EXHIBIT 2.8
ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
U.S. CONCRETE, INC.,
CONCRETE XI ACQUISITION, INC.,
CARRIER EXCAVATION AND FOUNDATION COMPANY,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ CARRIER,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, TRUSTEE FOR ▇▇▇▇ ▇▇▇▇▇▇▇ (TN UGMA),
▇▇▇▇▇▇▇ ▇▇▇▇▇ CARRIER, TRUSTEE FOR
▇▇▇▇▇▇▇ ▇▇▇▇▇ CARRIER, JR. (TN UGMA),
AND
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Dated as of September 14, 1999
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
ARTICLE III CONVERSION OF SHARES.................................................................... 7
3.01 CONVERSION OF SHARES.................................................................... 7
3.02 NEWCO SHARES............................................................................ 7
3.03 DELIVERY OF MERGER CONSIDERATION........................................................ 7
ARTICLE IV CLOSING................................................................................. 7
4.01 CLOSING................................................................................. 7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS...................................... 8
5.01 DUE ORGANIZATION AND QUALIFICATION...................................................... 8
5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS............................................. 8
5.03 CAPITALIZATION AND OWNERSHIP............................................................ 9
5.04 SUBSIDIARIES............................................................................ 9
5.05 FINANCIAL STATEMENTS.................................................................... 9
5.06 LIABILITIES AND OBLIGATIONS............................................................. 10
5.07 ACCOUNTS AND NOTES RECEIVABLE........................................................... 10
5.08 PROPERTIES AND ASSETS................................................................... 11
5.09 MATERIAL CUSTOMERS AND CONTRACTS........................................................ 13
5.10 PERMITS................................................................................. 14
5.11 ENVIRONMENTAL MATTERS................................................................... 14
5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS........................................ 15
5.13 INSURANCE............................................................................... 16
5.14 COMPENSATION; EMPLOYMENT AGREEMENTS..................................................... 16
5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS; EMPLOYEE POLICIES....... 16
5.16 EMPLOYEE BENEFIT PLANS.................................................................. 16
5.17 LITIGATION AND COMPLIANCE WITH LAW...................................................... 18
5.18 TAXES................................................................................... 19
5.19 ABSENCE OF CHANGES...................................................................... 19
5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY.................................. 20
5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES................................................... 21
5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS................................. 21
5.23 INTANGIBLE PROPERTY..................................................................... 21
5.24 CAPITAL EXPENDITURES.................................................................... 21
5.25 INVENTORIES............................................................................. 21
5.26 TAX REORGANIZATION REPRESENTATION....................................................... 21
5.27 NO IMPLIED REPRESENTATIONS.............................................................. 21
5.28 DISCLOSURE.............................................................................. 22
5.29 YEAR 2000 COMPLIANCE.................................................................... 22
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO.............................. 22
6.01 ORGANIZATION............................................................................. 22
6.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.............................................. 22
6.03 U.S. CONCRETE COMMON STOCK............................................................... 23
6.04 TAX REORGANIZATION REPRESENTATIONS....................................................... 23
6.05 SEC FILINGS; DISCLOSURE.................................................................. 24
6.06 NO IMPLIED REPRESENTATIONS............................................................... 24
6.07 DISCLOSURE............................................................................... 24
ARTICLE VII CERTAIN COVENANTS................................................................... 25
7.01 RELEASE FROM GUARANTEES.................................................................. 25
7.02 FUTURE COOPERATION; TAX MATTERS.......................................................... 25
7.03 EXPENSES................................................................................. 25
7.04 LEGAL OPINION............................................................................ 25
7.05 EMPLOYMENT AGREEMENTS.................................................................... 26
7.06 REPAYMENT OF RELATED PARTY INDEBTEDNESS.................................................. 26
7.07 STOCK OPTIONS............................................................................ 26
7.08 PRE-CLOSING DISTRIBUTIONS................................................................ 27
7.09 WORKING CAPITAL ADJUSTMENT............................................................... 27
ARTICLE VIII IDEMNIFICATION..................................................................... 27
8.01 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS.............................................. 27
8.02 INDEMNIFICATION BY U.S. CONCRETE......................................................... 28
8.03 THIRD PERSON CLAIMS...................................................................... 28
8.04 NON-THIRD PERSON CLAIMS.................................................................. 29
8.05 INDEMNIFICATION DEDUCTIBLE............................................................... 29
8.06 INDEMNIFICATION LIMITATION............................................................... 29
8.07 INDEMNIFICATION FOR NEGLIGENCE OF INDEMNIFIED PARTY...................................... 29
ARTICLE IX NONCOMPETITION COVENANTS............................................................ 30
9.01 PROHIBITED ACTIVITIES................................................................... 30
9.02 EQUITABLE RELIEF........................................................................ 31
9.03 REASONABLE RESTRAINT.................................................................... 31
9.04 SEVERABILITY; REFORMATION............................................................... 31
9.05 MATERIAL AND INDEPENDENT COVENANT....................................................... 31
ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................................. 31
10.01 GENERAL................................................................................. 31
10.02 EQUITABLE RELIEF........................................................................ 31
ARTICLE XI INTENDED TAX TREATMENT.................................................................. 32
11.01 TAX-FREE REORGANIZATION................................................................. 32
ARTICLE XII FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON STOCK... 32
12.01 COMPLIANCE WITH LAW..................................................................... 32
12.02 ECONOMIC RISK; SOPHISTICATION; ACCREDITED INVESTORS..................................... 33
12.03 RULE 144 REPORTING...................................................................... 34
12.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES.............................. 34
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ARTICLE XIII MISCELLANEOUS............................................................... 34
13.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES............................................... 34
13.02 ENTIRE AGREEMENT....................................................................... 35
13.03 COUNTERPARTS........................................................................... 35
13.04 BROKERS AND AGENTS..................................................................... 35
13.05 NOTICES................................................................................ 35
13.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES............................................. 36
13.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE................................... 36
13.08 REFORMATION AND SEVERABILITY........................................................... 36
13.09 SECTION HEADINGS; GENDER............................................................... 37
13.10 GOVERNING LAW.......................................................................... 37
13.11 DISPUTE RESOLUTION..................................................................... 37
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ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is
made as of September 14, 1999, by and among U.S. Concrete, Inc., a Delaware
corporation ("U.S. Concrete"), Concrete XI Acquisition, Inc., a Delaware
corporation that is a subsidiary of U.S. Concrete ("Newco"), Carrier Excavation
and Foundation Company, a Tennessee corporation (the "Company") and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Carrier, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee for
▇▇▇▇ ▇▇▇▇▇▇▇ (TN UGMA), ▇▇▇▇▇▇▇ ▇▇▇▇▇ Carrier, Trustee for ▇▇▇▇▇▇▇ ▇▇▇▇▇
Carrier, Jr. (TN UGMA), and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (such individuals and trustees are
collectively referred to hereinafter as the "Stockholders"), with the
Stockholders being all of the Company's Stockholders.
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively referred to as "Constituent Corporations") deem it advisable and
in the best interests of the Constituent Corporations and the stockholders of
the Constituent Corporations that the Company merge with and into Newco (the
"Merger"); and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization within the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, the stockholders of the Constituent Corporations have approved the
Merger in accordance with the GCL and the TBCA.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. Capitalized terms used in this Agreement shall have the
following meanings:
"Affiliate" of, or "Affiliated" with, a specified person or entity means a
person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the specified person or entity.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Balance Sheet Date" has the meaning set forth in Section 5.05.
"Broker" has the meaning set forth in Section 13.04.
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"Closing" has the meaning set forth in ARTICLE IV.
"Closing Date" has the meaning set forth in ARTICLE IV.
"Code" has the meaning set forth in the third paragraph of this Agreement.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Common Stock" means the Company's common stock, $24.00 par value
per share.
"Competitive Business" means any business that competes with the Company or
the Surviving Corporation, including, without limitation, any business that
involves the production and sale of ready-mixed concrete (including truck-mixed
concrete) and other cement mixtures and pre-cast concrete products and any
logical extension of or business activity reasonably related to any of the
foregoing.
"Constituent Corporations" has the meaning set forth in the second
paragraph of this Agreement.
"Effective Time" has the meaning set forth in Section 2.02.
"Employee benefit plan" has the meaning set forth in Section 5.16.
"Employee pension benefit plan" has the meaning set forth in Section 5.16.
"Employment Agreements" has the meaning set forth in Section 7.05.
"Encumbrances" means all liens, encumbrances, mortgages, pledges, security
interests, conditional sales agreements, charges, options, preemptive rights,
rights of first refusal, reservations, restrictions or other encumbrances or
defects in title.
"Environmental Laws" means any and all Laws or agreements with any
Governmental Authority relating to (a) the protection, preservation or
restoration of the environment (including, without limitation, ambient air,
surface water (including water management and runoff), groundwater, drinking
water supply, surface land, subsurface strata, plant and animal life or any
other natural resource) or human health or safety, (b) emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes (including, without
limitation, Hazardous Substances) or noxious noise or odor into the environment
or (c) the exposure to, or the use, storage, recycling, treatment, manufacture,
generation, transport, processing, handling, labeling, production, removal or
disposal of any pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes (including, without limitation, Hazardous
Substances), in each case as amended from time to time and as now or hereafter
in effect. The term "Environmental Laws" includes, without limitation, (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980 (CERCLA), the Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal
Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste Disposal and the Federal Toxic Substances Control Act,
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the Federal Insecticide Fungicide and Rodenticide Act, the Federal Occupational
Safety and Health Act of 1970, the Safe Drinking Water Act, the Atomic Energy
Act and the Hazardous Materials Transportation Act, in each case as amended from
time to time, and any other Laws now or hereafter relating to any of the
foregoing, and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of,
effects of or exposure to any Hazardous Substance.
"ERISA" has the meaning set forth in Section 5.16.
"ERISA Affiliate" has the meaning set forth in Section 5.16.
"Expiration Date" has the meaning set forth in Section 13.06.
"Financial Statements" has the meaning set forth in Section 5.05.
"GAAP" means generally accepted accounting principles as currently applied
by the respective party on a basis consistent with preceding years and
throughout the periods involved.
"GCL" means the General Corporation Law of the State of Delaware, as
amended.
"Governmental Authority" means any federal, state, local or foreign
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or quasi-
governmental authority.
"Hazardous Substances" means any and all substances presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law. The term "Hazardous
Substances" includes, without limitation, any substance to which exposure is
regulated by any Governmental Authority or any Environmental Law including,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial substance
or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos or asbestos containing material, urea formaldehyde foam
insulation, lead or polychlorinated biphenyls.
"Incentive Plan" has the meaning set forth in Section 7.07.
"Indemnified Party" has the meaning set forth in Section 8.03.
"Indemnifying Party" has the meaning set forth in Section 8.03.
"Initial Lockup Period" has the meaning set forth in Section 12.04.
"Interim Balance Sheet" has the meaning set forth in Section 5.05.
"Interim Financial Statements" has the meaning set forth in Section 5.05.
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"IRCA" has the meaning set forth in Section 5.12.
"JAMS" has the meaning set forth in Section 13.10.
"Judge List" has the meaning set forth in Section 13.10.
"Laws" means any and all federal, state, local or foreign statutes, laws,
ordinances, proclamations, codes, regulations, licenses, permits,
authorizations, rulings, approvals, consents, legal doctrines, published
requirements, orders, decrees, judgments, injunctions and rules of any
Governmental Authority, including, without limitation, those covering
environmental, Tax, energy, safety, health, transportation, bribery,
recordkeeping, zoning, discrimination, antitrust and wage and hour matters, in
each case as amended and in effect from time to time.
"Letter of Intent" means that certain letter of intent dated August 4, 1999
by and among U.S. Concrete, the Company and the Stockholders, and the other
parties named therein, as amended or supplemented.
"Listed Agreements" has the meaning set forth in Section 5.09.
"Lockup Periods" has the meaning set forth in Section 12.04.
"Losses" means any and all liabilities, losses, claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, fees, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees and
costs and expenses of investigation), net of (i) income Tax effects with respect
thereto (including, without limitation, income Tax benefits recognized in
connection therewith and income Taxes upon any indemnification recovery thereof)
and (ii) insurance recoveries.
"Material Customers" has the meaning set forth in Section 5.09.
"Merger" has the meaning set forth in the second paragraph of this
Agreement.
"Merger Consideration" has the meaning set forth in Section 3.01.
"Merger Filings" has the meaning set forth in Section 2.02.
"Newco" has the meaning set forth in the first paragraph of this Agreement.
"Noncompete Term" has the meaning set forth in Section 9.01(a).
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Permits" has the meaning set forth in Section 5.10.
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"Permitted Encumbrances" means any and all (a) Encumbrances reserved
against in the Interim Balance Sheet, (b) Encumbrances for property or ad
valorem Taxes not yet due and payable or which are being contested in good faith
and by appropriate proceedings if adequate reserves with respect thereto are
maintained on the Company's books in accordance with GAAP, and (c) obligations
under operating and capital leases described in Schedule 5.08.
"Plan" has the meaning set forth in Section 5.16.
"Prospectus" means the prospectus of U.S. Concrete, dated May 25, 1999,
relating to the initial public offering of U.S. Concrete Common Stock.
"Qualified Plan" has the meaning set forth in Section 5.16.
"Restricted Shares" has the meaning set forth in Section 12.01.
"Rule 144" means Rule 144 as promulgated under the 1933 Act.
"SEC" means the Securities and Exchange Commission.
"Secondary Lockup Period" has the meaning set forth in Section 12.04.
"Stockholder" means any of the Stockholders.
"Stockholders" has the meaning set forth in the first paragraph
of this Agreement.
"Structures" has the meaning set forth in Section 5.08.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Taxes" has the meaning set forth in Section 5.18.
"TBCA" means the Tennessee Business Corporation Act, as amended.
"10-Q" means the Quarterly Report on Form 10-Q of U.S. Concrete for the
period ended June 30, 1999.
"Territory" has the meaning set forth in Section 9.01.
"Third Person" has the meaning set forth in Section 8.03.
"U.S. Concrete" has the meaning set forth in the first paragraph
of this Agreement.
"U.S. Concrete Common Stock" means U.S. Concrete's Common Stock, par value
$.001 per share.
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"Year-End Financial Statements has the meaning set forth in Section 5.05.
"Year 2000 Compliant" has the meaning set forth in Section 5.27.
1.02 INTERPRETATION. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in Section 1.01 and elsewhere in this Agreement
include the plural as well as the singular and vice versa;
(b) all accounting terms not otherwise defined herein have the
meanings ascribed to them in accordance with GAAP; and
(c) the words "herein," "hereof," and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE II
THE MERGER AND THE SURVIVING CORPORATION
2.01 THE MERGER. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time in accordance with the TBCA and the GCL, the
Company shall be merged with and into Newco and the separate existence of the
Company shall thereupon cease. Newco shall be the surviving corporation in the
Merger (hereinafter sometimes referred to as the "Surviving Corporation").
2.02 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective at
such time (the "Effective Time") as (a) holders of all of the Company Common
Stock approve the Merger, and (b) a certificate of merger, in form mutually
acceptable to U.S. Concrete and the Company, is filed with the Secretaries of
State of the States of Delaware and Tennessee, respectively (the "Merger
Filings"). The Merger Filings shall be made simultaneously with or as soon as
practicable after the Closing.
2.03 CERTIFICATE OF INCORPORATION, BYLAWS AND BOARD OF DIRECTORS OF
SURVIVING CORPORATION. As a result of the Merger and at the Effective Time:
(a) The Certificate of Incorporation of Newco in effect immediately
prior to the Effective Time shall become the Certificate of Incorporation
of the Surviving Corporation, except that such Certificate of Incorporation
shall be amended as of the Effective Time to change the name of the
Surviving Corporation to "Carrier Excavation and Foundation Company" After
the Effective Time, the Certificate of Incorporation of the Surviving
Corporation may be amended in accordance with its terms and as provided in
the GCL.
(b) The Bylaws of Newco in effect immediately prior to the Effective
Time shall become the Bylaws of the Surviving Corporation, and thereafter
may be amended in accordance
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with their terms and as provided by the Certificate of Incorporation of the
Surviving Corporation and the GCL.
(c) The Board of Directors of Newco as constituted immediately prior
to the Effective Time shall be the Board of Directors of the Surviving
Corporation.
ARTICLE III
CONVERSION OF SHARES
3.01 CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger,
and without any action on the part of any holder of any capital stock of the
Company, the issued and outstanding shares of Company Common Stock as of the
Effective Time shall be converted into the right to receive, and become
exchangeable for $3,603,186.76 in cash and 568,224 shares of U.S. Concrete
Common Stock at Closing (the cash and U.S. Concrete Common Stock paid in
exchange for the Company Common Stock being herein collectively referred to as
the "Merger Consideration").
3.02 NEWCO SHARES. The outstanding shares of common stock, par value $1.00
per share, of Newco shall remain outstanding following the Merger.
3.03 DELIVERY OF MERGER CONSIDERATION. At the Closing, (a) each
Stockholder shall furnish to U.S. Concrete the certificates representing his or
her Company Common Stock, duly endorsed in blank by such Stockholder or
accompanied by duly executed blank stock powers, and (b) U.S. Concrete shall
deliver to each Stockholder cash (by wire transfer of immediately available
funds in accordance with the wiring instructions for such Stockholder set forth
on Schedule 3.01) and a copy of an irrevocable instruction letter to U.S.
Concrete's transfer agent directing that certificates representing the shares of
U.S. Concrete Common Stock be delivered to such Stockholder pursuant to Section
3.01. Each Stockholder agrees promptly to cure any deficiencies with respect to
the endorsement of the certificates or other documents of conveyance with
respect to the Company Common Stock or with respect to the stock powers
accompanying such stock.
ARTICLE IV
CLOSING
4.01 CLOSING. The consummation of the Merger and delivery of the Merger
Consideration and the other transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of U.S. Concrete, ▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, concurrently with the execution of this
Agreement or at such other time and date as U.S. Concrete, the Company and the
Stockholders may mutually agree, which date is herein referred to as the
"Closing Date."
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders, jointly and severally, represent and warrant to U.S.
Concrete as follows:
5.01 DUE ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Tennessee and is duly authorized and qualified to do business under all
applicable Laws to carry on its business in the places and in the manner as now
conducted. The Company has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as such business
is currently being conducted. Schedule 5.01 includes (a) certificate(s) of
existence and good standing for the Company issued by the appropriate
Governmental Authorities of the State of Tennessee, (b) a list of all
jurisdictions in which the Company is authorized or qualified to do business and
(c) certificate(s) of qualification or authority to do business (or similar
certificates) for the Company issued by the appropriate Governmental Authorities
of each of the jurisdictions in which the Company is authorized or qualified to
do business. The Company does not own, lease or operate any assets or
properties or carry on any business in any jurisdiction that Schedule 5.01 does
not list. Schedule 5.01 also contains a list of each county in Tennessee in
which the Company conducts business or has conducted business within the past
three years. True, complete and correct copies of the Articles of Incorporation
and Bylaws, each as amended, of the Company are attached hereto as Schedule
5.01, and no breach of such Articles of Incorporation or Bylaws has occurred and
is continuing. True, complete and correct copies of all stock records and
minute books of the Company have been provided to U.S. Concrete.
5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) The Company has the requisite corporate power and authority to enter
into this Agreement and the ancillary documents and agreements described herein
and to effect the Merger. Each Stockholder has the full legal right, power and
authority to enter into this Agreement. The execution, delivery and performance
of this Agreement and the transactions contemplated hereby have been approved by
the board of directors of the Company and by the Stockholders. No additional
corporate proceedings on the part of the Company are necessary to authorize the
execution and delivery of this Agreement and the consummation by the Company of
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and the Stockholders, and, assuming the
due authorization, execution and delivery hereof by U.S. Concrete and Newco,
constitutes a valid and binding agreement of the Company and the Stockholders,
enforceable against each of them in accordance with its terms.
(b) The execution and delivery of this Agreement by the Company and the
Stockholders do not, and the consummation by the Company and the Stockholders of
the transactions contemplated hereby will not, violate or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration under, or result in the creation of any
Encumbrance upon any of the properties or assets of the Company under any of the
terms, conditions or provisions of, (i) the Articles of Incorporation or Bylaws
of the Company, (ii) any Law applicable to the Stockholders or the Company or
any of the properties or assets of the
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Stockholders or the Company, or (iii) except as set forth in Schedule 5.02, any
agreement, note, bond, mortgage, indenture, deed of trust, license, franchise,
Permit, concession, lease or other instrument, obligation or agreement of any
kind to which any Stockholder or the Company is now a party or by which the
Company or any of its properties or assets may be bound or affected.
(c) Except for the Merger Filings and as set forth in Schedule 5.02, no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any Governmental Authority or other person or entity is
necessary for the execution and delivery of this Agreement by the Company and
the Stockholders or the consummation by the Company and the Stockholders of the
transactions contemplated hereby. Except as set forth in Schedule 5.02, none of
the contracts or agreements with Material Customers or contracts providing for
purchases or services individually in excess of $10,000, or in the aggregate in
excess of $25,000, or other agreements, licenses or Permits to which the Company
is a party requires notice to, or the consent or approval of, any Governmental
Authority or other person or entity to the execution and delivery of this
Agreement by the Company and the Stockholders or to any of the transactions
contemplated hereby to remain in full force and effect following such
transaction.
5.03 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of the
Company consists solely of 2,000 shares of Company Common Stock, of which 1048.1
shares are issued and outstanding. All of the issued and outstanding shares of
the Company Common Stock are owned beneficially and of record by the
Stockholders as set forth in Schedule 5.03. All of the issued and outstanding
shares of the Company Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, and were offered, issued, sold and delivered
by the Company in compliance with all applicable Laws, including, without
limitation, those Laws concerning the issuance of securities. None of such
shares were issued in violation of the preemptive rights of any past or present
stockholder of the Company. The exchange of Company Common Stock for U.S.
Concrete Common Stock pursuant to the Merger will transfer to U.S. Concrete
good, valid and marketable title in the shares of the Company Common Stock owned
by the Stockholders, free and clear of all Encumbrances except for those created
by U.S. Concrete. At the Effective Time, by virtue of the Merger Filing in
Tennessee the Merger will become effective in Tennessee. Except as set forth in
Schedule 5.03, (a) no shares of Company Common Stock are held by the Company as
treasury shares, and (b) no subscription, option, warrant, call, convertible or
exchangeable security, other conversion right or commitment of any kind exists
which obligates the Company to issue any of its capital stock or the
Stockholders to transfer any of the capital stock of the Company.
5.04 SUBSIDIARIES. Except as set forth in Schedule 5.04, the Company owns,
of record or beneficially, or controls, directly or indirectly, no capital
stock, securities convertible into or exchangeable for capital stock or any
other equity interest in any corporation, association or other business entity.
Except as set forth in Schedule 5.04, the Company is not, directly or
indirectly, a participant in any joint venture, limited liability company,
partnership or other noncorporate entity.
5.05 FINANCIAL STATEMENTS.
(a) The Company has delivered to U.S. Concrete true, complete and correct
copies of the following financial statements:
9
(i) the reviewed balance sheets of the Company as of December 31,
1996, 1997 and 1998 and the related reviewed statements of operations,
stockholders' equity and cash flows for the three-year period ended
December 31, 1998, together with the related notes, schedules and report of
the Company's independent accountants (such balance sheets, the related
statements of operations, stockholders' equity and cash flows and the
related notes and schedules are referred to herein as the "Year-End
Financial Statements"); and
(ii) the unaudited balance sheet (the "Interim Balance Sheet") of the
Company as of June 30, 1999 (the "Balance Sheet Date") and the related
unaudited statements of operations, stockholders' equity and cash flows for
the six-month period ended on the Balance Sheet Date, together with the
related notes and schedules (such balance sheets, the related statements of
operations, stockholders' equity and cash flows and the related notes and
schedules are referred to herein as the "Interim Financial Statements").
The Year-End Financial Statements and the Interim Financial Statements
(collectively, the "Financial Statements") are attached as Schedule 5.05 to
this Agreement;
(b) Except as set forth in Schedule 5.05, the Financial Statements have
been prepared from the books and records of the Company in conformity with GAAP
and present fairly the financial position and results of operations of the
Company as of the dates of such statements and for the periods covered thereby.
The books of account of the Company have been kept accurately in all material
respects in the ordinary course of business, the transactions entered therein
represent bona fide transactions, and the revenues, expenses, assets and
liabilities of the Company have been properly recorded therein in all material
respects. Within the past five fiscal years of the Company, the Company has not
received any correspondence with its accountants, including without limitation,
management letters, which have indicated or disclosed that there is a "material
weakness" in or "reportable condition" with respect to (as those terms are
defined under GAAP) the Company's financial condition.
5.06 LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule 5.06, as
of the Balance Sheet Date the Company does not have, nor has it incurred since
that date, any liabilities or obligations (whether absolute, accrued, contingent
or otherwise) of any nature, except liabilities, obligations or contingencies
(a) that are reflected or accrued or reserved against in the Financial
Statements or reflected in the notes thereto, (b) that are of a nature not
required to be reflected in the Financial Statements and that do not exceed or
reasonably could be expected to exceed $5,000 individually or $10,000 in the
aggregate and (c) that were incurred after the Balance Sheet Date and were
incurred in the ordinary course of business, consistent with past practices.
Schedule 5.06 contains a reasonable estimate by the Company and the Stockholders
of the maximum amount that may be payable with respect to liabilities which are
not fixed. For each such liability for which the amount is not fixed or is
contested, the Company has provided a summary description of the liability
together with copies of all relevant documentation relating thereto. Schedule
5.06 sets forth the Company's outstanding principal amount of indebtedness for
borrowed money (including overdrafts) as of the date hereof. Except as set
forth in Schedule 5.06, there are no prepayment penalties, termination fees or
other payments triggered by the prepayment or termination of any loan or
indebtedness of the Company.
5.07 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.07 sets forth an accurate
list of the accounts and notes receivable of the Company as of the Balance Sheet
Date and of those generated
10
between the Balance Sheet Date and the second business day preceding the Closing
Date, including any such amounts which are not reflected in the Interim Balance
Sheet. Receivables from and advances to employees, the Stockholders and any
entities or persons related to or Affiliates of the Stockholders are separately
identified in Schedule 5.07. Schedule 5.07 also sets forth an accurate aging of
all accounts and notes receivable as of the Balance Sheet Date, showing amounts
due in 30-day aging categories. The trade and other accounts receivable of the
Company, including without limitation those classified as current assets on the
Interim Balance Sheet, are bona fide receivables, were acquired in the ordinary
course of business, are stated in accordance with GAAP and are collectible in
the amounts shown on Schedule 5.07, net of reserves reflected in the Interim
Financial Statements with respect to the accounts receivable as of the Balance
Sheet Date, and net of reserves reflected in the books and records of the
Company (consistent with the methods used in the Interim Financial Statements)
with respect to receivables of the Company after the Balance Sheet Date.
5.08 PROPERTIES AND ASSETS.
(a) Schedule 5.08 sets forth an accurate list of all real and personal
property included in "property and equipment" on the Interim Balance Sheet and
all other tangible assets of the Company with a book value in excess of $5,000
(i) owned by the Company as of the Balance Sheet Date and (ii) acquired since
the Balance Sheet Date. Schedule 5.08 also sets forth an accurate list of all
real and personal property currently leased by the Company, and includes
complete and correct copies of leases for significant equipment and for all real
property leased by the Company and descriptions of all real property (as
currently owned or leased by the Company) on which plants, buildings,
warehouses, workshops, garages and other structures (collectively, the
"Structures") and vehicles used in the operation of the business of the Company
are situated and, for each of those properties, the address thereof, the type
and approximate square footage of each Structure located thereon and the use
thereof in the business of the Company. Schedule 5.08 indicates which
properties and assets used in the operation of the businesses of the Company are
currently owned by the Stockholders or Affiliates of either of the Company or
the Stockholders. Except as specifically identified in Schedule 5.08, all of
the tangible assets, plants, Structures, vehicles and other significant
machinery and equipment owned or leased by the Company listed in Schedule 5.08
are in good working order and condition, ordinary wear and tear excepted, have
been maintained in accordance with standard industry practice and are adequate
for the purpose for which they presently are being used or held for use. Except
as specifically described in Schedule 5.08, all properties and fixed assets used
by the Company in its business are either owned by the Company or leased under
agreements identified in Schedule 5.08 and are affixed only to one or more of
the real properties Schedule 5.08 lists. All leases set forth in Schedule 5.08
are in full force and effect and constitute valid and binding agreements of the
Company and the other parties thereto in accordance with their respective terms,
and all amounts currently payable thereunder have been paid. Neither the
Company nor any other party to the leases set forth in Schedule 5.08 is or has
been asserted to be in default, violation or breach of any such lease, and no
event has occurred and is continuing that constitutes or, with notice or the
passage of time or both, would constitute a default, violation or breach under
any such lease. The Company has good, valid and marketable title to the
tangible and intangible assets, personal property and real property owned and
used in its business, including, without limitation, the properties identified
in Schedule 5.08 as owned real property (each of which the Company owns in fee),
free and clear of all Encumbrances other than Permitted Encumbrances and those
set forth in Schedule 5.08. Schedule 5.08 contains true, complete and correct
copies of all title reports and title
11
insurance policies received or owned by the Company with respect to the real
property owned or leased by the Company. Schedule 5.08 includes a summary
description of all commitments of the Company involving the opening of new
operations, expansion of existing operations or the acquisition of any real
property or existing business, to which management of the Company has devoted
any significant effort or expenditure in the two-year period prior to the date
of the Agreement.
(b) Except as specifically described in Schedule 5.08, all uses of the real
property owned and leased by the Company conform in all material respects to all
applicable Laws and do not violate any instrument of record or agreement
affecting any such property. Neither the Company nor the Stockholders have
received any notice or communication from any Governmental Authority or other
person or entity indicating that any condition exists with respect to any of the
real property owned or leased by the Company or with respect to the improvements
thereon that violates any Law, including without limitation, any Environmental
Law. Neither the Company nor the Stockholders have received from any insurance
carrier insuring or proposing to insure any of the real property owned or leased
by the Company or any other person or entity any notice or other communication
noting any dangerous or illegal condition at any such property or any other
condition at any of such properties otherwise requiring corrective action.
Except as otherwise described on Schedule 5.08, all of the real property owned
and leased by the Company is in satisfactory, usable and operating condition
without the necessity of any major repairs, and all such real properties can be
used for the operations currently being conducted on such real properties.
Neither the Company nor the Stockholders have received any notice nor have any
knowledge that any of the real property owned or leased by the Company is or
will be affected by any special assessments, condemnation, eminent domain, off-
site improvements to be constructed, change in grade of public streets or
similar proceedings. There is no writ, injunction, decree, order or judgment
outstanding, nor any action, claim, suit or proceeding, pending or threatened,
relating to the ownership, lease, use, occupancy or operation of any real
property owned or leased by the Company.
(c) There is ingress and egress to and from each of the real properties
owned and leased by the Company of record adequate for the use of such
properties as currently operated by the Company. Except as disclosed in
Schedule 5.08, the Company has made no off-record agreements affecting the
ownership, use or occupation of any such properties. All public utilities,
including, without limitation, sewers, water, electric, gas and telephone,
required for the operation of each of the real properties owned and leased by
the Company as presently operated are installed and operating, and all
installation and connection charges therefor have been paid in full. Neither
the Company nor the Stockholders have received any notice stating that the
Company will not be able to obtain adequate supplies of water to operate its
business on any such properties as presently conducted, or that the provision of
utilities violates any public or private easement. Except as disclosed in
Schedule 5.08, neither the Company nor the Stockholders have received notice
that any part of any improvements on the real property owned or leased by the
Company (including any of the structures thereon) encroaches upon any property
adjacent thereto or upon any easement, nor is there any encroachment or overlap
upon the real property owned or leased by the Company. Each of the real
property leases listed in Schedule 5.08 grants the Company the exclusive right
to use and occupy the demised premises thereunder, and the Company enjoys
peaceful and undisturbed possession under its respective real property leases
listed on Schedule 5.08 for the real property leased by the Company. No person
or entity other than the Company is in possession of any of the real property
owned or leased by the Company. Except as set forth on Schedule 5.08, to the
best knowledge of the Company there are no contracts outstanding for the sale,
exchange, lease or transfer of
12
any of the real property owned or leased by the Company, or any other right of a
third party to acquire any interest therein. To the best knowledge of the
Stockholders, the heating, cooling, ventilation, electrical and plumbing systems
at all of the real property owned and leased by the Company is in good working
condition.
5.09 MATERIAL CUSTOMERS AND CONTRACTS.
(a) Schedule 5.09 (i) sets forth an accurate list of all customers
representing 5% or more of the Company's revenues for each of the fiscal year
ended in 1998 and the interim period ended on the Balance Sheet Date (the
"Material Customers"), and (ii) sets forth an accurate list and briefly
describes all material contracts, warranties, commitments, understandings,
instruments and similar agreements and arrangements to which the Company is
currently a party or by which it or any of its properties is bound (the "Listed
Agreements"), including, but not limited to, (A) all customer contracts in
excess of $10,000, individually, or $25,000 in the aggregate, (B) contracts with
any labor organizations, (C) leases providing for annual rental payments in
excess of $5,000, individually, or $10,000 in the aggregate, (D) loan
agreements, (E) pledge and security agreements, (F) financing agreements, (G)
indemnity or guaranty agreements or obligations, (H) bonds, debentures and
indentures, (I) notes, (J) mortgages, (K) joint venture, partnership or cost-
sharing agreements, (L) options to purchase real or personal property, (M)
agreements relating to the purchase or sale by the Company of assets or
securities for more than $5,000, individually, or $10,000 in the aggregate or
which contain, or commit or will commit the Company for a fixed term, (N)
agreements, which, by their terms, require the consent of any party thereto to
the consummation of the transactions contemplated hereby, (O) voting trust
agreements or similar stockholders' agreements, (P) agreements providing for the
purchase from a supplier of all or substantially all the requirements of the
Company of a particular product, material or service and (Q) any other
contracts, warranties, commitments, understandings, instruments and similar
agreements and arrangements which involve aggregate payments in excess of
$10,000 that cannot be canceled in 30 days' or less notice without penalty or
premium or any continuing obligation or liability. Prior to the date hereof, the
Company has made available to U.S. Concrete true, complete and correct copies
and complete written descriptions of all the Listed Agreements.
(b) Except as set forth in Schedule 5.09, since December 31, 1998 (i) no
Material Customer has canceled or substantially reduced or, to the knowledge of
the Company and the Stockholders, is threatening to cancel or substantially
reduce its purchases of the Company's products or services, and (ii) neither the
Company nor any other party to the Listed Agreements is or has been asserted to
be in default, violation or breach of any such Listed Agreement, and no event
has occurred and is continuing that constitutes or with notice or the passage of
time or both, would constitute a default, violation or breach under any such
Listed Agreement. The Listed Agreements are in full force and effect and
constitute valid and binding agreements of the Company and the other parties
thereto in accordance with their respective terms.
(c) Except as set forth in Schedule 5.09, the Company is not a party to any
contracts subject to price redetermination or renegotiation. Except to the
extent set forth in Schedule 5.09, the Company is not required to provide any
bonding or other financial security arrangements in any material amount in
connection with any transactions with any of its customers or suppliers.
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(d) Except as set forth in Schedule 5.09, neither the Company, the
Stockholders nor any officer, employee, stockholder, director, representative or
agent thereof is a party to any contract, arrangement, commitment or
understanding among themselves or with any of the Company's customers for the
repurchase of products, sharing of fees, rebating of charges, bribes, kickbacks
or other similar arrangements.
(e) Schedule 5.09 sets forth a summary of each outstanding bid or proposal
by the Company that, if awarded to the Company, contemplates payments to the
Company in excess of $25,000.
(f) Except as set forth in Schedule 5.09, neither the Company nor the
Stockholders have any knowledge of any plan or intention of any other party to
any Listed Agreement to exercise any right to cancel or terminate that Listed
Agreement, and neither the Company nor the Stockholders have any knowledge of
any condition or state of facts which would justify the exercise of such a
right.
5.10 PERMITS. Schedule 5.10 contains an accurate list, summary description
and copies of all licenses, franchises, permits, approvals, certificates,
transportation authorities and other governmental authorizations and intangible
assets held by the Company that are material to the conduct of its business,
including, without limitation, permits, licenses and operating authorizations,
titles (including motor vehicle titles and current registrations), fuel permits,
franchises, certificates, trademarks, trade names, patents, patent applications
and copyrights owned or held by the Company (collectively, the "Permits"). The
Permits are valid, and the Company has not received any written notice that any
Governmental Authority intends to cancel, terminate or not renew any such
Permit. The Permits are all the permits, licenses, operating authorizations,
franchises, approvals, certificates, transportation authorities and other
governmental authorizations and intangible assets that are required by Law for
the operation of the businesses of the Company as conducted at the Balance Sheet
Date and the ownership of the assets and properties of the Company. The Company
has conducted and is conducting its business in substantial compliance with the
requirements, standards, criteria and conditions set forth in the Permits, as
well as the applicable orders, approvals and variances related thereto, and is
not in violation of any of the foregoing. Except as specifically provided in
Schedule 5.10, the transactions contemplated by this Agreement will not result
in a default under, a breach or violation of, a termination of, or adversely
affect the rights and benefits afforded to the Company by, any Permits.
5.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5.11, (a) the
Company has complied with and is in compliance with all Environmental Laws, (b)
the Company has obtained and complied with all necessary permits, licenses,
authorizations and other approvals necessary to treat, transport, store, dispose
of and otherwise handle Hazardous Substances and has reported, to the extent
required by all Environmental Laws, all past and present sites owned or operated
by the Company where Hazardous Substances have been treated, stored, disposed of
or otherwise handled, (c) there have been no "releases" or threats of "releases"
(as defined in any Environmental Laws) at, from, in, to, under or on any
property currently or previously owned or operated by the Company, (d) there is
no on-site or off-site location to which the Company has transported or disposed
of Hazardous Substances or arranged for the transportation or disposal of
Hazardous Substances which is or could be the subject of any federal, state,
local or foreign enforcement action or any other investigation which could lead
to any claim against the Surviving Corporation, U.S. Concrete or Newco for any
clean-up cost, remedial work, damage to natural resources or personal injury,
including, but not limited to, any claim under any
14
Environmental Law and (e) the Company has no contingent liability in connection
with any release or disposal of any Hazardous Substance into the environment.
None of the past or present sites owned or operated by the Company is currently
or has ever been designated as a treatment, storage and/or disposal facility,
nor has any such facility ever applied for a permit, license, authorization or
other approval designating it as a treatment, storage and/or disposal facility,
under any Environmental Law. The Company has provided U.S. Concrete with copies
(or, if not available, accurate written summaries) of all environmental
investigations, studies, audits, reviews and other analyses conducted by or on
behalf, or which otherwise are in the possession, of the Company respecting any
facility site or other property previously or presently owned or operated by the
Company.
5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS.
(a) Except as set forth in Schedule 5.12, the Company is not bound by or
subject to any arrangement with any labor union. Except as set forth in Schedule
5.12, no employees of the Company are represented by any labor union or covered
by any collective bargaining agreement nor, to the Company's or the
Stockholders' knowledge, is any campaign to establish such representation in
progress nor has there been any campaign to establish such representation within
the last three years. There is no pending or, to the Company's or the
Stockholders' knowledge, threatened labor dispute involving the Company and any
group of its employees nor has the Company experienced any significant labor
interruptions over the past five years. Neither the Company nor the Stockholders
have any knowledge of any significant issues or problems in connection with the
relationship of the Company with its employees. The Company considers its
relationship with its employees to be good.
(b) Except as set forth in Schedule 5.12, (i) there is no unfair labor
practice charge or complaint pending or, to the knowledge of the Stockholders,
threatened against or otherwise affecting the Company, (ii) no action, suit,
complaint, charge, arbitration, inquiry, proceeding or investigation by or
before any Governmental Authority brought by or on behalf of any employee,
prospective employee, former employee, retiree, labor organization or other
representative of the Company's employees is pending or threatened against the
Company, (iii) no grievance is pending or threatened against the Company, (iv)
the Company is not a party to, or otherwise bound by, any consent decree with,
or citation by, any Governmental Authority relating to employees or employment
practices, (v) the Company has paid in full to, or accrued in its financial
books and records, all employees of the Company all wages, salaries,
commissions, bonuses, benefits and other compensation due to such employees or
otherwise arising under any policy, practice, agreement, plan, program, statute
or other law and (vi) the Company is in substantial compliance with its
obligations pursuant to the Worker Adjustment and Retraining Notification Act of
1988, and all other notification and bargaining obligations arising under any
collective bargaining agreement, statute or otherwise.
(c) Except as set forth in Schedule 5.12, all employees of the company are
(i) citizens of the United States or (ii) not citizens of the United States,
but, in accordance with the Immigration Reform and Control Act of 1986 ("IRCA")
and other applicable Laws are either (A) immigrants authorized to work in the
United States or (B) nonimmigrants authorized to work in the United States for
the Company in their specific jobs.
15
5.13 INSURANCE. Schedule 5.13 sets forth an accurate list as of the
Balance Sheet Date of (a) all insurance policies carried by the Company, copies
of which are attached as Schedule 5.13, (b) all insurance loss runs or workmen's
compensation claims received for the past five policy years, and (c) the
following information with respect to all insurance policies currently carried
by the Company and previously carried by the Company within the last five years:
(i) insurer, (ii) type of policy, (iii) coverage period, and (iv) policy limits
and amount of deductible or loss retention. Except as set forth in Schedule
5.13, none of such policies are "claims made" policies. The policies described
in Schedule 5.13 for the current policy year provide adequate coverage against
the risks involved in the Company's business and are currently in full force and
effect. Any open claims as of the Closing Date are recoverable under such
policies, except to the extent of any applicable deductible or loss retention as
set forth on Schedule 5.13.
5.14 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 5.14 sets forth an
accurate schedule of all officers, directors and Stockholder employees of the
Company with annual salaries of $50,000 or more, listing the rate of
compensation (and the portions thereof attributable to salary, bonus, benefits
and other compensation, respectively) of each of such persons as of (a) the
Balance Sheet Date and (b) the date hereof. Neither the Company nor the
Stockholders have any knowledge that any of such individuals has any present
intention of terminating his or her employment or association with the Company.
Attached to Schedule 5.14 are true, complete and correct copies of each
employment or consulting agreement with any employee of the Company or the
Stockholders. Except as set forth in Schedule 5.14, the Company is not a party
to any agreement, nor has it established any plan, policy, practice or program,
requiring it to make a payment or provide any other form of compensation or
benefit or vesting rights to any officer, director, stockholder, member or
employee of the Company or other person performing services for the Company
which would not be payable or provided in the absence of this Agreement or the
consummation of the transactions contemplated hereby, including any parachute
payment under Section 280G of the Code.
5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS;
EMPLOYEE POLICIES. Schedule 5.15 sets forth all agreements containing covenants
not to compete or solicit employees or to maintain the confidentiality of
information to which the Company or any of the Stockholders is bound or under
which the Company or any of the Stockholders has any rights or obligations.
Schedule 5.15 lists all employee manuals and all material policies, procedures
and work-related rules that apply to any employee, director or officer of, or
any other individual performing consulting or other independent contractor
services for, the Company. The Company has provided U.S. Concrete with a copy of
all such written policies and procedures and a written description of all such
unwritten policies and procedures.
5.16 EMPLOYEE BENEFIT PLANS.
(a) Schedule 5.16 sets forth an accurate schedule of each "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and all deferred compensation or retirement
funding arrangements, whether formal or informal and whether legally binding or
not, that are currently in force or under which the Company or an ERISA
Affiliate has any current or future obligation or liability or under which any
present or former employee of the Company or an ERISA Affiliate, or such present
or former employee's dependents or beneficiaries, has any current or future
right to benefits (each such plan and arrangement referred to hereinafter as a
16
"Plan"), together with true and complete copies of such Plans, arrangements and
any trusts related thereto, and classifications of employees covered thereby as
of the Balance Sheet Date. Except as set forth in Schedule 5.16, neither the
Company nor any ERISA Affiliate sponsors, maintains or contributes currently, or
sponsored, maintained or contributed at any time during the preceding five
years, to any plan, program, fund or arrangement that constitutes an employee
pension benefit plan. Each Plan may be terminated by the Company, or if
applicable, by an ERISA Affiliate at any time without any liability, cost or
expense, other than costs and expenses that are customary in connection with the
termination of a Plan. For purposes of this Agreement, the term "employee
pension benefit plan" shall have the meaning given that term in Section 3(2) of
ERISA, and the term "ERISA Affiliate" means any corporation or trade or business
under common control with the Company as determined under Section 414(b), (c),
(m) or (o) of the Code.
(b) Each Plan listed in Schedule 5.16 is in compliance in all material
respects with the applicable provisions of ERISA, the Code and any other
applicable Law. Except as set forth in Schedule 5.16, with respect to each Plan
of the Company and each ERISA Affiliate (other than a "multiemployer plan," as
defined in Section 4001(a)(3) of ERISA), all reports and other documents
required under ERISA or other applicable Law to be filed with any Governmental
Authority, including without limitation all Forms 5500, or required to be
distributed to participants or beneficiaries, have been duly and timely filed or
distributed. True and complete copies of all such reports and other documents
with respect to the past five years for each Plan have been provided to U.S.
Concrete. No "accumulated funding deficiency" (as defined in Section 412(a) of
the Code) with respect to any Plan has been incurred (without regard to any
waiver granted under Section 412 of the Code), nor has any funding waiver from
the Internal Revenue Service been received or requested. Except as set forth in
Schedule 5.16, each Plan that is intended to be "qualified" within the meaning
of Section 401(a) of the Code (a "Qualified Plan") is, and has been during the
period from its adoption to the date hereof, so qualified, both as to form and
operation and all necessary approvals of Governmental Authorities, including a
favorable determination as to the qualification under the Code of each of such
Qualified Plans and each amendment thereto, have been timely obtained. Except
as set forth in Schedule 5.16, all accrued contribution obligations of the
Company with respect to any Plan have either been fulfilled in their entirety or
are fully reflected in the Financial Statements.
(c) No Plan has incurred or will incur, and neither the Company nor any
ERISA Affiliate has incurred or will incur, with respect to any Plan, any
liability for excise tax or penalty due to the Internal Revenue Service. There
have been no terminations, partial terminations or discontinuances of
contributions to any Qualified Plan during the preceding five years without
notice to and approval by the Internal Revenue Service and payment of all
obligations and liabilities attributable to such Qualified Plan.
(d) Except as set forth in Schedule 5.16, neither the Company nor any ERISA
Affiliate has made any promises of retirement or other benefits to employees,
except as set forth in the Plans, and neither the Company nor any ERISA
Affiliate maintains or has established any Plan that is a "welfare benefit plan"
within the meaning of Section 3(1) of ERISA that provides for continuing
benefits or coverage for any participant or any beneficiary of a participant
after such participant's termination of employment, except as may be required by
Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code and
similar state Law provisions, and at the expense of the participant or the
beneficiary of the
17
participant, or retiree medical liabilities. Neither the Company nor any ERISA
Affiliate maintains, has established or has ever participated in a multiple
employer welfare benefit arrangement as described in Section 3(40)(A) of ERISA.
Except as set forth in Schedule 5.16, neither the Company nor any ERISA
Affiliate has any current or future obligation or liability with respect to a
Plan pursuant to the provisions of a collective bargaining agreement.
(e) Neither the Company nor any ERISA Affiliate has incurred, nor will it
incur as a result of past activities, any material liability to the Pension
Benefit Guaranty Corporation in connection with any Plan. The assets of each
Plan that are subject to Title IV of ERISA are sufficient to provide the
benefits under such Plan, the payment of which the Pension Benefit Guaranty
Corporation would guarantee if such Plan were terminated, and such assets are
also sufficient to provide all other "benefits liabilities" (as defined in ERISA
Section 4001(a)(16)) due under such Plan upon termination.
(f) No "reportable event" (as defined in Section 4043 of ERISA) has
occurred and is continuing with respect to any Plan. There are no pending, or to
the Company's and the Stockholders' knowledge, threatened claims, lawsuits or
actions (other than routine claims for benefits in the ordinary course) asserted
or instituted against, and neither the Company nor any ERISA Affiliate has
knowledge of any threatened litigation or claims against, the assets of any Plan
or its related trust or against any fiduciary of a Plan with respect to the
operation of such Plan. To the Company's and the Stockholders' knowledge, there
are no investigations or audits of any Plan by any Governmental Authority
currently pending and there have been no such investigations or audits that have
been concluded that resulted in any liability to the Company or any ERISA
Affiliate that has not been fully discharged. Neither the Company nor any ERISA
Affiliate has participated in any voluntary compliance or closing agreement
programs established with respect to the form or operation of a Plan.
(g) Neither the Company nor any ERISA Affiliate has engaged in any
prohibited transaction, within the meaning of Section 406 of ERISA or Section
4975 of the Code, in connection with any Plan for which exemption was not
available. Except as set forth in Schedule 5.16, neither the Company nor any
ERISA Affiliate is, or ever has been, a participant in or is obligated to make
any payment to a multiemployer plan. No person or entity that was engaged by the
Company or an ERISA Affiliate as an independent contractor within the last five
years reasonably can or will be characterized or deemed to be an employee of the
Company or an ERISA Affiliate under applicable Laws for any purpose whatsoever,
including, without limitation, for purposes of federal, state and local income
taxation, workers' compensation and unemployment insurance and Plan eligibility.
5.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in Schedule
5.17, there are no claims, actions, suits or proceedings, pending or, to the
knowledge of the Company and the Stockholders, threatened against or affecting
the Company, at law or in equity, or before or by any Governmental Authority
having jurisdiction over the Company. No written notice of any claim, action,
suit or proceeding, whether pending or threatened, has been received by the
Company and, to the Stockholders' and the Company's knowledge, there is no basis
therefor. Except to the extent set forth in Schedule 5.17, the Company has
conducted and is conducting its business in compliance with all Laws applicable
to the Company, its assets or the operation of its business.
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5.18 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, service use, license, payroll,
franchise, transfer and recording taxes, fees and charges, imposed by the United
States or any state, local or foreign government or subdivision or agency
thereof, whether computed on a separate, consolidated, unitary, combined or any
other basis; and such term shall include any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any such taxes,
charges, fees, levies or other assessments. The Company has timely filed all
requisite federal, state, local and other tax returns for all fiscal periods
ended on or before the Closing, and has duly paid in full or made adequate
provision in the Financial Statements for the payment of all Taxes for all
periods ending at or prior to the Closing Date. The Company has duly withheld
and paid or remitted all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other person or entity that required withholding under
any applicable Law, including, without limitation, any amounts required to be
withheld or collected with respect to social security, unemployment
compensation, sales or use taxes or workers' compensation. There have not been
during the past three years nor are there currently any examinations, audits,
proceedings, notices, waivers, asserted deficiencies or disputed valuations in
progress or claims against the Company relating to Taxes for any period or
periods prior to and including the Balance Sheet Date and no notice of any claim
for Taxes, whether pending or threatened, has been received. The Company has
not granted or been requested to grant any extension of the limitation period
applicable to any claim for Taxes or assessments with respect to Taxes. The
Company is not a party to any Tax allocation or sharing agreement and is not
otherwise liable or obligated to indemnify any person or entity with respect to
any Taxes. The amounts shown as accruals for Taxes on the Interim Financial
Statements as of the Balance Sheet Date are sufficient for the payment of all
Taxes for all fiscal periods ended on or before that date. True and complete
copies of (a) any tax examinations or audits, (b) extensions of statutory
limitations and (c) the federal, state and local Tax returns of the Company for
the last three fiscal years have been previously provided to U.S. Concrete.
There are no requests for ruling in respect of any Tax pending between the
Company and any Taxing authority. The Company has been taxed under the
provisions of Subchapter S of the Code since March 3, 1993. The Company
currently utilizes the accrual method of accounting for income tax purposes.
Such method of accounting has not changed in the past five years.
5.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
in Schedule 5.19, the Company has conducted its operations in the ordinary
course and there has not been:
(a) any material adverse change in the business, operations, properties,
condition (financial or other), assets, liabilities (contingent or otherwise),
results of operations or prospects of the Company;
(b) any damage, destruction or loss (whether or not covered by insurance)
materially adversely affecting the assets, properties or business of the
Company;
(c) any change in the authorized capital stock of the Company or in its
outstanding securities or any change in the Stockholders' ownership interests in
the Company or any grant of any options, warrants, calls, conversion rights or
commitments;
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(d) except as set forth on Schedule 7.08, any declaration or payment of any
dividend or distribution in respect of the capital stock or any direct or
indirect redemption, purchase or other acquisition of any of the capital stock
of the Company;
(e) any increase in the compensation payable or to become payable by the
Company to the Stockholders or any of its officers, directors, employees,
consultants or agents, except for ordinary and customary bonuses and salary
increases for employees in accordance with past practice, which bonuses and
salary increases are set forth in Schedule 5.19;
(f) any work interruptions, labor grievances or claims filed;
(g) any proposed law, regulation or event or condition of any character
materially adversely affecting the assets, properties or business of the
Company;
(h) except for the Merger, any sale or transfer, or any agreement to sell
or transfer, any material assets, properties or rights of the Company to any
person or entity, including, without limitation, the Stockholders and their
Affiliates;
(i) any cancellation, or agreement to cancel, any indebtedness or other
obligation owing to the Company;
(j) any increase in the indebtedness of the Company, other than accounts
payable incurred in the ordinary course of business, consistent with past
practices, or incurred in connection with the transactions contemplated by this
Agreement;
(k) any plan, agreement or arrangement granting any preferential rights to
purchase or acquire any interest in any of the assets, properties or rights of
the Company or requiring consent of any party to the transfer and assignment of
any such assets, properties or rights;
(l) any purchase or acquisition of, or agreement, plan or arrangement to
purchase or acquire, any assets, properties or rights outside of the ordinary
course of the Company's business;
(m) any waiver of any material rights or claims of the Company;
(n) any material breach, amendment or termination of any Listed Agreement,
Permit or other right to which the Company is a party or any of its property is
subject; or
(o) any other material transaction by the Company outside the ordinary
course of business.
5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY. Schedule 5.20
sets forth an accurate schedule, as of the date of this Agreement, of (a) the
name of each financial institution or brokerage firm in which the Company has
accounts or safe deposit boxes; (b) the names in which the accounts or boxes are
held; (c) the type of account and the cash, cash equivalents and securities held
in such account as of the second business day prior to the Closing, none of
which assets have been withdrawn from such accounts since such date except for
bona fide business purposes in the ordinary
20
course of the business of the Company; and (d) the name of each person
authorized to draw thereon or have access thereto. Schedule 5.20 also sets forth
the name of each person, corporation, firm or other entity holding a general or
special power of attorney from the Company and a description of the terms
thereof.
5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor the
Stockholders nor any of their respective Affiliates has given or offered to give
anything of value to any governmental official, political party or candidate for
government office that was illegal to give or offer to give nor has it otherwise
taken any action which would constitute a violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any similar Law.
5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth in Schedule 5.22, neither the Stockholders nor any other Affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
Competitive Business, lessor, lessee, customer or supplier of the Company.
Except as set forth in Schedule 5.22, no officer or director of the Company nor
the Stockholders have, nor had any interest in any tangible or intangible assets
or property, real or personal, used in or pertaining to the business of the
Company.
5.23 INTANGIBLE PROPERTY. Schedule 5.23 sets forth an accurate list of all
patents, patent applications, trademarks, service marks, technology, licenses,
trade names, copyrights and other intellectual property or proprietary property
rights owned or used by the Company. The Company owns or possesses, and the
assets of the Company include, sufficient legal rights to use all of such items
without conflict with or infringement of the rights of others.
5.24 CAPITAL EXPENDITURES. Schedule 5.24 sets forth the total amount of
capital expenditures currently budgeted to be incurred by the company in excess
of $25,000 in the aggregate during the balance of the Company's current fiscal
year.
5.25 INVENTORIES. Except as Schedule 5.25 sets forth: (i) all
inventories, net of reserves determined in accordance with GAAP, of the Company
which are classified as such on the Interim Balance Sheet are merchantable and
salable or usable in the ordinary course of business of the Company; and (ii)
the Company does not depend on any single vendor for its inventories the loss of
which could have a material adverse effect on the business or financial
condition of the Company or during the past five years has sustained a
difficulty material to the Company in obtaining its inventories.
5.26 TAX REORGANIZATION REPRESENTATION. The Surviving Corporation will
acquire substantially all of the properties of the Company within the meaning of
Section 368(a)(2)(D) of the Code.
5.27 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of the Stockholders
and the Company that U.S. Concrete and Newco are not making any representation
or warranty whatsoever, express or implied, other than those representations and
warranties of U.S. Concrete and Newco expressly set forth in this Agreement.
21
5.28 DISCLOSURE. The Stockholders and the Company have fully provided U.S.
Concrete or its representatives with all the information that U.S. Concrete has
requested in analyzing whether to consummate the Merger and the other
transactions contemplated by this Agreement. None of the information so
provided nor any representation or warranty of the Stockholders to U.S. Concrete
or Newco in this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements herein,
in light of the circumstances under which they were made, not misleading. There
is no fact known to the Stockholders which has specific application to the
Company (other than general economic or industry conditions) and which
materially adversely affects or, so far as the Stockholders can reasonably
foresee, materially threatens, the business or financial condition of the
Company which has not been described in the Agreement or the Schedules hereto or
disclosed in writing to U.S. Concrete.
5.29 YEAR 2000 COMPLIANCE. To the best knowledge of the Stockholders after
reasonable investigation, all devices, systems, machinery, information
technology, computer software and hardware, and other date sensitive technology
(jointly and severally its "systems") necessary for the Company's business as
presently conducted will be Year 2000 Compliant within a period of time
calculated to result in no material disruption of any of their business
operations. For purposes hereof, "Year 2000 Compliant" means that such systems
are designed to be used prior to, during and after the Gregorian calendar year
2000 A.D. and will operate during each such time period without error relating
to date data, specifically including any error relating to, or the product of,
date data which represents or references different centuries or more than one
century.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO
U.S. Concrete and Newco jointly and severally represent and warrant to the
Stockholders as follows:
6.01 ORGANIZATION. Each of U.S. Concrete and Newco is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, and is duly authorized and qualified under all applicable Laws to
carry on its business in the places and in the manner now conducted. Each of
U.S. Concrete and Newco has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as such business
is currently being conducted.
6.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) Each of U.S. Concrete and Newco has the full legal right, power and
authority to enter into this Agreement and the ancillary documents and
agreements described herein and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement has been
approved by the boards of directors of U.S. Concrete and Newco and by U.S.
Concrete, as the sole stockholder of Newco. No additional corporate proceedings
on the part of U.S. Concrete or Newco are necessary to authorize the execution
and delivery of this Agreement and the consummation by U.S. Concrete and Newco
of the transactions contemplated hereby. This Agreement has been duly and
22
validly executed and delivered by U.S. Concrete and Newco, and, assuming the due
authorization, execution and delivery by the Company and the Stockholders,
constitutes valid and binding agreements of U.S. Concrete and Newco, enforceable
against U.S. Concrete and Newco in accordance with its terms.
(b) The execution and delivery of this Agreement by U.S. Concrete and Newco
do not, and the consummation by U.S. Concrete and Newco of the transactions
contemplated hereby will not, violate or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under any of the terms, conditions or provisions of (i) the
Certificate of Incorporation or By-Laws of U.S. Concrete or Newco, (ii) any Law
applicable to either U.S. Concrete or Newco or any of its properties or assets
or (iii) any material note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which U.S. Concrete or Newco is now a party or by
which either U.S. Concrete or Newco or any of its properties or assets may be
bound or affected.
(c) Except for the Merger Filings and such filings as may be required under
federal or state securities Laws, no declaration, filing or registration with,
or notice to, or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this Agreement by U.S.
Concrete and Newco or the consummation by U.S. Concrete and Newco of the
transactions contemplated hereby.
6.03 U.S. CONCRETE COMMON STOCK. The shares of U.S. Concrete Common Stock
to be issued to the Stockholders pursuant to the Merger are duly authorized and,
when issued in accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable. The issuance of U.S. Concrete Common
Stock pursuant to the Merger will transfer to the Stockholders valid title to
such shares of U.S. Concrete Common Stock, free and clear of all Encumbrances,
except for any Encumbrances created by the Stockholders.
6.04 TAX REORGANIZATION REPRESENTATIONS.
(a) Prior to the Merger, U.S. Concrete will be in control of Newco within
the meaning of Section 368(c) of the Code.
(b) U.S. Concrete has no plan or intention to cause the Surviving
Corporation to issue additional shares of its stock that would result in U.S.
Concrete losing control of the Surviving Corporation within the meaning of
Section 368(c) of the Code.
(c) U.S. Concrete has no plan or intention to reacquire any of its stock
issued in the Merger.
(d) U.S. Concrete has no plan or intention to liquidate the Surviving
Corporation; to merge the Surviving Corporation with or into another
corporation; to sell or otherwise dispose of the stock of the Surviving
Corporation except for transfers of stock to another corporation controlled by
U.S. Concrete; or to cause the Surviving Corporation to sell or otherwise
dispose of any of its assets,
23
except for dispositions made in the ordinary course of business or transfers of
assets to a corporation controlled by U.S. Concrete.
(e) Following the Closing, U.S. Concrete's intention is that the Surviving
Corporation will continue the historic business of the Company or use a
significant portion of the historic business assets of the Company in a
business, all as required to satisfy the "continuity of business enterprise"
requirement under Section 368 of the Code.
(f) U.S. Concrete does not own, nor has it owned during the past five
years, any shares of the stock of the Company.
(g) Each of U.S. Concrete and Newco is undertaking the Merger for a bona
fide business purpose and not merely for the avoidance of federal income tax.
(h) Neither U.S. Concrete nor Newco is an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
(i) As of the Closing Date, the fair market value of the assets of Newco
will exceed the sum of Newco's liabilities plus the amount of other liabilities,
if any, to which Newco's assets are subject.
6.05 SEC FILINGS; DISCLOSURE. U.S. Concrete has filed with the SEC all
material forms, statements, reports and documents required to be filed by it
prior to the date hereof under each of the 1933 Act and the 1934 Act and the
respective rules and regulations thereunder, (a) all of which, as amended, if
applicable, complied when filed in all material respects with all applicable
requirements of the appropriate Act and the rules and regulations thereunder,
and (b) none of which, as amended, if applicable, contains any untrue statement
of material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made and at the time they were made, not
misleading.
6.06 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of U.S. Concrete
and Newco that the Stockholders are not making any representation or warranty
whatsoever, express or implied, other than those representations and warranties
of the Stockholders expressly set forth in this Agreement.
6.07 DISCLOSURE. U.S. Concrete has fully provided the Stockholders or
their representatives with all the information that the Stockholders have
requested in analyzing whether to consummate the Merger. None of the
information so provided nor any representation or warranty of U.S. Concrete
contained in this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading.
24
ARTICLE VII
CERTAIN COVENANTS
7.01 Release From Guarantees. U.S. Concrete shall use its commercially
reasonable efforts to have the Stockholders released from the personal
guarantees of the Company's indebtedness identified in Schedule 7.01 within 90
days after the Closing Date. U.S. Concrete hereby agrees to indemnify and
defend the Stockholders and hold each Stockholder harmless for any amounts that
such Stockholder is required to pay in connection with the enforcement of any
obligations under such personal guarantees after the Closing, including without
limitation any reasonable attorneys' fees and expenses incurred in connection
therewith.
7.02 FUTURE COOPERATION; TAX MATTERS. The Stockholders and U.S. Concrete
shall each deliver or cause to be delivered to the other following the Closing
such additional instruments as the other may reasonably request for the purpose
of fully carrying out this Agreement. The Stockholders will cooperate and use
their commercially reasonable best efforts to have the present officers,
directors and employees of the Company cooperate with U.S. Concrete and the
Surviving Corporation at and after the Closing in furnishing information,
evidence, testimony and other assistance in connection with any actions,
proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to the Closing. The Stockholders will cooperate
with the Surviving Corporation in the preparation of all Tax returns covering
the period from the beginning of the Company's current Tax year through the
Closing. In addition, U.S. Concrete will provide the Stockholders with access
to such of its books and records as may be reasonably requested by the
Stockholders in connection with federal, state and local tax matters relating to
periods prior to the Closing. The party requesting cooperation, information or
actions under this Section 7.02 shall reimburse the other party for all
reasonable out-of-pocket costs and expenses paid or incurred in connection
therewith, which costs and expenses shall not, however, include per diem charges
for employees or allocations of overhead charges.
7.03 EXPENSES. U.S. Concrete will pay the fees, expenses and disbursements
of U.S. Concrete and its agents, representatives, accountants and counsel
incurred in connection with the execution, delivery and performance of this
Agreement and any amendments hereto. The Company will be responsible for the
fees and expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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, ▇▇▇▇▇ & ▇▇▇▇▇▇, a Professional Association, to
deliver to U.S. Concrete a legal opinion in form and substance acceptable to
U.S. Concrete.
25
7.05 EMPLOYMENT AGREEMENTS. Concurrently with the execution of this
Agreement, the Surviving Corporation shall enter into a mutually acceptable
Employment Agreement with each of the individuals identified on Schedule 7.05
(collectively, the "Employment Agreements").
7.06 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the
execution of this Agreement, (a) the Stockholders shall repay to the Company all
amounts outstanding as advances to or receivables from the Stockholders, each of
which advances or receivables is specifically reflected in Schedule 5.07, and
(b) the Company shall repay all amounts outstanding under loans to the Company
from the Stockholders, each of which loans to the Company is specifically
reflected in Schedule 5.06.
7.07 STOCK OPTIONS. U.S. Concrete shall grant nonqualified options to
purchase an aggregate of 40,000 shares of U.S. Concrete Common Stock as of the
Closing Date under U.S. Concrete's 1999 Incentive Plan (the "Incentive Plan") to
certain key employees of the Company (other than the Stockholders), as set forth
on Schedule 7.07 in the amounts listed thereon. Schedule 7.07 shall also
include the social security number and home address of each individual listed
thereon. Such options shall vest in equal annual increments for four years,
commencing on the first anniversary of the Closing Date.
7.08 PRE-CLOSING DISTRIBUTIONS. Prior to the Closing, the Company may have
distributed to the Stockholders the cash and other assets set forth on Schedule
7.08. Any such distributions shall have been authorized by the Board of
Directors of the Company prior to the Closing, and the Company and the
Stockholders shall have used their respective best efforts to complete such
distributions prior to the Closing. Notwithstanding the foregoing, if any such
authorized distributions have not been completed prior to the Closing, the
Surviving Corporation shall use reasonable efforts to complete such authorized
distributions after the Closing. The Stockholders' sole recourse against the
Company with respect to this Section 7.08 shall be to receive the assets to be
distributed.
7.09 WORKING CAPITAL ADJUSTMENT. As soon as practicable, and in any event
within 75 days after the Closing Date, U.S. Concrete shall cause to be prepared
and delivered to the Stockholders a balance sheet of the Company as of August
31, 1999 (the "August 31, 1999 Balance Sheet") and a working capital adjustment
schedule (the "Adjustment Schedule"). The Adjustment Schedule will set forth
(a) the amount of cash on the August 31, 1999 Balance Sheet less the amount of
cash and cash equivalents of the Company distributed between August 31, 1999 and
the Closing Date (excluding the distribution of $116,000 from the proceeds of
the sale of real property located in Olive Branch, Mississippi), as set forth on
Schedule 7.08 (the "Adjusted Cash Amount") and (b) the amount of net working
capital of the Company at August 31, 1999 (computed by subtracting current
liabilities from current assets (excluding (i) cash and (ii) any current assets
of the Company distributed between August 31, 1999 and the Closing Date as set
forth on Schedule 7.08) listed on the August 31, 1999 Balance Sheet) (the
"Adjusted Working Capital Amount"). If the aggregate of the Adjusted Cash
Amount and the Adjusted Working Capital Amount (the "Adjusted Amount") is less
than $1,220,000, then the Stockholders shall, no later than 15 days after
delivery of the Adjustment Schedule by U.S. Concrete, pay to the Surviving
Corporation the amount by which $1,220,000 exceeds the Adjusted Amount (the
"Shortfall"). If the Adjusted Amount is greater than $1,220,000, then the
Surviving Corporation shall, no later than 15 days after delivery of the
Adjustment Schedule, pay to the Stockholders, on a pro rata basis in proportion
to their percentage ownership of the Company Common Stock outstanding
26
immediately prior to the Closing, the amount by which the Adjusted Amount
exceeds $1,220,000 (the "Excess"). The August 31, 1999 Balance Sheet and
Adjustment Schedule will be final and binding on the parties hereto unless,
within 15 days following the delivery of the Adjustment Schedule by U.S.
Concrete, the Stockholders notify U.S. Concrete in writing that the Stockholders
disagree with all or any portion of the August 31, 1999 Balance Sheet and/or the
Adjustment Schedule. If the Stockholders and U.S. Concrete cannot mutually
resolve any such disagreement within 15 days after the expiration of the
Stockholders' notice of disagreement, then the Stockholders and U.S. Concrete
shall submit the dispute to a mutually agreeable "Big Five" independent
certified public accountant (the "Accounting Firm") within 10 days after the end
of such 15-day period. If the Stockholders and U.S. Concrete are unable to
agree upon such an accountant within such 10-day period, then the Stockholders
and U.S. Concrete shall each select a "Big Five" accountant and within five days
after their selection, those two accountants shall select a third "Big Five"
accountant, which third accountant shall act as the Accounting Firm. The
Stockholders and U.S. Concrete shall request that the Accounting Firm audit the
August 31, 1999 Balance Sheet and provide a computation of the Adjusted Cash
Amount and/or the Adjusted Working Capital Amount within 30 days thereafter, and
this computation will be final and binding upon the parties hereto and used to
compute the Shortfall or the Excess, as the case may be, the payment of which
shall be made within five days of delivery by U.S. Concrete of the audited
August 31, 1999 Balance Sheet.
ARTICLE VIII
INDEMNIFICATION
The Stockholders, U.S. Concrete and Newco each make the following
covenants:
8.01 General Indemnification by the Stockholders. Subject to Section 8.05
and Section 8.06, the Stockholders covenant and agree that they will jointly and
severally (without any right of indemnification or contribution from the
Company) indemnify, defend, protect and hold harmless U.S. Concrete, Newco and
the Surviving Corporation, and their respective officers, directors, employees,
stockholders, agents, representatives and Affiliates, at all times from and
after the date of this Agreement from and against all Losses incurred by any of
such indemnified persons and entities as a result of or arising from (a) until
the Expiration Date any breach of the representations and warranties of the
Stockholders set forth herein or in the Schedules attached hereto or
certificates delivered in connection herewith, (b) any breach or nonfulfillment
of any covenant or agreement on the part of the Stockholders or the Company
under this Agreement, (c) all income Taxes payable by the Company for all
periods prior to and including the Closing Date, (d) all transfer and other
Taxes arising from the transactions contemplated by this Agreement, (e) any
violation of any Environmental Law by the Company or with respect to any
property currently or previously owned by the Company (f) any encroachment of
the improvements on the real property owned or leased by the Company upon any
property adjacent thereto or upon any easement or (g) all claims naming the
Company as a "potentially responsible party" in connection with the site known
as the South ▇▇▇ ▇▇▇▇▇▇ Superfund Site in West Memphis, Arkansas and/or the site
known as the ▇▇▇▇▇▇ Pit Site in ▇▇▇▇▇▇▇▇, Arkansas, including without limitation
those brought in the case of USA and the State of Arkansas v. Aircraft Service
International, et al, No. ▇-▇-98-362 in the United States District Court,
Eastern District of Arkansas, Jonesboro Division; provided, however, that in the
event any amount previously paid by the Company to cover clean-up costs of these
27
sites is returned to the Company, then Newco shall pay such amount to the
Stockholders, on a pro rata basis in proportion to their percentage ownership of
the Company Common Stock outstanding immediately prior to the Closing, within 30
days of receipt of such returned funds.
8.02 INDEMNIFICATION BY U.S. CONCRETE. Subject to Section 8.05 and Section
8.06, U.S. Concrete covenants and agrees that it will indemnify, defend, protect
and hold harmless the Stockholders and their respective agents, representatives,
Affiliates, beneficiaries and heirs and employees at all times from and after
the date of this Agreement from and against all Losses incurred by any of such
indemnified persons as a result of or arising from (a) until the Expiration
Date, any breach of the representations and warranties of U.S. Concrete or Newco
set forth herein or in the Schedules attached hereto or certificates delivered
in connection herewith or (b) any breach or nonfulfillment of any covenant or
agreement on the part of U.S. Concrete or Newco under this Agreement.
8.03 THIRD PERSON CLAIMS. Promptly after any party entitled to
indemnification under Sections 8.01 and 8.02 hereof (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person or entity not a party to this Agreement ("Third Person"), of the
commencement of any action or proceeding by a Third Person, which the
Indemnified Party believes in good faith is an indemnifiable claim under this
Agreement, the Indemnified Party shall give to the party obligated to provide
indemnification pursuant to Sections 8.01 or 8.02 hereof (hereinafter the
"Indemnifying Party") written notice of such claim or the commencement of such
action or proceeding. Such notice shall state the nature and the basis of such
claim and a reasonable estimate of the amount thereof. The Indemnifying Party
shall have the right to defend and settle, at its own expense and by its own
counsel reasonably acceptable to the Indemnified Party, any such matter so long
as the Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in all commercially
reasonable respects in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records and other information reasonably
requested by the Indemnifying Party and in the Indemnified Party's possession or
control. After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability, and for
so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability; provided, however, that the Indemnified Party shall
be entitled, at its expense, to participate in the defense of such asserted
liability and the negotiations of the settlement thereof. The Indemnifying
Party shall not settle any such Third Person claim without the consent of the
Indemnified Party, unless the settlement thereof imposes no liability or
obligation on, and includes a complete release from liability of, the
Indemnified Party. If the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person claim and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section with respect to such Third Person claim shall be limited to
the amount so offered in settlement by said Third Person; provided, however,
that notwithstanding the foregoing, the Indemnified Party shall be entitled to
refuse to consent to any such proposed settlement and the Indemnifying Party's
liability hereunder shall not be limited by the amount of the proposed
settlement if such settlement imposes any liability or obligation on, or does
not provide for the complete release of, the Indemnified Party. If, upon
receiving notice, the Indemnifying Party does not timely undertake to
28
defend such matter to which the Indemnified Party is entitled to indemnification
hereunder, or fails diligently to pursue such defense, the Indemnified Party may
undertake such defense through counsel of its choice, at the cost and expense of
the Indemnifying Party, and the Indemnified Party may settle such matter, in its
discretion, and the Indemnifying Party shall reimburse the Indemnified Party for
the amount paid in such settlement and any other liabilities or expenses
incurred by the Indemnified Party in connection therewith.
8.04 Non-Third Person Claims. In the event that any Indemnified Party
asserts the existence of a claim giving rise to Losses (but excluding claims
resulting from the assertion of liability by Third Persons), such party shall
give written notice to the Indemnifying Party. Such written notice shall state
that it is being given pursuant to this Section 8.04, specify the nature and
amount of the claim asserted, and indicate the date on which such assertion
shall be deemed accepted and the amount of the claim deemed a valid claim (such
date to be established in accordance with the next sentence). If such
Indemnifying Party, within 60 days after the mailing of notice by such
Indemnified Party, shall not give written notice to such Indemnified Party
announcing such Indemnifying Party's intent to contest such assertion of such
Indemnified Party, such assertion shall be deemed accepted and the amount of
such claim shall be deemed a valid claim. In the event, however, that such
Indemnifying Party contests such assertion of a claim by giving such written
notice to the Indemnified Party within said period, then the parties shall act
in good faith to reach agreement regarding such claim. In the event that
litigation shall arise with respect to any such claim, the prevailing party
shall be entitled to reimbursement of costs and expenses incurred in connection
with such litigation including reasonable attorneys' fees, if the parties
hereto, acting in good faith, cannot reach agreement with respect to such claim
within 60 days after the notice provided by the Indemnified Party.
8.05 Indemnification Deductible. Neither the Stockholders, on the one
hand, nor U.S. Concrete, Newco and the Surviving Corporation, on the other hand,
shall be entitled to indemnification from the other under the provisions of
Section 8.01(a) or Section 8.02(a), as the case may be, until such time as, and
only to the extent that, the claims subject to indemnification by such other
party exceed, in the aggregate, $77,974. Notwithstanding the foregoing, the
limitations set forth in this Section 8.05 shall not apply to fraudulent
misrepresentations.
8.06 INDEMNIFICATION LIMITATION. Subject to Section 8.05, the aggregate
indemnification obligation of the Stockholders under Section 8.01(a) and of U.S.
Concrete and Newco under Section 8.02(a) shall be limited to $7,797,390.
Notwithstanding the foregoing, the limitations set forth in this Section 8.06
shall not apply to fraudulent misrepresentations.
8.07 Indemnification for Negligence of Indemnified Party. THE RIGHTS TO
INDEMNIFICATION UNDER THIS ARTICLE VIII INCLUDE RIGHTS TO INDEMNIFICATION FOR
THE RESULTS OF AN INDEMNIFIED PARTY'S ACTUAL OR ALLEGED NEGLIGENCE, IF SUCH
INDEMNIFIED PARTY WOULD OTHERWISE BE ENTITLED TO INDEMNIFICATION HEREUNDER.
29
ARTICLE IX
NONCOMPETITION COVENANTS
9.01 PROHIBITED ACTIVITIES.
(a) For no additional consideration, each Stockholder will not for five
years following the Closing Date and, if any Stockholder is party to an
Employment Agreement, if longer, one year following such Stockholder's
termination of employment with the Surviving Corporation or its Affiliates (with
the applicable period being herein referred to as the "Noncompete Term"),
directly or indirectly, for himself or on behalf of or in conjunction with any
other person, company, partnership, corporation or business or other entity of
whatever nature:
(i) engage, as an officer, director, shareholder, owner, investor,
partner, joint venturer, or in a managerial or advisory capacity, whether
as an employee, independent contractor, consultant or advisor, or as a
sales representative, dealer or distributor, in any Competitive Business
within any Territory surrounding any plant or other operating facility in
which the Company was engaged in business on the date immediately prior to
the Closing Date (for purposes of this ARTICLE IX, the "Territory"
surrounding any plant or other operating facility will be: (A) the city,
town or village in which that plant or facility is located, (B) the county
or parish in which that plant or facility is located, (C) the counties or
parishes contiguous to the county or parish in which that plant or facility
is located, (D) the area located within 50 miles of that plant or facility,
(E) the area located within 100 miles of that plant or facility and (F) the
area in which that plant or facility regularly provides products or
services at the locations of its customers).
(ii) call upon or otherwise solicit any person, who is, at that time,
an employee or consultant of U.S. Concrete, the Surviving Corporation or
any of their respective subsidiaries, for the purpose or with the intent or
effect of enticing such employee or consultant away from or out of the
employ or contract with U.S. Concrete, the Surviving Corporation or any of
their respective subsidiaries;
(iii) call upon or otherwise solicit any person or entity which is,
at that time, or which has been, within two years prior to that time, a
customer of the Company, U.S. Concrete or the Surviving Corporation or any
of the subsidiaries of such parties within the Territory for the purpose of
soliciting or selling services or products in a Competitive Business within
the Territory; or
(iv) call upon or otherwise solicit any entity which the Company or
U.S. Concrete has called on in connection with the possible acquisition by
either of them of such entity or of which either of them has made an
acquisition analysis, with the knowledge of that entity's status as an
acquisition candidate of U.S. Concrete, for the purpose of acquiring that
entity or arranging the acquisition of that entity by any person or entity
other than U.S. Concrete.
(b) Notwithstanding the above, Section 9.01(a) shall not be deemed to
prohibit any Stockholder from acquiring, as a passive investor with no
involvement in the operations of the business,
30
not more than one percent of the capital stock of a Competitive Business whose
stock is publicly traded on a national securities exchange, the Nasdaq National
Market or over-the-counter.
9.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to U.S. Concrete and the Surviving Corporation as a result of a breach of
the foregoing covenant, because a breach of such covenant would diminish the
value of the assets, properties and business of the Company being sold pursuant
to this Agreement, and because of the immediate and irreparable damage that
could be caused to U.S. Concrete and the Surviving Corporation for which it
would have no other adequate remedy, each Stockholder agrees that the foregoing
covenant may be enforced against such individual by injunctions, restraining
orders and other equitable actions.
9.03 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this ARTICLE IX are necessary in terms of time, activity
and territory to protect U.S. Concrete's and the Surviving Corporation's
interest in the assets, properties and business being acquired pursuant to the
terms of this Agreement and impose a reasonable restraint on the Stockholders in
light of the activities and businesses of U.S. Concrete on the date of the
execution of this Agreement and the current plans of U.S. Concrete.
9.04 SEVERABILITY; REFORMATION. The covenants in this ARTICLE IX are
severable and separate, and the unenforceability of any specific covenant shall
not affect the continuing validity and enforceability of any other covenant. In
the event any court of competent jurisdiction shall determine that the scope,
time or territorial restrictions set forth in this ARTICLE IX are unreasonable
and therefore unenforceable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems reasonable
and this Agreement shall thereby be reformed.
9.05 MATERIAL AND INDEPENDENT COVENANT. The Stockholders acknowledge that
their agreements and the covenants set forth in this ARTICLE IX are material
conditions to U.S. Concrete's and Newco's agreements to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and that U.S.
Concrete and Newco would not have entered into this Agreement without such
covenants. All of the covenants in this ARTICLE IX shall be construed as an
agreement independent of any other provision in this Agreement. The existence of
any claim or cause of action by any Stockholder against U.S. Concrete, whether
predicated on this Agreement or otherwise, will not constitute a defense to the
enforcement by U.S. Concrete of any of the covenants of this ARTICLE IX. It is
specifically agreed that the time period Section 9.01 specifies will be computed
in the case of each Stockholder by excluding from that computation any time
during which that Stockholder is in violation of any provision of Section 9.01.
The covenants this ARTICLE IX contains will not be affected by any breach of any
other provision hereof by any party hereto.
ARTICLE X
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
10.01 General. The Stockholders recognize and acknowledge that they had
in the past, currently have, and in the future will have, access to certain
confidential information relating to the businesses of the Company, the
Surviving Corporation and/or U.S. Concrete, including, without limitation, lists
of customers, operational policies, and pricing and cost policies that are, and
31
following the Closing will be, valuable, special and unique assets of the
Surviving Corporation and U.S. Concrete. Each Stockholder agrees that he or she
will not use or disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose whatsoever, except as
is required in the course of performing his or her duties, if any, to the
Surviving Corporation and/or U.S. Concrete, unless (a) such information becomes
known to the public generally through no fault of the Stockholder or (b)
disclosure is required by Law, provided that prior to disclosing any information
pursuant to this clause (b) the disclosing Stockholder(s) shall give prior
written notice thereof to U.S. Concrete and the Surviving Corporation and
provide U.S. Concrete with the opportunity to contest such disclosure. In the
event of a breach or threatened breach by any Stockholder of the provisions of
this Section, U.S. Concrete shall be entitled to an injunction restraining such
Stockholder from disclosing, in whole or in part, such confidential information.
Nothing herein shall be construed as prohibiting U.S. Concrete from pursuing any
other available remedy for such breach or threatened breach, including, without
limitation, the recovery of damages.
10.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to U.S. Concrete and the Surviving Corporation as a result of the breach
of the foregoing covenant, because a breach of such covenant would diminish the
value of the assets, properties and business of the Company being sold pursuant
to this Agreement, and because of the immediate and irreparable damage that
would be caused for which the Surviving Corporation and/or U.S. Concrete would
have no other adequate remedy, each Stockholder agrees that the foregoing
covenants may be enforced against such individual by injunctions, restraining
orders and other equitable actions.
ARTICLE XI
INTENDED TAX TREATMENT
11.01 TAX-FREE REORGANIZATION. U.S. Concrete and the Stockholders are
entering into this Agreement with the intention that the Merger qualify as a
tax-free reorganization for federal income tax purposes, except to the extent of
any "boot" received, and neither U.S. Concrete nor the Stockholders will take
any actions that disqualify the Merger for such treatment.
ARTICLE XII
FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE
COMMON STOCK
12.01 Compliance with Law. The Stockholders acknowledge the shares of
U.S. Concrete Common Stock issued in accordance with the terms of this Agreement
(the "Restricted Shares") will not be registered under the 1933 Act and
therefore may not be resold without compliance with the 1933 Act. The
Restricted Shares are being or will be acquired by the Stockholders solely for
their own account, for investment purposes only, and with no present intention
of distributing, selling or otherwise disposing of them in connection with a
distribution. Each Stockholder covenants, warrants and represents that none of
the Restricted Shares held by such Stockholder will be, directly or indirectly,
offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all of the
32
applicable provisions of the 1933 Act and the rules and regulations of the SEC.
Certificates representing the Restricted Shares shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE NOT ISSUED IN A TRANSACTION
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"),
OR ANY APPLICABLE STATE SECURITIES LAWS. THE SHARES REPRESENTED HEREBY
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED UNLESS
SUCH SALE OR TRANSFER IS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE
OPINION OF COUNSEL TO THE ISSUER, IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS.
12.02 Economic Risk; Sophistication; Accredited Investors. Schedule 12.02
correctly states (i) whether each Stockholder is, or is not, an "accredited
investor" as defined in the Securities Act Rule 501(a) and, if he or she is not
such an investor, (ii) the name and address of his or her "purchaser
representative(s)" (as defined in Securities Act Rule 501(h)). Each Stockholder
is able to bear the economic risk of an investment in the Restricted Shares and
can afford to sustain a total loss of such investment. Each Stockholder has
such knowledge and experience in financial and business matters that he or she
is capable of evaluating the merits and risks of the proposed investment and
therefore has the capacity to protect his or her own interests in connection
with the acquisition of the Restricted Shares pursuant hereto. The purchaser
representative(s) of each Stockholder that is not an accredited investor has
received and reviewed a copy of each of the Prospectus and 10-Q. Each
Stockholder and his or her purchaser representative(s), if such Stockholder is
not an accredited investor, has had an adequate opportunity to ask questions of,
and receive answers from the appropriate officers and representatives of U.S.
Concrete and Newco concerning, among other matters, U.S. Concrete, its
management, business, operations and financial condition, its plans for the
operation of its business and potential additional acquisitions, and to obtain
any additional information requested by such Stockholder or his or her purchaser
representative(s), if such Stockholder is not an accredited investor, concerning
such matters, and all those questions have been answered to the satisfaction of
such Stockholder or purchaser representative(s).
12.03 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the SEC that may permit the resale of U.S.
Concrete Common Stock to the public without registration, for a period of two
years after the Closing, U.S. Concrete agrees to use its commercially reasonable
efforts to:
(a) make and keep public information (as such terms are defined in
Rule 144) regarding U.S. Concrete available;
(b) file with the SEC in a timely manner all reports and other
documents required of U.S. Concrete under the 1933 Act and the 1934 Act;
and
(c) furnish to a Stockholder upon written request a written statement
by U.S. Concrete as to its compliance with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, a copy of the most recent annual
or quarterly report of U.S. Concrete, and such other reports and documents
so filed as such Stockholder may reasonably request in availing
33
himself or herself of any rule or regulation of the SEC allowing such
Stockholder to sell any such shares without registration.
12.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES. The
Stockholders covenant, warrant and represent that (i) none of the Restricted
Shares will be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of, directly or indirectly, during the one-year period
commencing on the Closing Date (the "Initial Lockup Period") and (ii) 50% of the
Restricted Shares will not be offered, sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of, directly or indirectly, during the two-
year period commencing on the Closing Date (the "Secondary Lockup Period" and
together with the Initial Lockup Period, the "Lockup Periods") and, after the
applicable Lockup Period, the Restricted Shares may be offered, sold, assigned,
pledged, hypothecated, transferred or otherwise disposed of directly or
indirectly, only after full compliance with all of the applicable provisions of
the 1933 Act and the rules and regulations of the SEC; and, during the
applicable Lockup Period, the Stockholders shall not engage in put, call, short-
sale, hedge, straddle, collar or similar transactions intended to reduce the
Stockholders' risk of owning the Restricted Shares subject to the applicable
Lockup Period. Certificates representing 50% of the Restricted Shares shall
bear the following legend, which shall reflect the Initial Lockup Period, in
addition to the legend under Section 12.01:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL
RESTRICTION ON TRANSFER THAT EXPIRES ON SEPTEMBER 14, 2000 AND MAY NOT BE
OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE
PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC.
Certificates representing the remaining 50% of the Restricted Shares shall bear
the following legend, which shall reflect the Secondary Lockup Period, in
addition to the legend under Section 12.01:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL
RESTRICTION ON TRANSFER THAT EXPIRES ON SEPTEMBER 14, 2001 AND MAY NOT BE
OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE
PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC.
ARTICLE XIII
MISCELLANEOUS
13.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES. This Agreement and the
rights of the parties hereunder may not be assigned (except by operation of Law)
and shall be binding upon and shall inure to the benefit of the parties hereto,
the successors of U.S. Concrete, Newco, the Surviving Corporation and the
Company, and the heirs and legal representatives of the Stockholders. Except as
provided in ARTICLE VIII or in this Section 13.01, nothing in this Agreement is
intended or will be construed to confer upon or give any person or entity other
than the parties hereto any rights or remedies under or by reason of this
Agreement or any transaction contemplated hereby.
34
13.02 ENTIRE AGREEMENT. This Agreement (including the Schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders, the
Company, Newco and U.S. Concrete and supersede any prior agreement and
understanding relating to the subject matter of this Agreement, including,
without limitation, the Letter of Intent. This Agreement may be modified or
amended only by a written instrument executed by the Stockholders, the Company,
Newco and U.S. Concrete, acting through their respective officers, duly
authorized by their respective Boards of Directors. Any right hereunder may be
waived only by a written instrument executed by the party waiving such right.
13.03 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. Facsimile
transmission of any signed original document and/or retransmission of any signed
facsimile transmission will be deemed the same as delivery of an original. At
the request of any party, the parties will confirm facsimile transmission by
signing a duplicate original document.
13.04 BROKERS AND AGENTS. Each party hereto represents and warrants that
it employed no broker or agent in connection with the transactions contemplated
by this Agreement. Each party agrees to indemnify each other party against all
loss, cost, damages or expense arising out of claims for fees or commissions of
brokers employed or alleged to have been employed by such indemnifying party.
13.05 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested (which will be deemed
given three business days after deposit), or by delivering the same in person to
an officer or agent of such party (which will be deemed given when actually
received), as follows:
If to U.S. Concrete, Newco or the Surviving Corporation, addressed to them
at:
U.S. Concrete, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Secretary
If to the Stockholders, addressed as follows:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ Carrier
77 Waring
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ Carrier
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee for ▇▇▇▇ ▇▇▇▇▇▇▇ (TN UGMA)
77 Waring
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ Carrier, Trustee for
▇▇▇▇▇▇▇ ▇▇▇▇▇ Carrier, Jr. (TN UGMA)
77 Waring
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
77 Waring
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, Esq.
or such other address as any party hereto shall specify pursuant to this Section
13.05 from time to time.
13.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in ARTICLE V and ARTICLE VI shall survive the Closing for a
period of two years from the Closing Date (the "Expiration Date"), except that
the representations and warranties set forth in Sections 5.03, 5.11, 5.16 and
5.18 hereof shall survive until such time as the applicable statute of
limitations period has run, which shall be deemed to be the Expiration Date for
Sections 5.03, 5.11, 5.16 and 5.18, as the case may be. The respective parties
shall remain liable after the Expiration Date for breaches of the
representations and warranties set forth in ARTICLE V and ARTICLE VI, provided
such breaches are asserted in good faith by notice in writing to the alleged
breaching party prior to the Expiration Date.
13.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE. Except as
otherwise provided herein, no delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of any similar breach or default occurring later; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default occurring before or after that waiver. No right, remedy or
election any term of this Agreement gives will be deemed exclusive, but each
will be cumulative with all other rights, remedies and elections available at
law or in equity.
13.08 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal
36
and enforceable, but so as to most nearly retain the intent of the parties, and
if such modification is not possible, such provision shall be severed from this
Agreement, and in either case, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
13.09 Section Headings; Gender. The Section headings contained in this
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement. Words of the masculine gender
in this Agreement shall be deemed and construed to include correlative words of
the feminine and neuter genders and words of the neuter gender shall be deemed
and construed to include correlative words of the masculine and feminine
genders.
13.10 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Tennessee (except for its principles governing
conflicts of laws).
13.11 DISPUTE RESOLUTION.
(a) Except with respect to injunctive relief as provided in Section 9.02
and Section 10.02 (which relief may be sought from any court or administrative
agency with jurisdiction with respect thereto), any unresolved dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in accordance with the rules of the American
Arbitration Association then in effect. The arbitration shall be conducted by a
retired judge employed by the Atlanta, Georgia Regional Office of
J.A.M.S./Endispute, Inc. ("JAMS"). The arbitration shall be held in JAMS'
Atlanta, Georgia office.
(b) The parties shall obtain from JAMS a list of the retired judges
available to conduct the arbitration. The parties shall use their reasonable
efforts to agree upon a judge to conduct the arbitration. If the parties cannot
agree upon a judge to conduct the arbitration within 10 days after receipt of
the list of available judges, the parties shall ask JAMS to provide the parties
a list of three available judges (the "Judge List"). Within five days after
receipt of the Judge List, each party shall strike one of the names of the
available judges from the Judge List and return a copy of such list to JAMS and
the other party. If two different judges are stricken from the Judge List, the
remaining judge shall conduct the arbitration. If only one judge is stricken
from the Judge List, JAMS shall select a judge from the remaining two judges on
the Judge List to conduct the arbitration.
(c) The arbitrator shall not have the authority to add to, detract from, or
modify any provision hereof nor to award punitive damages to any injured party.
The arbitrator shall have the authority to order payment of damages,
reimbursement of costs, including those incurred to enforce this Agreement, and
interest thereon in the event the arbitrator determines that a material breach
of this Agreement has occurred. A decision by the arbitrator shall be final and
binding. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
37
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 XI ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
_____________________________
▇▇▇▇▇▇ ▇▇▇▇▇, President
CARRIER EXCAVATION AND
FOUNDATION COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
__________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Carrier
___________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇ Carrier, Individually
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
38
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, TRUSTEE FOR
▇▇▇ ▇▇▇▇▇▇▇ (TN UGMA)
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
______________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇▇ ▇▇▇▇▇ CARRIER, TRUSTEE FOR
▇▇▇▇▇▇▇ ▇▇▇▇▇ CARRIER, JR. (TN UGMA)
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Carrier
______________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇ Carrier, Trustee
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
______________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
39