EXHIBIT 2.16
ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
by and among
U.S. CONCRETE, INC.,
CONCRETE XXIV ACQUISITION, INC.,
STANCON INC.
AND
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ AND ▇▇▇▇ ▇▇▇▇▇
Dated as of March 2, 2000
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
▇▇▇▇▇▇ Ready Mix Concrete, a Texas corporation, including its subsidiaries set
forth on Schedule 5.04 (the "Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ (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, ▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, 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,
10
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
11
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
12
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
13
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
14
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
15
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.
16
(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,
17
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
18
"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
19
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.
20
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
21
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;
22
(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
23
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
24
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
25
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.
26
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
27
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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, ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, 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.
28
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.
29
(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
31
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
32
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
33
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) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 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) ▇▇▇▇ ▇▇▇▇▇ 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
34
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
35
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.
36
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:
37
(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
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
If to U.S. Concrete, Newco or the Surviving Corporation, addressed to them
at:
U.S. Concrete, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Secretary
If to the Stockholders, addressed as follows:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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
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
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]
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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/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Vice President
CONCRETE XXIV ACQUISITION, INC.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, President
STANCON INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
STOCKHOLDERS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------
▇▇▇▇ ▇▇▇▇▇, Individually
43
STATE OF TEXAS (S)
(S)
COUNTY OF ▇▇▇▇▇▇ (S)
------
The above and foregoing instrument was acknowledged before me on the 2nd
day of March, 2000, by ▇▇▇▇▇▇ ▇▇▇▇▇ of U.S. CONCRETE, a Delaware corporation, on
behalf of the corporation.
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Notary Public
My Commission Expires:
5/10/2000
--------------------------
(Seal)
STATE OF TEXAS (S)
(S)
COUNTY OF ▇▇▇▇▇▇ (S)
------
The above and foregoing instrument was acknowledged before me on the 2nd
day of March, 2000, by ▇▇▇▇▇▇ ▇▇▇▇▇ of CONCRETE XXIV ACQUISITION, INC., a
Delaware corporation, on behalf of the corporation.
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Notary Public
My Commission Expires:
5/10/2000
------------------------------
(Seal)
44
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 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ of STANCON, INC., a Texas corporation,
on behalf of the corporation.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
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 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
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 ▇▇▇▇ ▇▇▇▇▇.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Notary Public
My Commission Expires:
6/25/2000
-----------------------------
(Seal)
45