) the following
information with respect to all insurance policies currently carried by the
Company and previously carried by the Company within the last two years: (i)
insurer, (ii) type of policy, (iii) coverage period,
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and (iv) policy limits and amount of deductible or loss retention. Except as set
forth in Schedule 5.13, none of such policies are "claims made" policies. The
policies described in Schedule 5.13 for the current policy year provide adequate
coverage against the risks involved in the Company's business and are currently
in full force and effect. Any open claims as of the Closing Date (including,
without limitation, the Monarch Hills Condominium Association litigation
disclosed in Schedules 5.06 and 5.17) are recoverable under such policies,
except to the extent of any applicable deductible or loss retention as set forth
on Schedule 5.13.
5.14 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 5.14 sets forth an
accurate schedule of all officers, directors and Stockholder employees of the
Company 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 (a) the
Balance Sheet Date and (b) the date hereof. Neither the Company nor the
Stockholders have any knowledge that any of such individuals has any present
intention of terminating his or her employment or association with the Company.
Attached to Schedule 5.14 are true, complete and correct copies of each
employment or consulting agreement with any employee of the Company or the
Stockholders. Except as set forth in Schedule 5.14, the Company is not a party
to any agreement, nor has it 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 the Company or other person performing services for the 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.
5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS;
EMPLOYEE POLICIES. Schedule 5.15 sets forth all agreements containing covenants
not to compete or solicit employees or to maintain the confidentiality of
information to which the Company or any of the Stockholders is bound or under
which the Company or any of the Stockholders has any rights or obligations.
Schedule 5.15 lists all employee manuals and all material policies, procedures
and work-related rules that apply to any employee, director or officer of, or
any other individual performing consulting or other independent contractor
services for, the Company. The Company has provided U.S. Concrete with a copy of
all such written policies and procedures and a written description of all such
unwritten policies and procedures.
5.16 EMPLOYEE BENEFIT PLANS.
(a) Schedule 5.16 sets forth an accurate schedule of each "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and all deferred compensation or retirement
funding arrangements, whether formal or informal and whether legally binding or
not, under which the Company or an ERISA Affiliate has any current or future
obligation or liability or under which any present or former employee of the
Company or an ERISA Affiliate, or such present or former employee's dependents
or beneficiaries, has any current or future right to benefits (each such plan
and arrangement referred to hereinafter as a
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"Plan"), together with true and complete copies of such Plans, arrangements and
any trusts related thereto, and classifications of employees covered thereby as
of the Balance Sheet Date. Except as set forth in Schedule 5.16, neither the
Company nor any ERISA Affiliate sponsors, maintains or contributes currently, or
sponsored, maintained or contributed at any time during the preceding five
years, to any plan, program, fund or arrangement that constitutes an employee
pension benefit plan. Each Plan may be terminated by the Company, 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 Plan. For purposes of this Agreement, the term "employee
pension benefit plan" shall have the meaning given that term in Section 3(2) of
ERISA, and the term "ERISA Affiliate" means any corporation or trade or business
under common control with the Company as determined under Section 414(b), (c),
(m) or (o) of the Code.
(b) Each Plan listed in Schedule 5.16 is in compliance in all material
respects with the applicable provisions of ERISA, the Code and any other
applicable Law. Except as set forth in Schedule 5.16, with respect to each Plan
of the Company and each ERISA Affiliate (other than a "multiemployer plan," as
defined in Section 4001(a)(3) of ERISA), all reports and other documents
required under ERISA or other applicable Law to be filed with any Governmental
Authority, including without limitation all Forms 5500, or required to be
distributed to participants or beneficiaries, have been duly and timely filed or
distributed. True and complete copies of all such reports and other documents
with respect to the past five years for each Plan have been provided to U.S.
Concrete. No "accumulated funding deficiency" (as defined in Section 412(a) of
the Code) with respect to any Plan has been incurred (without regard to any
waiver granted under Section 412 of the Code), nor has any funding waiver from
the Internal Revenue Service been received or requested. Except as set forth in
Schedule 5.16, each Plan that is intended to be "qualified" within the meaning
of Section 401(a) of the Code (a "Qualified Plan") is, and has been during the
period from its adoption to the date hereof, so qualified, both as to form and
operation and all necessary approvals of Governmental Authorities, including a
favorable determination as to the qualification under the Code of each of such
Qualified Plans and each amendment thereto, have been timely obtained. Except as
set forth in Schedule 5.16, all accrued contribution obligations of the Company
with respect to any Plan have either been fulfilled in their entirety or are
fully reflected in the Financial Statements.
(c) No Plan has incurred or will incur, and neither the Company nor any
ERISA Affiliate has incurred or will incur, with respect to any Plan, any
liability for excise tax or penalty due to the Internal Revenue Service. There
have been no terminations, partial terminations or discontinuances of
contributions to any Qualified Plan during the preceding five years without
notice to and approval by the Internal Revenue Service and payment of all
obligations and liabilities attributable to such Qualified Plan.
(d) Except as set forth in Schedule 5.16, neither the Company nor any ERISA
Affiliate has made any promises of retirement or other benefits to employees,
except as set forth in the Plans, and neither the Company nor any ERISA
Affiliate maintains or has
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established any 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,
and at the expense of the participant or the beneficiary of the participant, or
retiree medical liabilities. Neither the Company 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. Except as
set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate has any
current or future obligation or liability with respect to a Plan pursuant to the
provisions of a collective bargaining agreement.
(e) Neither the Company nor any ERISA Affiliate has incurred, nor will it
incur as a result of past activities, any material liability to the Pension
Benefit Guaranty Corporation in connection with any Plan. The assets of each
Plan that are subject to Title IV of ERISA are sufficient to provide the
benefits under such Plan, the payment of which the Pension Benefit Guaranty
Corporation would guarantee if such Plan were terminated, and such assets are
also sufficient to provide all other "benefits liabilities" (as defined in ERISA
Section 4001(a)(16)) due under such Plan upon termination.
(f) No "reportable event" (as defined in Section 4043 of ERISA) has
occurred and is continuing with respect to any Plan. There are no pending, or to
the Company's and the Stockholders' knowledge, threatened claims, lawsuits or
actions (other than routine claims for benefits in the ordinary course) asserted
or instituted against, and neither the Company nor any ERISA Affiliate has
knowledge of any threatened litigation or claims against, the assets of any Plan
or its related trust or against any fiduciary of a Plan with respect to the
operation of such Plan. To the Company's and the Stockholders' knowledge, there
are no investigations or audits of any 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 Company or any ERISA
Affiliate that has not been fully discharged. Neither the Company nor any ERISA
Affiliate has participated in any voluntary compliance or closing agreement
programs established with respect to the form or operation of a Plan.
(g) Neither the Company 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 Plan for which exemption was not
available. Except as set forth in Schedule 5.16, neither the Company nor any
ERISA Affiliate is, or ever has been, a participant in or is obligated to make
any payment to a multiemployer plan. No person or entity that was engaged by the
Company or an ERISA Affiliate as an independent contractor within the last five
years reasonably can or will be characterized or deemed to be an employee of the
Company or an ERISA Affiliate under applicable Laws for any purpose whatsoever,
including, without limitation, for purposes of federal, state and local income
taxation, workers' compensation and unemployment insurance and Plan eligibility.
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5.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in Schedule
5.17, there are no claims, actions, suits or proceedings, pending or, to the
Best of the Stockholders' Knowledge, threatened against or affecting the
Company, at law or in equity, or before or by any Governmental Authority having
jurisdiction over the Company. No written notice of any claim, action, suit or
proceeding, whether pending or threatened, has been received by the Company and,
to the Best of the Stockholders' Knowledge, there is no basis therefor. Except
to the extent set forth in Schedule 5.17, the Company has conducted and is
conducting its business in compliance with all Laws applicable to the Company,
its assets or the operation of its business. Also listed on Schedule 5.17 are
all other instances where the Company is a plaintiff or complaining or moving
party, under any of the above types of proceedings.
5.18 TAXES. For purposes of this Agreement, the term "Taxes" shall mean 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. The Company has timely filed all
requisite federal, state, local and other tax returns for all fiscal periods
ended on or before the Closing, and has duly paid in full or made adequate
provision in the Financial Statements for the payment of all Taxes for all
periods ending at or prior to the Closing Date. The Company has 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 Company relating to Taxes for
any period or periods prior to and including the Balance Sheet Date and no
notice of any claim for Taxes, whether pending or threatened, has been received.
The Company has 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 Company is not a party to any Tax allocation or sharing agreement
and is 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 1999
Financial Statements as of the Balance Sheet Date 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
Company for the last three fiscal years have been previously provided to U.S.
Concrete. There are no requests for ruling in respect of any Tax pending between
the Company and any Taxing authority. The Company has been taxed under the
provisions of Subchapter S of the Code since April 1, 1989. The Company
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currently utilizes the accrual method of accounting for income tax purposes.
Such method of accounting has not changed in the past five years.
5.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
in Schedule 5.19, the Company has used its best efforts to preserve its business
organization intact and has conducted its operations in the ordinary course and
there has not been:
(a) any material adverse change in the business, operations, properties,
condition (financial or other), assets, liabilities (contingent or otherwise),
results of operations or prospects of the Company;
(b) any damage, destruction or loss (whether or not covered by insurance)
materially adversely affecting the assets, properties or business of the
Company;
(c) any change in the authorized capital stock of the Company or in its
outstanding securities or any change in the Stockholders' ownership interests in
the Company or any grant of any options, warrants, calls, conversion rights or
commitments;
(d) any declaration or payment of any dividend or distribution in respect
of the capital stock or any direct or indirect redemption, purchase or other
acquisition of any of the capital stock of the Company;
(e) any increase in the compensation payable or to become payable by the
Company to the Stockholders or any of its 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 5.19;
(f) any failure to keep available the services of the Company's key
employees;
(g) any work interruptions, labor grievances or claims filed;
(h) any proposed law, regulation or event or condition of any character
materially adversely affecting the assets, properties or business of the
Company;
(i) except for the Merger, any sale or transfer, or any agreement to sell
or transfer, any material assets, properties or rights of the Company to any
person or entity, including, without limitation, the Stockholders and their
Affiliates;
(j) any cancellation, or agreement to cancel, any indebtedness or other
obligation owing to the Company;
(k) any increase in the indebtedness of the Company, 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;
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(l) 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) 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 Company's business;
(n) any waiver of any material rights or claims of the Company;
(o) any material breach, amendment or termination of any Listed Agreement
(including any such agreement with any customer or supplier), Permit or other
right to which the Company is a party or any of its property is subject;
(p) any material discount to any accounts receivable from any customer;
(q) any failure to pay any vendor or any supplier on a timely basis;
(r) any failure to preserve the Company's existing relationships with its
customers, suppliers and others having business relationships with it and to
maintain the goodwill enjoyed by it with such persons; or
(s) any other material transaction by the Company outside the ordinary
course of business.
5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY. Schedule 5.20
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 the Company has
accounts or safe deposit boxes; (b) the names in which the accounts or boxes are
held; (c) the type of account and the cash, cash equivalents and securities held
in such account as of the second business day prior to the Closing, none of
which assets have been withdrawn from such accounts since such date except for
bona fide business purposes in the ordinary course of the business of the
Company; and (d) the name of each person authorized to draw thereon or have
access thereto. Schedule 5.20 also sets forth the name of each person,
corporation, firm or other entity holding a general or special power of attorney
from the Company and a description of the terms thereof.
5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor the
Stockholders 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.
5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as set
forth in Schedule 5.22, neither the Stockholders nor any other Affiliate of the
Company owns, directly or indirectly, any interest in, or is an officer,
director, employee
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or consultant of or otherwise receives remuneration from, any Competitive
Business, lessor, lessee, customer or supplier of the Company. Except as set
forth in Schedule 5.22, no officer or director of the Company nor the
Stockholders 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 Company.
5.23 INTANGIBLE PROPERTY. Schedule 5.23 sets forth an accurate list of all
patents, patent applications, trademarks, service marks, technology, licenses,
trade names, copyrights and other intellectual property or proprietary property
rights owned or used by the Company. The Company owns or possesses, and the
assets of the Company include, sufficient legal rights to use all of such items
without conflict with or infringement of the rights of others.
5.24 CAPITAL EXPENDITURES. Schedule 5.24 sets forth the total amount of
capital expenditures currently budgeted to be incurred by the company in excess
of $25,000 in the aggregate during the balance of the Company's current fiscal
year.
5.25 INVENTORIES. All inventories, net of reserves determined in accordance
with GAAP, of the Company which are classified as such on the balance sheet
included in the 1999 Financial Statements are merchantable and salable or usable
in the ordinary course of business of the Company. The Company does 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 Company or during
the past five years has sustained a difficulty material to the Company in
obtaining its inventories.
5.26 BACKLOG. All unfilled orders to purchase product from the Company are
pending in the ordinary course of business and are firm and binding commitments
of the respective purchasers.
5.27 PRODUCT WARRANTIES. Schedule 5.27 sets forth all the terms and
conditions of all product or service warranties and guarantees given by the
Company. 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 $25,000 per year during any one of the
five years ended December 31, 1999, and there has been no materially adverse
change in that experience since said date.
5.28 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of the Stockholders
and the Company that U.S. Concrete and Newco are not making any representation
or warranty whatsoever, express or implied, other than those representations and
warranties of U.S. Concrete and Newco expressly set forth in this Agreement.
5.29 DISCLOSURE The Stockholders and the Company have fully provided U.S.
Concrete or its representatives with all the information that U.S. Concrete has
requested in analyzing whether to consummate the Merger and the other
transactions contemplated by this Agreement. None of the information so provided
nor any representation or warranty of the Stockholders to U.S. Concrete or Newco
in this
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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. There is no fact known
to the Stockholders which has specific application to the Company (other than
general economic or industry conditions) and which materially adversely affects
or, so far as the Stockholders can reasonably foresee, materially threatens, the
business or financial condition of the Company which has not been described in
the Agreement or the Schedules hereto or disclosed in writing to U.S. Concrete.
5.30 YEAR 2000 COMPLIANCE. All devices, systems, machinery, information
technology, computer software and hardware, and other date sensitive technology
(jointly and severally its "systems") necessary for the Company's business as
presently conducted are Year 2000 Compliant within a period of time calculated
to result in no material disruption of any of its business operations, and no
such material disruptions have yet occurred. For purposes hereof, "Year 2000
Compliant" means that such systems are designed to be used prior to, during and
after the Gregorian calendar year 2000 A.D. and have operated and will continue
to operate during each such remaining time period without error relating to date
data, specifically including any error relating to, or the product of, date data
which represents or references different centuries or more than one century.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO
U.S. Concrete and Newco jointly and severally represent and warrant to the
Stockholders as follows:
6.01 ORGANIZATION. Each of U.S. Concrete and Newco is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, and is duly authorized and qualified under all applicable Laws to
carry on its business in the places and in the manner now conducted. Each of
U.S. Concrete and Newco has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as such business
is currently being conducted.
6.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) Each of U.S. Concrete and Newco has the full legal right, power and
authority to enter into this Agreement and the ancillary documents and
agreements described herein and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement has been
approved by the boards of directors of U.S. Concrete and Newco and by U.S.
Concrete, as the sole stockholder of Newco. No additional corporate proceedings
on the part of U.S. Concrete or Newco are necessary to authorize the execution
and delivery of this Agreement and the consummation by U.S. Concrete and Newco
of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by U.S. Concrete and Newco, and, assuming the due
authorization, execution and delivery by the Company and
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the Stockholders, constitutes valid and binding agreements of U.S. Concrete and
Newco, enforceable against U.S. Concrete and Newco in accordance with its terms.
(b) The execution and delivery of this Agreement by U.S. Concrete and Newco
do not, and the consummation by U.S. Concrete and Newco of the transactions
contemplated hereby will not, violate or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under any of the terms, conditions or provisions of (i) the
Certificate of Incorporation or Bylaws of U.S. Concrete or Newco, (ii) any Law
applicable to either U.S. Concrete or Newco or any of its properties or assets
or (iii) any material note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which U.S. Concrete or Newco is now a party or by
which either U.S. Concrete or Newco or any of its properties or assets may be
bound or affected.
(c) Except for the Merger Filings and such filings as may be required under
federal or state securities Laws, no declaration, filing or registration with,
or notice to, or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this Agreement by U.S.
Concrete and Newco or the consummation by U.S. Concrete and Newco of the
transactions contemplated hereby.
6.03 U.S. CONCRETE COMMON STOCK. The shares of U.S. Concrete Common Stock
to be issued to the Stockholders pursuant to the Merger 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 U.S. Concrete Common Stock
pursuant to the Merger will transfer to the Stockholders valid title to such
shares of U.S. Concrete Common Stock, free and clear of all Encumbrances, except
for any Encumbrances created by the Stockholders.
6.04 SEC FILINGS; DISCLOSURE. U.S. Concrete has filed with the SEC all
material forms, statements, reports and documents required to be filed by it
prior to the date hereof under each of the 1933 Act and the 1934 Act and the
respective rules and regulations thereunder, (a) all of which, as amended, if
applicable, complied when filed in all material respects with all applicable
requirements of the appropriate Act and the rules and regulations thereunder,
and (b) none of which, as amended, if applicable, contains any untrue statement
of material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made and at the time they were made, not
misleading.
6.05 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of U.S. Concrete
and Newco that the Stockholders are not making any representation or warranty
whatsoever, express or implied, other than those representations and warranties
of the Stockholders expressly set forth in this Agreement.
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6.06 DISCLOSURE. U.S. Concrete has fully provided the Stockholders or their
representatives with all the information that the Stockholders have requested in
analyzing whether to consummate the Merger. None of the information so provided
nor any representation or warranty of U.S. Concrete contained 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 or therein, in light of
the circumstances under which they were made, not misleading.
ARTICLE VII
CERTAIN COVENANTS
7.01 RELEASE FROM AND INDEMNITY WITH RESPECT TO GUARANTEES. U.S. Concrete
shall use its commercially reasonable efforts to have the Stockholders released
from the personal guarantees of the Company's indebtedness identified in
Schedule 7.01 on or before 90 days after the Closing Date. U.S. CONCRETE HEREBY
AGREES TO INDEMNIFY AND DEFEND THE STOCKHOLDERS AND HOLD EACH STOCKHOLDER
HARMLESS FOR ANY LOSSES INCURRED BY SUCH STOCKHOLDER IN CONNECTION WITH THE
ENFORCEMENT OF ANY OBLIGATIONS UNDER SUCH PERSONAL GUARANTEES AFTER THE CLOSING,
INCLUDING WITHOUT LIMITATION ANY REASONABLE ATTORNEYS' FEES AND EXPENSES
INCURRED IN CONNECTION THEREWITH.
7.02 FUTURE COOPERATION; TAX MATTERS. The Stockholders and U.S. Concrete
shall each deliver or cause to be delivered to the other following the Closing
such additional instruments as the other may reasonably request for the purpose
of fully completing the transactions and terms set forth in this agreement.
Except as otherwise expressly provided below, the Stockholders shall be
responsible for the payment of all Taxes attributable to all periods prior to
and including the Closing Date, including without limitation the period from the
beginning of the Company's current Tax year through the Closing Date. Except as
otherwise expressly provided below, the Stockholders shall be responsible for
the preparation of all Tax returns covering the period from the beginning of the
Company's current Tax year through the Closing Date, and shall be responsible
for all costs and expenses incurred in connection with the preparation of such
Tax returns. Notwithstanding any warranty, representation, indemnity or covenant
elsewhere in this Agreement to the contrary, the Surviving Corporation and the
Stockholders (but the Stockholder's one-half of such taxes to be allocated among
them in proportion to their relative equity interests) will each pay and be
responsible for one-half of the Texas corporate franchise taxes for the current
franchise tax year which is due on or before March 15, 2000, (which shall
include all franchise taxes computed on the periods of calendar year 1999 and on
the period from January 1, 2000 through the Closing Date) which covers the
privilege of the Company in franchise tax year 2000, together with all other
Texas corporate franchise taxes payable by the Company in connection with the
transactions contemplated by this Agreement. The Surviving Corporation will
cooperate with the Stockholders in the preparation of all Tax returns covering
the period from the beginning of the Company's current Tax year
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through the Closing. In addition, U.S. Concrete will provide the Stockholders
with access to such of its books and records as may be reasonably requested by
the Stockholders in connection with federal, state and local tax matters
relating to periods prior to the Closing and other matters involving the
personal liability of Stockholder(s) relating to such period(s). The
Stockholders will cooperate and use their commercially reasonable best efforts
to have the present officers, directors and employees of the Company cooperate
with U.S. Concrete and the Surviving Corporation at and after the Closing in
furnishing information, evidence, testimony and other assistance in connection
with any actions, proceedings, arrangements or disputes of any nature with
respect to matters pertaining to all periods prior to the Closing. The party
requesting cooperation, information or actions under this Section 7.02 shall
reimburse the other party for all reasonable out-of-pocket costs and expenses
paid or incurred in connection therewith, which costs and expenses shall not,
however, include per diem charges for employees or allocations of overhead
charges.
7.03 EXPENSES. U.S. Concrete will pay the fees, expenses and disbursements
of U.S. Concrete and its agents, representatives, accountants and counsel
incurred in connection with the execution, delivery and performance of this
Agreement and any amendments hereto. U.S. Concrete will be responsible for the
fees and expenses of Arthur Andersen LLP's audit or audit related procedures in
connection with the transactions contemplated hereby. The Stockholders will pay
their fees, expenses and disbursements and those of their and the Company's
agents, representatives, financial advisors, accountants and counsel incurred in
connection with the execution, delivery and performance of this Agreement and
any amendments hereto and the consummation of the transactions contemplated
hereby, including, without limitation, accounting fees and related expenses
attributable to the final Tax returns of the Company and the Stockholders for
periods through the Closing. The Stockholders will also pay any costs associated
with business brokers or other advisors engaged by the Stockholders or the
Company.
7.04 LEGAL OPINION. At the Closing, the Company and the Stockholders shall
cause their legal counsel, Adams, Lynch & Loftin, P.C., to deliver to U.S.
Concrete a legal opinion in the form of Exhibit A attached hereto.
7.05 EMPLOYMENT AGREEMENTS. Concurrently with the execution of this
Agreement, the Surviving Corporation shall enter into a mutually acceptable
Employment Agreement with each of the individuals identified on Schedule 7.05
(collectively, the "Employment Agreements").
7.06 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the
execution of this Agreement, (a) the Stockholders shall repay to the Company all
amounts outstanding as advances to or receivables from the Stockholders, each of
which advances or receivables is specifically reflected in Schedule 5.07, and
(b) the Company shall repay all amounts outstanding under loans to the Company
from the Stockholders, each of which loans to the Company is specifically
reflected in Schedule 5.06.
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7.07 STOCK OPTIONS. U.S. Concrete shall grant nonqualified options to
purchase an aggregate of 25,000 shares of U.S. Concrete Common Stock as of the
Closing Date under U.S. Concrete's 1999 Incentive Plan (the "Incentive Plan") to
certain key employees of the Company (other than the Stockholders), as set forth
on Schedule 7.07 in the amounts listed thereon at an exercise price equal to the
greater of (i) the closing price of the Purchaser's Common Stock on the Nasdaq
National Market as of the Closing Date, or (ii) $8.00 per share. Schedule 7.07
shall also include the social security number and home address of each
individual listed thereon. Such options shall vest in equal annual increments
for four years, commencing on the first anniversary of the Closing Date.
7.08 PRE-CLOSING DISTRIBUTIONS. Prior to the Closing, the Company may have
distributed to the Stockholders the cash and other assets set forth on Schedule
7.08. Any such distributions shall have been authorized by the Board of
Directors of the Company prior to the Closing, and the Company and the
Stockholders shall have used the respective best efforts to complete such
distributions prior to the Closing. Notwithstanding the foregoing, if any such
authorized distributions have not been completed prior to the Closing the
Surviving Corporation shall use reasonable efforts to complete such authorized
distributions after the Closing. The Stockholders' sole recourse against the
Surviving Corporation and U.S. Concrete with respect to this Section 7.08 shall
be to the assets distributed.
7.09 WORKING CAPITAL ADJUSTMENT.
(a) As soon as practicable after the Closing Date, but in no event prior to
21 days after the Closing Date, the Stockholders shall cause to be prepared and
delivered to U.S. Concrete a balance sheet of the Company as of the Closing Date
(the "Closing Date Balance Sheet Date"), which has been prepared from the books
and records of the Company in conformity with GAAP (the "Final Balance Sheet"),
and a working capital adjustment schedule (the "Adjustment Schedule"). The
Adjustment Schedule will set forth the computation of the Adjusted Working
Capital Amount. As used in this Section 7.09, capitalized terms not otherwise
defined in this Agreement shall have the following meanings:
"Adjusted Current Assets" means the amount of current assets of the Company
as set forth on the Closing Date Balance Sheet less cash in excess of $150,000
and less reserves for accounts receivable determined in accordance with GAAP
and, without duplication, adjustments for any receivables determined to be
uncollectable ;
"Adjusted Current Liabilities" means the amount of current liabilities of
the Company as set forth on the Closing Date Balance Sheet less the current
portion of Interest Bearing Debt as set forth on the Closing Date Balance Sheet;
and
"Adjusted Working Capital Amount" means the amount computed by subtracting
Adjusted Current Liabilities from Adjusted Current Assets.
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(b) If the Adjusted Working Capital Amount is less than $478,859.00, then
the Stockholders shall, no later than 15 days after the Determination Date (as
defined below), pay to the Surviving Corporation the amount by which $478,859.00
exceeds the Adjusted Working Capital Amount. If the Adjusted Working Capital
Amount is greater than $478,859.00, then U.S. Concrete shall, no later than 15
days after the Determination Date pay to the Stockholders the amount by which
the Adjusted Working Capital Amount exceeds $478,859.00. The amount payable
pursuant to whichever of the two preceding sentences applies, if either, is
referred to herein as the "Working Capital Adjustment."
(c) The Closing Date Balance Sheet and Adjustment Schedule will be final
and binding on the parties hereto unless, within 15 days following the delivery
of the Adjustment Schedule by the Stockholders, U.S. Concrete notifies the
Stockholders in writing that U.S. Concrete disagrees with all or any portion of
the Closing Date Balance Sheet and/or the Adjustment Schedule. If the
Stockholders and U.S. Concrete cannot mutually resolve any such disagreement
within 15 days after the receipt by the Stockholders of U.S. Concrete's notice
of disagreement, then the Stockholders and U.S. Concrete shall submit the
dispute to a mutually agreeable certified public accounting firm (the
"Accountant") within 10 days after the end of such 15-day period. If the
Stockholders and U.S. Concrete are unable to agree upon such an accounting firm
within such 10-day period, then the Stockholders and U.S. Concrete shall select
a "Big Five" accounting firm by lot (after excluding any of their respective
regular Big Five accounting firms), which accounting firm shall act as the
Accountant. The Stockholders and U.S. Concrete shall request that the Accountant
audit the Closing Date Balance Sheet and provide a computation of the Working
Capital Adjustment within 30 days thereafter, and this computation will be final
and binding upon the parties hereto and used to compute the Working Capital
Adjustment, the payment of any of which shall be made within five days of
delivery by U.S. Concrete of the audited Closing Date Balance Sheet. In the
event the Stockholders and U.S. Concrete submit any unresolved objections to an
Accountant for resolution as provided in this Section 7.09, the Stockholders and
U.S. Concrete will each pay one-half of the fees and expenses of the Accountant.
For purposes hereof, "Determination Date" shall mean the date on which the final
determination of the Working Capital Adjustment is made in the manner prescribed
in this Section 7.09(c).
7.10 INTEREST-BEARING DEBT ADJUSTMENT. As soon as practicable, and in any
event within 75 days after the Closing Date, U.S. Concrete shall deliver to the
Stockholders a schedule (the "Debt Schedule") which sets forth the amount of the
Company's Interest-Bearing Debt as of the Closing Date (the "Closing Date
Interest-Bearing Debt Amount"). If the Closing Date Interest-Bearing Debt Amount
is greater than $2,668,999.60, then the Stockholders shall, no later than 15
days after delivery of the Debt Schedule by U.S. Concrete, pay to the Surviving
Corporation the amount by which the Closing Date Interest-Bearing Debt Amount
exceeds $2,668,999.60.
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ARTICLE VIII
INDEMNIFICATION
The Stockholders, U.S. Concrete and Newco each make the following
covenants:
8.01 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. SUBJECT TO SECTION 8.05
AND SECTION 8.06, THE STOCKHOLDERS COVENANT AND AGREE THAT THEY WILL JOINTLY AND
SEVERALLY (WITHOUT ANY RIGHT OF INDEMNIFICATION OR CONTRIBUTION FROM THE
COMPANY) INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS U.S. CONCRETE, NEWCO AND
THE SURVIVING CORPORATION, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
STOCKHOLDERS, AGENTS, REPRESENTATIVES AND AFFILIATES, AT ALL TIMES FROM AND
AFTER THE DATE OF THIS AGREEMENT FROM AND AGAINST ALL LOSSES INCURRED BY ANY OF
SUCH INDEMNIFIED PERSONS AND ENTITIES AS A RESULT OF OR ARISING FROM (A) UNTIL
THE EXPIRATION DATE ANY BREACH OF THE REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS SET FORTH HEREIN OR IN THE SCHEDULES ATTACHED HERETO OR
CERTIFICATES DELIVERED IN CONNECTION HEREWITH, (B) ANY BREACH OR NONFULFILLMENT
OF ANY COVENANT OR AGREEMENT ON THE PART OF THE STOCKHOLDERS OR THE COMPANY
UNDER THIS AGREEMENT, (C) ALL INCOME TAXES PAYABLE BY THE COMPANY FOR ALL
PERIODS PRIOR TO AND INCLUDING THE CLOSING DATE, (D) EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN SECTION 5.11 ABOVE, ALL TRANSFER AND OTHER TAXES ARISING
FROM THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (E) ANY LITIGATION,
WHETHER OR NOT LISTED ON SCHEDULE 5.17, OR (F) ANY EVENTS OCCURRING, CONDITIONS
EXISTING, PRODUCTS OR SERVICES SOLD OR ANY ACTS OR OMISSION OF THE COMPANY OR
ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR STOCKHOLDERS OCCURRING ON
OR PRIOR TO THE CLOSING DATE WITH RESPECT TO THE OPERATION OF THE BUSINESS OF
THE COMPANY OR OWNERSHIP OF ANY OF THE PROPERTIES OR ASSETS OF THE COMPANY.
8.02 INDEMNIFICATION BY U.S. CONCRETE. SUBJECT TO SECTION 8.05 AND SECTION
8.06, U.S. CONCRETE COVENANTS AND AGREES THAT IT WILL INDEMNIFY, DEFEND, PROTECT
AND HOLD HARMLESS THE STOCKHOLDERS AND THEIR RESPECTIVE AGENTS, REPRESENTATIVES,
AFFILIATES, BENEFICIARIES AND HEIRS AND EMPLOYEES AT ALL TIMES FROM AND AFTER
THE DATE OF THIS AGREEMENT FROM AND AGAINST ALL LOSSES INCURRED BY ANY OF SUCH
INDEMNIFIED PERSONS AS A RESULT OF OR ARISING FROM (A) UNTIL THE EXPIRATION
DATE, ANY BREACH OF THE REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE OR NEWCO
SET FORTH HEREIN OR IN THE SCHEDULES ATTACHED HERETO OR CERTIFICATES DELIVERED
IN CONNECTION HEREWITH OR (B) ANY
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BREACH OR NONFULFILLMENT OF ANY COVENANT OR AGREEMENT ON THE PART OF U.S.
CONCRETE OR NEWCO UNDER THIS AGREEMENT.
8.03 THIRD PERSON CLAIMS. Promptly after any party entitled to
indemnification under Sections 8.01 and 8.02 hereof (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person or entity not a party to this Agreement ("Third Person"), or the
commencement of any action or proceeding by a Third Person, which the
Indemnified Party believes in good faith is an indemnifiable claim under this
Agreement, the Indemnified Party shall give to the party obligated to provide
indemnification pursuant to Sections 8.01 or 8.02 hereof (hereinafter the
"Indemnifying Party") written notice of such claim or the commencement of such
action or proceeding. Such notice shall state the nature and the basis of such
claim and a reasonable estimate of the amount thereof. The Indemnifying Party
shall have the right to defend and settle, at its own expense and by its own
counsel reasonably acceptable to the Indemnified Party, any such matter so long
as all Losses are borne and paid by the Indemnifying Party and the Indemnifying
Party pursues the same diligently and in good faith. If the Indemnifying Party
undertakes to defend or settle, it shall promptly notify the Indemnified Party
of its intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in all commercially reasonable respects in
the defense thereof and in any settlement thereof, so long as all Losses are
borne and paid by the Indemnifying Party. Such cooperation shall include, but
shall not be limited to, furnishing the Indemnifying Party with any books,
records and other information reasonably requested by the Indemnifying Party and
in the Indemnified Party's possession or control. After the Indemnifying Party
has notified the Indemnified Party of its intention to undertake to defend or
settle any such asserted liability, and for so long as the Indemnifying Party
diligently pursues such defense, and the interest of the Indemnifying Party is
reasonably represented in accordance with applicable law and Texas Bar Rules,
the Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability; provided, however, that the Indemnified Party shall
be entitled, at its expense, to participate in the defense of such asserted
liability and the negotiations of the settlement thereof. The Indemnifying Party
shall not settle any such Third Person claim without the consent of the
Indemnified Party, unless the settlement thereof imposes no Loss, liability or
obligation on, and includes a complete release from all liability of, the
Indemnified Party. If the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person claim (which pays or otherwise
satisfies all Losses which the Indemnified Party is entitled to have indemnified
under this Agreement) and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party's liability under this Section with
respect to such Third Person claim shall be limited to the amount so offered in
settlement by said Third Person; provided, however, that notwithstanding the
foregoing, the Indemnified Party shall be entitled to refuse to consent to any
such proposed settlement and the Indemnifying Party's liability hereunder shall
not be limited by the amount of the proposed settlement if such settlement
imposes any liability or obligation on, or does not provide for the complete
release of, the Indemnified Party. If, upon receiving notice, the Indemnifying
Party does not timely undertake to defend such matter to which the Indemnified
Party is entitled to indemnification hereunder, or fails diligently to pursue
such defense, the Indemnified Party may
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undertake such defense through counsel of its choice, at the cost and expense of
the Indemnifying Party, and the Indemnified Party may settle such matter, in its
discretion, and the Indemnifying Party shall reimburse the Indemnified Party for
the amount paid in such settlement and any other Losses, liabilities or expenses
incurred by the Indemnified Party in connection therewith.
8.04 NON-THIRD PERSON CLAIMS. In the event that any Indemnified Party
asserts the existence of a claim giving rise to Losses (but excluding claims
resulting from the assertion of liability by Third Persons), such party shall
give written notice to the Indemnifying Party. Such written notice shall state
that it is being given pursuant to this Section 8.04, specify the nature and
amount of the claim asserted, and indicate the date on which such assertion
shall be deemed accepted and the amount of the claim deemed a valid claim (such
date to be established in accordance with the next sentence). If such
Indemnifying Party, within 60 days after the mailing of notice by such
Indemnified Party, shall not give written notice to such Indemnified Party
announcing such Indemnifying Party's intent to contest such assertion of such
Indemnified Party, such assertion shall be deemed accepted and the amount of
such claim shall be deemed a valid claim. In the event, however, that such
Indemnifying Party contests such assertion of a claim by giving such written
notice to the Indemnified Party within said period, then the parties shall act
in good faith to reach agreement regarding such claim. If the parties cannot
resolve such dispute after good faith negotiations with respect thereto within
60 days after the notice provided by the Indemnifying Party, such dispute shall
be submitted to arbitration in accordance with the provisions of Section 13.11.
In the event that arbitration shall arise with respect to any such claim, the
prevailing party shall be entitled to reimbursement of costs and expenses
incurred in connection with such arbitration including reasonable attorneys'
fees.
8.05 INDEMNIFICATION DEDUCTIBLE. Neither the Stockholders, on the one hand,
nor U.S. Concrete, Newco and the Surviving Corporation, on the other hand, shall
be entitled to indemnification from the other under the provisions of Section
8.01(a) or Section 8.02(a), as the case may be, until such time as, and only to
the extent that, the claims subject to indemnification by such other party
exceed, in the aggregate, $100,000. Notwithstanding the foregoing, the
limitations set forth in this Section 8.05 shall not apply to fraudulent
misrepresentations.
8.06 INDEMNIFICATION LIMITATION. Subject to Section 8.05, the aggregate
indemnification obligation of each Stockholder under Section 8.01(a) shall be
limited to such Stockholder's pro rata share (in relation to their respective
equity interests) of the aggregate Merger Consideration provided in Section 3.01
and shall be limited, as to any particular indemnification obligation, to each
Stockholder's pro rata share (in relation to their respective equity interests)
of such indemnification obligation. Subject to Section 8.05, the aggregate
indemnification obligation of U.S. Concrete and Newco under Section 8.02(a)
shall be limited to the amount of Merger Consideration. Notwithstanding the
foregoing, the limitations set forth in this Section 8.06 shall not apply to
fraudulent misrepresentations. Except as to fraud, deceit and/or willful
misconduct and except for any party's right to pursue any available equitable
remedy in an appropriate case, the indemnity rights set forth in Section 8.01
and 8.02 above are the sole and exclusive
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remedies for the breaches of warranty and other matters expressly made the
subject of such indemnities.
8.07 INDEMNIFICATION FOR NEGLIGENCE OF INDEMNIFIED PARTY. THE RIGHTS TO
INDEMNIFICATION UNDER THIS ARTICLE VIII INCLUDE RIGHTS TO INDEMNIFICATION FOR
THE RESULTS OF AN INDEMNIFIED PARTY'S ACTUAL OR ALLEGED NEGLIGENCE, IF SUCH
INDEMNIFIED PARTY WOULD OTHERWISE BE ENTITLED TO INDEMNIFICATION HEREUNDER.
ARTICLE IX
NONCOMPETITION COVENANTS
9.01 PROHIBITED ACTIVITIES.
(a) For no additional consideration, (i) Donald S. Butler will not for five
years following the Closing Date and, if longer, one year following his
termination of employment with the Surviving Corporation or its Affiliates (with
the applicable period being herein referred to as the "Noncompete Term") and
(ii) John Grace will not for three years following the Closing Date and, if
longer, upon the termination of his employment with the Surviving Corporation or
its Affiliates (with the applicable period being herein referred to as the
"Noncompete Term"), directly or indirectly, for themselves 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 Competitive Business within any Territory
surrounding any plant or other operating facility in which the Company was
engaged in business on the date immediately prior to the Closing Date (for
purposes of this ARTICLE IX, the "Territory" surrounding any plant or other
operating facility will be: (A) the city, town or village in which that plant or
facility is located, (B) the county or parish in which that plant or facility is
located, (C) the counties or parishes contiguous to the county or parish in
which that plant or facility is located, (D) the area located within 50 miles of
that plant or facility, (E) the area located within 100 miles of that plant or
facility and (F) the area in which that plant or facility regularly provides
products or services at the locations of its customers);
(ii) call upon or otherwise solicit any person, who is, at that time, an
employee or consultant of U.S. Concrete, the Surviving Corporation 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 U.S. Concrete, the Surviving Corporation 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
Company, U.S. Concrete or the Surviving Corporation or any of the subsidiaries
of such parties
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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 which the Company or U.S.
Concrete 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 U.S.
Concrete, for the purpose of acquiring that entity or arranging the acquisition
of that entity by any person or entity other than U.S. Concrete.
(b) Notwithstanding the above, Section 9.01(a) shall not be deemed to
prohibit any Stockholder from acquiring, as a passive investor with no
involvement in the operations of the business, not more than one 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.
9.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to U.S. Concrete and the Surviving Corporation as a result of a breach of
the foregoing covenant, because a breach of such covenant would diminish the
value of the assets, properties and business of the Company being sold pursuant
to this Agreement, and because of the immediate and irreparable damage that
could be caused to U.S. Concrete and the Surviving Corporation for which it
would have no other adequate remedy, since monetary damages alone may not be an
adequate remedy, each Stockholder agrees that the foregoing covenant may be
enforced against such individual by, without limitation, injunctions,
restraining orders and other equitable actions.
9.03 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this ARTICLE IX are necessary in terms of time, activity
and territory to protect U.S. Concrete's and the Surviving Corporation's
interest in the assets, properties and business being acquired pursuant to the
terms of this Agreement and impose a reasonable restraint on the Stockholders in
light of the activities and businesses of U.S. Concrete on the date of the
execution of this Agreement and the current plans of U.S. Concrete.
9.04 SEVERABILITY; REFORMATION. The covenants in this ARTICLE IX 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 IX 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.
9.05 MATERIAL AND INDEPENDENT COVENANT. The Stockholders acknowledge that
their agreements and the covenants set forth in this ARTICLE IX are material
conditions to U.S. Concrete's and Newco's agreements to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and that U.S.
Concrete and Newco would not have entered into this Agreement without such
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covenants. All of the covenants in this ARTICLE IX shall be construed as an
agreement independent of any other provision in this Agreement. The existence of
any claim or cause of action by any Stockholder against U.S. Concrete, whether
predicated on this Agreement or otherwise, will not constitute a defense to the
enforcement by U.S. Concrete of any of the covenants of this ARTICLE IX. It is
specifically agreed that the time period Section 9.01 specifies will be computed
in the case of each Stockholder by excluding from that computation any time
during which that Stockholder is in violation of any provision of Section 9.01.
The covenants this ARTICLE IX contains will not be affected by any breach of any
other provision hereof by any party hereto.
ARTICLE X
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
10.01 General. The Stockholders recognize and acknowledge that they had in
the past, currently have, and in the future will have, access to certain
confidential information relating to the businesses of the Company, the
Surviving Corporation and/or U.S. Concrete, including, without limitation, lists
of customers, operational policies, and pricing and cost policies that are, and
following the Closing will be, valuable, special and unique assets of the
Surviving Corporation and U.S. Concrete. Each Stockholder agrees that he or she
will not use or disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose whatsoever, except as
is required in the course of performing his or her duties, if any, to the
Surviving Corporation and/or U.S. Concrete, unless (a) such information becomes
known to the public generally through no fault of the Stockholder or (b)
disclosure is required by Law, provided that prior to disclosing any information
pursuant to this clause (c) the disclosing Stockholder(s) shall give prior
written notice thereof to U.S. Concrete and the Surviving Corporation and
provide U.S. Concrete with the opportunity to contest such disclosure. In the
event of a breach or threatened breach by any Stockholder of the provisions of
this Section, U.S. Concrete shall be entitled to an injunction restraining such
Stockholder from disclosing, in whole or in part, such confidential information.
Nothing herein shall be construed as prohibiting U.S. Concrete from pursuing any
other available remedy for such breach or threatened breach, including, without
limitation, the recovery of damages.
10.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to U.S. Concrete and the Surviving Corporation as a result of the breach
of the foregoing covenant, because a breach of such covenant would diminish the
value of the assets, properties and business of the Company being sold pursuant
to this Agreement, and because of the immediate and irreparable damage that
would be caused for which the Surviving Corporation and/or U.S. Concrete would
have no other adequate remedy, since monetary damages alone may not be an
adequate remedy, each Stockholder agrees that the foregoing covenants may be
enforced against such individual by, without limitation, injunctions,
restraining orders and other equitable actions.
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ARTICLE XI
FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON
STOCK
11.01 COMPLIANCE WITH LAW. The Stockholders acknowledge the shares of U.S.
Concrete Common Stock issued in accordance with the terms of this Agreement (the
"Restricted Shares") will not be registered under the 1933 Act and therefore may
not be resold without compliance with the 1933 Act. The Restricted Shares are
being or will be acquired by the Stockholders 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. Each
Stockholder covenants, warrants and represents that none of the Restricted
Shares held by such Stockholder 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 1933 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.
11.02 ECONOMIC RISK; SOPHISTICATION; ACCREDITED INVESTORS. Each Stockholder
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. Each Stockholder has such
knowledge and experience in financial and business matters that he or she is
capable of evaluating the merits and risks of the proposed investment and
therefore has the capacity to protect his or her own interests in connection
with the acquisition of the Restricted Shares pursuant hereto. Each Stockholder
represents to U.S. Concrete and Newco that he or she is an "accredited
investor," as that term is defined in Regulation D under the 1933 Act. Each
Stockholder or his or her representatives have had an adequate opportunity to
ask questions of, and receive answers from the appropriate officers and
representatives of U.S. Concrete and Newco concerning, among other matters, U.S.
Concrete, 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 such Stockholder or his or
her representatives concerning such matters.
11.03 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 U.S.
Concrete Common Stock to the public without registration, for a period of two
years after the Closing, U.S. Concrete agrees to use its commercially reasonable
efforts to:
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(a) make and keep public information (as such terms are defined in Rule
144) regarding U.S. Concrete available;
(b) file with the SEC in a timely manner all reports and other documents
required of U.S. Concrete under the 1933 Act and the 1934 Act; and
(c) furnish to a Stockholder upon written request a written statement by
U.S. Concrete as to its compliance with the reporting requirements of Rule 144,
the 1933 Act and the 1934 Act, a copy of the most recent annual or quarterly
report of U.S. Concrete, and such other reports and documents so filed as such
Stockholder may reasonably request in availing himself or herself of any rule or
regulation of the SEC allowing such Stockholder to sell any such shares without
registration.
11.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES. The
Stockholders covenant, warrant and represent that (i) none of the Restricted
Shares will be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of, directly or indirectly, during the two-year period
commencing on the Closing Date (the "Lockup Period"); (ii) 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 1933 Act and
the rules and regulations of the SEC; (iii) during the one-year period
commencing on the Closing Date, the Stockholders 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 the Stockholders' risk of owning
such Restricted Shares; and (iv) following the one-year period described in
clause (iii) and for the remainder of the Lockup Period, the Stockholders shall
not engage in put, call, short-sale, hedge, straddle, collar or similar
transactions with respect to 50% or more of the Restricted Shares intended to
reduce the Stockholders' 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 11.01:
The shares represented by this certificate are subject to a contractual
restriction on transfer that expires on March 2, 2002 and may not be offered,
sold, assigned, pledged, hypothecated, transferred or otherwise disposed of
during the period of such contractual restriction without the prior written
consent of U.S. Concrete, Inc.
11.05 PROSPECTUS DELIVERY. Each Stockholder represents and acknowledges
that he or she has been provided with the most current prospectus of U.S.
Concrete, dated May 25, 1999, (solely for information purposes as to U.S.
Concrete and not in connection with the offering of securities effectuated
thereby) and all subsequent periodic reports filed by U.S. Concrete with the SEC
at least 20 days prior to the date hereof.
38
<PAGE>
ARTICLE XII
MISCELLANEOUS
12.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES. This Agreement and the
rights of the parties hereunder may not be assigned (except by operation of Law)
and shall be binding upon and shall inure to the benefit of the parties hereto,
the successors of U.S. Concrete, Newco, the Surviving Corporation and the
Company, and the heirs and legal representatives of the Stockholders. Except as
provided in ARTICLE VIII or in this Section 12.01, nothing in this Agreement is
intended or will be construed to confer upon or give any person or entity other
than the parties hereto any rights or remedies under or by reason of this
Agreement or any transaction contemplated hereby.
12.02 ENTIRE AGREEMENT. This Agreement (including the Schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders, the
Company, Newco and U.S. Concrete and supersede any prior agreement and
understanding relating to the subject matter of this Agreement, including,
without limitation, the Letter of Intent. This Agreement may be modified or
amended only by a written instrument executed by the Stockholders, the Company,
Newco and U.S. Concrete, acting through their respective officers, duly
authorized by their respective Boards of Directors. Any right hereunder may be
waived only by a written instrument executed by the party waiving such right.
12.03 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. Facsimile
transmission of any signed original document and/or retransmission of any signed
facsimile transmission will be deemed the same as delivery of an original. At
the request of any party, the parties will confirm facsimile transmission by
signing a duplicate original document.
12.04 BROKERS AND AGENTS. Each party hereto represents and warrants that it
employed no broker or agent in connection with the transactions contemplated by
this Agreement. EACH PARTY AGREES TO INDEMNIFY EACH OTHER PARTY AGAINST ALL
LOSS, COST, DAMAGES OR EXPENSE ARISING OUT OF CLAIMS FOR FEES OR COMMISSIONS OF
BROKERS EMPLOYED OR ALLEGED TO HAVE BEEN EMPLOYED BY SUCH INDEMNIFYING PARTY.
12.05 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested (which will be deemed
given three business days after deposit), or by delivering the same in person to
an officer or agent of such party (which will be deemed given when actually
received), as follows:
39
<PAGE>
If to U.S. Concrete, Newco or the Surviving Corporation, addressed to them
at:
U.S. Concrete, Inc.
1300 Post Oak Blvd., Suite 1200
Houston, Texas 77056
Attn: Corporate Secretary
If to the Stockholders, addressed as follows:
Donald S. Butler
4301 Hidden Valley Court
Colleyville, Texas 76034
John Grace
3402 Pembrooke Parkway South
Colleyville, Texas 76034
with a copy (which shall not constitute notice) to:
John T. Lynch, IV
Adams, Lynch & Loftin, P.C.
1903 Central Drive, Suite 400
Bedford, Texas 76201
Fax: (817) 571-2947
or such other address as any party hereto shall specify pursuant to this Section
12.05 from time to time.
12.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in ARTICLE V and ARTICLE VI shall survive the Closing for a
period of three years from the Closing Date (the "Expiration Date"), except that
the representations and warranties set forth in Sections 5.03, 5.11, 5.16 and
5.18 hereof shall survive until such time as the applicable statute of
limitations period has run, which shall be deemed to be the Expiration Date for
Sections 5.03, 5.11, 5.16 and 5.18, as the case may be. The respective parties
shall remain liable after the Expiration Date for breaches of the
representations and warranties set forth in ARTICLE V and ARTICLE VI, provided
such breaches are asserted in good faith by notice in writing to the alleged
breaching party prior to the Expiration Date.
12.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE. Except as
otherwise provided herein, no delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of any similar breach or default occurring later; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default occurring before or after that waiver. No right, remedy or
election any term of this Agreement gives will be deemed exclusive, but each
40
<PAGE>
will be cumulative with all other rights, remedies and elections available at
law or in equity.
12.08 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.
12.09 SECTION HEADINGS; GENDER. The Section headings contained in this
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement. Words of the masculine gender
in this Agreement shall be deemed and construed to include correlative words of
the feminine and neuter genders and words of the neuter gender shall be deemed
and construed to include correlative words of the masculine and feminine
genders.
12.10 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Texas (except for its principles governing conflicts of
laws).
12.11 DISPUTE RESOLUTION.
(a) Except with respect to injunctive relief as provided in Section 9.02
and Section 10.02 (which relief may be sought from any court or administrative
agency with jurisdiction with respect thereto), any unresolved dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in accordance with the rules of the American
Arbitration Association ("AAA") then in effect through its Dallas, Texas
offices. The arbitration shall be conducted by a single arbitrator who is a
retired state or federal judge in Texas selected in accordance with AAA rules
and procedures then in effect. The arbitration shall be conducted in Dallas,
Texas.
(b) The parties shall obtain from AAA a list of the retired judges
available to conduct the arbitration. The parties shall use their reasonable
efforts to agree upon a judge to conduct the arbitration. If the parties cannot
agree upon a judge to conduct the arbitration within 10 days after receipt of
the list of available judges, the parties shall ask AAA to provide the parties a
list of three available judges (the "Judge List"). Within five days after
receipt of the Judge List, each party shall strike one of the names of the
available judges from the Judge List and return a copy of such list to AAA and
the other party. If two different judges are stricken from the Judge List, the
remaining judge shall conduct the arbitration. If only one judge is stricken
from the Judge List, AAA shall select a judge from the remaining two judges on
the Judge List to conduct the arbitration.
(c) The arbitrator shall not have the authority to add to, detract from, or
modify any provision hereof nor to award punitive damages to any injured party.
The arbitrator shall have the authority to order payment of damages,
reimbursement of costs,
41
<PAGE>
including those incurred to enforce this Agreement, and interest thereon in the
event the arbitrator determines that a material breach of this Agreement has
occurred. A decision by the arbitrator shall be final and binding. Judgment may
be entered on the arbitrator's award in any court having jurisdiction.
12.12 INTEGRATION OF OPERATIONS. The Stockholders and the Company
acknowledge that U.S. Concrete intends to integrate the operations conducted by
the Company with the operations of other companies owned now or in the future by
U.S. Concrete in the Dallas-Fort Worth Metroplex area, Texas.
12.13 EXCEPTIONS REGARDING LEWISVILLE LEASE (a) Stockholders warrant and
represent to U.S. Concrete that the real property ("Lewisville Property") which
is the subject of the Lewisville Plant Site of Company has a valid certificate
of occupancy and is in compliance with the ordinances of the city of Lewisville
and meets the city of Lewisville requirements for use of the Lewisville Plant in
its current manner; however, the Lewisville Property is not platted.
Stockholders warrant and represent that the current use and development status
of the Lewisville Property and appurtenant plant and improvements are lawful,
nonconforming uses and structures with respect to the City of Lewisville
Development Code.
(b) Stockholders assert that any new construction, additional improvements
to the realty, and other actions set forth in the City of Lewisville Development
Code will trigger the requirement for platting, and that platting will require a
number of improvements and other actions at a significant cost and delay.
Stockholders further assert that it was the plan and intent of Company to use
the Lewisville Property "as is" until such time that any event triggered the
requirement to meet the City of Lewisville Development Code, at which time the
Lewisville Plant would be moved to an alternate location. It is stipulated and
agreed that notwithstanding anything in this Agreement to the contrary, except
for any material misrepresentation or material incorrectness of the warranties
and representations set forth in Section 12.13(a) above, any cost or other
requirements to meet the City of Lewisville Development Code or move to an
alternate location are excluded from any warranty, representation, covenant and
indemnity obligations of Stockholders set forth in this Agreement.
[Remainder of page intentionally left blank]
42
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
U.S. CONCRETE, INC.
By:/s/ Donald Wayne
------------------------------
Donald Wayne, Vice President
CONCRETE XXIV ACQUISITION, INC.
By:/s/ Donald Wayne
-------------------------------
Donald Wayne, President
STANCON INC.
By:/s/ Donald S. Butler
-------------------------------
Donald S. Butler, President
STOCKHOLDERS:
/s/ Donald S. Butler
----------------------------------
Donald S. Butler, Individually
/s/ John Grace
----------------------------------
John Grace, Individually
43
<PAGE>
STATE OF TEXAS (S)
(S)
COUNTY OF Harris (S)
------
The above and foregoing instrument was acknowledged before me on the 2nd
day of March, 2000, by Donald Wayne of U.S. CONCRETE, a Delaware corporation, on
behalf of the corporation.
/s/ Stephanie A. Thomas
--------------------------------
Notary Public
My Commission Expires:
5/10/2000
- --------------------------
(Seal)
STATE OF TEXAS (S)
(S)
COUNTY OF Harris (S)
------
The above and foregoing instrument was acknowledged before me on the 2nd
day of March, 2000, by Donald Wayne of CONCRETE XXIV ACQUISITION, INC., a
Delaware corporation, on behalf of the corporation.
/s/ Stephanie A. Thomas
----------------------------
Notary Public
My Commission Expires:
5/10/2000
- ------------------------------
(Seal)
44
<PAGE>
STATE OF TEXAS (S)
(S)
COUNTY OF Tarrant (S)
-------
The above and foregoing instrument was acknowledged before me on the 2nd
day of March, 2000, by Donald S. Butler of STANCON, INC., a Texas corporation,
on behalf of the corporation.
/s/ Stacy D. Turner
----------------------------
Notary Public
My Commission Expires:
6/25/2000
- ---------------------------
(Seal)
STATE OF TEXAS (S)
(S)
COUNTY OF Tarrant (S)
The above and foregoing instrument was acknowledged before me on the 2nd
day of March, 2000, by Donald S. Butler.
/s/ Stacy D. Turner
-----------------------------
Notary Public
My Commission Expires:
6/25/2000
- ------------------------------
(Seal)
STATE OF TEXAS (S)
(S)
COUNTY OF Tarrant (S)
-------
The above and foregoing instrument was acknowledged before me on the 2nd
day of March, 2000, by John Grace.
/s/ Stacy D. Turner
------------------------------
Notary Public
My Commission Expires:
6/25/2000
- -----------------------------
(Seal)
45
<PAGE>
EXHIBIT 4.6
AMENDED AND RESTATED CREDIT AGREEMENT
among
U.S. CONCRETE, INC.
as the Borrower,
THE GUARANTORS,
party hereto,
THE LENDERS,
party hereto,
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Administrative Agent,
BANKERS TRUST COMPANY
as syndication agent,
and
FIRST UNION NATIONAL BANK,
as documentation agent,
and
BANK ONE, TEXAS, NA
BRANCH BANKING & TRUST COMPANY
CREDIT LYONNAIS NEW YORK BRANCH
THE BANK OF NOVA SCOTIA,
as co-managing agents,
and
CHASE SECURITIES INC.,
as Sole Book Manager and Lead Arranger
$200,000,000 REVOLVING CREDIT LOAN
FEBRUARY 9, 2000
ANDREWS & KURTH L.L.P.
COUNSEL TO THE ADMINISTRATIVE AGENT
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................... 1
SECTION 1.01. Defined Terms............................................ 1
SECTION 1.02. Classification of Loans and Borrowings................... 18
SECTION 1.03. Terms Generally.......................................... 19
SECTION 1.04. Accounting Terms; GAAP................................... 19
ARTICLE II THE CREDITS.................................................. 19
SECTION 2.01. Commitments.............................................. 19
SECTION 2.02. Loans and Borrowings..................................... 20
SECTION 2.03. Requests for Revolving Borrowings........................ 20
SECTION 2.04. Swingline Loans.......................................... 21
SECTION 2.05. Letters of Credit........................................ 22
SECTION 2.06. Funding of Borrowings.................................... 26
SECTION 2.07. Interest Elections....................................... 27
SECTION 2.08. Termination and Reduction of Commitments................. 28
SECTION 2.09. Repayment of Loans; Evidence of Debt..................... 29
SECTION 2.10. Prepayment of Loans...................................... 30
SECTION 2.11. Fees..................................................... 30
SECTION 2.12. Interest................................................. 31
SECTION 2.13. Alternate Rate of Interest............................... 32
SECTION 2.14. Increased Costs.......................................... 33
SECTION 2.15. Break Funding Payments................................... 34
SECTION 2.16. Taxes.................................................... 34
SECTION 2.17. Payments Generally; Pro Rata Treatment;
Sharing of Set-offs...................................... 35
SECTION 2.18. Mitigation Obligations; Replacement of Lenders........... 37
SECTION 2.19. Effect of Increased Costs................................ 37
ARTICLE III REPRESENTATIONS AND WARRANTIES.............................. 38
SECTION 3.01. Organization; Powers..................................... 38
SECTION 3.02. Authorization; Enforceability............................ 38
SECTION 3.03. Governmental Approvals; No Conflicts..................... 38
SECTION 3.04. Financial Condition; No Material Adverse Change.......... 38
SECTION 3.05. Properties............................................... 39
SECTION 3.06. Litigation and Environmental Matters..................... 40
SECTION 3.07. Compliance with Laws and Agreements...................... 40
SECTION 3.08. Investment and Holding Company Status.................... 40
SECTION 3.09. Taxes.................................................... 40
SECTION 3.10. ERISA.................................................... 41
SECTION 3.11. Disclosure............................................... 41
SECTION 3.12. Year 2000................................................ 41
SECTION 3.13 Solvency................................................. 41
SECTION 3.14 Insurance................................................ 41
SECTION 3.15. Subsidiaries............................................. 42
ARTICLE IV CONDITIONS................................................... 42
SECTION 4.01. Effective Date........................................... 42
SECTION 4.02. Each Credit Event........................................ 45
ARTICLE V AFFIRMATIVE COVENANTS.......................................... 46
i
<PAGE>
SECTION 5.01. FINANCIAL STATEMENTS; AND OTHER INFORMATION.............. 46
SECTION 5.02. Notices of Material Events............................... 47
SECTION 5.03. Existence; Conduct of Business; Location................. 48
SECTION 5.04. Payment of Obligations................................... 48
SECTION 5.05. Maintenance of Properties; Insurance..................... 48
SECTION 5.06. Books and Records; Inspection Rights; Audits............. 49
SECTION 5.07. Compliance with Laws..................................... 49
SECTION 5.08. Use of Proceeds and Letters of Credit.................... 49
SECTION 5.09. Subsidiaries............................................. 49
SECTION 5.10. Collateral............................................... 50
SECTION 5.11. Employee Agreements...................................... 51
SECTION 5.12. Compliance With Leases................................... 51
ARTICLE VI NEGATIVE COVENANTS........................................... 51
SECTION 6.01. Indebtedness............................................. 51
SECTION 6.02. Liens.................................................... 52
SECTION 6.03. Fundamental Changes...................................... 53
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions............................................. 53
SECTION 6.05. Restricted Payments...................................... 54
SECTION 6.06. Transactions with Affiliates............................. 54
SECTION 6.07. Restrictive Agreements................................... 54
SECTION 6.08. Financial Ratios......................................... 55
SECTION 6.09. Net Worth................................................ 56
SECTION 6.10. Capital Expenditures..................................... 56
SECTION 6.11. Limitation of Acquisitions............................... 56
SECTION 6.12. Hedging Agreement........................................ 58
SECTION 6.13 Additional Borrowings Under Union Bank Indebtedness...... 58
SECTION 6.14. Prepayment of Other Indebtedness......................... 58
SECTION 6.15. Fiscal Year.............................................. 58
SECTION 6.16. Sale and Leaseback....................................... 58
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES.............................. 59
SECTION 7.01. Events of Default........................................ 59
SECTION 7.02. Remedies................................................. 61
ARTICLE VIII THE ADMINISTRATIVE AGENT.................................... 61
ARTICLE IX MISCELLANEOUS............................................... 63
SECTION 9.01. Notices.................................................. 63
SECTION 9.02. Waivers; Amendments...................................... 65
SECTION 9.03. Expenses; Indemnity; Damage Waiver....................... 66
SECTION 9.04. Successors and Assigns................................... 67
SECTION 9.05. Survival................................................. 69
SECTION 9.06. Counterparts; Integration; Effectiveness................. 69
SECTION 9.07. Severability............................................. 70
SECTION 9.08. Right of Setoff.......................................... 70
SECTION 9.09. Governing Law; Jurisdiction; Consent to
Service of Process....................................... 70
SECTION 9.10. WAIVER OF JURY TRIAL..................................... 71
SECTION 9.11. Headings................................................. 71
SECTION 9.12. Confidentiality.......................................... 72
SECTION 9.13. Interest Rate Limitation................................. 72
SECTION 9.14. FINAL AGREEMENT OF THE PARTIES........................... 73
SECTION 9.15. Limited Liability........................................ 73
ARTICLE X GUARANTY....................................................... 73
ii
<PAGE>
SECTION 10.01. Guaranty................................................ 73
SECTION 10.02. Continuing Guaranty..................................... 74
SECTION 10.03. Effect of Debtor Relief Laws............................ 75
SECTION 10.04. Partial Waiver of Subrogation........................... 75
SECTION 10.05. Subordination........................................... 76
SECTION 10.06. Waiver.................................................. 76
SECTION 10.07. Full Force and Effect................................... 77
SECTION 10.08. Termination of Guaranty................................. 77
iii
<PAGE>
SCHEDULES:
- ---------
Schedule 2.01 Commitments
Schedule 3.05(b) Leases
Schedule 3.05(d) Location of Business/Chief Executive Office
Schedule 3.06 Disclosed Matters
Schedule 3.15 Subsidiaries
Schedule 6.01 Existing Indebtedness
Schedule 6.04 Existing Investments
Schedule 6.07 Existing Restrictions
EXHIBITS:
- --------
Exhibit 1.01A Form of Assignment and Acceptance
Exhibit 1.01B Form of Note
Exhibit 1.01C Form of Terms of Subordination for Subordinated Debt
Exhibit 5.09 Form of Joinder Agreement
Exhibit 6.11 Form of Acquisition Information Worksheet
iv
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT dated as of February 9, 2000, among the
Borrower, the Guarantors, the Lenders, Bankers Trust Company, as syndication
agent, First Union National Bank, as documentation agent, Bank One, Texas, NA,
Branch Banking & Trust Company, Credit Lyonnais New York Branch and The Bank of
Nova Scotia, as co-managing agents and Chase Bank of Texas, N.A., as the
Administrative Agent.
The Borrower, certain Guarantors, certain Lenders and the
Administrative Agent entered into the Prior Credit Agreement dated May 28, 1999.
The Borrower now requests that the Lenders amend and restate the Prior Credit
Agreement and provide the Borrower with a credit facility pursuant to which the
Lenders will commit to make Revolving Credit Loans of up to an additional
$100,000,000, for a total of $200,000,000. The proceeds of the Revolving Credit
Loans shall be used to finance working capital needs of the Borrower and its
Subsidiaries and, for their general corporate purposes, including permitted
acquisitions.
In connection therewith, the Administrative Agent has agreed to serve
in such capacity for the Lenders and the Administrative Agent and the Lenders
are agreeable to the Borrower's request, subject to the terms of this Agreement.
All capitalized terms used in this introductory paragraph are defined in
Article I, Definitions.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants set forth herein, the Borrower, the Administrative Agent and the
Lenders agree to amend and restate the Prior Credit Agreement in its entirety as
follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR" when used in reference to any Loan or Borrowing, refers to a
Loan or Borrowing bearing interest at a rate determined by reference to the
Alternate Base Rate.
"Acquisition" means any transaction, or any series of related
transactions, by which the Borrower or any of its Subsidiaries (a) acquires all
or substantially all of the assets of any Qualified Company (including the
Acquisition Targets), or division thereof, whether through purchase of assets,
merger or otherwise or (b) directly or indirectly acquires all of the securities
of or outstanding ownership interests or control of any Qualified Company
(including the Acquisition Targets).
"Acquisition Documents" means any and all purchase agreements, in each
case among the Borrower, and any Qualified Company that is the subject of an
Acquisition and/or the
<PAGE>
stockholders of such Qualified Company and all other conveyance documents, bills
of sale and all other written agreements, documents, instruments and
certificates now or hereafter executed and delivered by any Person required to
be delivered to consummate any Acquisition and any and all amendments,
supplements, and other modifications thereof, in each case other than from the
Borrower or another Subsidiary.
"Acquisition Targets" means collectively, the following Qualified
Companies: the Allega Cement Companies and the Beall Industries Companies, and
individually, any of the foregoing.
"Add-Back Adjustments" means the pro forma adjustments of the types
referred to in 17 CFR 210.11-02(b)(6).
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, the interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the statutory Reserve Rate.
"Administrative Agent" means Chase Bank of Texas, National
Association, a national banking association, in its capacity as administrative
agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire
in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agreement" means this agreement, as the same may be amended, amended
and restated, modified or supplemented from time to time.
"Allega Cement Companies" means Allega Cement, an Ohio corporation and
its subsidiaries.
"Alternate Base Rate" means for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day, and (b) the Federal Funds
Effective Rate in effect on such day plus 0.5% per annum. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
2
<PAGE>
"Applicable Margin" means, for any day during any period between two
successive Financial Statement Delivery Dates commencing on the first Financial
Statement Delivery Date in such period and ending on the day before the
following Financial Statement Delivery Date, with respect to any ABR Loan,
Eurodollar Revolving Loan, or with respect to the commitment fees payable
hereunder, as the case may be, the applicable margin per annum set forth in the
appropriate column below under the caption "ABR Spread", "Eurodollar Spread" or
"Commitment Fee Rate", as the case may be, for the ratio of Funded Debt to
EBITDA for the fiscal period for which such financial statements were delivered
as of the Financial Statement Delivery Date; provided, that upon the occurrence
of any Capital Markets Event, each of the applicable margins per annum set forth
in the appropriate column below under the caption "ABR Spread" and "Eurodollar
Spread", as the case may be, shall be equal to the amount set forth below minus
.25%, however, the applicable margin under the caption "Commitment Fee" shall
remain unchanged:
<TABLE>
<CAPTION>
Ratio of Funded Debt to EBITDA ABR Eurodollar Commitment
- ------------------------------ ------- ---------- ----------
Spread Spread Fee Rate
------- ---------- ----------
<S> <C> <C> <C>
*3.0 to 1.0 2.00% 3.00% .50%
*2.5 to 1.0 but **3.0 to 1.0 1.75% 2.75% .50%
*2.0 to 1.0 but **2.5 to 1.0 1.50% 2.50% .50%
*1.5 to 1.0 but **2.0 to 1.0 1.00% 2.00% .50%
*1.0 to 1.0 but **1.5 to 1.0 .75% 1.75% .375%
*.5 to 1.0 but **1.0 to 1.0 .50% 1.50% .375%
**.5 to 1.0 .25% 1.25% .250%
</TABLE>
* Greater than or equal to
** Lesser than
As of the date hereof and until delivery of the Financial Statements
for the period ending December 31, 1999 required under Section 5.01, the
Applicable Margin for Eurodollar Loans shall be 2.50% per annum, for ABR Loans,
1.50% per annum, and the Commitment Fee Rate shall be .50% per annum.
For purposes of the foregoing, (a) if sufficient information does not
exist to calculate the Applicable Margin, or the Borrower has not delivered such
information to the Administrative Agent in a timely manner, Eurodollar Loans
shall not be available to the Borrower and the Applicable Margin for ABR Loans
shall be 2.00% per annum and for the commitment fee shall be .50% per annum; and
(b) if (i) the Ratio of Funded Debt to EBITDA shall change upon delivery of any
financial statement required under Section 5.01 or (ii) a Capital Markets Event
shall have occurred, such change in the Applicable Margin shall be effective as
of the date on which any such financial statement is delivered or on the date of
the Capital Markets Event shall have occurred, as the case may be, irrespective
of whether it is in the middle of an Interest Period or when notice of such
change shall have been furnished by the Borrower to the Administrative Agent and
the Lenders pursuant to Section 5.01(c) hereof or otherwise. Each change in the
Applicable Margin shall apply during the period commencing on the effective date
of such change and ending on the date immediately preceding the effective date
of the next such change.
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"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit 1.01A or any other form approved by the Administrative Agent.
"Availability Period" means the period from and including the
Effective Date to but excluding the earlier of thirty (30) days prior to the
Maturity Date and the date of termination of the Commitments.
"Autoborrow Agreement" means the Autoborrow Service Agreement dated as
of July 30, 1999, between the Borrower and the Swingline Lender.
"BT" means Bankers Trust Company.
"Beall Companies" means Beall Industries, Inc. a Texas corporation,
its subsidiaries, Beall Management, Inc., a Texas corporation, Beall Investment
Corporation, Inc., a Delaware corporation and Beall Concrete Enterprises, Ltd.,
a Texas limited partnership.
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" means U.S. Concrete, Inc., a Delaware corporation.
"Borrowing" means (a) Revolving Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect, and (b) Swingline Loans.
"Borrowing Request" means a request by the Borrower for a Revolving
Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in Houston, Texas are authorized or required by
law to remain closed; provided that, when used in connection with a Eurodollar
Loan, the term "Business Day" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" of any Person means the expenditures for any
purchase or other acquisition of any asset (other than for any Acquisition)
which are required to be classified and accounted for as a capital asset on a
consolidated balance sheet of such Person under GAAP and the amount of such
expenditures shall be the capitalized amount thereof determined in accordance
with GAAP.
"Capital Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
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accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capital Markets Event" means the first issuance after the Effective
Date by the Borrower or any Subsidiary of (i) Subordinated Debt, (ii) preferred
stock on terms reasonably satisfactory to the Administrative Agent and the
Lenders or (iii) common equity of the Borrower, from which the gross proceeds to
the Borrower are in an aggregate principal amount of not less than $100,000,000.
"Certificate of Title" means any written instrument which may be
issued solely by and under the authority of any jurisdiction for any vehicle
which is required by such jurisdiction to be licensed or registered.
"Change in Control" means (a) the failure of Vincent Foster to be
Chairman of the Board of Directors of the Borrower; (b) occupation of a majority
of the seats (other than vacant seats) on the board of directors of the Borrower
by Persons who were neither (i) nominated by the board of directors of the
Borrower nor (ii) appointed by directors so nominated; or (c) the acquisition of
direct or indirect Control of the Borrower by any Person or group other than the
shareholders of the Borrower beneficially as shown on page 60 of the
Registration Statement.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof having the effect of law by any
Governmental Authority after the date of this Agreement or (c) compliance by any
Lender or the Issuing Bank (or, for purposes of Section 2.14(b), by any lending
office of such Lender or by such Lender's or the Issuing Bank's holding company,
if any) with any request, guideline or directive (whether or not having the
force of law) of any Governmental Authority made or issued after the date of
this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Swingline Loans.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" means all of the material assets of the Borrower and its
Subsidiaries, including, all accounts, inventory, vehicles, equipment (including
rolling stock), furniture, fixtures, general intangibles, capital stock of
subsidiaries and all real property and leasehold estates (including improvements
thereon) held by such Person.
"Commitment" means (a) with respect to each Lender, the commitment of
such Lender to make Revolving Loans and to acquire participations in Letters of
Credit and Swingline Loans hereunder, expressed as an amount representing the
maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder,
as such commitment may be (i) reduced from time to time pursuant to Section 2.08
or and (ii) reduced or increased from time to time pursuant to assignments by or
to such Lender pursuant to Section 9.04 and (b) with respect to the Swingline
Lender, its commitment to make Swingline Loans. The initial amount of each
Lender's
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Commitment is set forth on Schedule 2.01 under the caption "Initial Commitment",
or in the Assignment and Acceptance pursuant to which such Lender shall have
assumed its Commitment, as applicable. The aggregate amount of the Lenders'
total Commitments is $200,000,000.00 initially, and reduces to $175,000,000 upon
and after the occurrence of a Capital Markets Event.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Default Rate" has the meaning specified in Section 2.12(c).
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"dollars" or "$" refers to lawful money of the United States of
America.
EBITDA means, determined for the most recently ended period of four
full fiscal quarters of the Borrower, the sum of:
(a) consolidated operating income of the Borrower before any deduction
for federal, state and local income and franchise taxes, excluding any
extraordinary gains or losses, plus (to the extent deducted in determining
income for such period) the aggregate amount which was deducted for such period
in determining such income for interest expense, depreciation expense and
amortization expense, plus, for each such period that includes the fiscal
quarter of the Borrower ending March 31, 1999, the noncash, nonrecurring stock
compensation charge of the Borrower in that fiscal quarter as reflected in the
Registration Statement, plus, for each such period that includes dates prior to
May 29, 1999, the Add-Back Adjustments of the Founding Companies from the
beginning of the relevant fiscal period to the end of each such period;
provided, that for any such period that includes May 28, 1999 as to the Founding
Companies, EBITDA under this subparagraph (a) will be determined as if the
Borrower and the Founding Companies had been a consolidated entity from the
beginning of such applicable period; and
(b) for each Qualified Company whose Acquisition by the Borrower
occurs during the four quarters preceding the date as of which EBITDA is
calculated and with respect to the period beginning four quarters prior to the
calculation of EBITDA through the date of such Acquisition, the sum of the
consolidated operating income of such Qualified Company before any deduction for
federal, state and local income and franchise taxes, excluding any extraordinary
gains or losses, plus the aggregate amount which was deducted for such period in
determining such income for interest expense, depreciation expense and
amortization expense, plus Add-Back Adjustments of such Qualified Company;
provided, said pre-acquisition EBITDA of any Qualified Company shall be included
in EBITDA only to the extent any such amount (i) is not included in subparagraph
(a)
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above, (ii) if the statement of operations of such Qualified Company for its
most recently ended fiscal year prior to its Acquisition (or, if that fiscal
year is not a calendar year, for the most recently ended calendar year, at the
option of the Borrower) has been audited by independent public accountants of
recognized standing, is derived from that audited statement and from such
Qualified Company's interim unaudited statement of operations prepared on the
same basis as that audited statement for the period since the year covered in
that audited statement and (iii) if not included in clause (ii) of this proviso,
is (A) approved for inclusion in such calculation by the Required Lenders, (B)
not in excess of $1,000,000 in the aggregate for all such acquisitions during
any rolling 12 month period or (C) is pre-acquisition EBITDA of Olive Branch.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all final laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters to the extent binding on the Borrower
and its Subsidiaries and their properties.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials in a manner that results in damage to the
environment, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate
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from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in
Article VII.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.18(b)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender's failure to comply with Section 2.16(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.16(a).
"Federal Funds Effective Rate" means (a) for the first day of an ABR
Borrowing or Swingline Loan, the rate per annum which is the average of the
rates on the offered side of the Federal funds market quoted by three interbank
Federal funds brokers, selected by the Administrative Agent, at approximately
the time the Borrower request such Borrowing or Swingline Loan, for dollar
deposits in immediately available funds, for a period and in an amount,
comparable to the principal amount of such ABR Borrowing or Swingline Loan, as
the case may be, and (b) for each other day of such ABR Borrowing or Swingline
Loan thereafter, or for any other amount hereunder which bears interest at the
Alternate Base Rate, the rate per annum which is the average of the rates on the
offered side of the Federal funds market quoted by three interbank Federal funds
brokers, selected by the Administrative Agent, at approximately 2:00 p.m. New
York City time on such day for dollar deposits in immediately available funds,
for a period and in an amount, comparable to the principal amount of such ABR
Borrowing, Swingline Loan or other amount, as the case may be; in the case of
both clauses (a) and (b), as determined by the Administrative Agent and rounded
upwards, if necessary, to the nearest 1/100 of 1%.
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"Financial Officer" means the chief executive officer or the chief
financial officer of the Borrower.
"Financial Statement Delivery Date" means the earlier of the date on
which the financial statements of the Borrower are delivered or are required to
be delivered to the Administrative Agent and the Lenders pursuant to Section
5.01(a) or 5.01(b), as the case may be.
"Founding Companies" means Central Concrete Supply Co., Inc., a
California corporation; Walker's Concrete, Inc., a California corporation; Bay
Cities Building Materials Co., Inc., a California corporation; Opportunity
Concrete Corporation, a District of Columbia corporation; Baer Concrete,
Incorporated, a New Jersey corporation; and R.G. Evans/Associates d/b/a/ Santa
Rosa Cast Products Co., a California corporation.
"Foreign Lender" means any Lender that is organized under the laws of
a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Funded Debt" means, as to any Person on a consolidated basis, all
Indebtedness for borrowed money evidenced by a note, agreement, debenture, bond
or similar writing and requiring periodic payments of interest and/or principal,
Capitalized Lease Obligations, the aggregate LC Exposure and Indebtedness
evidenced by any Guaranty of Indebtedness other than the Guaranty of the
Indebtedness hereunder.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guaranty" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
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obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Guarantors" means the Persons on the signature pages hereto under the
caption "Guarantors" and any other Person that shall become a Guarantor
hereunder pursuant to Section 5.09.
"Guaranteed Obligations" has the meaning specified in Section 10.01
hereof.
"Hazardous Materials" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any foreign currency exchange agreement,
commodity price protection agreement or other currency exchange rate or
commodity price hedging arrangement.
"Highest Lawful Rate" means as to any Lender, the maximum nonusurious
rate of interest that, under applicable law, may be contracted for, taken,
reserved, charged or received by such Lender on the Loans or under the Loan
Documents at any time or from time to time. If the maximum rate of interest
which, under applicable law, any of the Lenders is permitted to charge the
Borrower on its Loans shall change after the date hereof, to the extent
permitted by applicable law, the Highest Lawful Rate applicable to such Loans
shall be automatically increased or decreased, as the case may be, as of the
effective time of such change without notice to the Borrower or any other
Person.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid, (d)
all obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person (excluding accounts
payable and accrued liabilities incurred in the ordinary course of business),
(e) all obligations of such Person in respect of the deferred purchase price of
property or services (excluding accounts payable and accrued liabilities
incurred in the ordinary course of business), (f) all Indebtedness of others
secured by any Lien on property owned or acquired by such Person, whether or not
the Indebtedness secured thereby has been assumed, (g) all Guaranties by such
Person of Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations, contingent or otherwise, of such Person as an
account party in respect of Letters of Credit, any other letters of credit,
letters of guaranty supporting Indebtedness and the net amount under any
Interest Rate Risk Indebtedness, any and (j) all obligations, contingent or
otherwise, of such Person in respect of bankers' acceptances. The Indebtedness
of any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as
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a result of such Person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Information Memorandum" means the Confidential Information Memorandum
dated January, 2000, relating to the Borrower and the Transactions.
"Interest Election Request" means a request by the Borrower to convert
or continue a Revolving Borrowing in accordance with Section 2.07.
"Interest Payment Date means (a) with respect to any ABR Loan
(including any Swingline Loan), the last day of each March, June, September and
December and (b) with respect to any Eurodollar Loan, the last day of the
Interest Period applicable to the Borrowing of which such Loan is a part and, in
the case of a Eurodollar Borrowing with an Interest Period of more than three
months' duration, each day prior to the last day of such Interest Period that
occurs at intervals of three months' duration after the first day of such
Interest Period.
"Interest Period" means with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter; "provided," that (i) if any Interest Period would end on a day other
than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such
next succeeding Business Day would fall in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day and (ii)
any Interest Period pertaining to a Eurodollar Borrowing that commences on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall
be the date on which such Borrowing is made and, in the case of a Revolving
Borrowing, thereafter shall be the effective date of the most recent conversion
or continuation of such Borrowing.
"Interest Rate Risk Agreement" means the program, and all documents
related thereto, for the hedging of interest rate risk provided for in any
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement or similar arrangement entered into by the Borrower with any Lender
for the purpose of reducing its exposure to interest rate fluctuations in
connection with this Agreement and not for speculative purposes.
"Interest Rate Risk Indebtedness" means all obligations and
Indebtedness of the Borrower to one or more of the Lenders with respect to the
program for the hedging of interest rate risk provided for in any Interest Rate
Risk Agreement.
"Issuing Bank" means Chase Bank of Texas, National Association, in its
capacity as the issuer of Letters of Credit hereunder, and its successors in
such capacity as provided in Section 2.05(i). The Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit
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to be issued by Affiliates of the Issuing Bank, in which case the term "Issuing
Bank" shall include any such Affiliate with respect to Letters of Credit issued
by such Affiliate.
"Joinder Agreement" has the meaning specified in Section 5.09 hereof.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at any time shall
be its Applicable Percentage of the total LC Exposure at such time.
"Leases" means those certain material lease agreements executed by any
Person, as lessor, and the Borrower or any Subsidiary, as lessee (or any lease
agreement, sublease or other similar arrangement entered into by the Borrower or
any Subsidiary after the Effective Date) under the terms of which the Borrower
or any Subsidiary occupies or uses real property and any improvements located
thereon in the ordinary course of its business.
"Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance. Unless the context otherwise requires, the
term "Lenders" includes the Swingline Lender.
"Letter of Credit" means any letter of credit issued pursuant to this
Agreement.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service
(or any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement
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relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
"Loan Documents" means this Agreement, the Notes, the Autoborrow
Agreement, the Security Documents, any Interest Rate Risk Agreement with any of
the Lenders, any applications or requests for Letters of Credit hereunder and
all documents related thereto.
"Loans" means the loans made by the Lenders to the Borrower pursuant
to this Agreement.
"Maintenance Capital Expenditure" of any Person means the actual
depreciation expense required to be classified and accounted for as depreciation
expense on a consolidated income statement of such Person under GAAP.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects, or condition, financial or otherwise,
of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the
Borrower and its Subsidiaries taken as a whole, to perform any of its
obligations under this Agreement or (c) the material rights of or benefits
available to the Lenders under this Agreement to enforce collection of the
Obligations.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements
or Interest Rate Risk Agreements, of any one or more of the Borrower and its
Subsidiaries in an aggregate principal amount exceeding $1,000,000 outstanding.
For purposes of determining Material Indebtedness, the "principal amount" of the
obligations of the Borrower or any Subsidiary in respect of any Hedging
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that the Borrower or such Subsidiary would be required
to pay if such Hedging Agreement were terminated at such time.
"Maturity Date" means May 28, 2002 unless accelerated pursuant to
Section 7.02 hereof.
"Maximum Guaranteed Amount" means the maximum amount which any
Subsidiary could pay or agree to pay under its Guaranty of the Obligations
contained in Article X hereof without having such agreement or payment set aside
as a fraudulent transfer or similar action under the Bankruptcy Code Title II
(United States Code) or applicable state or foreign law.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Note" means the promissory note executed by the Borrower payable to
each Lender in the amount of such Lender's Commitment, each substantially in the
form of Exhibit 1.01B hereto.
"Obligations" means all obligations of the Borrower and each of its
Subsidiaries hereunder (including the obligations of each Subsidiary under the
Guaranty in Article X hereof) and
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under each of the other Loan Documents for the
payment of money the performance of any action or any other type of obligation.
"Olive Branch" means Olive Branch Ready Mix, Inc., a Delaware
corporation.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested or otherwise exist in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of
business or are being contested or otherwise exist in compliance with
Section 5.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course
of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Section 7.01; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any Indebtedness and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower and its Subsidiaries,
taken as a whole, including all of such as disclosures in the preliminary
title reports prepared by Chicago Title Insurance Company in connection
with the Security Documents executed and delivered pursuant to Section
4.01(c)(iv);
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means:
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(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's; and
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof which
has a combined capital and surplus and undivided profits of not less than
$500,000,000.
(d) accounts receivable and payroll advances in the ordinary course of
business;
(e) other advances and loans to officers and employees of the Borrower
or any Subsidiary, so long as the aggregate principal amount of such
advances and loans does not exceed $250,000 at any one time outstanding;
(f) Interest Rate Risk Indebtedness with respect to any Indebtedness
that is permitted by the terms of this Agreement to be outstanding; and
(g) Investments in prepaid expenses, negotiable instruments held for
collection and lease, utility, worker's compensation and performance and
other similar deposits in the ordinary course of business.
"Permitted Liens" means, collectively, Permitted Encumbrances and
Liens permitted under Section 6.02 of this Agreement.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" means that certain Amended and Restated Pledge
Agreement of even date herewith executed by the Borrower and its Subsidiaries to
the Administrative Agent for the benefit of itself and the Lenders pledging the
shares of stock of each of the Subsidiaries as security for the Obligations.
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"Prime Rate" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Prior Credit Agreement" means that certain Credit Agreement among the
Borrower, certain Guarantors, certain Lenders party thereto and the
Administrative Agent dated May 28, 1999, as amended by that certain First
Amendment to Credit Agreement dated June 30, 1999, that certain Second Amendment
to Credit Agreement effective July 31, 1999, that certain Third Amendment to
Credit Agreement effective August 31, 1999 and that certain Fourth Amendment to
Credit Agreement dated effective December 6, 1999, under the terms of which the
Lenders agreed to make revolving loans and acquire participations in letters of
credit and Swingline loans not to exceed in the aggregate, $100,000,000.
"Qualified Company" means any provider of ready-mixed concrete,
concrete products or related products and services to the construction industry
in major markets in the United States.
"Register" has the meaning set forth in Section 9.04.
"Registration Statement" means that certain Registration Statement of
the Borrowers on Form S-1 filed with the SEC on March 25, 1999, as amended.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Revolving Credit
Exposures and unused Commitments representing at least 66 2/3% of the sum of the
total Revolving Credit Exposures and unused Commitments at such time.
"Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property, except distributions payable in capital
stock) with respect to any shares of any class of capital stock of the Borrower
or any Subsidiary (other than distributions to the Borrower or any Subsidiary),
or any payment (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such shares of
capital stock of the Borrower, any option, warrant or other right to acquire any
such shares of capital stock of the Borrower or any debt of the Borrower
subordinated to the Obligations; provided Restrictive Payment shall not include
any scheduled interest payment made on Subordinated Debt, which Subordinated
Debt is otherwise permitted pursuant to the terms hereof.
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"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans and its LC Exposure and Swingline Exposure at such time.
"Revolving Loan" means a Loan made pursuant to Section 2.03.
"Santa Rosa" means R.G. Evans/Associates dba Santa Rosa Cast Products
Co., a California corporation.
"Security Agreements" means (a) that certain Amended and Restated
Security Agreement of even date herewith executed by each of the Borrower and
its Subsidiaries to the Administrative Agent for the benefit of itself and the
Lenders and (b) that certain Collateral Assignment of Partnership Interests of
even date herewith executed by USC GP, Inc. and USC LP, Inc. to the
Administrative Agent for the benefit of itself and the Lenders.
"Security Documents" means the guaranty of each of the Guarantors
contained in Article X hereof, together with any guaranty delivered pursuant to
Section 5.09 hereof, the Pledge Agreement, the Security Agreements, each Joinder
Agreement and any and all those security agreements, pledge agreements,
mortgages, deeds of trust, leasehold mortgages, leasehold deeds of trust,
guaranty agreements, landlord's consents, estoppels, assignments, UCC financing
statements and all similar documents executed by any Person in connection
herewith including those listed in Section 4.01(c) hereof, together with any
agreements delivered pursuant to Section 5.09 or Section 5.10 hereof, granting
to the Administrative Agent for the benefit of the Lenders a first Lien and
security interest in substantially all of the Collateral of the Borrower and its
Subsidiaries as security for the Obligations, subject to Permitted Liens.
"Significant Subsidiary" means any Subsidiary, the net book value of
whose assets are equal to or greater than 5% of the consolidated net book value
of the assets of the Borrower and its consolidated subsidiaries or whose gross
revenues are equal to or greater than 5% of the consolidated revenues of the
Borrower and its consolidated Subsidiaries, in each case, measured by the most
recent financial statements delivered under Section 5.01(a) or (b) at the time
of determination.
"statutory Reserve Rate" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such
Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
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"Subordinated Debt" means any Indebtedness of the Borrower or any
Subsidiary permitted hereunder that is subordinated to the Indebtedness incurred
under this Agreement on terms substantially in form and substance to those
contained in Exhibit 1.01C hereto, including such incurred in connection with a
Capital Markets Event, and to the extent complying with the terms contained in
Exhibit 1.01C hereto, any renewals or extensions thereof, amendments thereto,
substitutions therefor or restatements and refinancings thereof.
"subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or, in the case
of a partnership, more than 50% of the general partnership interests are, as of
such date, owned, controlled or held.
"Subsidiary" means any direct or indirect subsidiary of the Borrower.
"Swingline Exposure" means, at any time, the aggregate principal
amount of all Swingline Loans outstanding at such time. The Swingline Exposure
of any Lender at any time shall be its Applicable Percentage of the total
Swingline Exposure at such time.
"Swingline Lender" means Bank of America, N.A., in its capacity as
lender of Swingline Loans hereunder or such other Person designated as Swingline
Lender hereunder.
"Swingline Loan" means a Loan made pursuant to Section 2.04.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Transactions" means the execution, delivery and performance by the
Borrower of this Agreement, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes
of this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., a "Eurodollar Revolving Loan"). Borrowings
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also may be classified and referred to by Class (e.g., a "Revolving
Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or by Class and Type
(e.g., a "Eurodollar Revolving Borrowing").
SECTION 1.03. Terms Generally The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.04. Accounting Terms; GAAP Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions set
forth herein, each Lender agrees to make Revolving Loans to the Borrower from
time to time during the Availability Period in an aggregate principal amount
that will not result in (a) such Lender's Revolving Credit Exposure exceeding
such Lender's Commitment or (b) the sum of the total Revolving Credit Exposures
exceeding the total Commitments. Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Revolving Loans.
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SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan shall
be made as part of a Borrowing consisting of Revolving Loans made by the Lenders
ratably in accordance with their respective Commitments. The failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.
(b) Subject to Section 2.13, each Revolving Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith; provided each Swingline Loan shall be an ABR Loan. Each
Lender at its option may make any Eurodollar Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; provided that any
exercise of such option shall not affect the obligation of the Borrower to repay
such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $500,000 and not less than $1,000,000, unless such
Borrowing represents a Borrowing of all of the unused Commitment. At the time
that each ABR Revolving Borrowing is made (other than Swingline Borrowings),
such Borrowing shall be in an aggregate amount that is an integral multiple of
$500,000 and not less than $1,000,000; provided that an ABR Revolving Borrowing
may be in an aggregate amount that is equal to the entire unused balance of the
total Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.05(e). At any time when the
Autoborrow Agreement is in effect, the provisions thereof shall govern the
advancing of a Swingline Borrowing. At any time when the Autoborrow Agreement
is not in effect, each Swingline Borrowing shall be in an amount not less than
$50,000 and integral multiples of $10,000 in excess thereof. Borrowings of more
than one Type and Class may be outstanding at the same time; provided that there
shall not at any time be more than a total of seven (7) Eurodollar Revolving
Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.
SECTION 2.03. Requests for Revolving Borrowings. To request a
Revolving Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., Houston, Texas time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 10:00
a.m., Houston, Texas time, on the date of the proposed Borrowing; provided that
any such notice of an ABR Revolving Borrowing to finance the reimbursement of an
LC Disbursement as contemplated by Section 2.05(e) may be given not later than
10:00 a.m., Houston, Texas time, on the date of the proposed Borrowing. Each
such telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
the Borrower. Each such telephonic and written Borrowing Request shall specify
the following information in compliance with Section 2.02:
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(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by
the definition of the term "Interest Period";
(v) the location and number of the account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.05; and
(vi) the aggregate Revolving Credit Exposure of the Lenders after
giving effect to such requested Borrowing.
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing, then
the Borrower shall be deemed to have selected an Interest Period of one month's
duration. Promptly following receipt of a Borrowing Request in accordance with
this Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
SECTION 2.04. Swingline Loans. (a) Subject to the terms and
conditions set forth herein, the Swingline Lender agrees to make Swingline Loans
to the Borrower from time to time during the Availability Period on same-day
notice, in an aggregate principal amount at any time outstanding that will not
result in (i) the aggregate principal amount of outstanding Swingline Loans
exceeding $5,000,000 or (ii) the sum of the total Revolving Credit Exposure
exceeding the total Commitments. Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Swingline Loans.
(b) At any time when the Autoborrow Agreement is in effect, the provisions
thereof shall govern the advancing of a Swingline Loan. At any time when the
Autoborrow Agreement is not in effect, the provisions of this Section 2.04(b)
shall govern the request for and the advance of a Swingline Loan. To request a
Swingline Loan, the Borrower shall notify the Swingline Lender (with a copy of
such notification to the Administrative Agent) of such request not later than
12:00 noon, Houston, Texas time, on the day of a proposed Swingline Loan. Each
such notice shall be irrevocable and shall specify the requested date (which
shall be a Business Day) and amount of the requested Swingline Loan. The
Swingline Lender shall make each Swingline Loan available to the Borrower by
means of a credit to the general deposit account of the Borrower with the
Swingline Lender (or, in the case of a Swingline Loan made to finance the
reimbursement of an LC Disbursement as provided in Section 2.05(e), by
remittance to the Issuing Bank) by 3:00 p.m., Houston, Texas time, on the
requested date of such Swingline Loan.
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(c) The Swingline Lender may by written notice given to the Administrative
Agent not later than 10:00 a.m., Houston, Texas time, on any Business Day
following an Event of Default including the failure of Borrower to pay any
principal, interest, fees or other amounts with respect to a Swingline Loan at
the time required by this Agreement, require the Lenders to acquire
participations on such Business Day in all or a portion of the Swingline Loans
outstanding. Such notice shall specify the aggregate amount of Swingline Loans
in which Lenders will participate. Promptly upon receipt of such notice, the
Administrative Agent will give notice thereof to each Lender, specifying in such
notice such Lender's Applicable Percentage of such Swingline Loan or Loans.
Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice
as provided above, to promptly pay to the Administrative Agent, for the account
of the Swingline Lender, such Lender's Applicable Percentage of such Swingline
Loan or Loans. Each Lender acknowledges and agrees that its obligation to
acquire participations in Swingline Loans pursuant to this paragraph is absolute
and unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever. Each Lender shall
comply with its obligation under this paragraph by wire transferring immediately
available funds, in the same manner as provided in Section 2.06 with respect to
Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to
the payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Swingline Lender the amounts so received by it from the
Lenders. The Administrative Agent shall notify the Borrower of any
participations in any Swingline Loan acquired pursuant to this paragraph, and
thereafter payments in respect of such Swingline Loan shall be made to the
Administrative Agent and not to the Swingline Lender. Promptly after receipt,
the Swingline Lender shall remit to the Administrative Agent any amounts
received by the Swingline Lender from the Borrower (or other party on behalf of
the Borrower) in respect of a Swingline Loan after receipt by the Swingline
Lender of the proceeds of a sale of participations therein; any such amounts
received by the Administrative Agent shall be promptly remitted by the
Administrative Agent to the Lenders that shall have made their payments pursuant
to this paragraph and to the Swingline Lender, as their interests may appear.
The purchase of participations in a Swingline Loan pursuant to this paragraph
shall not relieve the Borrower of any default in the payment thereof.
SECTION 2.05. Letters of Credit. (a) General. Subject to the terms
and conditions set forth herein, the Borrower may request a portion of the
Revolving Credit Facility not in excess of $5,000,000 be made available for the
issuance of Letters of Credit for its own account, in a form reasonably
acceptable to the Administrative Agent and the Issuing Bank, at any time and
from time to time during the Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (reasonably in advance of the requested date
of issuance,
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amendment, renewal or extension) a notice requesting the issuance
of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, and specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section), the
amount of such Letter of Credit (which shall be denominated in U.S. dollars),
the name and address of the beneficiary thereof and such other information as
shall be necessary to prepare, amend, renew or extend such Letter of Credit. If
requested by the Issuing Bank, the Borrower also shall submit a letter of credit
application on the Issuing Bank's standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (and any
substantially contemporaneous amendment, reduction or release of any LC
Exposure) (i) the LC Exposure shall not exceed $5,000,000 and (ii) the sum of
the total Revolving Credit Exposures shall not exceed the total Commitments. The
Issuing Bank will confirm to the Administrative Agent the issuance of any Letter
of Credit and, if requested by the Administrative Agent or any Lender, will
provide a copy of any Letter of Credit issued, renewed or extended hereunder.
The Administrative Agent will promptly notify each Lender of the issuance,
amendment or extension of any Letter of Credit. The terms of payment of any
Letter of Credit shall be at sight.
(c) Expiration Date. Each Letter of Credit shall expire at or prior
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five (5) Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Lender's Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender
hereby absolutely and unconditionally agrees to pay to the Administrative Agent,
for the account of the Issuing Bank, such Lender's Applicable Percentage of each
LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on
the date due as provided in paragraph (e) of this Section, or of any
reimbursement payment required to be refunded to the Borrower for any reason.
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the Borrower shall reimburse such LC
Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, Houston, Texas time, on the date that
such LC Disbursement is made, if the Borrower shall have received
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notice of such LC Disbursement prior to 10:00 a.m., Houston, Texas time, on such
date, or, if such notice has not been received by the Borrower prior to such
time on such date, then not later than 12:00 noon, Houston, Texas time, on (i)
the Business Day that the Borrower receives such notice, if such notice is
received prior to 10:00 a.m., Houston, Texas time, on the day of receipt, or
(ii) the Business Day immediately following the day that the Borrower receives
such notice, if such notice is not received prior to such time on the day of
receipt. If the Borrower fails to make such payment when due, the Administrative
Agent shall notify each Lender of the applicable LC Disbursement, the payment
then due from the Borrower in respect thereof and such Lender's Applicable
Percentage thereof. Promptly following receipt of such notice, each Lender shall
pay to the Administrative Agent its Applicable Percentage of the payment then
due from the Borrower, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Lenders), and the Administrative
Agent shall promptly pay to the Issuing Bank the amounts so received by it from
the Lenders. Promptly following receipt by the Administrative Agent of any
payment from the Borrower pursuant to this paragraph, the Administrative Agent
shall distribute such payment to the Issuing Bank or, to the extent that Lenders
have made payments pursuant to this paragraph to reimburse the Issuing Bank,
then to such Lenders and the Issuing Bank as their interests may appear. Any
payment made by a Lender pursuant to this paragraph to reimburse the Issuing
Bank for any LC Disbursement shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder other
than any matter arising out of the gross negligence or willful misconduct of the
Issuing Bank, the Administrative Agent or any of their employees, officers,
agents, successors and assigns. Neither the Administrative Agent, the Lenders
nor the Issuing Bank, nor any of their Related Parties, shall have any liability
or responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank; provided that the foregoing shall
not be construed to excuse the Issuing Bank from liability to the Borrower to
the extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented
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under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or willful
misconduct on the part of the Issuing Bank, the Issuing Bank shall be deemed to
have exercised care in each such determination. In furtherance of the foregoing
and without limiting the generality thereof, the parties agree that, with
respect to documents presented which appear on their face to be in substantial
compliance with the terms of a Letter of Credit, the Issuing Bank may, acting in
good faith, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit. Any standby Letter of Credit issued hereunder shall be
subject to the International Standby Practices (ISP 98) as it may be amended,
restated or revised from time to time (as used in this Section, the "ISP"), or
the UCP (as defined below) and all documentary (commercial) Letters of Credit
issued hereunder shall be subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce,
Publication No. 500, as it may be amended, restated or revised from time to time
(as used in this Section, the "UCP") and, all Letters of Credit to the extent
not inconsistent therewith, shall be subject to the Uniform Commercial Code of
the State of Texas. The Borrower agrees that any action taken or omitted by the
Issuing Bank under or in connection with any Letter of Credit or the related
drafts or documents, if done in accordance with the standards of care specified
in the ISP or the UCP, as applicable, shall not result in any liability of the
Issuing Bank to the Borrower.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Lenders with respect to any such LC
Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.12(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank, except that interest accrued on and after the date of payment by
any Lender pursuant to paragraph (e) of this Section to reimburse the Issuing
Bank shall be for the account of such Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced
at any time by written agreement among the Borrower, the Administrative Agent,
the replaced Issuing Bank and the successor Issuing Bank. The Administrative
Agent shall notify the Lenders of any such replacement of the Issuing Bank. At
the time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
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Section 2.10(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and
be continuing, on the Business Day that the Borrower receives written notice
from the Administrative Agent or the Required Lenders demanding the deposit of
cash collateral pursuant to this paragraph, the Borrower shall deposit in an
account with the Administrative Agent, in the name of the Administrative Agent
and for the benefit of the Lenders, an amount in cash equal to the LC Exposure
as of such date plus any accrued and unpaid interest thereon; provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in clause (h) or (i) of Section 7.01. Such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the Obligations. The Administrative Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal,
over such account. Other than any interest earned on the investment of such
deposits, which investments shall be made at the option and sole discretion of
the Administrative Agent and at the Borrower's risk and expense, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall be applied by the
Administrative Agent to reimburse the Issuing Bank for LC Disbursements for
which it has not been reimbursed and, to the extent not so applied, shall be
held for the satisfaction of the reimbursement obligations of the Borrower for
the LC Exposure at such time or, if the maturity of the Loans has been
accelerated, be applied to satisfy other Obligations. If the Borrower is
required to provide an amount of cash collateral hereunder as a result of the
occurrence and continuance of an Event of Default, (i) such amount (to the
extent not applied as aforesaid) shall be returned to the Borrower within three
Business Days after all Events of Default have been cured or waived or (ii) any
amount of such cash collateral in excess of the unpaid Obligations shall be
returned to the Borrower upon the Borrower's written request.
SECTION 2.06. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:30 p.m., Houston, Texas time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; provided that Swingline Loans shall be made as provided
in Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in Houston,
Texas or other location as designated by the Borrower in the applicable
Borrowing Request.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the
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Administrative Agent such Lender's share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand
such corresponding amount with interest thereon, for each day from and including
the date such amount is made available to the Borrower to but excluding the date
of payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate requested by
the Borrower to be applicable to such Borrowing. If such Lender pays such amount
to the Administrative Agent, then such amount shall constitute such Lender's
Loan included in such Borrowing.
SECTION 2.07. Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Revolving Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The Borrower may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing
(in which case the information to be specified pursuant to clauses (iii)
and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
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(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Revolving Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof,
if a Default has occurred and is continuing, then, so long as a Default is
continuing (i) no outstanding Revolving Borrowing may be converted to or
continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Revolving Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.
SECTION 2.08. Termination and Reduction of Commitments. (a) Unless
previously terminated, the Commitments shall terminate on the Maturity Date.
(b) Immediately upon the occurrence of a Capital Markets Event, the
Commitment of each Lender to make Revolving Loans and to acquire participations
in Letters of Credit and Swingline Loans hereunder shall, without any further
action, be automatically and permanently reduced on such date by twelve and one-
half percent (12 1/2%). Upon the occurrence of such event, the aggregate amount
of each Lender's Commitment is set forth on Schedule 2.01 under the caption
"Commitment Subsequent to a Capital Markets Event" or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Commitment, as
applicable.
(c) The Borrower may at any time terminate, or from time to time
reduce, the Commitments; provided that (i) each reduction of the Commitments
shall be in an amount that is an integral multiple of $1,000,000 and not less
than $5,000,000 and (ii) the Borrower shall not terminate or reduce the
Commitments if, after giving effect to any concurrent prepayment of the Loans in
accordance with Section 2.10, the sum of the LC Exposure plus the aggregate
principal amount of outstanding Loans would exceed the total Commitments.
(d) The Borrower shall notify the Administrative Agent of its exercise
of any election to terminate or reduce the Commitments under paragraph (c) of
this Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election
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and the effective date thereof. Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
notice delivered by the Borrower pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Commitments delivered by the
Borrower may state that such notice is conditioned upon the effectiveness of
other credit facilities or other circumstances, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied. In the event
of any termination, the Administrative Agent and the Lenders agree to use their
best efforts to execute releases or assignments of Liens, and take other
reasonable actions as may be reasonably requested by the Borrower at the expense
of the Borrower. Any termination or reduction of the Commitments shall be
permanent. Each reduction of the Commitments shall be made ratably among the
Lenders in accordance with their respective Commitments.
SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each Lender, the then unpaid principal amount of each Revolving Loan
on the Maturity Date and (ii) to the Swingline Lender the then unpaid principal
amount of each Swingline Loan on the Maturity Date.
(b) Concurrently upon the occurrence of a Capital Markets Event, the
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender, the aggregate principal amount, if any, required
to reduce such Lender's Revolving Credit Exposure to an amount not in excess of
such Lender's Commitment as such Lender's Commitment is reduced pursuant to
Section 2.08(b).
(c) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(d) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(e) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
(f) The Loans made by each Lender shall be evidenced by a Note payable
to said Lender.
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SECTION 2.10. Prepayment of Loans. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to prior notice in accordance with paragraph (b) of this Section.
(b) The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan at any time when the Autoborrow Agreement
is not in effect, the Swingline Lender) by telephone (confirmed by telecopy) of
any prepayment hereunder (i) in the case of prepayment of a Eurodollar Revolving
Borrowing, not later than 11:00 a.m., Houston, Texas time, three Business Days
before the date of prepayment, (ii) in the case of prepayment of an ABR
Revolving Borrowing, not later than 11:00 a.m., Houston, Texas time, one
Business Day before the date of prepayment or (iii) in the case of prepayment of
a Swingline Loan at any time when the Autoborrow Agreement is not in effect, not
later than 12:00 noon, Houston, Texas time, on the date of prepayment. At any
time when the Autoborrow Agreement is in effect, the provisions thereof shall
govern the prepayment of a Swingline Loan. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid; provided that, if a notice of
prepayment is given in connection with a conditional notice of termination of
the Commitments as contemplated by Section 2.08, then such notice of prepayment
may be revoked if such notice of termination is revoked in accordance with
Section 2.08. Promptly following receipt of any such notice relating to a
Revolving Borrowing, the Administrative Agent shall advise the Lenders of the
contents thereof. Each partial prepayment of any Revolving Borrowing shall be
in an amount that would be permitted in the case of an advance of a Revolving
Borrowing of the same Type as provided in Section 2.02. Each prepayment of a
Revolving Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.12.
SECTION 2.11. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the then Applicable Margin shown under the column for
"Commitment Fee Rate" in the definition of Applicable Margin on the daily
average Commitment of each Lender less the Revolving Credit Exposure for such
Lender during the period from and including the date of this Agreement to but
excluding the date on which such Commitment terminates, provided, for purposes
of this Section 2.11(a) only, but for no other purpose, Revolving Credit
Exposure shall not include any Lender's Swingline Exposure. Accrued and unpaid
commitment fees shall be payable in arrears on the last day of March, June,
September and December of each year and on the date on which the Commitments
terminate, commencing on the first such date to occur after the date hereof;
provided that any unpaid commitment fees accruing after the date on which the
Commitments terminate shall be payable on demand. All facility fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Lender a participation fee with respect to each Letter of Credit
issued hereunder equal to the greater of (A) the then Applicable Margin shown
under the column captioned "Eurodollar" spread in the definition of Applicable
Margin, multiplied by the face amount of each Letter of Credit or (B) $500, and
(ii) to the Issuing Bank a fronting fee, equal to .25% per annum multiplied
times the face amount of such Letter of Credit, as well as the Issuing Bank's
standard fees with respect
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to the issuance, amendment, renewal or extension of any Letter of Credit or
processing of drawings thereunder. Participation fees and fronting fees shall be
payable in arrears on the last day of March, June, September and December of
each year; provided that all such fees shall be payable on the date on which the
Commitments terminate and any such fees accruing after the date on which the
Commitments terminate shall be payable on demand. Any other fees payable to the
Issuing Bank pursuant to this paragraph shall be payable within 10 days after
demand. All participation fees and fronting fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(c) The Borrower agrees to pay to Chase Securities Inc., for its own
account, and BT, for its own account, the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon
between the Borrower, the Administrative Agent and BT.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of letter of credit related fees payable to it) for
distribution, in the case of commitment fees and participation fees, to the
Lenders pro rata in accordance with their respective Commitments. Fees paid
shall not be refundable under any circumstances.
SECTION 2.12. Interest. (a) (i) The Loans comprising each ABR
Borrowing (excluding each Swingline Loan) shall bear interest at a rate per
annum equal to the lesser of: (y) the Alternate Base Rate plus the Applicable
Margin and (z) the Highest Lawful Rate.
(ii) Each Swingline Loan shall bear interest at a rate per annum
equal to the lesser of (y) the Alternate Base Rate plus the Applicable
Margin for ABR Loans less the applicable Commitment Fee Rate and (z)
the Highest Lawful Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest
at a rate per annum equal to the lesser of: (i) the Adjusted LIBO Rate for the
Interest Period in effect for such Borrowing plus the Applicable Margin and (ii)
the Highest Lawful Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest payable on demand, after as well as before
judgment, at a rate per annum equal to the lesser of: (i)(x) in the case of
overdue principal of any Loan, 2% per annum plus the rate otherwise applicable
to such Loan as provided in the preceding paragraphs of this Section or (y) in
the case of any other amount, 2% per annum plus the rate applicable to ABR Loans
as provided in paragraph (a) of this Section (such increased rate per annum in
(x) or (y) being, the "Default Rate") and (ii) the Highest Lawful Rate.
(d) Accrued and unpaid interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan and, in the case of
Revolving Loans and Swingline Loans, upon termination of the Commitments;
provided that (i) in the event of any repayment or prepayment of any Loan (other
than a prepayment of an ABR Revolving Loan or a repayment of a Swingline Loan
prior to the end of the Availability Period), accrued interest on the principal
amount repaid or prepaid
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shall be payable on the date of such repayment or prepayment and (ii) in the
event of any conversion of any Eurodollar Revolving Loan prior to the end of the
current Interest Period therefor, accrued and unpaid interest on such Loan shall
be payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent,
and such determination shall be prima facie evidence of the correctness thereof.
SECTION 2.13. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent reasonably determines (which
determination shall be prima facie evidence of the correctness thereof) that
adequate and reasonable means do not exist for ascertaining the Adjusted LIBO
Rate or the LIBO Rate, as applicable, for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
they have reasonably determined in good faith that the Adjusted LIBO Rate or the
LIBO Rate, as applicable, for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (or Lender) of making or maintaining
their Loans (or its Loan) included in such Borrowing for such Interest Period;
or
(c) any Lender advises the Administrative Agent of any Change in Law
or that the interpretation thereof by any Governmental Authority shall make it
unlawful for such Lender to make or maintain any Eurodollar Borrowing or
Eurodollar Loan or to give effect to its obligations as contemplated hereby.
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist (which notice the
Administrative Agent agrees to give promptly after a reasonable basis therefor
exists), (i) any Interest Election Request that requests the conversion of any
Revolving Borrowing to, or continuation of any Revolving Borrowing as, a
Eurodollar Borrowing shall be ineffective; (ii) if any Borrowing Request
requests a Eurodollar Revolving Borrowing, such Borrowing shall be made as an
ABR Borrowing and (iii) with respect to clause (c) above, require that all
outstanding Eurodollar Loans made by such Lender be converted to ABR Loans, in
which event all such Eurodollar Loans of such Lender shall be automatically
converted to ABR Loans as of the effective date of such notice.
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SECTION 2.14. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans
made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as, in the reasonable judgment of the affected
Lender, will compensate such Lender or the Issuing Bank, as the case may be, for
such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in
Law regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender's or the Issuing Bank's capital or on the capital
of such Lender's or the Issuing Bank's holding company, if any, as a consequence
of this Agreement or the Loans made by, or participations in Letters of Credit
held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a
level below that which such Lender or the Issuing Bank or such Lender's or the
Issuing Bank's holding company could have achieved but for such Change in Law
(taking into consideration such Lender's or the Issuing Bank's policies and the
policies of such Lender's or the Issuing Bank's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
or the Issuing Bank, as the case may be, such additional amount or amounts
reasonably determined by such Lender as will compensate such Lender or the
Issuing Bank or such Lender's or the Issuing Bank's holding company for any such
reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be prima facie
evidence of the correctness thereof. The Borrower shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within fifteen (15) days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 180 days prior to the date that such Lender or the Issuing Bank, as
the
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case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 180-day period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.15. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice may be revoked
under Section 2.10(b) and is revoked in accordance therewith), or (d) the
assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.18, then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount reasonably determined by such Lender to be the excess, if any,
of (i) the amount of interest which would have accrued on the principal amount
of such Loan had such event not occurred, at the Adjusted LIBO Rate that would
have been applicable to such Loan, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the Borrower and shall be prima facie evidence of the correctness thereof.
The Borrower shall pay such Lender the amount shown as due on any such
certificate within ten (10) days after receipt thereof.
SECTION 2.16. Taxes. (a) Any and all payments by or on account of
any obligation of the Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each Lender
and the Issuing Bank, within fifteen (15) days after written demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing
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Bank, as the case may be, on or with respect to any payment by or on account of
any obligation of the Borrower hereunder (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent
on its own behalf or on behalf of a Lender or the Issuing Bank, prima facie
evidence of the correctness thereof.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate.
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-
offs. (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or reimbursement of LC
Disbursements, or of amounts payable under Section 2.14, 2.15 or 2.16, or
otherwise) prior to 12:00 noon, Houston, Texas time, on the date when due, in
immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the recipient, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All other such payments shall be made to the
Administrative Agent at its offices at 712 Main St., Houston, Texas 77002,
except payment to be made directly to the Issuing Bank or Swingline Lenders as
expressly provided herein or in any other Loan Document, and except that
payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly
to the Persons entitled thereto. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
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and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Revolving Loans or participations in LC Disbursements or Swingline Loans
resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Revolving Loans and participations in LC Disbursements
and Swingline Loans and accrued interest thereon than the proportion received by
any other Lender, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the Revolving Loans and
participations in LC Disbursements and Swingline Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans and participations in LC
Disbursements and Swingline Loans; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise,
after the occurrence and during the continuance of an Event of Default, against
the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing Bank,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the Issuing Bank, as the
case may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.05(d) or (e), 2.06(b) or 2.17(d), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received
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by the Administrative Agent for the account of such Lender to satisfy such
Lender's obligations under such Sections until all such unsatisfied obligations
are fully paid.
SECTION 2.18. Mitigation Obligations; Replacement of Lenders. (a)
If any Lender requests compensation under Section 2.14, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.16, then such
Lender shall, following a request by Borrower, use reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.14 or 2.16, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) If any Lender requests compensation under Section 2.14, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Commitment is being assigned, the Issuing Bank and Swingline Lender), which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.14 or payments required
to be made pursuant to Section 2.16, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
SECTION 2.19. Effect of Increased Costs. The provisions of Sections
2.05, 2.14, 2.15, 2.16, 2.17 and 2.18 shall be interpreted in the broadest
possible terms to include any increased costs, payments or reduced income for
any reason, including but specifically not by way of limitation, due to taxes,
capital adequacy provisions, reserve requirements, withholding obligations,
costs due to the payment of any sums on a date other than the regularly
scheduled date or for any other reason. The Borrower does hereby indemnify and
hold harmless the Administrative Agent and each Lender for all such costs and
does hereby agree to pay same or cover the Administrative Agent's or any
Lender's expenses or losses in regard to same. The Borrower shall pay such sums
to the Administrative Agent or to any Lender as are necessary to mitigate all
such items. This obligation is in addition to all other Obligations of the
Borrower hereunder.
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ARTICLE III
Representations and Warranties
The Borrower for itself and each of its Subsidiaries, and each
Subsidiary as to itself, represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and its
Subsidiaries is duly organized or formed, as the case may be, validly existing
and in good standing under the laws of the jurisdiction of its organization or
formation, has all requisite power and authority to carry on its business as now
conducted and is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required except, in each case, where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.02. Authorization; Enforceability. Each of the Borrower
and its Subsidiaries has the requisite power and authority to execute, deliver
and perform its obligations hereunder and under the Loan Documents to which it
is a party and all such action has been duly authorized by all necessary
corporate and, if required, stockholder or other organizational action. The
Loan Documents to which each such Person is a party have been duly executed and
delivered by such Person and constitute a legal, valid and binding obligation of
such Person, enforceable in accordance with the respective terms thereof,
subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation including, without limitations, ERISA or the
charter, by-laws or other organizational documents of the Borrower or any of its
Subsidiaries or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture, agreement or other instrument binding
upon the Borrower or any of its Subsidiaries or its assets, or give rise to a
right thereunder to require any payment to be made by the Borrower or any of its
Subsidiaries, and (d) will not result in the creation or imposition of any Lien
on any asset of the Borrower or any of its Subsidiaries other than Permitted
Encumbrances and Liens granted pursuant to the Loan Documents.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a)
The Borrower has heretofore furnished or, as applicable will furnish, to the
Lenders (i) the unaudited, consolidated balance sheet and statement of
operations, stockholder's equity and cash flows of the Borrower and its
Subsidiaries for fiscal quarters ending June 1999 and September 1999; (ii) the
unaudited, consolidated pro forma balance sheets, statement of operations,
stockholder's equity and
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cash flows of the Borrower and its Subsidiaries and the Acquisition Targets as
of and for the periods ending December 31, 1998 and December 31, 1999, (iii)
upon acquisition of the Beall Companies, audited financial statements (including
balance sheet and statement of operations) for the Beall Companies (representing
eighty-five percent (85%) of the operations of the Beall Companies) for the
twelve-month period ending December 31, 1998; and (iv) upon acquisition of the
Allega Companies, audited financial statements (including balance sheet and
statement of operations) for the Allega Companies (representing sixty-five
percent (65%) of the operations of the Allega Companies) for the twelve-month
period ending December 31, 1998. Effective upon the respective acquisition, such
audited financial statements to the knowledge of the Borrower present fairly, in
all material respects, the financial position and results of operations and cash
flows of the Allega Companies and the Beall Companies, respectively, as of such
dates and for such periods stated in such financial statements in accordance
with GAAP. Such pro forma financial statements fairly present the financial
position and results of operations and cash flows of the Borrower and its
consolidated Subsidiaries as of such dates and for such period in accordance
with GAAP, subject to the assumptions made by the Borrower in its reasonable
judgment. Such unaudited financial statements fairly present the financial
position and results of operations and cash flows of the Borrower and its
consolidated Subsidiaries as of such dates and for such periods in accordance
with GAAP, subject to year-end audit adjustments and exclusion of detailed
footnotes.
(b) Since September 30, 1999, there has been no material adverse
change in the business, assets, operations or condition, financial or otherwise,
of the Borrower and its Subsidiaries, taken as a whole.
(c) Neither USC LP, Inc. nor Beall Investment Corporation, Inc. owns
or will own any assets other than a 99% limited partnership interest in USC
Management Co., L.P. and Beall Concrete Enterprises, Ltd., respectively.
SECTION 3.05. Properties. (a) Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, subject to no Liens except those
in favor of the Administrative Agent and other Permitted Liens, and except for
minor defects in title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such properties for their intended
purposes.
(b) Schedule 3.05(b) describes all of the Leases in effect as of the
Effective Date (copies of each of which have been provided to the Administrative
Agent), each of which to the knowledge of the Borrower and the Subsidiary that
is a party thereto, (i) has been duly executed and delivered by and constitutes
the legal, valid and binding obligation of, the Borrower or the Subsidiary, as
the case may be, party thereto in accordance with its terms, except for
creditors' rights and equitable principles, (ii) is in full force and effect and
there is no default thereunder and (iii) has not been amended or modified, nor
any provisions thereof waived, except for matters affecting the enforceability,
effectiveness, breaches or amendments and modifications which in the aggregate
are not reasonably likely to result in a Material Adverse Effect.
(c) Each of the Borrower and its Subsidiaries owns, or is licensed to
use, all trademarks, trade names, copyrights, patents and other intellectual
property material to its business,
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and the use thereof by the Borrower and its Subsidiaries does not infringe upon
the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
(d) The place of business or chief executive office of the Borrower
and each Subsidiary is at the location shown on Schedule 3.05(d) or at such
other locations as disclosed to the Administrative Agent in writing after the
date hereof. The federal employee identification number for the Borrower and
each of its Subsidiaries is set forth on Schedule 3.05(d).
SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits, arbitrations or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Borrower or
any Subsidiary, threatened against or affecting the Borrower or any of its
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Borrower's payment
Obligations hereunder.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither the Borrower nor any of
its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any reasonable basis for any
Environmental Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in a Material Adverse Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
and all material contracts that significantly impact the operations of the
Borrower or its Subsidiaries in each case, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. No default has occurred and is continuing hereunder
or under any such other document.
SECTION 3.08. Investment and Holding Company Status. Neither the
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable,
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has set aside on its books adequate reserves or (b) to the extent that the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.11. Disclosure. Each of the Borrower and its Subsidiaries
has disclosed to the Lenders all material agreements, instruments and corporate
or other restrictions to which it or any of its Subsidiaries is subject, and all
other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. Neither the
Information Memorandum nor any of the other written reports, financial
statements, certificates or other information furnished by or on behalf of the
Borrower to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time and the
Administrative Agent and the Lenders acknowledge that such projections are not
facts and that actual results will differ.
SECTION 3.12. Year 2000 Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (i) the Borrower's
computer systems and (ii) equipment containing embedded microchips (including
systems and equipment supplied by others or with which the Borrower's systems
interface) and the testing of all such systems and equipment, as so
reprogrammed, has been completed. The cost to the Borrower of such
reprogramming and testing and of the reasonably foreseeable consequences of year
2000 to the Borrower (including reprogramming errors and the failure of others'
systems or equipment) has not resulted and will not result in a Default or a
Material Adverse Effect.
SECTION 3.13 Solvency. After giving effect to the Loans and the
terms of this Agreement, the Borrower and each of its Subsidiaries, taken as a
whole, have assets that exceed their liabilities, are able to pay their debts as
they accrue and has reasonable capital to carry on their business.
SECTION 3.14 Insurance. Each of the Borrower and its Subsidiaries
maintains insurance of such types as is usually carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated with financially sound, responsible and reputable insurance companies
or associations (or, as to workers' compensation or similar insurance, with an
insurance fund or by self-insurance authorized by the jurisdiction in which its
operations are carried on) and in such amounts (and with co-insurance and
deductibles) as such insurance is usually carried by corporations of established
reputation and engaged in the same or similar businesses and similarly situated,
or self insurance programs, but in any event, with respect to improvements to
real property and tangible personal property insuring the full replacement cost
of such improvement and such tangible personal property, subject to standard and
customary deductibles.
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SECTION 3.15. Subsidiaries. Schedule 3.15 contains an accurate list
of all of the Subsidiaries of the Borrower as of the Effective Date setting
forth their respective jurisdictions of organization and the percentage of their
respective capital stock owned by the Borrower or any Subsidiary, and each of
said Subsidiaries, other than USC LP, Inc. has executed this Agreement as a
Guarantor. Such Subsidiaries, together with each of the Subsidiaries of the
Borrower who have complied with the requirements of Section 5.09 hereof, are all
of the Subsidiaries of the Borrower. All of the issued and outstanding shares
of capital stock of such Subsidiaries have been duly authorized and issued and
are fully paid and non-assessable.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which the Administrative Agent shall have
received the following (or such shall have been waived in accordance with
Section 9.02), each in form and substance reasonably satisfactory to the
Administrative Agent unless otherwise required:
(a) this Agreement executed by the Borrower;
(b) one Note for each Lender, each executed by the Borrower and
payable to the order of said Lender in the amount of its Commitment;
(c) the following Security Documents executed by the parties thereto
granting to the Administrative Agent and the Lenders a first and prior Lien on
the collateral described therein (subject only to Permitted Liens) as security
for the Obligations;
(i) the Pledge Agreement;
(ii) the Security Agreements;
(iii) a Guaranty from each of the Borrower's Subsidiaries
included in Article X hereof;
(iv) All mortgages, deeds of trust, assignments and related
documents in regard to the real property described in Section 4.01(c)(iv)
of the Prior Credit Agreement and; all applicable similar documents in
regard to real property of all Qualified Companies acquired by the Borrower
or any Subsidiary subsequent to the Prior Credit Agreement as follows:
(A) AFTM Corporation
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(1) leasehold interest (3655 Grand Oaks Drive, Howell)
Livingston County, MI;
(B) Carrier Excavation and Foundation Company
(1) fee interests (four parcels in Memphis) Shelby
County, TN,
(2) leasehold interest (5441 Pleasant View, Memphis)
Shelby County, TN,
(3) leasehold interest (5585 Commander Road, Arlington)
Shelby County, TN,
(4) leasehold interest (8031 Alexander, Olive Branch)
Desoto County, MS, and
(5) leasehold interest (2141 E. Person, Memphis)
Shelby County, TN;
(C) Fendt Transit Mix, Inc.
(1) leasehold interest (43443 Flint Road, Novi)
Oakland County, MI;
(D) Olive Branch Ready Mix, Inc.
(1) leasehold interest (2940 Frayser Blvd, Memphis)
Shelby County, TN,
(2) fee interest (1960 Old Hwy 51, Nesbit)
Desoto County, MS, and
(3) fee interest (4994 Hwy. 305 South, Olive Branch)
Desoto County, MS;
(E) Ready Mix Concrete Company of Knoxville
(1) fee interests (nine parcels) Knox County, TN;
(F) Western Concrete Products, Inc.
(1) leasehold interest (3500 Boulder Street, Pleasanton)
Alameda County, CA;
(v) Landlord's Consent, Acknowledgment and Estoppel Certificates
executed on behalf of any landlord under any leasehold estate covered by
any deed of trust/mortgage delivered under clause (iv) above if requested
by the Administrative Agent; and
(vi) modification agreements to each of the mortgages and deeds
of trust recorded under the Prior Credit Agreement; and
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(vii) UCC-1 Financing Statements as reasonably requested by the
Administrative Agent;
(d) a certificate of an officer and of the secretary or an assistant
secretary of the Borrower and each Subsidiary certifying, inter alia, (i) true
and complete copies of each of the articles or certificate of incorporation, as
amended and in effect, of such Person, the bylaws, as amended and in effect, of
such Person and the resolutions adopted by the Board of Directors of such Person
(A) authorizing the execution, delivery and performance by such Person of the
Loan Documents to which it is or will be a party and, as to the Borrower, the
Loans to be made hereunder, (B) approving the forms of the Loan Documents to
which it is or will be a party and which will be delivered at or prior to the
date of the initial Borrowing and (C) authorizing officers of such Person to
execute and deliver the Loan Documents to which it is or will be a party and any
related documents, including, any agreement contemplated by this Agreement and
(ii) the incumbency and specimen signatures of the officers of such Person
executing any documents on its behalf;
(e) a signed enforceability opinion addressed to the Administrative
Agent and the Lenders from Baker Botts L.L.P., counsel to the Borrower and its
Subsidiaries and a signed opinion addressed to the Administrative Agent and the
Lenders from the General Counsel of the Borrower, in each case, in form and
substance satisfactory to the Administrative Agent and the Lenders and their
counsel;
(f) receipt of (i) audited financial statements for each of Carrier
Excavation & Foundation Company and Pleasant View Associates, L.L.C., Ready Mix
Concrete Company of Knoxville, San Diego Precast Concrete, Inc., Western
Concrete Products, Inc., American Ready Mix, Inc., Fendt Transit Mix Inc. &
combined companies, and DYNA Corporation and (ii) a copy of the review of Olive
Branch as agreed by Arthur Andersen LLP and the Borrower;
(g) the payment to the Administrative Agent, Chase Securities Inc., BT
and the Lenders, as applicable, of all fees and expenses (other than the fees
and disbursements of Andrews & Kurth L.L.P. pursuant to Section 9.03, which will
be paid within 30 days of the Closing) which payments may be made with proceeds
of the initial Advance;
(h) certificates of appropriate public officials as to the existence
and good standing of the Borrower and each Subsidiary and a certificate of an
appropriate official as to the qualification to do business as a foreign
corporation of the Borrower and each Subsidiary in each jurisdiction in which
the ownership of its properties or the conduct of its business requires such
qualifications and where the failure to so qualify would have a Material Adverse
Effect, each of such certificates to be dated no earlier than January 20, 2000;
(i) certificates of insurance showing the Administrative Agent as loss
payee or additional insured, as appropriate, and a schedule of existing
insurance, in each case reasonably satisfactory to the Administrative Agent
evidencing the existence of all insurance required to be maintained pursuant to
Section 5.05 hereof;
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(j) determination that no material part of the property covered by the
mortgages to be delivered pursuant to Section 4.01(c)(iii) lies in a Special
Flood Hazard Area or other hazard or flood plain area however designated, as
determined in accordance with the criteria established by the Federal Insurance
Administration or any other governmental authority having jurisdiction over the
subject property;
(k) lien searches on the Borrower and its Subsidiaries in the
jurisdictions requested by the Administrative Agent, together with waivers from
the holders of any Liens (other than Permitted Liens) as reasonably requested by
the Administrative Agent;
(l) evidence that all governmental and third-party approvals or
consents necessary, or in the discretion of the Administrative Agent, advisable
in connection with the Transactions and the continuing operations of the
Borrower and its Subsidiaries;
(m) such other consents, approvals, opinions or documents as the
Administrative Agent or the Lenders may reasonably request.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) on or prior to 2:00 p.m., Houston, Texas time, on
February 10, 2000 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The effectiveness of this Agreement
and the obligation of each Lender (including the Swingline Lender) to make a
Loan on the occasion of any Borrowing which increases the aggregate principal
amount of the Obligations, and of the Issuing Bank to issue, amend, renew or
extend any Letter of Credit, is subject to the satisfaction of the following
conditions:
(a) The representations and warranties of the Borrower set forth in
this Agreement shall be true and correct on and as of the date of such Borrowing
or the date of issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, except to the extent such representations and warranties
relate to a prior date or after prior notice to the Administrative Agent are
untrue or incorrect as a result of transactions permitted by the Loan Documents.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
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ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees and other amounts payable
hereunder shall have been paid in full and all Letters of Credit shall have
expired or terminated and all LC Disbursements shall have been reimbursed, the
Borrower for itself and each of its Subsidiaries and each Subsidiary, for
itself, covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements; and Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the Borrower,
its audited consolidated balance sheet and related consolidated statements of
operations, stockholders' equity and cash flows as of the end of and for such
year, setting forth in each case (commencing with the financial statements for
the 2000 fiscal year) in comparative form the figures for the previous fiscal
year, all reported on by Arthur Andersen LLP or other independent public
accountants of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the consolidated financial position and
consolidated results of operations of the Borrower and its consolidated
Subsidiaries in conformity with GAAP, and all to be prepared in accordance with
GAAP consistently applied, except to the extent the Borrower's independent
auditors concur with any such inconsistency;
(b) within 45 days after the end of each fiscal quarter (excluding any
quarter containing the Borrower's fiscal year end) of the Borrower, its
consolidated balance sheet and related statements of operations, stockholders'
equity and cash flows as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case (commencing with
financial statements for periods ending after May 28, 2000) in comparative form
the figures for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous fiscal year, all certified by one
of its Financial Officers as presenting fairly in all material respects the
consolidated financial condition and consolidated results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, except for such changes with which the
Borrower's independent auditors concur, subject to normal year-end audit
adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Borrower
(i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Sections 6.08, 6.09, 6.10 and 6.11 and (iii)
stating whether any change in GAAP or in the application thereof has occurred
since the date of the audited financial statements referred to in Section 3.04
and, if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate;
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(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) promptly upon receipt thereof, a copy of any management letter or
report submitted to the Borrower by its independent accountants in connection
with any regular or special audit;
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Borrower or any Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by the
Borrower to its shareholders generally;
(g) as soon as available and in any event within sixty (60) days after
the end of each fiscal year of the Borrower, the annual financial projections
and budgets of the Borrower and its Subsidiaries;
(h) concurrently with the delivery of financial statements under (a)
and (b) above, a summary of (i) all of the fee and leasehold properties of the
Borrower and its Subsidiaries, including ownership interest, location and
whether such property is subject to a Lien in favor of the Administrative Agent,
and (ii) all vehicles and rolling stock of the Borrower and its Subsidiaries,
including description and serial number; and
(i) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of this Agreement, as
the Administrative Agent or any Lender may reasonably request.
SECTION 5.02. Notices of Material Events. The Borrower will furnish
to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that could reasonably be
expected to have a Material Adverse Effect; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
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Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business; Location. (a) The
Borrower will, and will cause each of its Subsidiaries to, do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges and franchises
material to the conduct of its business, unless the failure to so maintain would
not reasonably be expected to have a Material Adverse Effect.
(b) The Borrower will promptly notify the Administrative Agent of any
change of the Borrower's or any Subsidiary's name, corporate structure, federal
employer identification number, address of its principal place of business or
chief executive office where such Person maintains its books and records.
SECTION 5.04. Payment of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.05. Maintenance of Properties; Insurance. (a) The Borrower
will, and will cause each of its Subsidiaries to, keep and maintain all property
material to the conduct of its business in good working order and condition,
force majeure and ordinary wear and tear excepted.
(b) The Borrower will, and will cause each of its Subsidiaries to,
maintain (i) "all risk" insurance (at replacement cost) against loss or damage
to all property of the Borrower and its Subsidiaries, (ii) commercial general
liability insurance (including contractual liability, independent contractors,
products liability and completed operations coverage, (iii) directors and
officers liability insurance (iv) workers compensation/employers liability
insurance (in amounts not less than minimum applicable statutory requirements),
(v) automobile liability insurance, (vi) surety bond program, (vii) flood
insurance for any real property constituting Collateral determined to be in a
"special flood hazard area" as set forth by the Federal Emergency Management
Agency and (viii) such other insurance of such types as is usually carried by
corporations of established reputation engaged in the same or similar businesses
and similarly situated, and in each case with financially sound, responsible and
reputable insurance companies or associations (or, as to workers' compensation
or similar insurance, with an insurance fund or by self-insurance authorized by
the jurisdiction in which its operations are carried on) and in such amounts
(and with co-insurance and deductibles) as such insurance is usually carried by
corporations of established reputation and engaged in the same or similar
businesses and similarly situated, or self insurance programs reasonably
satisfactory to the Administrative Agent in respect of employee health insurance
programs only, but in any event, with respect to improvements to real property
and tangible personal
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property insuring the full replacement cost of such improvements and the
tangible personal property, subject to standard and customary deductibles. All
insurance policies required pursuant to this Section 5.05 shall (i) name the
Administrative Agent on behalf of the Lenders as mortgagee (in the case of
property insurance) or additional insured (in the case of liability insurance),
as applicable, and provide that no cancellation or modification of the policies
will be made without thirty (30) days' prior written notice to the
Administrative Agent.
SECTION 5.06. Books and Records; Inspection Rights; Audits. (a) The
Borrower will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities which
shall, to the maximum extent possible, be kept in accordance with GAAP. The
Borrower will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested so long as the Borrower
has an opportunity to have a representative participate or be present.
(b) The Borrower will, and will cause each of its Subsidiaries to,
within 90 days of the completion of an audit by the Administrative Agent of the
information technology systems of the Borrower and its Subsidiaries, complete
installation or implementation, as necessary, of the changes, revisions,
upgrades or equipment as requested by the Administrative Agent as a result of
such audit.
SECTION 5.07. Compliance with Laws. The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or its property including,
without limitation, ERISA and all Environmental Laws, except where the failure
to do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 5.08. Use of Proceeds and Letters of Credit. The proceeds of
the Loans will be used only for (a) for Acquisition of the Acquisition Targets,
(b) refinancing Indebtedness incurred in connection with the acquisition of the
Founding Companies, (c) subject to Section 6.11, the Acquisition of any
Qualified Company and (d) for other general corporate purposes. No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the regulations of the Board,
including Regulations U and X. Letters of Credit will be issued only to support
activities in connection with the uses permitted hereunder.
SECTION 5.09. Subsidiaries. (a) The Borrower will, and will cause
each of its Subsidiaries to, cause any Person becoming a Subsidiary, other than
USC LP, Inc. and Beall Investment Corporation, Inc., to become a Guarantor of
the Obligations under this Agreement, the Notes and the other Loan Documents and
grant to the Administrative Agent for the benefit of the Lenders a first
priority Lien on all of such Subsidiary's material assets, subject to Permitted
Liens. Each such Subsidiary shall, within ten (10) days of becoming a
Subsidiary, execute and deliver to the Administrative Agent (i) together with
the parent of such Subsidiary, a joinder agreement
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substantially in the form of Exhibit 5.09 hereto (a "Joinder Agreement"), (ii)
subject to Section 5.10, a deed of trust, mortgage, leasehold mortgage and/or
other security agreement granting Liens on the fee and leasehold interests of
such Subsidiary; provided that the Administrative Agent may waive, without the
consent of any Lender, the requirement that security interests be granted on any
leasehold interest if the underlying lease by its terms expressly prohibits such
assignment, or if the Administrative Agent makes a good faith determination that
a Lien on such leasehold interest is not required and (iii) UCC-1 financing
statements to be filed in connection with such Liens.
(b) The Borrower and each Subsidiary, other than USC LP, Inc. and
Beall Investment Corporation, Inc., shall have pledged at all times 100% of such
Person's ownership interest in any Subsidiary to the Administrative Agent for
the benefit of the Lenders pursuant to the Pledge Agreement, a Joinder Agreement
or other pledge or security agreement in form and substance reasonably
satisfactory to the Administrative Agent.
SECTION 5.10. Collateral. (a) The Borrower will, and will cause each
of its Subsidiaries (other than USC LP, Inc. and Beall Investment Corporation,
Inc.) to, for each vehicle with a gross vehicle weight in excess of 40,000
pounds, including all mixer trucks and aggregate delivery trucks, and which is
less than seven (7) years old (as determined by the date on the Certificate of
Title for such vehicle), (i) within thirty (30) days of the Effective Date,
provide evidence satisfactory to the Administrative Agent that all Certificates
of Title for each such vehicle owned by the Borrower or any such Subsidiary have
been submitted to the appropriate state department of motor vehicles or other
regulatory authority as appropriate for the jurisdiction of location of such
vehicle for the purpose of having the Administrative Agent for the benefit of
the Lenders recorded as lienholder on each of such Certificates of Title, (ii)
within thirty (30) days of the acquisition of any new vehicle, provide evidence
satisfactory to the Administrative Agent that the Certificate of Title for such
newly acquired vehicle shall have been submitted to the appropriate state
department of motor vehicles or other regulatory authority as appropriate for
the jurisdiction of location of such vehicle for the purpose of having the
Administrative Agent for the benefit of the Lenders recorded as lienholder on
each such Certificate of Title; provided, that in either case of (i) or (ii)
above and so long as there is no Default or Event of Default, any Certificate of
Title which evidences the Administrative Agent for the benefit of the Lenders as
lienholder shall be returned to the Borrower, and (iii) within thirty (30) days
of the submission of any Certificate of Title to the appropriate authority of
recordation of the Lien, provide to the Administrative Agent a copy of each
Certificate of Title reflecting the Administrative Agent as lienholder.
(b) Within thirty (30) days of the acquisition of any (i) fee interest
in any real property or (ii) material leasehold interest in any real property
used in the operation (as opposed to administration) of the business of the
Borrower or any Subsidiary (other than USC LP, Inc. and Beall Investment
Corporation, Inc.), the Borrower will, and will cause each of such Subsidiaries
to, (w) execute in form and substance reasonably satisfactory to the
Administrative Agent, a deed of trust or mortgage, as applicable, in respect of
such fee interest and (x) use reasonably commercial efforts to execute in form
and substance reasonably satisfactory to the Administrative Agent, a leasehold
deed of trust or mortgage, as applicable, in each case granting a first priority
perfected Lien on such property as collateral for the Obligations, subject only
to Permitted Liens, (y) provide a preliminary title report in favor of the
Administrative Agent and the Lenders in form and substance reasonably
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satisfactory to the Administrative Agent for any property on which a lien is
granted pursuant to clause (w) or (x), and (z) for any property acquired for
which the Borrower or any such Subsidiary obtains an owner's policy of title
insurance, provide a copy of such owner's policy. For purposes of this Section
5.10(b) and (c) below, a leasehold interest shall be deemed material if the
Borrower, in its good faith judgment, determines (1) that said leasehold
provides a significant portion of the product supplied by the Borrower and its
Subsidiaries in the geographic market in which said leasehold is located and (2)
that the Borrower could not readily replace such leasehold with a comparable
property on substantially similar terms and conditions.
(c) The Borrower will, and will cause each of its Subsidiaries (other
than USC LP, Inc. and Beall Investment Corporation, Inc.) to, use commercially
reasonable efforts in negotiating any new material lease or the renewal or
extension of any existing lease covering real property to provide in such lease
that the interest of the lessee may be hypothecated without any further approval
of the landlord.
SECTION 5.11. Employee Agreements. Upon request of the
Administrative Agent, the Borrower and its Subsidiaries shall provide to the
Administrative Agent copies of all material agreements relating to the employees
of the Borrower and its Subsidiaries, including all collective bargaining
agreements, employment contracts, non-compete agreements, employee savings,
employee retirement and employee benefit plans. Upon request of the
Administrative Agent, the Borrower will provide a list of (a) each employment
agreement between the Borrower and each of its officers, (b) each employment
agreement between any Subsidiary and the key employees of such Subsidiary (or
its predecessor), (c) each union with which any Subsidiary of the Borrower has
entered into a collective bargaining agreement, and (iv) each employee pension
benefit plan (as defined in ERISA) sponsored by the Borrower or any Subsidiary.
SECTION 5.12. Compliance With Leases. The Borrower shall, and shall
cause each of its Subsidiaries to, perform and observe all covenants,
agreements, terms, conditions and limitations applicable to such Person
contained in any Lease and shall do all things necessary to keep unimpaired all
of its rights thereunder and to prevent any default thereunder or any forfeiture
or impairment thereof, except as to any nonperformance, nonobservance, default
or forfeiture which would not reasonably be expected to result in a Material
Adverse Effect.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees and other amounts payable hereunder have
been paid in full and all Letters of Credit have expired or terminated and all
LC Disbursements shall have been reimbursed, the Borrower covenants and agrees
with the Lenders that:
SECTION 6.01. Indebtedness. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:
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(a) Indebtedness created hereunder;
(b) Indebtedness existing on the date hereof and set forth in Schedule
6.01 and extensions, renewals and replacements of any such Indebtedness that do
not increase the outstanding principal amount thereof;
(c) Indebtedness of the Borrower to any wholly-owned Subsidiary and of
any Subsidiary to the Borrower or any other Subsidiary;
(d) Indebtedness of the Borrower or any Subsidiary incurred to
finance, or assumed in connection with, any Acquisition or the acquisition of
other assets, including Capital Lease Obligations and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof; provided that (i) such Indebtedness is incurred prior
to or within 90 days after such Acquisition or acquisition, (ii) such
Indebtedness was not incurred by such Person in contemplation of such
Acquisition and (iii) the aggregate principal amount of Indebtedness permitted
by clause (b) above and this clause (d) shall not exceed the greater of (1) 5%
of the consolidated tangible net worth of the Borrower or (2) $3,000,000 at any
time outstanding;
(e) Subordinated Debt incurred in respect of a Capital Markets Event
(including the Guaranty thereof by the Subsidiaries); and
(f) Interest Rate Risk Indebtedness.
SECTION 6.02. Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(a) Permitted Encumbrances;
(b) Any Lien on any property or asset of the Borrower or any
Subsidiary securing Indebtedness permitted in Section 6.01(b) or 6.01(d);
provided that (i) such Lien shall not apply to any other property or asset other
than accessions, improvements, upgrades and the proceeds thereof of the Borrower
or any Subsidiary and (ii) such Lien shall secure only those obligations which
it secures on the date hereof and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;
(c) Liens in favor of the Administrative Agent securing the
Obligations;
(d) Liens securing potential prepayment obligations of Walker's
Concrete, Inc. to Union Bank of California, N.A. encumbering assets of Walker's
Concrete, Inc.; provided no further Indebtedness is owing by the Borrower or any
Subsidiary to said bank; and
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(e) Renewals and extensions of the above on similar terms and
conditions.
SECTION 6.03. Fundamental Changes. (a) The Borrower will not, and
will not permit any Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
sell, transfer, lease or otherwise dispose of (in one transaction or in a series
of transactions) all or any substantial part of its assets, or all or
substantially all of the stock of any of its Subsidiaries (in each case, whether
now owned or hereafter acquired), or liquidate or dissolve, except that, if at
the time thereof and immediately after giving effect thereto no Default shall
have occurred and be continuing, (i) any Subsidiary may merge into the Borrower
in a transaction in which the Borrower is the surviving Person, (ii) any
Subsidiary may merge into any Subsidiary in a transaction in which the surviving
entity is a Subsidiary, (iii) the Borrower or any Subsidiary may sell, transfer,
lease or otherwise dispose of its assets (A) to the Borrower or to another
Subsidiary (B) in the ordinary course of its business or (C) which are surplus,
obsolete or no longer useful in the operation of its business and do not
materially prejudice the Lenders in any way, and (iv) any Subsidiary may
liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders.
(b) The Borrower will not, and will not permit any of its Subsidiaries
to, engage to any material extent in any business other than businesses of the
type conducted by the Borrower and its Subsidiaries on the date of execution of
this Agreement and businesses reasonably related thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower will not, and will not permit any of its
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly owned Subsidiary prior to such merger) any
capital stock, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person constituting a business unit, except:
(a) Permitted Investments;
(b) investments by the Borrower existing on the date hereof as set
forth on Schedule 6.04, including investments in its direct and indirect
Subsidiaries;
(c) equity investments by the Borrower or any Subsidiary in any
Subsidiary and loans or advances made by the Borrower to any wholly-owned
Subsidiary and made by any wholly-owned Subsidiary to the Borrower or any other
Subsidiary;
(d) subject to the limitations contained in Section 6.11, investments
in the stock, warrants, stock appreciation rights, other securities and/or other
assets of Qualified Companies; and
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(e) guaranties of the Subordinated Debt incurred in connection with a
Capital Market Event that are subordinated in the same manner as the
Subordinated Debt.
SECTION 6.05. Restricted Payments. The Borrower will not, and will
not permit any of its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment, except (a) Subsidiaries may
declare and pay dividends to the Borrower and other Subsidiaries and (b) the
Borrower may redeem capital stock in an aggregate amount not to exceed
$500,000.00.
SECTION 6.06. Transactions with Affiliates. The Borrower will not,
and will not permit any of its Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) in the ordinary course of business at prices and
on terms and conditions not less favorable to the Borrower or such Subsidiary
than could be obtained on an arm's-length basis from unrelated third parties,
(b) transactions between or among the Borrower and its wholly owned Subsidiaries
not involving any other Affiliate provided; no transfer of assets may be made to
Beall Investment Corporation, Inc., USC LP, Inc. or any other Subsidiary that
has not complied with the requirements of Sections 5.09 and 5.10 hereof, (c) any
Restricted Payment permitted by Section 6.05, (d) compensation and other
benefits paid to officers, directors and employees, and (e) transactions in
connection with the acquisition of any Qualified Company.
SECTION 6.07. Restrictive Agreements. Except for restrictions
contained in the indenture governing the Subordinated Debt incurred as a result
of the Capital Market Event, the Borrower will not, and will not permit any of
its Subsidiaries to, directly or indirectly, enter into, incur or permit to
exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (a) the ability of the Borrower or any Subsidiary to create,
incur or permit to exist any Lien upon any of its property or assets, or (b) the
ability of any Subsidiary to pay dividends or other distributions with respect
to any shares of its capital stock or to make or repay loans or advances to the
Borrower or any other Subsidiary or to guarantee Indebtedness of the Borrower or
any other Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement or the Loan
Documents, (ii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder, (iii) clause
(a) of the foregoing shall not apply to customary provisions in leases and other
contracts restricting the assignment thereof and (iv) and the foregoing shall
not apply to restrictions
(A) existing on the Effective Date and disclosed on Schedule 6.07
hereto;
(B) effecting a refinancing of Indebtedness incurred pursuant to an
agreement referred to in clause (A), so long as the encumbrances and
restrictions contained in any such refinancing agreement are no more
restrictive than the encumbrances and restrictions contained in such
agreements;
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(C) constituting restrictions on the sale or other disposition of any
Property securing Indebtedness as a result of a Permitted Encumbrance on
such property; and
(D) constituting provisions contained in agreements or instruments
relating to Indebtedness which prohibit the transfer of all or
substantially all of the assets of the obligor thereunder unless the
transferee shall assume the obligations of the obligor under such agreement
or instrument.
SECTION 6.08. Financial Ratios. The following financial ratios will
be calculated as of each Financial Statement Delivery Date for the immediately
preceding period of four quarters to which the financial statements relate after
giving pro forma effect to the Acquisitions.
(a) Fixed Charge Coverage Ratio. The Borrower will not at any time
permit the ratio of (i) EBITDA calculated on a rolling four (4) quarter basis
(excluding any EBITDA computed pursuant to clause (b) of the definition of
EBITDA) minus cash federal, state and local income and franchise taxes actually
paid during such period (or, for any period prior to the Acquisition of the
Founding Companies, 40.8% of pro forma consolidated pre-tax net income of the
Borrower and its Subsidiaries for such included period), to (ii) cash interest
expense, actually paid during such period (including the interest expense
portion of any payments on Capitalized Lease Obligations but net of cash
interest income actually received during such period) plus Maintenance Capital
Expenditures for said period, to be less than 2.00 to 1.0 at any time during the
term hereof. For purposes of determining interest expense during the first
fiscal year of this Agreement, actual cash interest expense for any period from
the May 28, 1999 through the end of the period being calculated shall be
annualized and interest expense prior to the May 28, 1999 shall be disregarded.
(b) Asset Coverage Ratio. The Borrower will not at any time permit
the ratio of: (a) (i) accounts receivable plus (ii) inventory plus (iii) the net
book value of all property, plant and equipment in each case as reflected on the
financial statements delivered pursuant to Section 5.01, to (b) Funded Debt
minus Subordinated Debt, to be less than (i) 1.0 to 1.0 for the period from the
Effective Date through September 29, 2000 and (ii) 1.25 to 1.0 for the period
from September 30, 2000 and thereafter; provided, that upon the occurrence of a
Capital Markets Event, such ratio will not be less than 1.5 to 1.0 for the
period from the date of occurrence of the Capital Markets Event and thereafter.
For the purposes of calculating this Asset Coverage Ratio, the Borrower may use
(i) the book value of such assets as recorded on the financials delivered under
Section 5.01 hereof or (ii) the fair market value of such assets, as such fair
market value is determined by a third party approved by the Administrative Agent
in its sole discretion; provided, that in the event any fair market valuation
has been determined which for any asset is less that its book value, such fair
market valuation must be used in the calculation of this Asset Coverage Ratio.
(c) Senior Debt Leverage Ratio. The Borrower will not at any time
permit the ratio of (i) Funded Debt minus Subordinated Debt to (ii) EBITDA
calculated on a rolling four (4) quarter basis, to be greater than (i) 2.75 to
1.0 for the period from the Effective Date through June 29, 2000, (ii) 2.50 to
1.0 for the period from June 30, 2000 through September 29, 2000 and (iii) 2.25
to 1.0 for the period from September 30, 2000 and thereafter; provided, that
upon the occurrence of
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a Capital Markets Event, such ratio will not be greater than 2.25 to 1.0 for the
period from the date of occurrence of the Capital Markets Event and thereafter.
(d) Total Debt Leverage Ratio. The Borrower will not at any time
permit the ratio of (i) Funded Debt (including all Subordinated Debt) to (ii)
EBITDA calculated on a rolling four (4) quarters basis, to be greater than 3.25
to 1.0.
SECTION 6.09. Net Worth. The Borrower will not permit at any time
during the term hereof consolidated net worth to be less than $69,113,000, plus
commencing May 28, 1999, fifty percent (50%) of after tax net income (if
positive) of the Borrower and its Subsidiaries for each theretofore completed
fiscal year during the term hereof, plus one hundred percent (100%) of the net
cash proceeds theretofore received subsequent to May 28, 1999 from the issuance
of any capital stock by the Borrower or any Subsidiary (other than from the
Borrower or another Subsidiary) subsequent to the date hereof, plus, without
duplication, one hundred percent (100%) of any amount recorded on the balance
sheet of the Borrower from the issuance of any equity.
SECTION 6.10. Capital Expenditures The Borrower will not, and will
not permit its Subsidiaries to, make any Capital Expenditure (including any
Capitalized Lease Obligations) during any fiscal year if, after giving effect
thereto, the aggregate of all such expenditures would exceed five percent (5%)
of actual total revenues of the Borrower and its Subsidiaries for the
immediately preceding four quarters.
SECTION 6.11. Limitation on Acquisitions The Borrower will not, and
will not permit any Subsidiary to, acquire any stock or assets of any Qualified
Company (other than (i) upon the receipt of an audited balance sheet and
statement of operations of the Allega Companies for the fiscal year ending
December 31, 1998, the Allega Companies and, (ii) upon receipt of a Joinder
Agreement and the documents and other items required by the Joinder Agreement
from the applicable Beall Companies, the Beall Companies) without the prior
written consent of the Required Lenders if (a) the cash consideration (defined
as total net cash to be paid plus Indebtedness to be assumed) for any such
proposed acquisition exceeds 7.50% of the consolidated net worth of the Borrower
and its Subsidiaries (pre-acquisition) as reflected in the most recent
consolidated balance sheet delivered pursuant to Section 5.01 hereof or (b) the
total consideration (defined as total net cash to be paid plus Indebtedness to
be assumed plus the value of any stock of the Borrower or any Subsidiary given
as consideration, (as reflected on the Borrower's consolidated balance sheet,)
plus related Acquisition costs) exceeds 15.0% of the consolidated net worth of
the Borrower and its Subsidiaries (pre-acquisition) as reflected on the most
recent consolidated balance sheet delivered pursuant to Section 5.01 hereof; and
provided the Borrower is in compliance with all of the following:
(i) no Default or Event of Default is in existence at the time of
the consummation of such proposed Acquisition or would exist after giving
effect thereto, all representations and warrants contained herein and in
the other Loan Documents shall be true and correct in all material respects
with the same effect as though such representations and warranties were
made on and as of the date of such proposed Acquisition (both before and
after giving effect thereto) except to the extent limited to a specific
prior date or incorrect as
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a result of transactions permitted under the Loan Documents, and no other
agreement, contract or instrument to which the Borrower is a party
restricts such proposed Acquisition;
(ii) the Borrower shall have given the Administrative Agent and
the Lenders at least ten (10) Business Days prior written notice of any
such proposed Acquisition (each of such notices, a "Permitted Acquisition
Notice"), which notice must be timely provided and must be accompanied by
all of the information required in this Section 6.11 and shall (A) contain
the estimated date such proposed Acquisition is scheduled to be
consummated, (B) attach a true and correct copy of the draft purchase
agreement (if available), letter of intent, description of material terms
or similar agreements executed by the parties thereto in connection with
such proposed Acquisition, (C) contain the estimated aggregate purchase
price of such proposed Acquisition and the estimated amount of related
costs and expenses and the intended method of financing thereof, and (D)
contain the estimated amount of Loans required to effect such proposed
Acquisition;
(iii) concurrently with delivery of the Permitted Acquisition
Notice, the Borrower shall have provided the Administrative Agent and the
Lenders with all information related to the proposed Acquisition as is
reasonably required in the form of Acquisition Information Worksheet
attached hereto as Exhibit 6.11, and, promptly upon request, such
additional information as the Administrative Agent shall reasonably
request, including, delivery of the expert reports (if any) prepared by
accounting, environmental, and/or other experts which the Borrower has
obtained and the Administrative Agent shall reasonably request;
(iv) (A) as soon as available but not less than the earlier of
three (3) days after the execution thereof, a copy of the executed
principal Acquisition Documents with respect to such proposed Acquisition
and (B) at the time of delivery of the Acquisition Documents, certification
from the Borrower as to the purchase price for the Acquisition (or a
formula therefor) and the estimated amount of all related costs, fees and
expenses and that, except as described, there are no other amounts which
will be payable in connection with such proposed Acquisition;
(v) concurrently with the delivery of the Permitted Acquisition
Notice, the Borrower shall have provided to the Administrative Agent and
the Lenders recalculations of the calculations set forth in the certificate
most recently delivered pursuant to Section 5.01(c) are made by the
Borrower evidencing its compliance with the covenants contained in Section
6.08 (excluding Section 6.08(c)) through 6.10, inclusive, and such
recalculations shall show that during the period of four fiscal quarters
covered by that certificate, on a pro forma basis, the Borrower would have
been in compliance therewith.
(vi) at any time prior to the occurrence of a Capital Markets
Event, concurrently with the delivery of the Permitted Acquisition Notice,
the Borrower shall have provided to the Administrative Agent and the
Lenders a calculation by the Borrower of the ratio of pro forma Funded Debt
minus Subordinated Debt (after giving effect to the proposed Acquisition)
to pro forma EBITDA (after giving effect to the proposed Acquisition)
showing
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that such ratio will not at any time be greater than (A) 2.50 to
1.0 for the period from the Effective Date through June 29, 2000, (B) 2.25
to 1.0 for the period from June 30, 2000 through September 29, 2000 and (C)
2.00 to 1.0 for the period from September 30, 2000 and thereafter.
(vii) the Borrower shall have delivered updated schedules to any
Acquisition Agreement related to such proposed Acquisition to the
Administrative Agent; and
(viii) prior to the consummation of the proposed Acquisition,
the Borrower shall furnish the Administrative Agent and the Lenders an
officer's certificate executed by a Financial Officer of the Borrower,
certifying as to compliance with the requirements of the applicable
preceding clauses (i) through (vi), containing the calculations required in
this Section 6.11. The consummation of each Acquisition shall be deemed to
be a representation and warranty by the Borrower that all conditions
thereto have been satisfied and that same is permitted in accordance with
the terms of this Agreement, which representation and warranty shall be
deemed to be a representation and warranty for all purposes hereunder; and
further provided, that for any Acquisition, regardless of the consideration
paid, the Borrower must be in compliance with clauses (i) and (iii) above.
SECTION 6.12. Hedging Agreement. The Borrower will not, and will not
permit any Subsidiary to, enter into any Hedging Agreement.
SECTION 6.13 Additional Borrowings Under Union Bank Indebtedness. The
Company will not, and will not permit any Subsidiary, including, without
limitation, Walker's Concrete, Inc., to borrow, accept any advances under, or in
any manner increase its liability in respect of, the documents evidencing
certain Indebtedness and obligations of said Subsidiary to Union Bank of
California, N.A.
SECTION 6.14. Prepayment of Other Indebtedness. The Borrower will
not, and will not permit any Subsidiary to, make any voluntary prepayments of
principal or interest on, defease or establish any escrow or defeasance accounts
or trusts in respect of any Subordinated Debt. The Borrower will not, and will
not permit any Subsidiary to, amend or obtain or grant a waiver of any repayment
schedule (other than a deferral), subordination provision or related definition
contained in the note agreement or indenture entered into in connection with the
Subordinated Debt without the prior written consent of the Required Lenders.
SECTION 6.15. Fiscal Year. The Borrower will not change its fiscal
year from December 31st.
SECTION 6.16. Sale and Leaseback. The Borrower will not, and will
not permit any Subsidiary to, directly or indirectly enter into any agreement or
arrangement providing for the sale or transfer by it of any property (now owned
or hereafter acquired) to a Person and the subsequent lease or rental of such
property or similar property from such Person.
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ARTICLE VII
Events of Default and Remedies
SECTION 7.01. Events of Default.
The following events ("Events of Default") shall constitute Events of
Default hereunder:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Section 7.01) payable under this Agreement, when and as the same shall become
due and payable;
(c) any representation or warranty made or deemed made by or on behalf
of the Borrower or any Subsidiary in or in connection with this Agreement or any
other Loan Document or any amendment or modification hereof or thereof or waiver
hereunder or thereunder, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with this Agreement or any
amendment or modification hereof or waiver hereunder, shall prove to have been
incorrect in any material respect when made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02(a), 5.03 (with respect to the
Borrower's existence) or 5.08 or in Article VI;
(e) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those specified
in clause (a), (b) or (d) of this Section 7.01), and such failure shall continue
unremedied for a period of fifteen (15) days after notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);
(f) the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Subordinated Debt or any Material Indebtedness, when and as the same shall
become due and payable;
(g) any event or condition occurs that results in any Subordinated
Debt or any Material Indebtedness becoming due prior to its scheduled maturity
or that enables or permits the holder or holders of any Subordinated Debt or any
Material Indebtedness or any trustee or agent on its or their behalf to cause
any Subordinated Debt or any Material Indebtedness to become due, or
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to require the prepayment, repurchase, redemption or defeasance thereof, prior
to its scheduled maturity;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Significant Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Significant Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;
(i) the Borrower or any Significant Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Section 7.01, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any
Significant Subsidiary or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors or
(vi) take any action for the purpose of effecting any of the foregoing;
(j) the Borrower or any Significant Subsidiary shall become unable,
admit in writing its inability or fail generally to pay its debts as they become
due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $1,000,000 (not covered by insurance subject to customary
deductible) shall be rendered against the Borrower, any Significant Subsidiary
or any combination thereof and the same shall remain undischarged for a period
of 30 consecutive days during which execution shall not be effectively stayed,
or any action shall be legally taken by a judgment creditor to attach or levy
upon any assets of the Borrower or any Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower
and its Subsidiaries in an aggregate amount exceeding (i) $1,000,000 in any year
or (ii) $1,000,000 for all periods;
(m) a Change in Control shall occur; or
(n) any material Loan Document shall be determined by the
Administrative Agent, in its good faith judgment to be unenforceable in any
material respect or Borrower or any Subsidiary shall claim such to be the case
other than in accordance with its terms or the terms of the other Loan
Documents.
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SECTION 7.02. Remedies. On the occurrence of any event described in
Section 7.01 (other than an event with respect to the Borrower described in
clause (h) or (i) thereof), and at any time thereafter during the continuance of
such event, the Administrative Agent may, and at the request of the Required
Lenders shall, by notice to the Borrower, take either or both of the following
actions, at the same time or different times: (i) terminate the Commitments
(including the Commitment of the Swingline Lender with respect to its obligation
to advance Swingline Loans), and thereupon the Commitments shall terminate
immediately; provided that in the case of the Commitment of the Swingline Lender
with respect to its obligation to advance Swingline Loans, the Swingline Lender
may, by notice to the Borrower (with a copy to the Administrative Agent) and
regardless of whether the Required Lenders elect to terminate the Commitments
hereunder, terminate such Commitment, and thereupon such Commitment shall
terminate immediately, (ii) declare the Loans then outstanding to be due and
payable in whole (or in part, in which case any principal not so declared to be
due and payable may thereafter be declared to be due and payable), and thereupon
the principal of the Loans so declared to be due and payable, together with
accrued and unpaid interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall become due and payable immediately, without
notice, presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; and in case of any event with respect to the
Borrower described in clause (h) or (i) of Section 7.01 of this Article, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower, (iii) set off any amounts of the
Borrower or any Subsidiary held by it, (d) exercise any other rights or remedies
described in the other Loan Documents, including, without limitation, each of
the Security Documents, and (iv) exercise such other rights as are available to
lenders and secured parties at law or in equity.
ARTICLE VIII
The Administrative Agent
Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default
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has occurred and is continuing, (b) the Administrative Agent shall not have any
duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated hereby that the
Administrative Agent is required to exercise in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 9.02), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to the
Borrower or any of its Subsidiaries or Affiliates that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates in
any capacity. The Administrative Agent shall not be liable for any action taken
or not taken by it with the consent or at the request of the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 9.02) or in the absence of its own
gross negligence or willful misconduct. The Administrative Agent shall be deemed
not to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement, (ii) the contents of any certificate, report or
other document delivered hereunder or in connection herewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreement, instrument or document, or
(v) the satisfaction of any condition set forth in Article IV or elsewhere
herein, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Bank and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have
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been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent which
shall be a bank with an office in Houston, Texas, or an Affiliate of any such
bank. Upon the acceptance of its appointment as Administrative Agent hereunder
by a successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
None of the documentation agent, the syndication agent or any of the
co-managing agents in their respective capacities as such shall have any duties
or responsibilities to any other Person under this Agreement or any other Loan
Document.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
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(a) if to the Borrower or to any Guarantor,
U.S. Concrete
1300 Post Oak Blvd., Suite 1220
Houston, Texas 77056
Attention: Michael Harlan
Telephone No.: (713) 499-6203
Telecopy No.: (713) 499-6201
(b) if to the Administrative Agent,
Chase Bank of Texas, National Association
712 Main Street, 5th Floor East
Houston, Texas 77002
Attention: James R. Dolphin
Telephone No.: (713) 216-5347
Telecopy No.: (713) 216-6004
with copies to
The Chase Manhattan Bank
Agency Services
One Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Muniram Appanna
Telecopy No.: (212) 552-7940
Telephone No.: (212) 552-7943
(c) if to the Issuing Bank,
Chase Bank of Texas, National Association
712 Main Street, 5th Floor East
Houston, Texas 77002
Attention: James R. Dolphin
Telecopy No.: (713) 216-5347
Telephone No.: (713) 216-6004
(d) if to the Swingline Lender,
Bank of America, N.A.,
700 Louisiana, 7th Floor,
Houston, Texas 77002,
Attention: William Borus
Telecopy No.: (713) 247-7748
Telephone No.: (713) 247-7756
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(e) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on (a) if delivered in
person, when delivered, (b) if delivered by telecopy, on the date of confirmed
transmission, (c) if delivered by overnight courier, one (1) Business Day after
deliver to the courier properly addressed or (d) if by mail, four (4) days after
deposit in the United States mails (by certified mail, return receipt
requested), with proper postage prepaid.
SECTION 9.02. Waivers; Amendments. (a) To the extent permitted by
law, no failure or delay by the Administrative Agent, the Issuing Bank or any
Lender in exercising any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. To the extent permitted by law, the rights and remedies of the
Administrative Agent, the Issuing Bank and the Lenders hereunder are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
To the extent permitted by law, no waiver of any provision of this Agreement or
consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Administrative
Agent, any Lender or the Issuing Bank may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; provided that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
LC Disbursement or reduce the rate of interest thereon, or reduce any fees or
other amounts payable hereunder, without the written consent of each Lender
affected thereby, (iii) postpone the scheduled date of payment of the principal
amount of any Loan or LC Disbursement, or any interest thereon, or any fees or
other amounts payable hereunder, or reduce the amount of, waive or excuse any
such payment, or postpone the scheduled date of expiration of any Commitment,
without the written consent of each Lender affected thereby, (iv) change Section
2.17(b) or (c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (v) release any
Collateral securing the Obligations, without the written consent of each Lender,
provided that the Administrative Agent may release any collateral sold or
transferred as permitted under this Agreement by the Borrower or any Subsidiary
in the ordinary course of business or as otherwise permitted under this
Agreement, (vi) release the Borrower or any Guarantor or any other Person liable
for the repayment of the Obligations, without the written consent of each Lender
or (vii) change any of the provisions of this Section or the definition of
"Required Lenders" or any other
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provision hereof specifying the number or percentage of Lenders required to
waive, amend or modify any rights hereunder or make any determination or grant
any consent hereunder, without the written consent of each Lender; provided
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent, the Issuing Bank or the Swingline
Lender hereunder without the prior written consent of the Administrative Agent,
the Issuing Bank or the Swingline Lender, as the case may be.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation,
execution and delivery of this Agreement or any amendments, modifications or
waivers of the provisions hereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
expenses incurred by the Issuing Bank and the Swingline Lender in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all reasonable out-of-pocket
expenses incurred by the Administrative Agent, the Issuing Bank or any Lender,
including the reasonable fees, charges and disbursements of any counsel for the
Administrative Agent, the Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement, the
Security Documents and the other Loan Documents, including its rights under this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such reasonable out-of-pocket expenses incurred during
any workout or restructuring of such Loans or Letters of Credit.
(b) The Borrower shall and hereby does indemnify Chase Securities,
Inc., the Administrative Agent, the Issuing Bank, the Swingline Lender and each
Lender, and each Related Party of any of the foregoing Persons (each such Person
being called an "Indemnitee") against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related reasonable
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement, the Security Documents and the other Loan Documents or any agreement
or instrument contemplated hereby, the performance by the parties hereto of
their respective obligations hereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit
or the use of the proceeds therefrom (including any refusal by the Issuing Bank
to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by the Borrower or
any of its Subsidiaries, or any Environmental Liability related in any way to
the Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; PROVIDED THAT IT IS THE EXPRESS INTENTION OF
THE PARTIES HERETO THAT SUCH INDEMNITY SHALL BE APPLICABLE REGARDLESS OF WHETHER
ANY LOSS OR LIABILITY WAS CAUSED BY ANY INDEMNITEE'S OWN NEGLIGENCE OR ARISES
FROM ANY THEORY OF STRICT LIABILITY but shall not,
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as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined to have resulted from
the gross negligence or willful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent, the Issuing Bank or the Swingline
Lender under paragraph (a) or (b) of this Section, each Lender severally agrees
to pay to the Administrative Agent, the Issuing Bank or the Swingline Lender, as
the case may be, such Lender's Applicable Percentage (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent, the Issuing Bank or the Swingline
Lender in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable not later than
fifteen (15) days after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit) and, to the extent expressly contemplated
hereby, the Related Parties of each of the Administrative Agent, the Issuing
Bank and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Commitment and the Loans at the time owing to it); provided that (i) except
in the case of an assignment to a Lender or an Affiliate of a Lender, each of
the Borrower and the Administrative Agent (and, in the case of an assignment of
all or a portion of a Commitment or any Lender's obligations in respect of its
LC Exposure or Swingline Exposure, the Issuing Bank and the Swingline Lender)
must give their prior written consent to such assignment (which consent shall
not be unreasonably withheld), (ii) except in the case of an assignment to a
Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender's Commitment, the amount of the Commitment of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be
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less than $5,000,000 unless each of the Borrower and the Administrative Agent
otherwise consent, (iii) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and obligations
under this Agreement, (iv) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance, together with
a processing and recordation fee of $3,500, and (v) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; and provided further that any consent of the Borrower otherwise
required under this paragraph shall not be required if an Event of Default under
clause (h) or (i) of Article VII has occurred and is continuing. Subject to
acceptance and recording thereof pursuant to paragraph (d) of this Section, from
and after the effective date specified in each Assignment and Acceptance the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03).
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in Houston, Texas a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be prima facie evidence of the correctness thereof, and the
Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the
Borrower, the Issuing Bank and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, the Issuing Bank, or the Swingline Lender sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrower, the
Administrative Agent, the Issuing Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations
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under this Agreement. Any agreement or instrument pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in the
first proviso to Section 9.02(b) that affects such Participant. Subject to
paragraph (f) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 9.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.17(c) as
though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.14, 2.15 or 2.16 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.16 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.16(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations
and warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.14, 2.15, 2.16 and 9.03 and Article
VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.
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This Agreement and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. Without limiting the remedies
provided for in Article VII hereof, if an Event of Default shall have occurred
and be continuing and after acceleration of the Obligations, each Lender is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations at
any time owing by such Lender to or for the credit or the account of the
Borrower or any Guarantor against any of and all the obligations of the Borrower
now or hereafter existing under this Agreement held by such Lender, irrespective
of whether or not such Lender shall have made any demand under this Agreement,
its Notes or the Obligations and although Obligations may be unmatured. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) THIS AGREEMENT, ALL NOTES, THE OTHER LOAN DOCUMENTS AND ALL OTHER
DOCUMENTS EXECUTED IN CONNECTION HEREWITH, EXCEPT AS OTHERWISE PROVIDED THEREIN,
SHALL BE DEEMED TO BE CONTRACTS AND AGREEMENTS UNDER THE LAWS OF THE STATE OF
TEXAS AND OF THE UNITED STATES OF AMERICA AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF TEXAS AND OF THE
UNITED STATES. Without limitation of the foregoing, nothing in this Agreement,
or in the Notes or in any other Loan Document shall be deemed to constitute a
waiver of any rights which any Lender may have under applicable federal
legislation relating to the amount of interest which such Lender may contract
for, take, receive or charge in respect of the Loan and the Loan Documents,
including any right to take, receive, reserve and charge interest at the rate
allowed by the law of the state where any Lender is located. The Administrative
Agent, each Lender and the Borrower further agree that insofar as the provisions
of the Texas Finance Code, Chapter 303, as amended, are applicable to the
determination of the Highest Lawful Rate with respect to the Notes and the
Obligations hereunder and under the other Loan Documents, the indicated rate
ceiling of such Code shall be applicable; provided, however, that to the extent
permitted by such Code, the Administrative Agent may from time to time by notice
to the Borrower revise the election of such interest rate
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ceiling as such ceiling affects the then current or future balances of the
Loans. The provisions of the Texas Finance Code, Chapter 346, do not apply to
this Agreement, any Note issued hereunder or the other Loan Documents.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the district courts
of Harris County, Texas and of the United States District Court of the Southern
District of Texas, sitting in Houston, Texas and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
State or, to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement
shall affect any right that the Administrative Agent, the Issuing Bank or any
Lender may otherwise have to bring any action or proceeding relating to this
Agreement against the Borrower or its properties in the courts of any
jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this agreement to serve process
in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
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SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information confidential)
to be used solely in connection with the administration of the Loan Documents,
(b) to the extent requested by any regulatory authority, (c) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (d) to any other party to this Agreement, (e) in connection with the
exercise of any remedies hereunder or any suit, action or proceeding relating to
this Agreement or the enforcement of rights hereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement, (g) with
the consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to the Administrative Agent, the Issuing Bank or any Lender on
a nonconfidential basis from a source other than the Borrower. For the purposes
of this Section, "Information" means all information received from the Borrower
relating to the Borrower or its business, other than any such information that
is available to the Administrative Agent, the Issuing Bank or any Lender on a
nonconfidential basis prior to disclosure by the Borrower; provided that, in the
case of information received from the Borrower after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 9.13. Interest Rate Limitation. Each provision in this
Agreement and each other Loan Document is expressly limited so that in no event
whatsoever shall the amount paid, or otherwise agreed to be paid, to the
Administrative Agent or any Lender, or charged, contracted for, reserved, taken
or received by the Administrative Agent or any Lender, for the use, forbearance
or detention of the money to be loaned under this Agreement or any Loan Document
or otherwise (including any sums paid as required by any covenant or obligation
contained herein or in any other Loan Document which is for the use, forbearance
or detention of such money), exceed the Highest Lawful Rate, and all amounts
owed under this Agreement and each other Loan Document shall be held to be
subject to reduction so that any and all amounts so paid or agreed to be paid,
charged, contracted for, reserved, taken or received which are for the use,
forbearance or detention of money under this Agreement or such Loan Document
shall in no event exceed the Highest Lawful Rate. Anything in any Note or any
other Loan Document to the contrary notwithstanding, the Borrower shall not be
required to pay unearned interest on any Note and the Borrower shall not be
required to pay interest on the Obligations at a rate in excess of the Highest
Lawful Rate, and if the effective rate of interest which would otherwise be
payable under such Note and such Loan Documents would exceed the Highest Lawful
Rate, or if the holder of such Note shall receive any unearned interest or shall
receive monies that are deemed to constitute interest which would increase the
effective rate of interest payable by the Borrower under such Note and the other
Loan Documents to a rate in excess of the Highest Lawful Rate, then (a) the
amount of interest which would otherwise be payable
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by the Borrower shall be reduced to the amount allowed under applicable law and
(b) any unearned interest paid by the Borrower or any interest paid by the
Borrower in excess of the Highest Lawful Rate shall in the first instance be
credited on the principal of the Obligations of the Borrower (or if all such
Obligations shall have been paid in full, refunded to the Borrower). It is
further agreed that, without limitation of the foregoing, all calculations of
the rate of interest contracted for, reserved, taken, charged or received by any
Lender under the Notes and the Obligations and under the other Loan Documents
are made for the purpose of determining whether such rate exceeds the Highest
Lawful Rate, and shall be made, to the extent permitted by usury laws applicable
to such Lender, by amortizing, prorating and spreading in equal parts during the
period of the full stated term of the Notes and this Agreement and all interest
at any time contracted for, charged or received by such Lender in connection
therewith.
SECTION 9.14. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT
(INCLUDING THE SCHEDULES AND EXHIBITS HERETO), THE NOTES, THE GUARANTY IN
ARTICLE X HEREOF, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
SECTION 9.15. Limited Liability. No director, officer, employee,
incorporator or stockholder of the Borrower or any Subsidiary, as such, shall
have any liability for any obligations of the Borrower under the Notes, the
Guarantors under the Guaranty or the Loan Documents or for any claim based on,
in respect of, or by reason of, such obligations or their creation. Each Lender
waives and releases all such liability. The waiver and release are part of the
consideration for Transactions.
ARTICLE X
Guaranty
SECTION 10.01. Guaranty In consideration of, and in order to induce
the Lenders to make the Loans hereunder, each Subsidiary as a Guarantor hereby
absolutely, unconditionally and irrevocably, jointly and severally guarantees
the punctual payment and performance when due, whether at stated maturity, by
acceleration or otherwise, of the Obligations, and all other obligations and
covenants of the Borrower now or hereafter existing under this Agreement, the
Notes and the other Loan Documents whether for principal, interest (including
interest accruing or becoming owing both prior to and subsequent to the
commencement of any proceeding against or with respect to the Borrower under any
chapter of the Bankruptcy Code), Fees, commissions, expenses (including
reasonable attorneys' fees and expenses) or otherwise, and all reasonable costs
and expenses, if any, incurred by the Administrative Agent or any Lender in
connection with enforcing any rights under this Guaranty (all such obligations
being the "Guaranteed Obligations"), and agrees to pay any and all reasonable
expenses incurred by each Lender and the Administrative Agent in enforcing this
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Guaranty; provided that notwithstanding anything contained herein or in any of
the Loan Documents to the contrary, the maximum liability of each Guarantor
hereunder and under the other Loan Documents shall in no event exceed such
Guarantor's Maximum Guaranteed Amount, and provided further, each Guarantor
shall be unconditionally required to pay all amounts demanded of it hereunder
prior to any determination of such Maximum Guaranteed Amount and the recipient
of such payment, if so required by a final non-appealable order of a court of
competent jurisdiction, shall then be liable for the refund of any excess
amounts. If any such rebate or refund is ever required, all other Guarantors
(and the Borrower) shall be fully liable for the repayment thereof to the
maximum extent allowed by applicable law. This Guaranty is an absolute,
unconditional, present and continuing guaranty of payment and not of
collectibility and is in no way conditioned upon any attempt to collect from the
Borrower or any other action, occurrence or circumstance whatsoever. Each
Guarantor agrees that the Guaranteed Obligations may at any time and from time
to time exceed the Maximum Guaranteed Amount of such Guarantor without impairing
this Guaranty or affecting the rights and remedies of the Lenders hereunder.
SECTION 10.02. Continuing Guaranty. Each Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms of
this Agreement, the Notes and the other Loan Documents. Each Guarantor agrees
that the Guaranteed Obligations and Loan Documents may be extended or renewed,
and Loans repaid and reborrowed in whole or in part, without notice to or assent
by such Guarantor, and that it will remain bound upon this Guaranty
notwithstanding any extension, renewal or other alteration of any Guaranteed
Obligations or Loan Documents, or any repayment and reborrowing of Loans. To
the maximum extent permitted by applicable law, the obligations of each
Guarantor under this Guaranty shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms hereof under any
circumstances whatsoever, including:
(a) any extension, renewal, modification, settlement, compromise,
waiver or release in respect of any Guaranteed Obligations;
(b) any extension, renewal, amendment, modification, rescission,
waiver or release in respect of any Loan Documents;
(c) any release, exchange, substitution, non-perfection or invalidity
of, or failure to exercise rights or remedies with respect to, any direct or
indirect security for any Guaranteed Obligations, including the release of any
Guarantor or other Person liable on any Guaranteed Obligations;
(d) any change in the corporate existence, structure or ownership of
the Borrower, any Guarantor, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting the Borrower, such Guarantor, any other
Guarantor or any of their respective assets;
(e) the existence of any claim, defense, set-off or other rights or
remedies which such Guarantor at any time may have against the Borrower, or the
Borrower or such Guarantor may have at any time against the Administrative
Agent, any Lender, any other Guarantor or any other Person, whether in
connection with this Guaranty, the Loan Documents, the transactions
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contemplated thereby or any other transaction other than by the payment in full
by the Borrower of the Guaranteed Obligations after the termination of the
Commitments of the Lenders;
(f) any invalidity or unenforceability for any reason of this
Agreement or other Loan Documents, or any provision of law purporting to
prohibit the payment or performance by the Borrower, such Guarantor or any other
Guarantor of the Guaranteed Obligations or Loan Documents, or of any other
obligation to the Administrative Agent or any Lender; or
(g) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing.
SECTION 10.03. Effect of Debtor Relief Laws. If after receipt of any
payment of, or proceeds of any security applied (or intended to be applied) to
the payment of all or any part of the Guaranteed Obligations, the Administrative
Agent or any Lender is for any reason compelled to surrender or voluntarily
surrenders (under circumstances in which it believes it could reasonably be
expected to be so compelled if it did not voluntarily surrender), such payment
or proceeds to any Person (a) because such payment or application of proceeds is
or may be avoided, invalidated, declared fraudulent, set aside, determined to be
void or voidable as a preference, fraudulent conveyance, fraudulent transfer,
impermissible set-off or a diversion of trust funds or (b) for any other similar
reason, including (i) any judgment, decree or order of any court or
administrative body having jurisdiction over the Administrative Agent, any
Lender or any of their respective properties or (ii) any settlement or
compromise of any such claim effected by the Administrative Agent or any Lender
with any such claimant (including the Borrower), then the Guaranteed Obligations
or part thereof intended to be satisfied shall be reinstated and continue, and
this Guaranty shall continue in full force as if such payment or proceeds have
not been received, notwithstanding any revocation thereof or the cancellation of
any Note or any other instrument evidencing any Guaranteed Obligations or
otherwise; and the Guarantors, jointly and severally, shall be liable to pay the
Administrative Agent and the Lenders, and hereby do indemnify the Administrative
Agent and the Lenders and hold them harmless for the amount of such payment or
proceeds so surrendered and all expenses (including reasonable attorneys' fees,
court costs and expenses attributable thereto) incurred by the Administrative
Agent or any Lender in the defense of any claim made against it that any payment
or proceeds received by the Administrative Agent or any Lender in respect of all
or part of the Guaranteed Obligations must be surrendered. The provisions of
this paragraph shall survive the termination of this Guaranty, and any
satisfaction and discharge of the Borrower by virtue of any payment, court order
or any federal or state law.
SECTION 10.04. Partial Waiver of Subrogation. Notwithstanding any
payment or payments made by any Guarantor hereunder, or any set-off or
application by the Administrative Agent or any Lender of any security or of any
credits or claims, no Guarantor will assert or exercise any rights of the
Administrative Agent or any Lender or of such Guarantor against the Borrower to
recover the amount of any payment made by such Guarantor to the Administrative
Agent or any Lender hereunder by way of any claim, remedy or subrogation,
reimbursement, exoneration, contribution, indemnity, participation or otherwise
arising by contract, by statute, under common law or otherwise, and such
Guarantor shall not have any right to exercise any right of recourse to or any
claim against assets or property of the Borrower, in each case unless and until
the Obligations of the
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Borrower guaranteed hereby have been fully and finally satisfied. Until such
time (but not thereafter), each Guarantor hereby expressly waives any right to
exercise any claim, right or remedy which such Guarantor may now have or
hereafter acquire against the Borrower that arises under this Agreement or any
other Loan Document or from the performance by any Guarantor of the Guaranty
hereunder including any claim, remedy or right of subrogation, reimbursement,
exoneration, contribution, indemnification or participation in any claim, right
or remedy of the Administrative Agent or any Lender against the Borrower or any
Guarantor, or any security that the Administrative Agent or any Lender now has
or hereafter acquires, whether or not such claim, right or remedy arises in
equity, under contract, by statute, under common law or otherwise. If any amount
shall be paid to a Guarantor by the Borrower or another Guarantor after payment
in full of the Obligations, and the Obligations shall thereafter be reinstated
in whole or in part and the Administrative Agent or any Lender forced to repay
any sums received by any of them in payment of the Obligations, this Guaranty
shall be automatically reinstated and such amount shall be held in trust for the
benefit of the Administrative Agent and the Lenders and shall forthwith be paid
to the Administrative Agent to be credited and applied to the Guaranteed
Obligations, whether matured or unmatured. The provisions of this paragraph
shall survive the termination of this Guaranty, and any satisfaction and
discharge of the Borrower by virtue of any payment, court order or any federal
or state law.
SECTION 10.05. Subordination. If any Guarantor becomes the holder of
any indebtedness payable by the Borrower or another Guarantor, each Guarantor
hereby subordinates all indebtedness owing to it from the Borrower or such other
Guarantor to all indebtedness of the Borrower to the Administrative Agent and
the Lenders, and agrees that during the continuance of any Event of Default it
shall not accept any payment on the same until payment in full of the
Obligations of the Borrower under this Agreement and the other Loan Documents
after the termination of the Commitments of the Lenders and shall in no
circumstance whatsoever attempt to set-off or reduce any obligations hereunder
because of such indebtedness. If any amount shall nevertheless be paid in
violation of the foregoing to a Guarantor by the Borrower or another Guarantor
prior to payment in full of the Guaranteed Obligations, such amount shall be
held in trust for the benefit of the Administrative Agent and the Lenders and
shall forthwith be paid to the Administrative Agent to be credited and applied
to the Guaranteed Obligations, whether matured or unmatured.
SECTION 10.06. Waiver. To the extent permitted by applicable law,
each Guarantor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Guaranteed Obligations and this Guaranty
and waives presentment, demand of payment, notice of intent to accelerate,
notice of dishonor or nonpayment and any requirement that the Administrative
Agent or any Lender institute suit, collection proceedings or take any other
action to collect the Guaranteed Obligations, including any requirement that the
Administrative Agent or any Lender protect, secure, perfect or insure any Lien
against any property subject thereto or exhaust any right or take any action
against the Borrower or any other Person or any collateral (it being the
intention of the Administrative Agent, the Lenders and each Guarantor that this
Guaranty is to be a guaranty of payment and not of collection). It shall not be
necessary for the Administrative Agent or any Lender, in order to enforce any
payment by any Guarantor hereunder, to institute suit or exhaust its rights and
remedies against the Borrower, any other Guarantor or any other Person,
including others liable to pay any Guaranteed Obligations, or to enforce its
rights against any security
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<PAGE>
ever given to secure payment thereof. Each Guarantor hereby expressly waives to
the maximum extent permitted by applicable law each and every right to which it
may be entitled by virtue of the suretyship laws of the State of Texas,
including any and all rights it may have pursuant to Rule 31, Texas Rules of
Civil Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code
and Chapter 34 of the Texas Business and Commerce Code. Each Guarantor hereby
waives marshaling of assets and liabilities, notice by the Administrative Agent
or any Lender of any indebtedness or liability to which such Lender applies or
may apply any amounts received by such Lender, and of the creation, advancement,
increase, existence, extension, renewal, rearrangement or modification of the
Guaranteed Obligations. Each Guarantor expressly waives, to the extent permitted
by applicable law, the benefit of any and all laws providing for exemption of
property from execution or for valuation and appraisal upon foreclosure.
SECTION 10.07. Full Force and Effect. This Guaranty is a continuing
guaranty and shall remain in full force and effect until all of the Obligations
of the Borrower under this Agreement and the other Loan Documents and all other
amounts payable under this Guaranty have been paid in full (after the
termination of the Commitments of the Lenders). All rights, remedies and powers
provided in this Guaranty may be exercised, and all waivers contained in this
Guaranty may be enforced, only to the extent that the exercise or enforcement
thereof does not violate any provisions of applicable law which may not be
waived.
SECTION 10.08. Termination of Guaranty. Upon the sale or other
disposition (by merger or otherwise) of a Guarantor (or all or substantially all
of such Guarantor's voting stock or its property and assets) to a Person other
than the Borrower or another Guarantor and pursuant to a transaction that is
otherwise in compliance with this Agreement, such Guarantor (unless it otherwise
remains a Subsidiary) shall be deemed released from its Guaranty and the related
Obligations set forth in this Agreement and the other Loan Documents to which
Guarantor is a party and all Liens on the capital stock of such Guarantor and
Liens on the property or assets created or existing under the Loan Documents
shall automatically and without further action be terminated and of no further
force and effect. The Administrative Agent and the Lenders agree to execute and
deliver any releases, termination statements, reassignments, discharges of
liens, pledges, security interests and amend any Loan Document or any other
document executed pursuant to the Agreement to evidence such termination;
provided no Default or Event of Default shall have occurred and be continuing
and provided further that any such termination shall occur only to the extent
that all Obligations of such Guarantor under all of its guarantees of and under
all of its pledges of assets or other security interests which secure, other
Indebtedness of the Borrower shall also terminate or be released upon such sale
or other disposition.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
BORROWER:
U.S. CONCRETE, INC., a Delaware corporation
By:/s/ Michael W. Harlan
----------------------------------------
Michael W. Harlan
Senior Vice President
Each of the undersigned by executing this Agreement acknowledges that it is
a Guarantor hereunder and, as such, is subject to and agrees to be bound by all
of the terms and conditions of Article X hereof.
GUARANTORS:
AFTM Corporation, a Michigan corporation
B.C.B.M. Transport, Inc., a California corporation
Baer Concrete, Inc., a New Jersey corporation
Bay Cities Building Materials Co., Inc., a California
corporation
Carrier Excavation and Foundation Company, a Delaware
corporation
Central Concrete Supply Co., Inc., a California
corporation
Concrete XIV Acquisition, Inc., a Delaware corporation
Concrete XV Acquisition, Inc., a Delaware corporation
Concrete XVIII Acquisition, Inc., a Delaware
corporation
Concrete XIX Acquisition, Inc., a Delaware corporation
Concrete XX Acquisition, Inc., a Delaware corporation
DYNA, Inc., a Delaware corporation
Fendt Transit Mix, Inc., a Michigan corporation
Hunter Equipment Company, a Michigan corporation
Olive Branch Ready Mix, Inc., a Delaware corporation
Opportunity Concrete Corporation , a District of
Columbia corporation
R.G. Evans/Associates
d/b/a/ Santa Rosa Cast Products Co., a California
corporation
Ready Mix Concrete Company of Knoxville, a Delaware
corporation
San Diego Precast Concrete, Inc., a Delaware
corporation
<PAGE>
USC GP, Inc., a Delaware corporation
Walker's Concrete, Inc., a California corporation
Western Concrete Products, Inc., a Delaware corporation
By:/s/ Michael W. Harlan
---------------------------------------
Michael W. Harlan
Vice President
USC Management Co., L.P.
By: USC GP, Inc.
By:/s/ Michael W. Harlan
-----------------------------------
Michael W. Harlan
Vice President
<PAGE>
ADMINISTRATIVE AGENT/LENDER:
---------------------------
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
By: /s/ James R. Dolphin
-----------------------------
Name: James R. Dolphin
---------------------------
Title: Senior Vice President
-------------------------
ADDRESS FOR NOTICE:
Chase Bank of Texas, National Association
712 Main Street
5th Floor East
Houston, Texas 77008
Telephone: (713) 216-5347
Telecopy: (713) 216-6004
Attn.: James R. Dolphin
<PAGE>
Syndication Agent/Lender:
------------------------
BANKERS TRUST COMPANY
By: /s/ Andrew Keith
----------------------------
Name: Andrew Keith
-------------------------
Title: Vice President
------------------------
ADDRESS FOR NOTICE:
BANKERS TRUST COMPANY
130 Liberty Street, 27th Floor
New York, New York 10006
Telephone: (212) 250-8617/9080
Telecopy: (212) 250-7218
Attn: Andrew Keith/Alex Bici
<PAGE>
DOCUMENTATION AGENT/LENDER:
--------------------------
FIRST UNION NATIONAL BANK
By:/s/ Tom Bohrer
---------------------
Name: Tom Bohrer
Title: Vice President
ADDRESS FOR NOTICE:
First Union National Bank
One First Union Center
301 South College Street, DC-5
Charlotte, North Carolina 28288-0737
Telephone: (704) 383-3544
Telecopy: (704) 374-4793
Attn.: David C. Hauglid
<PAGE>
Lender:
------
BANK OF AMERICA, N.A.
By:/s/ William B. Borus
----------------------------
William B. Borus
Vice President
ADDRESS FOR NOTICE:
BANK OF AMERICA, N.A.
700 Louisiana, 7th Floor
Houston, Texas 77002
Telephone: (713) 247-7756
Telecopy: (713) 247-7748
Attn: William Borus
<PAGE>
CO-MANAGING AGENT/LENDER:
------------------------
BANK ONE, TEXAS, NA
By:/s/ John J. Zollinger, IV
-----------------------------
John J. Zollinger, IV
Vice President
ADDRESS FOR NOTICE:
BANK ONE, TEXAS, NA
910 Travis Street, 7th Floor
Houston, Texas 77002
Telephone: (713) 751-6188
Telecopy: (713) 751-6777
Attn: John J. Zollinger, IV
<PAGE>
CO-MANAGING AGENT/LENDER:
------------------------
CREDIT LYONNAIS
NEW YORK BRANCH
By:/s/ Robert Ivosevich
----------------------
Name: Robert Ivosevich
Title: Senior Vice President
ADDRESS FOR NOTICE:
c/o CREDIT LYONNAIS
REPRESENTATIVE OFFICE
2200 Ross Avenue, Suite 4400W
Dallas, Texas 75201
Telephone: (214) 220-2303
Telecopy: (214) 220-2323
Attn: Blake Wright
<PAGE>
CO-MANAGING AGENT/LENDER:
------------------------
THE BANK OF NOVA SCOTIA
By:/s/ F. C. H. Ashby
--------------------
Name: F. C. H. Ashby
Title: Senior Manager Loan Operations
ADDRESS FOR NOTICE:
THE BANK OF NOVA SCOTIA
Atlanta Agency
600 Peachtree Street N.A.
Suite 2700
Atlanta, Georgia 30308
Telephone: (404) 877-1500
Telecopy: (404) 888-8998
Attn.: F.C.H. Ashby
with a copy to:
THE BANK OF NOVA SCOTIA
1100 Louisiana, Suite 3000
Houston, Texas 77002
Telephone: (713) 759-3430
Telecopy: (713) 752-2425
Attn.: Gregory E. George
<PAGE>
CO-MANAGING AGENT/LENDER:
------------------------
BRANCH BANKING & TRUST COMPANY
By:/s/ Cory Boyte
------------------
Name: Cory Boyte
Title: Vice President
ADDRESS FOR NOTICE:
BRANCH BANKING & TRUST
COMPANY
110 South Stratford Rd., Suite 301
Winston Salem, NC 27104
Telephone: (336) 733-3259
Telecopy: (336) 733-3254
Attn: Cory Boyte
<PAGE>
LENDER:
------
COMERICA BANK
By:/s/ Mark B. Grover
----------------------------
Mark B. Grover
Vice President
ADDRESS FOR NOTICE:
COMERICA BANK
4100 Spring Valley, Suite 900
Dallas, Texas 75244
Telephone: (972) 361-2545
Telecopy: (972) 361-2550
Attn: Mark B. Grover
<PAGE>
EXHIBIT 10.11
Donald C. Wayne
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of the
Effective Date (as defined herein) by and between U.S. Concrete, Inc., a
Delaware corporation (the "Company"), and Donald C. Wayne (the "Employee").
PRELIMINARY STATEMENT
In entering into this Agreement, the Company desires to provide the
Employee with substantial incentives to serve the Company without distraction or
concern over minimum compensation, benefits or tenure, to develop and implement
the Company's initial development plan and thereafter to assist in the
management of the Company's future growth and development and the maximization
of the returns to the Company's stockholders.
NOW, THEREFORE, in consideration of the foregoing and the mutual
provisions contained herein, and for other good and valuable consideration, the
parties hereto agree with each other as follows:
Section 1. Certain Defined Terms. (a) The following terms this
Agreement uses have the respective meanings this Section 1(a) assigns to them:
"Acquiring Person" means any Person who or which, together with all
its Affiliates and Associates, is or are the Beneficial Owner of 50.1% or
more of the shares of Common Stock then outstanding, but does not include
any Exempt Person; provided, however, that a person will not be or become
an Acquiring Person if that Person, together with its Affiliates and
Associates, becomes the Beneficial Owner of 50.1% or more of the shares of
Common Stock then outstanding solely as a result of a reduction in the
number of shares of Common Stock outstanding which results from the
Company's repurchase of Common Stock, unless and until such time as that
Person or any Affiliate or Associate of that Person purchases or otherwise
becomes the Beneficial Owner of additional shares of Common Stock
constituting 1% or more of the then outstanding shares of Common Stock or
any other Person (or Persons) who is (or collectively are) the Beneficial
Owner of shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock becomes an Affiliate or Associate of
that Person, unless, in either such case, that Person, together with all
its Affiliates and Associates, is not then the Beneficial Owner of 50.1% or
more of the shares of Common Stock then outstanding.
1
<PAGE>
"Active Status" means the Employee's Employment status from the
Effective Date to and including the first to occur of (i) the Part-time
Employment Effective Date or (ii) the Termination Date.
"Affiliate" has the meaning Exchange Act Rule 12b-2 specifies.
"Annual Cash Compensation" of the Employee for any Compensation Year
means the salary the Employee earns during that Compensation Year pursuant
to this Agreement, including all amounts of salary the Employee earns
during that Compensation Year and elects to (i) defer, whether pursuant to
a Compensation Plan intended to qualify as a plan under Code Section 401(k)
or otherwise, and (ii) forego pursuant to a Compensation Plan under which
the Employee may receive Common Stock or any other form of noncash
compensation in lieu of that salary. For purposes of this definition, any
form of noncash compensation will be valued at its fair market value at the
time that compensation is awarded, earned or paid, as the case may be.
"Associate" means, with reference to any Person, (i) any corporation,
firm, partnership, association, unincorporated organization or other entity
(other than the Company or a subsidiary of the Company) of which that
Person is an officer or general partner (or officer or general partner of a
general partner) or is, directly or indirectly, the Beneficial Owner of 10%
or more of any class of its equity securities, (ii) any trust or other
estate in which that Person has a substantial beneficial interest or for or
of which that Person serves as trustee or in a similar fiduciary capacity
and (iii) any relative or spouse of that Person, or any relative of that
spouse, who has the same home as that Person.
"Average Annual Cash Compensation" of the Employee means, as of the
Part-time Employment Effective Date, the average of (i) the Annual Cash
Compensation the Employee has earned in each of the two Compensation Years
next preceding that date or, if less than two Compensation Years have
occurred prior to that date and since the Effective Date, (ii) the Annual
Cash Compensation in each whole Compensation Year, if any, and, restated on
an annualized basis, the Annual Cash Compensation in each partial
Compensation Year (up to a maximum of two partial Compensation Years) next
preceding the Part-time Employment Effective Date.
"Base Salary" means: (i) prior to the Part-time Employment Effective
Date, the guaranteed minimum annual salary payable by the Company to the
Employee pursuant to Section 4(a); and (ii) on and after the Part-time
Employment Effective Date, the guaranteed minimum annual salary payable by
the Company to the Employee pursuant to Section 5(e).
A specified Person is deemed the "Beneficial Owner" of, and is deemed
to "beneficially own," any securities:
2
<PAGE>
(i) of which that Person or any of its Affiliates or Associates,
directly or indirectly, is the "beneficial owner" (as determined
pursuant to Exchange Act Rule 13d-3) or otherwise has the right to
vote or dispose of, including pursuant to any agreement, arrangement
or understanding (whether or not in writing); provided, however, that
a Person will not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (i) as a
result of an agreement, arrangement or understanding to vote that
security if that agreement, arrangement or understanding: (A) arises
solely from a revocable proxy or consent given in response to a public
(that is, not including a solicitation exempted by Exchange Act Rule
14a-2(b)(2)) proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the Exchange Act; and
(B) is not then reportable by that Person on Exchange Act Schedule 13D
(or any comparable or successor report);
(ii) which that Person or any of its Affiliates or Associates,
directly or indirectly, has the right or obligation to acquire
(whether that right or obligation is exercisable or effective
immediately or only after the passage of time or the occurrence of an
event) pursuant to any agreement, arrangement or understanding
(whether or not in writing) or on the exercise of conversion rights,
exchange rights, other rights, warrants or options, or otherwise;
provided, however, that a Person will not be deemed the "Beneficial
Owner" of, or to "beneficially own," securities tendered pursuant to a
tender or exchange offer made by that Person or any of its Affiliates
or Associates until those tendered securities are accepted for
purchase or exchange; or
(iii) which are beneficially owned, directly or indirectly, by
(A) any other Person (or any Affiliate or Associate thereof) with
which the specified Person or any of its Affiliates or Associates has
any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy or consent as described in the proviso
to subparagraph (i) of this definition) or disposing of any voting
securities of the Company or (B) any group (as Exchange Act Rule 13d-
5(b) uses that term) of which that specified Person is a member;
provided, however, that nothing in this definition will cause a Person
engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities that Person acquires
through its participation in good faith in a firm commitment underwriting
(including securities acquired pursuant to stabilizing transactions to
facilitate a public offering in accordance with Exchange Act Regulation M
or to cover overallotments created in connection with a public offering)
until the expiration of 40 days after the date of that acquisition. For
purposes of this definition, "voting" a security includes voting, granting
a proxy, acting by consent, making a request or demand relating to
corporate action
3
<PAGE>
(including calling a stockholder meeting) or otherwise giving an
authorization (within the meaning of Exchange Act Section 14(a)) in respect
of that security.
"Board" means the entire Board of Directors of the Company.
"Business Reason" for the Company's termination of the Employee's
Employment means any lawful reason other than Cause.
"Cause" for the Company's termination of the Employee's Employment
means: (i) the Employee's conviction of a felony crime (or the Employee's
entering of a plea of nolo contendere to any charge against him of a felony
crime) of any kind; or (ii) the Employee's continuing failure to
substantially perform his duties and responsibilities hereunder (except by
reason of the Employee's incapacity attributable to physical or mental
illness or injury) for a period of 20 days after the Required Board
Majority has delivered to the Employee a written demand for substantial
performance hereunder which specifically identifies the bases for the
Required Board Majority's determination that the Employee has not
substantially performed his duties and responsibilities hereunder (that
period being the "Grace Period"); provided, that for purposes of this
clause (ii), the Company will not have Cause to terminate the Employee's
Employment unless (A) at a meeting of the Board called and held following
the Grace Period in the city in which the Company's principal executive
offices are located of which the Employee was given not less than 10 days'
prior written notice and at which the Employee was afforded the opportunity
to be represented by counsel, appear and be heard, the Required Board
Majority adopts a written resolution which (1) sets forth the Required
Board Majority's determination that the failure of the Employee to
substantially perform his duties and responsibilities hereunder has (except
by reason of his incapacity attributable to physical or mental illness or
injury) continued past the Grace Period and (2) specifically identifies the
bases for that determination and (B) the Company, at the written direction
of the Required Board Majority, delivers to the Employee a Notice of
Termination for Cause to which a copy of that resolution, certified as
being true and correct by the secretary or any assistant secretary of the
Company, is attached. Cause of the type referred to in clause (i) of the
preceding sentence is a "Type I Cause," while Cause of the type referred to
in clause (ii) of the preceding sentence is a "Type II Cause."
"Change of Control" means the occurrence of any of the following
events that occurs after the IPO Closing Date: (i) any Person becomes an
Acquiring Person; (ii) at any time the then Continuing Directors cease to
constitute a majority of the members of the Board; (iii) a merger of the
Company with or into, or a sale by the Company of its properties and assets
substantially as an entirety to, another Person occurs and, immediately
after that occurrence, any Person (other than an Exempt Person), together
with all its Affiliates and Associates, is the Beneficial Owner of 50.1% or
more of the total voting power of the then outstanding Voting Shares of the
Person surviving that transaction (in the case of a merger or
consolidation) or the Person acquiring those properties and assets
substantially as an entirety.
4
<PAGE>
"Change of Control Payment" means at any time as of which the Employee
terminates his Employment by reason of a Change of Control, an amount equal
to the product of (i) one-twelfth of the Base Salary that would be paid for
the Compensation Year in which the Employee elects to terminate his
Employment pursuant to the provisions of Section 5(b)(i)(B) multiplied by
(ii) the greater of (A) the number of whole and partial calendar months in
the period beginning on the date the Employee so terminates his Employment
and ending on the last day of the Initial Term and (B) 12.
"Code" means the Internal Revenue Code of 1986.
"Common Stock" means the common stock of the Company.
"Company" means (i) U.S. Concrete, Inc., a Delaware corporation, and,
unless the context otherwise requires, (ii) any Person that assumes the
obligations of "the Company" hereunder, by operation of law, pursuant to
Section 9(c)(iii) or otherwise.
"Compensation Plan" means any compensation arrangement, plan, policy,
practice or program the Company or any subsidiary of the Company
establishes, maintains or sponsors, or to which the Company or any
subsidiary of the Company contributes, on behalf of two or more Executive
Officers (including, for this purpose, any member of the family of any
Executive Officer), (i) including (A) any "employee pension benefit plan"
(as defined in ERISA Section 3(2)) or other "employee benefit plan" (as
defined in ERISA Section 3(3)), (B) any other retirement or savings plan,
including any supplemental benefit arrangement relating to any plan
intended to be qualified under Code Section 401(a) or whose benefits the
Code or ERISA limits, (C) any "employee welfare plan" (as defined in ERISA
Section 3(1)), (D) any arrangement, plan, policy, practice or program
providing for severance pay, deferred compensation or insurance benefit and
(E) any Incentive Plan, but (ii) excluding any compensation arrangement,
plan, policy, practice or program to the extent it provides for annual base
salary.
"Compensation Committee" means the committee of the Board to which the
Board has delegated duties respecting the compensation of Executive
Officers and the administration of Incentive Plans, if any, intended to
qualify for the Rule 16b-3 exemption under the Exchange Act.
"Compensation Year" means a calendar year.
"Confidential Information" means, with respect to the Company or any
subsidiary of the Company, all trade secrets and other confidential,
nonpublic and/or proprietary information of that Person, including
information derived from reports, investigations, research, work in
progress, codes, marketing and sales programs, customer lists, records of
customer service requirements, capital expenditure projects, cost
summaries, pricing formulae, contract analyses, financial information,
projections, present and future business
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plans, confidential filings with any governmental authority and all other
confidential, nonpublic concepts, methods of doing business, ideas,
materials or information prepared or performed for, by or on behalf of that
Person.
"Continuing Director" means at any time any individual who then (i) is
a member of the Board and was a member of the Board as of the IPO Closing
Date or whose nomination for his first election, or that first election, to
the Board following that date was recommended or approved by a majority of
the then Continuing Directors (acting separately or as a part of any action
taken by the Board of any committee thereof) and (ii) is not an Acquiring
Person, an Affiliate or Associate of an Acquiring Person or a nominee or
representative of an Acquiring Person or of any such Affiliate or
Associate.
"CPI" means for any period the Consumer Price Index for All Urban
Consumers, All Items, 1982-84 = 100, U.S. City Average, as published by the
United States Department of Labor, Bureau of Labor Statistics (or its
successor) for that period.
"Disability" of the Employee means the Employee has been determined
(which determination will be final and binding on all Persons, absent
manifest error), as a result of a physical or mental illness or personal
injury he has incurred (including illness or injury resulting from any
substance abuse), by a Qualified Physician (who may be the doctor treating
or otherwise acting as the Employee's doctor in connection with the illness
or injury in question) selected by the Employee, or by the Company at its
expense, to be unable to perform, at the time of that determination and, in
all reasonable medical likelihood, indefinitely thereafter, the normal
duties then most recently assigned, under and in accordance with the terms
hereof, to the Employee while on Active Status; provided that the
determination whether the Employee has incurred a Disability will be made
by a majority of three Qualified Physicians, (i) one of whom the Employee
selects, (ii) one of whom the Company selects and (iii) the remaining one
of whom the Qualified Physicians the Employee and the Company have selected
pursuant to clauses (i) and (ii) of this proviso select and the fees and
expenses of whom the Employee and the Company will share and pay in equal
amounts, if: (A) the Employee has selected a Qualified Physician and the
Company has selected another Qualified Physician, in each case to determine
whether the Employee has incurred a Disability, and (B) those Qualified
Physicians disagree as to whether the Employee has incurred a Disability.
For purposes of this definition, if the Employee is unable by reason of
illness or injury to give an informed consent to the performance of the
treatment of that illness or injury, a Qualified Physician selected by any
Person who is authorized by applicable law to give that consent will be
deemed to have been selected by the Employee. Notwithstanding the
foregoing, if the Company maintains a disability insurance policy that
provides coverage for its Executive Officers generally, the term
"Disability," as used in this Agreement, shall mean the events and/or
circumstances under which the Employee will be entitled to receive
disability benefits under that insurance policy.
"Effective Date" has the meaning Section 9(l) specifies.
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"Employment" means the salaried employment of the Employee by the
Company or a subsidiary of the Company hereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Exchange Act" means the Securities Exchange Act of 1934.
"Executive Officer" means any of the chairman of the board, the chief
executive officer, the chief operating officer, the chief financial
officer, the president or any executive, regional or other group or senior
vice president of the Company.
"Exempt Person" means: (i) (A) the Company, any subsidiary of the
Company, any employee benefit plan of the Company or of any subsidiary of
the Company and (B) any Person organized, appointed or established by the
Company for or pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for employees of
the Company or any subsidiary of the Company; (ii) the Employee, any
Affiliate or Associate of the Employee or any group (as Exchange Act Rule
13d-5(b) uses that term) of which the Employee or any Affiliate or
Associate of the Employee is a member; (iii) Main Street Merchant Partners
II, L.P. or any of its controlling Affiliates; or (iv) any Person or group
(as Exchange Act Rule 13d-5(b) uses that term) a majority of the Continuing
Directors by resolution deems not to be an "Acquiring Person."
"Good Reason" for the Employee's termination of his Employment means:
(i) any violation hereof in any material respect by the Company; (ii)
either (A) a failure of the Company to continue in effect any Compensation
Plan in which the Employee was participating or (B) the taking of any
action by the Company which would adversely affect the Employee's
participation in or materially reduce the Employee's benefits under any
such Compensation Plan, unless (1) in the case of either subclause (A) or
(B) of this clause, there is substituted a comparable Compensation Plan
that is at least economically equivalent, in terms of the benefit offered
to the Employee, to the Compensation Plan being ended or in which the
Employee's participation is being adversely affected or the Employee's
benefits are being materially reduced or (2) in the case of that subclause
(A), the failure, or in the case of that subclause (B), the taking of
action, adversely affects Executive Officers generally or (iii) the
assignment to the Employee without the Employee's written consent of duties
inconsistent in any material respect with the Employee's then current
positions, authority, duties or responsibilities or any other action by the
Company which results in a material diminution in those positions,
authority, duties or responsibilities.
"Incentive Plan" means any compensation arrangement, plan, policy,
practice or program the Company or any subsidiary of the Company
establishes, maintains or sponsors, or to which the Company or any
subsidiary of the Company contributes, on behalf of at least two Executive
Officers and which provides for incentive, bonus or other performance-based
awards of cash, securities or the phantom equivalent of securities,
including any stock option,
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stock appreciation right and restricted stock plan, but excluding any plan
intended to qualify as a plan under any one or more of Code Sections
401(a), 401(k) or 423.
"Initial Term" has the meaning Section 3 specifies.
"IPO" means the first time a registration statement the Company has
filed under the Securities Act of 1933 and respecting an underwritten
primary offering by the Company of shares of Common Stock becomes effective
under that act and the Company issues and sells any of the shares
registered by that registration statement.
"IPO Closing Date" means the date on which the Company first receives
payment for the shares of Common Stock it sells in the IPO.
"Nonterminating Party" means the Employee or the Company, as the case
may be, to which the Terminating Party delivers a Notice of Termination.
"Notice of Termination" to or from the Employee means a written
notice that: (i) states that it is a "Notice of Termination" hereunder,
(ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances the Terminating Party claims to provide a basis for
termination of the Employee's Employment, and if the Termination Date is
other than the date of receipt of the notice, (iii) sets forth that
Termination Date.
"Outside Director" means at any time a member of the Board at that
time who is not then an employee of the Company or any subsidiary of the
Company.
"Part-time Employment Effective Date" means, (i) if the Company elects
pursuant to any applicable provision hereof to terminate the Employee's
Employment other than for Cause or (ii) if the Employee elects pursuant to
the applicable provision hereof to terminate his Employment for Good Reason
or by reason of his Disability, the date the Nonterminating Party receives
the Terminating Party's Notice of Termination.
"Part-time Employment Period" means the period of time which begins on
the Part-time Employment Effective Date and ends on the first to occur of
(i) the third anniversary of the Effective Date or, if later, the first
anniversary of the Part-time Employment Effective Date, (ii) the
termination by the Company of the Employee's Employment for Type I Cause or
(iii) the death of the Employee.
"Person" means any natural person, sole proprietorship, corporation,
partnership of any kind having a separate legal status, limited liability
company, business trust, unincorporated organization or association, mutual
company, joint stock company, joint venture, estate, trust, union or
employee organization or governmental authority.
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<PAGE>
"Qualified Physician" means, in the case of any determination whether
the Employee has sustained a Disability, a physician (i) holding an M.D.
degree from a medical school located in the United States, (ii)
specializing and board-certified in the treatment of the injury or illness
that has or may have caused that Disability and (iii) having admission
privileges to one or more hospitals located in the state in which the
Company then has its principal executive offices or in the state in which
the Employee then is domiciled.
"Required Board Majority" means at any time a majority of the members
of the Board at that time.
"Retirement" means termination of the Employee's Employment by reason
of the Employee's giving a Notice of Termination on or following the date
he has attained age 65, other than a Notice of Termination by reason of a
Change of Control pursuant to the provisions of Section 5(b)(i)(B).
"Terminating Party" means the Employee or the Company, as the case may
be, who or which terminates the Employee's Employment by means of a Notice
of Termination.
"Termination Date" means: (i) if the Employee's Employment terminates
by reason of the Employee's death, the date of that death; (ii) if the
Employee's Employment terminates by reason of the Employee's giving a
Notice of Termination following a Change of Control, the first date on
which the Company pays to the Employee in full the amounts owed to the
Employee pursuant to Section 5(b)(iii); (iii) if the Employee's Employment
terminates by reason of the Employee's giving a Notice of Termination
Without Good Reason or by reason of Retirement, the elapse of the 30th day
after the Company receives that notice; (iv) if the Company terminates the
Employee's Employment (A) at any time for Type I Cause or (B) at any time
prior to the Part-time Employment Effective Date for Type II Cause, the
date the Employee receives the Company's Notice of Termination for Cause;
and (v) if the Employee's Employment terminates for any other reason, at
the expiration of the Part-time Employment Period.
"Type I Cause" means Cause of the type to which clause (i) of the
first sentence of the definition of Cause herein refers.
"Type II Cause" means Cause of the type to which clause (ii) of the
first sentence of the definition of Cause herein refers.
"Voting Shares" means: (i) in the case of any corporation, stock of
that corporation of the class or classes having general voting power under
ordinary circumstances to elect a majority of that corporation's board of
directors; and (ii) in the case of any other entity, equity interests of
the class or classes having general voting power under ordinary
circumstances equivalent to the Voting Shares of a corporation.
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<PAGE>
"Without Good Reason" for the Employee's termination of his Employment
means that, at the time the Company receives the Employee's Notice of
Termination, the Employee was not entitled to terminate his Employment (i)
for a Good Reason, (ii) following a Change of Control or (iii) by reason of
his Disability or Retirement.
(b) Other Definitional Provisions. (i) Except as this Agreement
otherwise may specify, all references herein to any statute, including the Code,
ERISA and the Exchange Act, are references to that statute or any successor
statute, as the same may have been or be amended or supplemented from time to
time, and any rules or regulations promulgated thereunder, and all references
herein to any rule or regulation are references to that rule or regulation, or
any successor rule or regulation, as the same may be amended or supplemented
from time to time.
(ii) This Agreement uses the words "herein," "hereof" and "hereunder"
and words of similar import to refer to this Agreement as a whole and not to any
provision of this Agreement, and the word "Section" refers to a Section of this
Agreement unless otherwise specified.
(iii) Whenever the context so requires, the singular number
includes the plural and vice versa, and a reference to one gender includes the
other gender and the neuter.
(iv) The word "including" (and, with correlative meaning, the word
"include") means including, without limiting the generality of any description
preceding that word, and the words "shall" and "will" are used interchangeably
and have the same meaning.
Section 2. Employment. (a) On the terms and subject to the
conditions hereinafter set forth, and beginning as of the Effective Date and
continuing until the first to occur of the Part-time Employment Effective Date
or the Termination Date, (i) the Company will employ the Employee as Vice
President and General Counsel of the Company, (ii) the Employee will serve in
the Company's employ in that position and (iii) the Employee will perform such
duties, and have such powers, authority, functions, duties and responsibilities
for the Company and entities affiliated with the Company as are commensurate and
consistent with his employment in the position or positions to which clause (i)
of this sentence refers. The Employee also will have such additional powers,
authority, functions, duties and responsibilities as the chief executive officer
of the Company or his delegate may assign to the Employee from time to time;
provided that, without the Employee's written consent, those additional powers,
authority, functions, duties and responsibilities must not be inconsistent or
interfere with, or detract from, those herein vested in, or otherwise then being
performed for the Company by, the Employee.
(b) The Employee will not, at any time during his Employment, engage
in any other activities unless those activities do not interfere materially with
the Employee's duties and responsibilities to the Company at that time, except
that the Employee will be entitled, subject to the provisions of Section 7, (i)
to continue with such activities as the Employee has carried on prior to the
Effective Date, including making and managing his personal investments and
participating in
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other business or civic activities and (ii) to serve on corporate or other
business, civic or charitable boards or committees and trade association or
similar boards or committees.
Section 3. Term of Employment. Subject to the provisions of Section
5, the term of the Employee's Employment will be for an initial term of three
years (the "Initial Term"), provided that, beginning on the second anniversary
of the Effective Date, the term of the Employee's Employment will be for a
continually renewing term of one year commencing on that anniversary date and
renewing each day thereafter for an additional day without any further action by
either the Company or the Employee until an event has occurred as described in,
or one of the parties has made an appropriate election pursuant to, Section 5.
After the Termination Date has occurred and the Company has paid to the Employee
all the applicable amounts Section 5 provides the Company will pay as a result
of the termination of the Employee's Employment, including all amounts accruing
during the Part-time Employment Period, if any, this Agreement will terminate
and have no further force or effect, except that Sections 8, 9 and 10 will
survive that termination indefinitely and Section 7 will survive for the period
of time it specifies.
Section 4. Compensation. (a) Base Salary. A Base Salary will be
payable to the Employee by the Company as a guaranteed minimum annual amount
hereunder for each Compensation Year during the period from the Effective Date
to the first to occur of the Part-time Employment Effective Date or the
Termination Date. The Company will pay that Base Salary in the intervals
consistent with its normal payroll schedules, and that Base Salary will be
payable initially at the annual rate of $110,000 and will be increased (but not
decreased or adjusted other than as Section 5 provides) as follows:
(i) on the first and each subsequent anniversary of the Effective
Date, by the amount equal to the product of (A) the annual rate of that
Base Salary as in effect immediately prior to that anniversary multiplied
by (B) the percentage increase (if any) in the CPI for the 12-month period
immediately preceding that anniversary; and
(ii) on the first and each subsequent anniversary of the Effective
Date or at any other time, by such additional amount (if any) the
Compensation Committee in its sole discretion may determine or approve, as
evidenced by the written minutes or records of the Compensation Committee
and its written notices of those determinations or approvals to the
Employee.
Effective as of the Part-time Employment Effective Date, the Base Salary
theretofore in effect will be adjusted as Section 5(e) provides.
(b) Other Compensation. The Employee will be entitled to participate
in all Compensation Plans from time to time in effect while he remains on Active
Status, regardless of whether the Employee is an Executive Officer. All awards
to the Employee under all Incentive Plans will take into account the Employee's
positions with and duties and responsibilities to the Company and its
subsidiaries.
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Section 5. Termination of Employment and Its Consequences. (a)
Termination by the Company. (i) The Company will be entitled, if acting at the
direction of the Required Board Majority, to terminate the Employee's Employment
(A) at any time for Type I Cause or (B) at any time prior to the Part-time
Employment Effective Date for (1) Type II Cause or (2) any Business Reason. The
Company's termination of the Employee's Employment for Cause will be effective
on the date the Company delivers a Notice of Termination for Cause to the
Employee pursuant to this Section 5(a)(i) (together, in the case of a
termination for Type II Cause, with the certified resolution to which clause
(ii) of the definition herein of Cause refers), while the Company's termination
of the Employee's Employment for a Business Reason will be effective on the
later of (A) the third anniversary of the Effective Date and (B) first
anniversary of the date the Company delivers a Notice of Termination for a
Business Reason to the Employee pursuant to this Section 5(a)(i).
(ii) If the Company terminates the Employee's Employment for Cause,
the Company promptly thereafter, and in any event within five business days
thereafter, will pay the Employee his Base Salary to and including the
Termination Date and the amount of all compensation the Employee has previously
deferred (together with any accrued interest or earnings thereon), in each case
to the extent not theretofore paid, and, when that payment is made, the Company
will, notwithstanding Section 3, have no further or other obligations hereunder
to the Employee.
(iii) If the Company terminates the Employee's Employment for a
Business Reason, the respective rights and obligations of the Company and the
Employee during the Part-time Employment Period will be as Section 5(e) sets
forth.
(b) Termination by the Employee. (i) The Employee will be entitled
to terminate his Employment (A) for a Good Reason at any time within 180 days
after the facts or circumstances constituting that Good Reason first exist and
are known to the Employee, (B) by reason of a Change of Control at any time
within 365 days after that Change of Control occurs (provided, however, that the
Employee will not be entitled to terminate his Employment by reason of that
Change of Control if it occurs (1) after the Company's receipt of the Employee's
Notice of Termination Without Good Reason, (2) after (a) the receipt by the
Nonterminating Party of the Terminating Party's Notice of Termination pursuant
to Section 5(c) or (b) the Employee's receipt of the Company's Notice of
Termination for a Business Reason (other than in connection with that Change of
Control) or (3) more than 90 days after the Company's receipt of the Employee's
Notice of Termination for Good Reason), (C) Without Good Reason at any time or
(D) by reason of his Retirement. The Employee's termination of his Employment
for Good Reason will be effective on the later of (A) the third anniversary of
the Effective Date and (B) the first anniversary of the date the Employee
delivers a Notice of Termination for Good Reason to the Company. The Employee's
termination of his Employment by reason of a Change of Control will be effective
on the first date on which the Change of Control Payment shall have been paid in
full to the Employee. The Employee's termination of his Employment Without Good
Reason or by reason of his Retirement will be
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<PAGE>
effective on the 30th day following the Employee's delivery of a Notice of
Termination Without Good Reason or by reason of his Retirement.
(ii) If the Employee terminates his Employment for Good Reason, the
respective rights and obligations of the Company and the Employee during the
Part-time Employment Period will be as Section 5(e) sets forth.
(iii) If the Employee terminates his Employment by reason of a
Change of Control, the Company will pay to the Employee in a cash lump sum
within 10 business days after the date the Company receives the Employee's
Notice of Termination by reason of that Change of Control the amount equal to
the sum of (A) the portion of the Base Salary to and including the Termination
Date which has not yet been paid, (B) all compensation the Employee has
previously deferred (together with any accrued interest and earnings thereon)
which has not yet been paid, (C) any accrued but unpaid vacation pay and (D) the
Change of Control Payment.
(iv) If the Employee terminates his Employment Without Good Reason or
by reason of his Retirement, the Company will pay to the Employee, in a cash
lump sum within 10 business days after the Termination Date, the amount equal to
the sum of (A) the portion of the Base Salary to and including the Termination
Date which has not yet been paid, (B) all compensation the Employee has
previously deferred (together with any accrued interest and earnings thereon)
which has not yet been paid and (C) any accrued but unpaid vacation pay.
(c) Termination by Reason of Disability. If the Employee incurs any
Disability while on Active Status, either the Employee or the Company may
terminate the Employee's Employment effective on the first anniversary of the
date the Nonterminating Party receives a Notice of Termination from the
Terminating Party pursuant to this Section 5(c). If the Employee's Employment
terminates by reason of the Employee's Disability, the respective rights and
obligations of the Company and the Employee during the Part-time Employment
Period will be as Section 5(e) sets forth.
(d) Termination of Employment by Death. The Employee's Employment
will terminate automatically at the time of his death. If the Employee's
Employment terminates by reason of the Employee's death, the Company will pay to
the Person the Employee has designated in a written notice delivered to the
Company as his beneficiary entitled to that payment, if any, or to the
Employee's estate, as applicable, in a cash lump sum within 30 days after the
Termination Date, the amount equal to the sum of (i) the portion of the Base
Salary through the end of the month in which the Termination Date occurs which
has not yet been paid, (ii) all compensation the Employee has previously
deferred (together with any accrued interest or earnings thereon) which has not
yet been paid, (iii) any accrued but unpaid vacation pay (if the Employee dies
while on Active Status) and (iv) (A) if the Employee dies while on Active Status
or during the Part-time Employment Period (other than during the last 12 months
of the Part-time Employment Period), an amount equal to the Base Salary being
paid for the Compensation Year in which he dies or (B) if the Employee dies
during the last 12 months of the Part-time Employment Period, the product of (1)
one-twelfth
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of the Base Salary being paid for the Compensation Year in which the Employee
dies multiplied by (2) the number of whole and partial calendar months in the
period beginning with the first calendar month after the calendar month in which
he dies and ending with the last calendar month in which the Termination Date
would have occurred if the Employee's Employment were to have continued to the
end of the Part-time Employment Period. For purposes of this Section 5(d), if
the anniversary of the Effective Date in the Compensation Year in which the
Employee dies has not occurred on or before the Termination Date, the Base
Salary for that Compensation Year will be calculated on the assumption that no
increase in the amount thereof would be made effective as of that anniversary
pursuant to Section 4(a) or 5(e)(i), as applicable.
(e) Employee's Rights During the Part-time Employment Period. (i)
The Company will pay the Employee a Base Salary, in the intervals consistent
with its normal payroll schedules, during the Part-time Employment Period in the
amounts determined from time to time as follows: Effective as of the Part-time
Employment Effective Date, the Base Salary payable by the Company to the
Employee for the Part-time Employment Period will be as follows:
(A) (1) if the Part-time Employment Effective Date occurs as a
result of the receipt by the Nonterminating Party of a Notice of
Termination for a Business Reason or a Notice of Termination for Good
Reason, the amount equal to the Average Annual Cash Compensation of the
Employee determined as of the Part-time Employment Effective Date; and (2)
if the Part-time Employment Effective Date occurs as a result of the
receipt by the Nonterminating Party of a Notice of Termination for
Disability, the amount equal to the amount by which (a) the Average Annual
Cash Compensation of the Employee determined as of the Part-time Employment
Effective Date exceeds (b) the aggregate amount of periodic payments the
Employee receives during the 12 months beginning on that date under
Compensation Plans then in effect and providing for those payments to the
Employee solely as a result or on account of disability; and
(B) on each anniversary of the Effective Date which occurs during the
Part-time Employment Period, if any, the Base Salary payable pursuant to
this Section 5(e) will be increased by the amount equal to the product of
(1) the annual rate of that Base Salary as in effect immediately prior to
that anniversary multiplied by (2) the percentage increase (if any) in the
CPI for the 12-month period immediately preceding that anniversary.
(ii) The Employee will continue to participate in all Compensation
Plans from time to time in effect during the Part-time Employment Period,
provided, however, that: (A) the Employee will not be entitled to receive any
new award or grant under any Incentive Plan, and any such new award or grant
will be at the sole discretion of the Compensation Committee or the Board, as
applicable, with respect to that Incentive Plan; and (B) if (1) the terms of any
such plan preclude the Employee's continued participation therein or (2) his
continued participation in any such plan would or reasonably could be expected
to disqualify that plan under the Code, the Employee will not be entitled to
participate in that plan, but the Company instead will provide the Employee with
the after-tax equivalent of the benefits that would have been provided to the
Employee were he a
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participant in that plan. For purposes of determining eligibility (including
years of service) for retirement benefits payable under any Compensation Plan,
the Employee will be deemed to have retired at the Termination Date.
(iii) Subject to the provisions of Section 7, the Employee will not
be (A) prevented from accepting other employment or engaging in (and devoting
substantially all his time to) other business activities or (B) required to
perform any regular duties for the Company (except to provide such services
consistent with the Employee's educational background, experience and prior
positions with the Company as may be acceptable to the Employee) or to seek or
accept additional employment with any other Person during the Part-time
Employment Period. If the Employee, at his discretion, accepts any such
additional employment or engages in any such other business activity, there will
be no offset, reduction or effect on any rights, benefits or payments to which
the Employee is entitled pursuant to this Agreement. Furthermore, the Employee
will have no obligation to account for, remit, rebate or pay over to the Company
any compensation or other amounts he earns or derives in connection with such
additional employment or business activity. The Employee will, however, make
himself generally available for special projects or to consult with the Company
and its employees at such times and at such places as the Company may reasonably
request on terms that are reasonably satisfactory to the Employee and consistent
with the Employee's regular duties and responsibilities in the course of his
then new occupation or other employment, if any.
(f) Return of Property. On termination of the Employee's
Employment, however brought about, the Employee (or his representatives) will
promptly deliver and return to the Company all the Company's property that is in
the possession or under the control of the Employee (or those representatives).
(g) Stock Options. Notwithstanding any other provision of this
Agreement to the contrary: (i) except in the case of a termination of the
Employee's Employment by the Company for Cause or by the Employee (A) Without
Good Reason at any time while on Active Status or (B) by reason of a Change of
Control pursuant to the provisions of Section 5(b)(i)(B), all stock options
previously granted to the Employee under Incentive Plans that have not been
exercised and are outstanding as of the time immediately prior to the
Termination Date will, notwithstanding any contrary provision of any applicable
Incentive Plan, remain outstanding (and continue to become exercisable pursuant
to their respective terms) until exercised or the expiration of their term,
whichever is earlier; (ii) in the case of a termination of the Employee's
Employment by the Employee Without Good Reason at any time while on Active
Status, all stock options previously granted to the Employee under Incentive
Plans that have not been exercised and are outstanding and exercisable as of the
time immediately prior to the Termination Date will, notwithstanding any
contrary provision of any applicable Incentive Plan, remain outstanding and
continue to be exercisable until exercised or the date that is 90 days after the
Termination Date, whichever is earlier, whereupon, those options will expire;
(iii) in the case of a termination of the Employee's Employment by the Employee
by reason of a Change of Control pursuant to the provisions of Section
5(b)(i)(B), all stock options previously granted to the Employee under Incentive
Plans that
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have not been exercised and are outstanding as of the time immediately prior to
the Termination Date will, not withstanding any contrary provision of any
applicable Incentive Plan, be exercisable on and after the Termination Date
(whether or not previously exercisable) and remain outstanding until exercised
or the expiration of their term, whichever is earlier (provided, however, that
if the Change of Control results from a transaction that the Company intends (as
reflected in the definitive documentation relating to that transaction) to
qualify for "pooling of interests" accounting treatment under generally accepted
accounting principles as then in effect and the application of this clause (iii)
would disqualify the transaction from that accounting treatment, then this
clause (iii) will not be applicable and the provisions of clause (i) above
instead will apply); and (iv) in the case of a termination of the Employee's
Employment by the Company for Cause at any time while the Employee is on Active
Status, all stock options previously granted to the Employee under Incentive
Plans will expire on the Termination Date. No stock option previously granted to
the Employee under any Incentive Plan will, notwithstanding any contrary
provision of that Incentive Plan, expire or fail to become exercisable or, if
exercisable, cease to be exercisable by reason of either (i) the occurrence of
the Employee's Part-time Employment Effective Date or (ii) the Employee's
service during the Part-time Employment Period being less than full-time.
(h) No Constructive Termination. Except in the case of a termination
of the Employee's Employment which results from the Employee's death, no
termination of the Employee's Employment will be effective for any purpose
hereunder unless the Terminating Party delivers a Notice of Termination to the
Nonterminating Party. An offer by the Employee to resign from an office or the
Board or otherwise to step aside will not, whether in writing or oral,
constitute a Notice of Termination by the Employee.
Section 6. Other Employee Rights (a) Paid Vacation and Holidays.
The Employee will be entitled to not less than four weeks of annual vacation and
all legal holidays during which times his applicable compensation will be paid
in full.
(b) Business Expenses. The Employee is authorized to incur, and will
be entitled to receive prompt reimbursement for, all reasonable expenses the
Employee incurs in performing his duties and carrying out his responsibilities
hereunder, including (i) business meals and entertainment and travel expenses
and (ii) mileage reimbursements in accordance with the Company's automobile
expense reimbursement policy as in effect at the time those expenses are
incurred, provided that the Employee complies with the applicable policies,
practices and procedures of the Company relating to the submission of expense
reports, receipts or similar documentation of those expenses. The Company will
either pay directly or promptly reimburse the Employee for those expenses not
more than 30 days after the submission to the Company by the Employee from time
to time of an itemized accounting of those expenses for which direct payment or
reimbursement is sought. Unpaid reimbursements after that 30-day period will
accrue interest in accordance with Section 9(i).
(c) No Forced Relocation. The Employee will not be required to move
his principal place of residence from the metropolitan Houston area or to
perform regular duties that
16
<PAGE>
could reasonably be expected to require either such move against his wish or his
spending amounts of time each week outside the metropolitan Houston area which
are unreasonable in relation to the duties and responsibilities of the Employee
hereunder, and the Company agrees that, if it requests the Employee to make such
a move and the Employee declines that request, that declination will not
constitute any basis for a determination that Type II Cause exists.
Section 7. Covenant Not To Compete; Non-Solicitation. (a) The
Employee recognizes that in each of the highly competitive businesses in which
the Company will be engaged following the Effective Date, personal contact is of
primary importance in securing new customers and in retaining the accounts and
goodwill of present customers and protecting the business of the Company. The
Employee, therefore, agrees that during the term of his Employment and for a
period of three years after the Termination Date, he will not, within 75 miles
of each geographic location in which he has devoted substantial attention at
such location to the material business interests of the Company (the "Relevant
Geographic Areas"): (i) accept employment or render service to any Person that
is engaged in a business directly competitive with the business then engaged in
by the Company or (ii) enter into or take part in or lend his name, counsel or
assistance to any business, either as proprietor, principal, investor, partner,
director, officer, employee, consultant, advisor, agent, independent contractor,
or in any other capacity whatsoever, for any purpose that would be competitive
with the business of the Company (all of the foregoing activities are
collectively referred to as the "Prohibited Activity"). Notwithstanding the
foregoing, the Employee may own and hold as a passive investment up to 5% of the
outstanding shares of any class of capital stock (or other equity interest) in a
competing corporation, limited liability company, limited partnership or other
entity if that class of capital stock (or other equity interest) is listed on a
national stock exchange or included in the Nasdaq National Market.
(b) The Employee agrees that he will not, during the period
beginning on the date hereof and ending on the third anniversary of the
Termination Date, directly or indirectly, for any reason, for his own account or
on behalf of or together with any other person, entity or organization:
(i) call on or otherwise solicit any natural person who is at that
time employed by the Company or any subsidiary of the Company in any
capacity with the purpose or intent of attracting that person from the
employ of the Company or any of its subsidiaries;
(ii) call on, solicit or perform services for, either directly or
indirectly, any person, entity or organization that at that time is, or at
any time within two years prior to that time was, a customer of the Company
or any of its subsidiaries, (A) for the purpose of soliciting business or
selling any product or service in competition with the Company or any of
its subsidiaries and (B) with the knowledge of that customer relationship;
or
(iii) call on or otherwise solicit any USC Acquisition Candidate or
the owners of any USC Acquisition Candidate for the purpose of acquiring
that USC Acquisition Candidate or arranging the acquisition of that USC
Acquisition Candidate by any person, entity or organization other than the
Company or any of its subsidiaries (for these purposes,
17
<PAGE>
"USC Acquisition Candidate" means any prospective acquisition candidate
engaged in the ready-mixed concrete industry (A) which the Company has
called on in connection with the possible acquisition of that candidate or
(B) of which the Company has made an acquisition analysis).
(c) In addition to all other remedies at law or in equity which the
Company may have for breach of a provision of this Section 7 by the Employee, it
is agreed that in the event of any breach or attempted or threatened breach of
any such provision, the Company will be entitled, on application to any court of
proper jurisdiction, to a temporary restraining order or preliminary injunction
(without the necessity of (i) proving irreparable harm, (ii) establishing that
monetary damages are inadequate or (iii) posting any bond with respect thereto)
against the Employee prohibiting such breach or attempted or threatened breach
by proving only the existence of such breach or attempted or threatened breach.
If the provisions of this Section 7 should ever be deemed to exceed the time,
geographic or occupational limitations applicable law permits, the Employee and
the Company agree that those provisions will be and are hereby reformed to the
maximum time, geographic or occupational limitations applicable law permits.
(d) The covenants of the Employee in this Section 7 are independent of
and severable from every other provision of this Agreement; and the breach of
any other provision of this Agreement by the Company or the breach by the
Company of any other agreement between the Company and the Employee will not
affect the validity of the provisions of this Section 7 or constitute a defense
of the Employee in any suit or action brought by the Company to enforce any of
the provisions of this Section 7 or seek any relief for the breach thereof by
Employee.
(e) The Employee acknowledges, agrees and stipulates that: (i) the
terms and provisions of this Agreement are reasonable and constitute an
otherwise enforceable agreement to or of which the terms and provisions of this
Section 7 are ancillary or a part; (ii) the consideration provided by the
Company under this Agreement is not illusory; and (iii) the consideration given
by the Company under this Agreement, including the provision by the Company of
Confidential Information to the Employee as Section 8 contemplates, gives rise
to the Company's interest in restraining and prohibiting the Employee from
engaging in the Prohibited Activity within the Relevant Geographic Areas as this
Section 7 provides and the Employee's covenant not to engage in the Prohibited
Activity within the Relevant Geographic Areas pursuant to this Section 7 is
designed to enforce the Employee's consideration (or return promises) including
the Employee's promise in Section 8 to not disclose Confidential Information.
Section 8. Confidential Information. The Employee acknowledges that
he has had and will continue to have access to various Confidential Information.
The Employee agrees, therefore, that he will not at any time, either while
employed by the Company or afterwards, make any independent use of, or disclose
to any other person (except as authorized by the Company) any Confidential
Information. Confidential Information will not include (a) information that
becomes known to the public generally through no fault of the Employee, (b)
information required to be disclosed by law or legal process or the order of any
governmental authority under color of law,
18
<PAGE>
provided, that prior to disclosing any information pursuant to this clause (b),
the Employee will give prior written notice thereof to the Company and provide
the Company with the opportunity to contest that requirement, or (c) the
Employee reasonably believes that disclosure is required in connection with the
defense of a lawsuit against the Employee. In the event of a breach or
threatened breach by the Employee of the provisions of this Section 8 with
respect to any Confidential Information, the Company will be entitled to a
temporary restraining order and a preliminary and permanent injunction (without
the necessity of posting any bond in connection therewith) restraining the
Employee from disclosing, in whole or in part, that Confidential Information.
Nothing herein will be construed as prohibiting the Company from pursuing any
other available remedy for that breach or threatened breach, including the
recovery of damages.
Section 9. General Provisions. (a) Severability. If any one or more
of the provisions of this Agreement shall, for any reason, be held or found by
final judgment of a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, (i) that invalidity, illegality or
unenforceability will not affect any other provisions of this Agreement and (ii)
this Agreement will be construed as if that invalid, illegal or unenforceable
provision had never been contained herein.
(b) Nonexclusivity of Rights. Nothing herein will prevent or limit
the Employee's continuing or future participation in any Compensation Plan or,
subject to Section 9(k), limit or otherwise affect such rights as the Employee
may have under any other contract or agreement with the Company. Vested
benefits and other amounts to which the Employee is or becomes entitled to
receive under any Compensation Plan on or after the Termination Date will be
payable in accordance with that Compensation Plan, except as expressly modified
hereby.
(c) Successors. (i) This Agreement is personal to the Employee and,
without the prior written consent of the Company, is not assignable by the
Employee otherwise than by will or the laws of descent and distribution. This
Agreement will inure to the benefit and be enforceable by the Employee's legal
representatives (including any duly appointed guardian) acting in their
capacities as such pursuant to applicable law.
(ii) This Agreement will inure to the benefit of and be binding on
the Company and its successors and assigns. If, at any time prior to the
Termination Date, the Employee is not an Executive Officer, the Company will be
entitled to assign all its obligations hereunder to a subsidiary of the Company
and treat the Employee as an employee of that subsidiary for all purposes, but
the Company will remain liable for the full, timely performance of all the
obligations so assigned as if the assignment had not been made.
(iii) The Company will require any successor (direct or indirect
and whether by purchase, merger, consolidation, share exchange or otherwise) to
the business, properties and assets of the Company substantially as an entirety
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent the Company would have been required to perform it had no
such succession taken place.
19
<PAGE>
(d) Amendments; Waivers. This Agreement may not be amended or
modified except (i) by a written agreement executed and delivered by the parties
hereto or their respective successors or legal representatives acting in their
capacities as such pursuant to applicable law or (ii) pursuant to the provisions
of Section 7(c) or 9(a).
(e) Notices. All notices and other communications required or
permitted under this Agreement must be in writing and will be deemed delivered
and received (i) if personally delivered or if delivered by telex, telegram,
facsimile or courier service, when actually received by the party to whom the
notice or communication is sent or (ii) if delivered by mail (whether actually
received or not), at the close of business on the third business day (in the
location where the Company then has its principal executive offices) next
following the day when placed in the mail, postage prepaid, certified or
registered, addressed to the appropriate party or parties at the address of that
party set forth below (or at such other address as that party may designate by
written notice to the other party in accordance herewith):
(A) if to the Employee, addressed as follows:
Donald C. Wayne
1360 Post Oak Blvd., Suite 800
Houston, Texas 77065
(B) if to the Company, addressed as follows:
U.S. Concrete, Inc.
1360 Post Oak Blvd., Suite 800
Houston, Texas 77065
Attn: Corporate Secretary
Facsimile: (713) 350-6001
(f) No Waiver. The failure of the Company or the Employee to insist
on strict compliance with any provision of, or to assert any right under, this
Agreement (including the right of the Employee to terminate his Employment for
Good Reason or by reason of a Change of Control) will not be deemed a waiver of
that provision or of any other provision of or right under this Agreement.
(G) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ANY
PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD CAUSE THE LAWS OF ANY OTHER
JURISDICTION TO APPLY.
(h) Headings. The headings of Sections and subsections hereof are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
20
<PAGE>
(i) Interest. If any amounts required to be paid or reimbursed to the
Employee hereunder are not so paid or reimbursed at the times provided herein
(including amounts required to be paid by the Company pursuant to Sections 6 and
10), those amounts will accrue interest compounded daily at the annual
percentage rate equal to the interest rate shown as the Prime Rate in the Money
Rates column in the then most recently published edition of The Wall Street
Journal, or, if that rate is not then so published on at least a weekly basis,
the interest rate announced by The Chase Manhattan Bank (or its successor), from
time to time, as its Base Rate (or prime lending rate), from the date those
amounts were required to have been paid or reimbursed to the Employee until
those amounts are finally and fully paid or reimbursed; provided, however, that
in no event will the amount of interest contracted for, charged or received
hereunder exceed the maximum non-usurious amount of interest allowed by
applicable law.
(j) Tax Withholding. Notwithstanding any other provision hereof, the
Company may withhold from amounts payable hereunder all Federal, state, local
and foreign taxes that applicable laws or regulations require it to withhold.
(k) Entire Agreement. The Company and the Employee agree that this
Agreement supersedes all prior written and oral agreements between them with
respect to the employment of the Employee by the Company, but has no effect on
any Compensation Plan in which the Employee was participating prior to the
Effective Date.
(l) Effective Date. This Agreement will become effective on the IPO
Closing Date (the "Effective Date").
Section 10. Payment of Expenses; Resolution of Disputes. (a) Payment
of Expenses. If at any time during the term hereof or afterwards: (i) there
should exist a dispute or conflict between the Employee and the Company or
another Person as to the validity, interpretation or application of any term or
condition hereof, or as to the Employee's entitlement to any benefit intended to
be bestowed hereby, which is not resolved to the satisfaction of the Employee,
(ii) the Employee must (A) defend the validity of this Agreement or (B) contest
any determination by the Company concerning the amounts payable (or
reimbursable) by the Company to the Employee or (iii) the Employee must prepare
responses to an Internal Revenue Service ("IRS") audit of, or otherwise defend,
his personal income tax return for any year the subject of any such audit, or an
adverse determination, administrative proceedings or civil litigation arising
therefrom that is occasioned by or related to an audit by the IRS of the
Company's income tax returns, then the Company hereby unconditionally agrees:
(1) on written demand of the Company by the Employee, to provide sums sufficient
to advance and pay on a current basis (either by paying directly or by
reimbursing the Employee) not less than 30 days after a written request therefor
is submitted by the Employee, the Employee's reasonable out-of-pocket costs and
expenses (including reasonable attorney's fees) the Employee incurs in
connection with any such matter; (2) the Employee will be entitled, on
application to any court of competent jurisdiction, to the entry of a mandatory
injunction without the necessity of posting any bond with respect thereto which
compels the Company to pay or advance such costs and expenses on a current
basis; and (3) the Company's obligations under this
21
<PAGE>
Section 10(a) will not be affected if the Employee is not the prevailing party
in the final resolution of any such matter.
(b) Resolution of Disputes. If a dispute of any type referred to in
Section 10(a) arises between the Company and the Employee and they fail to
resolve that dispute by direct negotiation, the Company and the Employee agree
that the next step taken to resolve that dispute, prior to either party
initiating any litigation to resolve that dispute (not including any litigation
that may be required to enforce the Employee's rights to the payment or
advancement of expenses and legal fees on a current basis pursuant to Section
10(a)) will be to submit the dispute to an agreed Alternative Dispute Resolution
("ADR") process, to which process the parties will strive diligently in good
faith to agree within 10 business days after either party has given written
notice to the other party that it is unable to concur in the other party's final
proposed negotiated resolution of the dispute. If the Company and the Employee
are unable to agree in writing to an acceptable ADR process within that 10-
business day period, then the parties will submit to a mandatory ADR process by
making joint application to the then Chief United States Federal District Judge
in the federal district in which the Company then has its principal executive
offices for the selection of an ADR process for the parties. The parties will
diligently in good faith participate in the ADR process that judge chooses. If
the parties are unable to resolve their dispute after diligent good faith
participation in the ADR process, then either party will be free to initiate
such litigation as that party deems appropriate under the circumstances. Under
no circumstances will the Employee be obligated to pay for the cost of any ADR
process or to pay or reimburse the Company for any attorneys' fees, costs or
other expenses the Company incurs in connection with any process undertaken by
the Employee to resolve disputes under this Agreement. This Section 10 uses the
term "Employee" to include, if the Employee has died or become incompetent as a
matter of applicable law, the Employee's legal representative acting in his
capacity as such under applicable law.
22
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year indicated above.
U.S. CONCRETE, INC.
By: /s/ Eugene P. Martineau
-------------------------------------
Eugene P. Martineau
President and Chief Executive Officer
EMPLOYEE
/s/ Donald C. Wayne
-----------------------------------------
Donald C. Wayne
23
<PAGE>
EXHIBIT 21
Subsidiaries of U.S. Concrete, Inc.
AFTM Corporation
Atlas Concrete, Inc.
Atlas-Tuck Concrete, Inc.
B.C.B.M. Transport, Inc.
Baer Concrete, Inc.
Bay Cities Building Materials Co., Inc.
Beall Concrete Enterprises, Ltd.
Beall Industries, Inc.
Beall Investment Corporation, Inc.
Beall Management Inc.
Beall Trucking, Inc.
Carrier Excavation and Foundation Company
Central Concrete Supply Co., Inc.
Corden, Inc.
Cornillie Fuel & Supply, Inc.
Cornillie Leasing, Inc.
Dencor, Inc.
DYNA, Inc.
Fendt Transit Mix, Inc.
Hunter Equipment Company
Olive Branch Ready Mix, Inc.
Opportunity Concrete Corporation
R.G. Evans/Associates d/b/a Santa Rosa Cast Products Co.
Ready Mix Concrete Company of Knoxville
San Diego Precast Concrete, Inc.
Stancon Concrete Enterprises, Ltd.
Stancon Investment Corporation, Inc.
Stancon Management, Inc.
Stancon, Inc. d/b/a Butler Ready Mix Concrete
Stokes Transit-Mix, Inc.
USC GP, Inc.
USC LP, Inc.
USC Management Co., L.P.
Walker's Concrete, Inc.
Western Concrete Products, Inc.
1
<PAGE>
EXHIBIT 23
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated March 10, 2000 included in this Form 10-K into
U.S. Concrete's previously filed Registration Statement on Form S-8 (File No.
333-83273).
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Houston, Texas
March 29, 2000
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<PAGE>
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 627
<SECURITIES> 0
<RECEIVABLES> 45,581
<ALLOWANCES> 730
<INVENTORY> 4,351
<CURRENT-ASSETS> 52,317
<PP&E> 53,949
<DEPRECIATION> 11,908
<TOTAL-ASSETS> 212,734
<CURRENT-LIABILITIES> 37,739
<BONDS> 57,235
0
0
<COMMON> 19
<OTHER-SE> 110,774
<TOTAL-LIABILITY-AND-EQUITY> 212,734
<SALES> 167,912
<TOTAL-REVENUES> 167,912
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<INCOME-TAX> 7,658
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