EXHIBIT 2.13
ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
U.S. CONCRETE, INC.,
CONCRETE XIX ACQUISITION, INC.,
▇▇▇▇▇▇▇▇▇ FUEL & SUPPLY, INC.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
AND
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, TRUSTEE URTA OF
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, DATED OCTOBER 4, 1995
Dated as of February 8, 2000
TABLE OF CONTENTS
ARTICLE I DEFINITIONS............................................................................ 1
1.01 Definitions............................................................................ 1
1.02 Interpretation......................................................................... 5
ARTICLE II THE MERGER AND THE SURVIVING CORPORATION............................................... 6
2.01 The Merger............................................................................. 6
2.02 Effective Time of the Merger........................................................... 6
2.03 Certificate of Incorporation, Bylaws and Board of Directors of Surviving Corporation... 6
ARTICLE III CONVERSION OF SHARES................................................................... 6
3.01 Conversion of Shares................................................................... 6
3.02 Newco Shares........................................................................... 7
3.03 Delivery of Merger Consideration....................................................... 7
ARTICLE IV CLOSING................................................................................ 7
4.01 Closing................................................................................ 7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS..................................... 7
5.01 Due Organization and Qualification..................................................... 7
5.02 Authorization; Non-Contravention; Approvals............................................ 8
5.03 Capitalization and Ownership........................................................... 9
5.04 Subsidiaries........................................................................... 9
5.05 Financial Statements................................................................... 9
5.06 Liabilities and Obligations............................................................ 10
5.07 Accounts and Notes Receivable.......................................................... 10
5.08 Properties and Assets.................................................................. 11
5.09 Material Customers and Contracts....................................................... 13
5.10 Permits................................................................................ 14
5.11 Environmental Matters.................................................................. 14
5.12 Labor and Employee Relations; Employment Matters....................................... 15
5.13 Insurance.............................................................................. 16
5.14 Compensation; Employment Agreements.................................................... 16
5.15 Noncompetition, Confidentiality and Nonsolicitation Agreements; Employee Policies...... 16
5.16 Employee Benefit Plans................................................................. 17
5.17 Litigation and Compliance with Law..................................................... 19
5.18 Taxes.................................................................................. 19
5.19 Absence of Changes..................................................................... 20
5.20 Accounts with Banks and Brokerages; Powers of Attorney................................. 21
5.21 Absence of Certain Business Practices.................................................. 21
5.22 Competing Lines of Business; Related-Party Transactions................................ 21
5.23 Intangible Property.................................................................... 21
5.24 Capital Expenditures................................................................... 22
5.25 Inventories............................................................................ 22
5.26 Tax Reorganization Representation...................................................... 22
5.27 Absence of Interest-Bearing Debt....................................................... 22
5.28 No Implied Representations............................................................. 22
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5.29 Disclosure............................................................................. 22
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND
NEWCO.................................................................................. 22
6.01 Organization........................................................................... 22
6.02 Authorization; Non-Contravention; Approvals............................................ 23
6.03 U.S. Concrete Common Stock............................................................. 23
6.04 Tax Reorganization Representations..................................................... 24
6.05 SEC Filings; Disclosure................................................................ 24
6.06 No Implied Representations............................................................. 25
6.07 Disclosure............................................................................. 25
ARTICLE VII CERTAIN COVENANTS...................................................................... 25
7.01 Release From Guarantees................................................................ 25
7.02 Future Cooperation; Tax Matters........................................................ 25
7.03 Expenses............................................................................... 26
7.04 Legal Opinion.......................................................................... 26
7.05 Employment Agreements.................................................................. 26
7.06 Repayment of Related Party Indebtedness................................................ 26
7.07 Stock Options.......................................................................... 26
7.08 Pre-Closing Distributions.............................................................. 26
7.09 Working Capital Adjustment............................................................. 27
7.10 Wastewater Discharge Permit............................................................ 28
7.11 Other Documents........................................................................ 28
7.12 Benefit Plans.......................................................................... 29
ARTICLE VIII INDEMNIFICATION........................................................................ 29
8.01 General Indemnification by the Stockholders............................................ 29
8.02 Indemnification by U.S. Concrete....................................................... 30
8.03 Third Person Claims.................................................................... 30
8.04 Non-Third Person Claims................................................................ 31
8.05 Indemnification Deductible............................................................. 31
8.06 Liability Limitation................................................................... 31
8.07 Form of Indemnity Payment.............................................................. 31
ARTICLE IX NONCOMPETITION COVENANTS............................................................... 32
9.01 Prohibited Activities.................................................................. 32
9.02 Equitable Relief....................................................................... 32
9.03 Reasonable Restraint................................................................... 33
9.04 Severability; Reformation.............................................................. 33
9.05 Material and Independent Covenant...................................................... 33
ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................................. 33
10.01 General................................................................................ 33
10.02 Equitable Relief....................................................................... 34
ARTICLE XI INTENDED TAX TREATMENT................................................................. 34
11.01 Tax-Free Reorganization................................................................ 34
ARTICLE XII FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON STOCK...... 34
12.01 Compliance with Law.................................................................... 34
12.02 Economic Risk; Sophistication; Accredited Investors.................................... 35
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12.03 Rule 144 Reporting..................................................................... 35
12.04 Restriction on Sale or Other Transfer of Restricted Shares............................. 35
12.05 Prospectus Delivery.................................................................... 36
12.06 Removal of Legends..................................................................... 36
ARTICLE XIII MISCELLANEOUS.......................................................................... 36
13.01 Successors and Assigns; Rights of Parties.............................................. 36
13.02 Entire Agreement....................................................................... 36
13.03 Counterparts........................................................................... 36
13.04 Brokers and Agents..................................................................... 37
13.05 Notices................................................................................ 37
13.06 Survival of Representations and Warranties............................................. 37
13.07 Exercise of Rights and Remedies; Remedies Cumulative................................... 38
13.08 Reformation and Severability........................................................... 38
13.09 Section Headings; Gender............................................................... 38
13.10 Governing Law.......................................................................... 38
13.11 Dispute Resolution..................................................................... 38
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ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is
made as of February 8, 2000, by and among U.S. Concrete, Inc., a Delaware
corporation ("U.S. Concrete"), Concrete XIX Acquisition, Inc., a Delaware
corporation that is a subsidiary of U.S. Concrete ("Newco"), ▇▇▇▇▇▇▇▇▇ Fuel &
Supply, Inc., a Michigan corporation (the "Company") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
("Deneweth") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, individually and as Trustee URTA of ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, Dated October 4, 1995 ("▇▇▇▇▇▇▇▇▇") (Deneweth and ▇▇▇▇▇▇▇▇▇ are
each referred to hereinafter as a "Stockholder" and collectively, the
"Stockholders"), with the Stockholders being all of the Company's Stockholders.
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively referred to as "Constituent Corporations") deem it advisable and
in the best interests of the Constituent Corporations and the stockholders of
the Constituent Corporations that Newco merge with and into the Company (the
"Merger");
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization within the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, the stockholders of the Constituent Corporations have approved the
Merger in accordance with the GCL and the MBCA; and
WHEREAS, U.S. Concrete is also, pursuant to separate written agreements,
acquiring the equity interests of ▇▇▇▇▇▇▇▇▇ Leasing, Inc. (the "Leasing Merger
Agreement") and Dencor, Inc. (the "Dencor Stock Purchase Agreement");
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. Capitalized terms used in this Agreement shall have the
following meanings:
"Affiliate" of, or "Affiliated" with, a specified person or entity means a
person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the specified person or entity.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Balance Sheet Date" has the meaning set forth in Section 5.05.
"Broker" has the meaning set forth in Section 13.04.
"Closing" has the meaning set forth in ARTICLE IV.
"Closing Date" has the meaning set forth in ARTICLE IV.
"Code" has the meaning set forth in the third paragraph of this Agreement.
"Company" has the meaning set forth in the first paragraph of this Agreement.
"Company Common Stock" means the Company's common stock, $10.00 par value per
share.
"Competitive Business" means any business that competes with any business of
U.S. Concrete existing on the date hereof, including, without limitation, any
business that involves the production and sale of ready-mixed concrete
(including truck-mixed concrete) and other cement mixtures; pre-cast concrete
products and slag products.
"Constituent Corporations" has the meaning set forth in the second paragraph
of this Agreement.
"Effective Time" has the meaning set forth in Section 2.02.
"Employee benefit plan" has the meaning set forth in Section 5.16.
"Employee pension benefit plan" has the meaning set forth in Section 5.16.
"Employment Agreements" has the meaning set forth in Section 7.05.
"Encumbrances" means all liens, encumbrances, mortgages, pledges, security
interests, conditional sales agreements, charges, options, preemptive rights,
rights of first refusal, reservations, restrictions or other encumbrances or
defects in title.
"Environmental Laws" means any and all Laws or agreements between Company and
any Governmental Authority relating to (a) the protection, preservation or
restoration of the environment (including, without limitation, ambient air,
surface water (including water management and runoff), groundwater, drinking
water supply, surface land, subsurface strata, plant and animal life or any
other natural resource) or human health or safety, (b) emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes (including, without
limitation, Hazardous Substances) or noxious noise or odor into the environment
or (c) the exposure to, or the use, storage, recycling, treatment, manufacture,
generation, transport, processing, handling, labeling, production, removal or
disposal of any pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes (including, without limitation, Hazardous
Substances), in each case as amended from time to time and as now or hereafter
in effect. The term "Environmental Laws" includes, without limitation, the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980 (CERCLA), the Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal
Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste
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Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide
Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of
1970, the Safe Drinking Water Act, the Atomic Energy Act and the Hazardous
Materials Transportation Act, and any comparable or similar Michigan Law, in
each case as amended from time to time, and any other Laws now or hereafter
relating to any of the foregoing.
"ERISA" has the meaning set forth in Section 5.16.
"ERISA Affiliate" has the meaning set forth in Section 5.16.
"Expiration Date" has the meaning set forth in Section 13.06.
"Financial Statements" has the meaning set forth in Section 5.05.
"GAAP" means generally accepted accounting principles as currently applied by
the respective party on a basis consistent with preceding years and throughout
the periods involved.
"GCL" means the General Corporation Law of the State of Delaware, as amended.
"Governmental Authority" means any federal, state, local or foreign
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or quasi-
governmental authority.
"Hazardous Substances" means any and all substances presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law. The term "Hazardous
Substances" includes, without limitation, any substance to which exposure is
regulated by any Environmental Law including, without limitation, any toxic
waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous
waste, special waste, industrial substance or petroleum or any derivative or by-
product thereof, radon, radioactive material, asbestos or asbestos containing
material, urea formaldehyde foam insulation, lead or polychlorinated biphenyls.
"Incentive Plan" has the meaning set forth in Section 7.07.
"Indemnified Party" has the meaning set forth in Section 8.03.
"Indemnifying Party" has the meaning set forth in Section 8.03.
"Interest-Bearing Debt" means the total amount of outstanding indebtedness of
the Company for borrowed money (including, without limitation, bank debt,
equipment debt, capital lease obligations with non-affiliates of Company, bank
overdrafts and any other indebtedness for borrowed money).
"Interim Balance Sheet" has the meaning set forth in Section 5.05.
"Interim Financial Statements" has the meaning set forth in Section 5.05.
"IRCA" has the meaning set forth in Section 5.12.
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"JAMS" has the meaning set forth in Section 13.10.
"Judge List" has the meaning set forth in Section 13.10.
"Laws" means any and all federal, state, local or foreign statutes, laws,
ordinances, codes, rules, regulations, orders, decrees, judgments and
injunctions of any Governmental Authority, including, without limitation, those
covering, Tax, energy, safety, health, transportation, bribery, record keeping,
zoning, discrimination, antitrust and wage and hour matters, in each case as
amended and in effect from time to time.
"Letter of Intent" means that certain letter of intent dated December 15,
1999 by and among U.S. Concrete, the Company and the Stockholders, and the other
parties named therein, as amended or supplemented.
"Listed Agreements" has the meaning set forth in Section 5.09.
"Lockup Period" has the meaning set forth in Section 12.04.
"Losses" means any and all liabilities, losses, claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, fees, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees and
costs and expenses of investigation), net of (i) income Tax effects with respect
thereto (including, without limitation, income Tax benefits recognized in
connection therewith and income Taxes upon any indemnification recovery
thereof), and (ii) insurance proceeds related to such Losses actually received
by the Indemnified Party; provided, however, that no Indemnified Party shall be
under any obligation either to insure any particular risk or to make a claim
under an existing policy (except that the Surviving Corporation agrees to
continue to pursue the insurance claim made by Company in connection with the
litigation disclosed on Schedule 5.17).
"MBCA" means the Michigan Business Corporation Act, as amended.
"Material Customers" has the meaning set forth in Section 5.09.
"Merger" has the meaning set forth in the second paragraph of this Agreement.
"Merger Consideration" has the meaning set forth in Section 3.01.
"Merger Filings" has the meaning set forth in Section 2.02.
"Newco" has the meaning set forth in the first paragraph of this Agreement.
"Noncompete Term" has the meaning set forth in Section 9.01(a).
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
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"Permits" has the meaning set forth in Section 5.10.
"Permitted Encumbrances" means any and all (a) Encumbrances reserved against
in the Interim Balance Sheet, (b) Encumbrances for property or ad valorem Taxes
not yet due and payable or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are maintained
on the Company's books in accordance with GAAP, and (c) obligations described in
Schedule 5.08.
"Plan" has the meaning set forth in Section 5.16.
"Qualified Plan" has the meaning set forth in Section 5.16.
"Restricted Shares" has the meaning set forth in Section 12.01.
"Rule 144" means Rule 144 as promulgated under the 1933 Act.
"SEC" means the Securities and Exchange Commission.
"Stockholders" has the meaning set forth in the first paragraph of this
Agreement.
"Structures" has the meaning set forth in Section 5.08.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Taxes" has the meaning set forth in Section 5.18.
"Territory" has the meaning set forth in Section 9.01.
"Third Person" has the meaning set forth in Section 8.03.
"U.S. Concrete" has the meaning set forth in the first paragraph of this
Agreement.
"U.S. Concrete Common Stock" means U.S. Concrete's Common Stock, par value
$.001 per share.
"Year-End Financial Statements has the meaning set forth in Section 5.05.
1.02 INTERPRETATION. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in Section 1.01 and elsewhere in this Agreement include
the plural as well as the singular and vice versa;
(b) all accounting terms not otherwise defined herein have the meanings
ascribed to them in accordance with GAAP; and
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(c) the words "herein," "hereof," and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE II
THE MERGER AND THE SURVIVING CORPORATION
2.01 THE MERGER. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time in accordance with the MBCA and the GCL, Newco
shall be merged with and into the Company and the separate existence of Newco
shall thereupon cease. The Company shall be the surviving corporation in the
Merger (hereinafter sometimes referred to as the "Surviving Corporation").
2.02 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective at
such time (the "Effective Time") as (a) holders of all of the Company Common
Stock approve the Merger, and (b) a certificate of merger, in form mutually
acceptable to U.S. Concrete and the Company, is filed with the Secretary of
State of the State of Delaware and the Michigan Department of Consumer &
Industry Services, respectively (the "Merger Filings"). The Merger Filings
shall be made simultaneously with or as soon as practicable after the Closing.
2.03 CERTIFICATE OF INCORPORATION, BYLAWS AND BOARD OF DIRECTORS OF
SURVIVING CORPORATION. As a result of the Merger and at the Effective Time:
(a) The Certificate of Incorporation of the Company in effect immediately
prior to the Effective Time shall become the Certificate of Incorporation
of the Surviving Corporation. After the Effective Time, the Certificate of
Incorporation of the Surviving Corporation may be amended in accordance
with its terms and as provided in the MBCA.
(b) The Bylaws of the Company in effect immediately prior to the Effective
Time shall become the Bylaws of the Surviving Corporation, and thereafter
may be amended in accordance with their terms and as provided by the
Certificate of Incorporation of the Surviving Corporation and the MBCA.
(c) The Board of Directors of Newco as constituted immediately prior to the
Effective Time shall be the Board of Directors of the Surviving
Corporation.
ARTICLE III
CONVERSION OF SHARES
3.01 CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger, and without any action on the part of any holder of any capital stock of
the Company, the issued and outstanding shares of Company Common Stock as of the
Effective Time shall be cancelled and retired and converted into the right to
receive, and become exchangeable for an aggregate of $561,566 in cash and
329,546 shares of U.S. Concrete Common Stock (having an aggregate value of
$2,389,208 at $7.25 per share) at Closing (the cash and U.S. Concrete Common
Stock paid in exchange for the Company Common Stock being herein collectively
referred to as the
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"Merger Consideration"). The Merger Consideration shall be allocated between
Stockholders as set forth on Exhibit A, attached hereto and made a part hereof.
3.02 NEWCO SHARES. The outstanding shares of common stock, par value $.01
per share, of Newco shall be converted into the right to receive, and become
exchangeable for, 1,000 shares of Common Stock of the Surviving Corporation.
3.03 DELIVERY OF MERGER CONSIDERATION. At the Closing, (a) each
Stockholder shall furnish to U.S. Concrete the certificates representing his or
her Company Common Stock, duly endorsed in blank by such Stockholder or
accompanied by duly executed blank stock powers, and (b) U.S. Concrete shall
deliver to each Stockholder cash (by wire transfer in accordance with the wiring
instructions for such Stockholder set forth on Schedule 3.01) and a copy of an
irrevocable instruction letter to U.S. Concrete's transfer agent directing that
certificates representing the shares of U.S. Concrete Common Stock be delivered
to such Stockholder pursuant to Section 3.01. Each Stockholder agrees promptly
to cure any deficiencies with respect to the endorsement of the certificates or
other documents of conveyance with respect to the Company Common Stock or with
respect to the stock powers accompanying such stock. U.S. Concrete will take
all steps necessary to ensure that the stock certificates are promptly issued by
the transfer agent in accordance with the terms of this Agreement and the
irrevocable instruction letter.
ARTICLE IV
CLOSING
4.01 CLOSING. The consummation of the Merger and delivery of the Merger
Consideration and the other transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, 3200
National City Center, ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, concurrently
with the execution of this Agreement or at such other time and date as U.S.
Concrete, the Company and the Stockholders may mutually agree, which date is
herein referred to as the "Closing Date."
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders, jointly and severally, represent and warrant to U.S.
Concrete as follows:
5.01 DUE ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Michigan and is duly authorized and qualified to do business under all
applicable Laws and to carry on its business in the places and in the manner as
now conducted. The Company has the requisite power and authority to own, lease
and operate its assets and properties and to carry on its business as such
business is currently being conducted. Schedule 5.01 includes (a)
certificate(s) of existence and good standing for the Company issued by the
appropriate Governmental Authorities of the State of Michigan, (b) a list of all
jurisdictions in which the Company is authorized or qualified to do business and
(c) certificate(s) of qualification or authority to do business (or similar
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certificates) for the Company issued by the appropriate Governmental Authorities
of each of the jurisdictions in which the Company is authorized or qualified to
do business. The Company does not own, lease or operate any assets or properties
or carry on any business in any jurisdiction that Schedule 5.01 does not list.
True, complete and correct copies of the Articles of Incorporation and Bylaws,
each as amended, of the Company are attached hereto as Schedule 5.01, and no
breach of such Articles of Incorporation or Bylaws has occurred and is
continuing. True, complete and correct copies of all stock records and minute
books of the Company have been provided to U.S. Concrete.
5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) The Company has the requisite corporate power and authority to enter into
this Agreement and the ancillary documents and agreements described herein
and to effect the Merger. Each Stockholder has the full legal right, power
and authority to enter into this Agreement. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby have
been approved by the board of directors of the Company and by the
Stockholders. No additional corporate proceedings on the part of the
Company are necessary to authorize the execution and delivery of this
Agreement and the consummation by the Company of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and the Stockholders, and, assuming the due
authorization, execution and delivery hereof by U.S. Concrete and Newco,
constitutes a valid and binding agreement of the Company and the
Stockholders, enforceable against each of them in accordance with its
terms, subject to general principles of equity and bankruptcy, insolvency
and other similar laws relating to the enforcement of creditor's rights.
(b) The execution and delivery of this Agreement by the Company and the
Stockholders do not, and the consummation by the Company and the
Stockholders of the transactions contemplated hereby will not, violate or
result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Encumbrance upon any
of the properties or assets of the Company under any of the terms,
conditions or provisions of, (i) the Articles of Incorporation or Bylaws of
the Company, (ii) any Law applicable to the Stockholders or the Company or
any of the properties or assets of the Stockholders or the Company, or
(iii) except as set forth in Schedule 5.02, any agreement, note, bond,
mortgage, indenture, deed of trust, license, franchise, Permit, concession,
lease or other instrument, obligation or agreement of any kind to which any
Stockholder or the Company is now a party or by which the Company or any of
its properties or assets may be bound or affected, except for any of the
foregoing which would not have a material adverse effect on the financial
condition or results of operations of Company or the Surviving Corporation.
(c) Except for the Merger Filings and as set forth in Schedule 5.02, no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any Governmental Authority or other person or
entity is necessary for the execution and delivery of this Agreement by the
Company and the Stockholders or the consummation by the Company and the
Stockholders of the transactions contemplated
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hereby. Except as set forth in Schedule 5.02, none of the contracts or
agreements with Material Customers or contracts providing for purchases or
services individually in excess of $10,000, or in the aggregate in excess
of $25,000, or leases or Permits to which the Company is a party requires
notice to, or the consent or approval of, any Governmental Authority or
other person or entity to the execution and delivery of this Agreement by
the Company and the Stockholders or to any of the transactions contemplated
hereby to remain in full force and effect following such transaction.
5.03 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of the
Company consists solely of 5,000 shares of Company Common Stock, of which 138
shares are issued and outstanding. All of the issued and outstanding shares of
the Company Common Stock are owned beneficially and of record by the
Stockholders as set forth in Schedule 5.03. All of the issued and outstanding
shares of the Company Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, and were offered, issued, sold and delivered
by the Company in compliance with all applicable Laws, including, without
limitation, those Laws concerning the issuance of securities. None of such
shares were issued in violation of the preemptive rights of any past or present
stockholder of the Company. At the Effective Time, by virtue of the Merger
Filing in Michigan the Merger will become effective in Michigan. Except as set
forth in Schedule 5.03, (a) no shares of Company Common Stock are held by the
Company as treasury shares, and (b) no subscription, option, warrant, call,
convertible or exchangeable security, other conversion right or commitment of
any kind exists which obligates the Company to issue any of its capital stock or
the Stockholders to transfer any of the capital stock of the Company.
5.04 SUBSIDIARIES. Except as set forth in Schedule 5.04, the Company
owns, of record or beneficially, or controls, directly or indirectly, no capital
stock, securities convertible into or exchangeable for capital stock or any
other equity interest in any corporation, association or other business entity.
Except as set forth in Schedule 5.04, the Company is not, directly or
indirectly, a participant in any joint venture, limited liability company,
partnership or other noncorporate entity.
5.05 FINANCIAL STATEMENTS.
(a) The Company has delivered to U.S. Concrete true, complete and correct
copies of the following financial statements:
(i) the reviewed balance sheets of the Company as of March 31, 1997, 1998
and 1999 and the related reviewed statements of operations,
stockholders' equity and cash flows for the three-year period ended
March 31, 1999, together with the related notes, schedules and report
of the Company's independent accountants (such balance sheets, the
related statements of operations, stockholders' equity and cash flows
and the related notes and schedules are referred to herein as the
"Year-End Financial Statements"); and
(ii) the unaudited balance sheet (the "Interim Balance Sheet") of the
Company as of December 31, 1999 (the "Balance Sheet Date") and the
related unaudited statements of operations, for the nine-month period
ended on the Balance Sheet Date (such balance sheets, the related
statements of operations, and
9
any related notes and schedules are referred to herein as the "Interim
Financial Statements"). The Year-End Financial Statements and the
Interim Financial Statements (collectively, the "Financial
Statements") are attached as Schedule 5.05 to this Agreement;
(b) Except as set forth in Schedule 5.05, the Financial Statements have been
prepared from the books and records of the Company in conformity with GAAP
and present fairly the financial position and results of operations of the
Company in all material respects as of the dates of such statements and for
the periods covered thereby; provided, however, that the Interim Financial
Statements are subject to normal year-end adjustments and lack footnotes
and other presentation items. The books of account of the Company have
been kept accurately in all material respects in the ordinary course of
business, the transactions entered therein represent bona fide
transactions, and the revenues, expenses, assets and liabilities of the
Company have been properly recorded therein in all material respects.
Within the past five fiscal years of the Company, the Company has not
received any correspondence with its accountants, including without
limitation, management letters, which have indicated or disclosed that
there is a "material weakness" in or "reportable condition" with respect to
(as those terms are defined under GAAP) the Company's financial condition.
5.06 LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule 5.06,
as of the Balance Sheet Date the Company did not have, nor has it incurred since
that date, any liabilities or obligations (whether absolute, accrued, contingent
or otherwise) of any nature, except liabilities, obligations or contingencies
(a) that are reflected or accrued or reserved against in the Financial
Statements or reflected in the notes thereto, (b) that are of a nature not
required to be reflected in the Financial Statements in accordance with GAAP, or
(c) that were incurred after the Balance Sheet Date and were incurred in the
ordinary course of business, consistent with past practices. For each such
liability for which the amount is not fixed or is contested, the Company has
provided a summary description of the liability together with copies of all
relevant documentation relating thereto. Except as set forth in Schedule 5.06,
there are no prepayment penalties, termination fees or other payments triggered
by the prepayment or termination of any loan or indebtedness of the Company.
5.07 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.07 sets forth an accurate
list of the accounts and notes receivable of the Company as of the Balance Sheet
Date and of those generated between the Balance Sheet Date and the second
business day preceding the Closing Date, including any such amounts which are
not reflected in the Interim Balance Sheet. Receivables from and advances to
employees, the Stockholders and any entities or persons related to or Affiliates
of the Stockholders are separately identified in Schedule 5.07. Schedule 5.07
also sets forth an accurate aging of all accounts and notes receivable as of the
Balance Sheet Date, showing amounts due in 30-day aging categories. The trade
and other accounts receivable of the Company, including without limitation those
classified as current assets on the Interim Balance Sheet, are bona fide
receivables, were acquired in the ordinary course of business, are stated in
accordance with GAAP and are collectible in the amounts shown on Schedule 5.07,
net of reserves reflected in the Interim Financial Statements with respect to
the accounts receivable as of the Balance Sheet Date, and net of reserves
reflected in the books and records of the Company (consistent with the methods
used in the Interim Financial Statements) with respect to receivables of the
Company after the Balance Sheet Date.
10
5.08 PROPERTIES AND ASSETS.
(a) Schedule 5.08 sets forth an accurate list of all real and personal
property included in "property and equipment" on the Interim Balance Sheet
and all other tangible assets of the Company with a book value in excess of
$5,000 (i) owned by the Company as of the Balance Sheet Date and (ii)
acquired since the Balance Sheet Date. Schedule 5.08 also sets forth an
accurate list of all real and personal property currently leased by the
Company, and includes complete and correct copies of leases for significant
equipment and for all real property leased by the Company and descriptions
of all real property (as currently owned or leased by the Company) on which
plants, buildings, warehouses, workshops, garages and other structures
(collectively, the "Structures") and vehicles used in the operation of the
business of the Company are situated and, for each of those properties, the
address thereof, the type and approximate square footage of each Structure
located thereon and the use thereof in the business of the Company.
Schedule 5.08 indicates which properties and assets used in the operation
of the businesses of the Company are currently owned by the Stockholders or
Affiliates of either of the Company or the Stockholders. Except as
specifically identified in Schedule 5.08, all of the tangible assets,
plants, Structures, vehicles and other significant machinery and equipment
owned or leased by the Company listed in Schedule 5.08 have been maintained
by the Company in the ordinary course of business consistent with past
practice and are in such condition and repair as is suitable for the
purpose for which they presently are being used or held for use, ordinary
wear and tear excepted. Except as specifically described in Schedule 5.08,
all properties and fixed assets used by the Company in its business are
either owned by the Company or leased under agreements identified in
Schedule 5.08 and are affixed only to one or more of the real properties
Schedule 5.08 lists. All leases set forth in Schedule 5.08 are in full
force and effect and constitute valid and binding agreements of the Company
and the other parties thereto in accordance with their respective terms,
and all amounts currently due and payable thereunder have been paid.
Neither the Company nor any other party to the leases set forth in Schedule
5.08 is or has been asserted to be in default, violation or breach of any
such lease in any material respects, and no event has occurred and is
continuing that constitutes or, with notice or the passage of time or both,
would constitute such a default, violation or breach under any such lease.
The Company has good, valid and marketable title to the tangible and
intangible assets, personal property and real property owned and used in
its business, including, without limitation, the properties identified in
Schedule 5.08 as owned real property (each of which the Company owns in
fee), free and clear of all Encumbrances other than Permitted Encumbrances
and those set forth in Schedule 5.08. Schedule 5.08 contains true,
complete and correct copies of all title reports and title insurance
policies in the possession or control of the Company with respect to the
real property owned or leased by the Company. Schedule 5.08 includes a
summary description of all commitments of the Company involving the opening
of new operations, expansion of existing operations or the acquisition of
any real property or existing business, to which management of the Company
has devoted any significant effort or expenditure in the two-year period
prior to the date of the Agreement and which the Surviving Corporation
would be obligated to continue after the Merger.
11
(b) Except as specifically described in Schedule 5.08, all uses of the real
property owned and leased by the Company conform in all material respects
to all applicable Laws and do not violate any instrument of record or
agreement affecting any such property. Neither the Company nor the
Stockholders have received from any insurance carrier insuring or proposing
to insure any of the real property owned or leased by the Company or any
other person or entity any written notice or communication noting any
dangerous or illegal condition at any such property or any other condition
at any of such properties otherwise requiring corrective action as of the
Closing Date. Except as otherwise described on Schedule 5.08, all of the
real property owned and leased by the Company can be used by the Surviving
Corporation for their intended purposes without violating any conditional
use permit, variance or private restriction. Neither the Company nor the
Stockholders have received any written notice nor have any knowledge that
any of the real property owned or leased by the Company is or will be
affected by any special assessments, condemnation, eminent domain, off-site
improvements to be constructed, change in grade of public streets or
similar proceedings. There is no writ, injunction, decree, order or
judgment outstanding, nor any action, claim, suit or proceeding, pending
or, to the Stockholders' knowledge, threatened, relating to the ownership,
lease, use, occupancy or operation of any real property owned or leased by
the Company.
(c) There is ingress and egress to and from each of the real properties owned
and leased by the Company of record adequate for the use of such properties
as currently operated by the Company. Except as disclosed in Schedule
5.08, the Company has made no off-record agreements affecting the
ownership, use or occupation of any such properties. All public utilities,
including if applicable, without limitation, sewers, water, electric, gas
and telephone, required for the operation of each of the real properties
owned and leased by the Company as presently operated are installed and
operating, and all installation and connection charges therefor have been
paid in full. Neither the Company nor the Stockholders have received any
written notice stating that the Company will not be able to obtain adequate
supplies of water to operate its business on any such properties as
presently conducted, or that the provision of utilities violates any public
or private easement as of the Closing Date. Neither the Company nor the
Stockholders have received written notice that any part of any improvements
on the real property owned or leased by the Company (including any of the
structures thereon) encroaches upon any property adjacent thereto or upon
any easement, nor is there any encroachment or overlap upon the real
property owned or leased by the Company as of the Closing Date. Each of
the real property leases listed in Schedule 5.08 grants the Company the
exclusive right to use and occupy the demised premises thereunder, and the
Company enjoys peaceful and undisturbed possession under its respective
real property leases listed on Schedule 5.08 for the real property leased
by the Company. None of the real property leases requires the consent of
the applicable landlord to the Merger or the transactions contemplated by
this Agreement. Except as set forth on Schedule 5.08, no person or entity
other than the Company is in possession of any of the real property owned
or leased by the Company. Except as set forth on Schedule 5.08, to the
knowledge of the Company there are no contracts outstanding for the sale,
exchange, lease or transfer of any of the real property owned or leased by
the Company, or any other right of a third party to acquire any interest
therein. The heating, cooling, ventilation, electrical and plumbing
systems at all
12
of the real property owned and leased by the Company is in good working
condition, in all material respects, ordinary wear and tear excepted.
5.09 MATERIAL CUSTOMERS AND CONTRACTS.
(a) Schedule 5.09 (i) sets forth an accurate list of all customers
representing 5% or more of the Company's revenues for each of the fiscal
year ended in 1999 and the interim period ended on the Balance Sheet Date
(the "Material Customers"), and (ii) sets forth an accurate list and
briefly describes all material contracts, warranties, commitments,
understandings, instruments and similar agreements and arrangements to
which the Company is currently a party or by which it or any of its
properties is bound (the "Listed Agreements"), including, but not limited
to, (A) all customer contracts in excess of $10,000, individually, or
$25,000 in the aggregate, (B) contracts with any labor organizations, (C)
leases providing for annual rental payments in excess of $5,000,
individually, or $10,000 in the aggregate, (D) loan agreements, (E) pledge
and security agreements, (F) financing agreements, (G) indemnity or
guaranty agreements or obligations, (H) bonds, debentures and indentures,
(I) notes, (J) mortgages, (K) joint venture, partnership or cost-sharing
agreements, (L) options to purchase real or personal property, (M)
agreements relating to the purchase or sale by the Company of assets or
securities for more than $5,000, individually, or $10,000 in the aggregate,
(N) agreements, which, by their terms, require the consent of any party
thereto to the consummation of the transactions contemplated hereby, (O)
voting trust agreements or similar stockholders' agreements, (P) agreements
providing for the purchase from a supplier of all or substantially all the
requirements of the Company of a particular product, material or service
and (Q) any other contracts, warranties, commitments, understandings,
instruments and similar agreements and arrangements which involve aggregate
payments in excess of $10,000 that cannot be canceled in 30 days' or less
notice without penalty or premium or any continuing obligation or
liability. Prior to the date hereof, the Company has made available to
U.S. Concrete true, complete and correct copies of all the Listed
Agreements.
(b) Except as set forth in Schedule 5.09, since December 31, 1999 (i) no
Material Customer has canceled or substantially reduced or, to the
knowledge of the Company and the Stockholders, is threatening to cancel or
substantially reduce its purchases of the Company's products or services,
and (ii) neither the Company nor any other party to the Listed Agreements
is or has been asserted to be in default, violation or breach in any
material respect of any such Listed Agreement, and no event has occurred
and is continuing that constitutes or with notice or the passage of time or
both, would constitute such a default, violation or breach under any such
Listed Agreement. The Listed Agreements are in full force and effect and
constitute valid and binding agreements of the Company and the other
parties thereto in accordance with their respective terms.
(c) Except as set forth in Schedule 5.09, the Company is not a party to any
contracts subject to price redetermination or renegotiation. Except to the
extent set forth in Schedule 5.09, the Company is not required to provide
any bonding or other financial security arrangements in any material amount
in connection with any transactions with any of its customers or suppliers.
13
(d) Except as set forth in Schedule 5.09, neither the Company, the
Stockholders nor, to the Stockholders' knowledge, any officer, employee,
stockholder, director, representative or agent thereof is a party to any
contract, arrangement, commitment or understanding among themselves or with
any of the Company's customers for the repurchase of products, sharing of
fees, rebating of charges, bribes, kickbacks or other similar arrangements.
(e) Schedule 5.09 sets forth a summary of each outstanding bid or proposal by
the Company that, if awarded to the Company, contemplates payments to the
Company in excess of $50,000.
(f) Except as set forth in Schedule 5.09, neither the Company nor the
Stockholders have any knowledge of any plan or intention of any other party
to any Listed Agreement to exercise any right to cancel or terminate that
Listed Agreement, and neither the Company nor the Stockholders have any
knowledge of any condition or state of facts which would justify the
exercise of such a right.
5.10 PERMITS. Schedule 5.10 contains an accurate list, and copies of all
licenses, franchises, permits, approvals, certificates, transportation
authorities and other governmental authorizations and intangible assets held by
the Company that are material to the conduct of its business, including, without
limitation, permits, licenses and operating authorizations, fuel permits,
franchises and certificates owned or held by the Company (collectively, the
"Permits"). The Permits are valid, and the Company has not received any written
notice that any Governmental Authority intends to cancel, terminate or not renew
any such Permit. The Permits are all the permits, licenses, operating
authorizations, franchises, approvals, certificates, transportation authorities
and other governmental authorizations and intangible assets that are required by
Law for the operation of the businesses of the Company as conducted at the
Balance Sheet Date and the ownership of the assets and properties of the
Company. The Company has conducted and is conducting its business in
substantial compliance with the requirements, standards, criteria and conditions
set forth in the Permits, as well as the applicable orders, approvals and
variances related thereto, and is not in substantial violation of any of the
foregoing. Except as specifically provided in Schedule 5.10, the transactions
contemplated by this Agreement will not result in a default under, a breach or
violation of, a termination of, or adversely affect the rights and benefits
afforded to the Company by, any Permits.
5.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5.11, (a)
the Company has complied with and is in compliance with all Environmental Laws,
(b) the Company has obtained and complied with all necessary permits, licenses,
authorizations and other approvals necessary to treat, transport, store, dispose
of and otherwise handle Hazardous Substances and has reported, to the extent
required by all Environmental Laws, all past and present sites owned or operated
by the Company where Hazardous Substances have been treated, stored, disposed of
or otherwise handled, (c) there have been no "releases" or threats of "releases"
(as defined in any Environmental Laws) by the Company, its agents, employees or
representatives at, from, in, to, under or on any property currently or
previously owned or operated by the Company, (d) there is no on-site or off-site
location to which the Company has transported or disposed of Hazardous
Substances or arranged for the transportation or disposal of Hazardous
Substances which, to the Stockholders' knowledge, is the subject of any federal,
state, local or foreign enforcement action
14
or any other investigation which could lead to any claim against the Surviving
Corporation, U.S. Concrete or Newco for any clean-up cost, remedial work, damage
to natural resources or personal injury, including, but not limited to, any
claim under any Environmental Law and (e) the Company has no contingent
liability in connection with any release or disposal of any Hazardous Substance
by the Company, its agents, employees or representatives into the environment.
None of the past or present sites owned or operated by the Company is currently
or has during Stockholders' ownership of Company been designated as a treatment,
storage and/or disposal facility, nor, to the Stockholders' knowledge, has any
such facility ever applied for a permit, license, authorization or other
approval designating it as a treatment, storage and/or disposal facility, under
any Environmental Law. The Company has provided U.S. Concrete with copies (or,
if not available, accurate written summaries) of all environmental
investigations, studies, audits, reviews and other analyses conducted by or on
behalf, or which otherwise are in the possession, of the Company respecting any
facility site or other property previously or presently owned or operated by the
Company.
5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS.
(a) Except as set forth in Schedule 5.12, the Company is not bound by or
subject to any arrangement with any labor union. Except as set forth in
Schedule 5.12, no employees of the Company are represented by any labor
union or covered by any collective bargaining agreement nor, to the
Company's or the Stockholders' knowledge, is any campaign to establish such
representation in progress nor has there been any campaign to establish
such representation within the last three years. There is no pending or,
to the Company's or the Stockholders' knowledge, threatened labor dispute
involving the Company and any group of its employees nor has the Company
experienced any significant labor interruptions over the past five years.
Neither the Company nor the Stockholders have any knowledge of any
significant issues or problems in connection with the relationship of the
Company with its employees. The Company considers its relationship with
its employees to be good.
(b) Except as set forth in Schedule 5.12, (i) there is no unfair labor
practice charge or complaint pending or, to the knowledge of the
Stockholders, threatened against or otherwise affecting the Company, (ii)
no action, suit, complaint, charge, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority brought by or on
behalf of any employee, prospective employee, former employee, retiree,
labor organization or other representative of the Company's employees is
pending or, to the Stockholders' knowledge, threatened against the Company,
(iii) no grievance is pending or threatened against the Company, (iv) the
Company is not a party to, or otherwise bound by, any consent decree with,
or citation by, any Governmental Authority relating to employees or
employment practices, (v) the Company is in substantial compliance with all
applicable Laws, agreements, contracts and policies relating to employment,
employment practices, wages, hours and terms and conditions of employment,
(vi) the Company has paid in full to, or accrued in its financial books and
records, all employees of the Company all wages, salaries, commissions,
bonuses, benefits and other compensation due to such employees or otherwise
arising under any policy, practice, agreement, plan, program, statute or
other law and (vii) the Company is in substantial compliance with its
obligations pursuant to the Worker Adjustment and Retraining
15
Notification Act of 1988, and all other notification and bargaining
obligations arising under any collective bargaining agreement, statute or
otherwise.
(c) Except as set forth in Schedule 5.12, to the Stockholders' knowledge, all
employees of the company are (i) citizens of the United States or (ii) not
citizens of the United States, but, in accordance with the Immigration
Reform and Control Act of 1986 ("IRCA") and other applicable Laws are
either (A) immigrants authorized to work in the United States or (B) non-
immigrants authorized to work in the United States for the Company in their
specific jobs.
5.13 INSURANCE. Schedule 5.13 sets forth an accurate list as of the
Balance Sheet Date of (a) all insurance policies carried by the Company, copies
of which are attached as Schedule 5.13, (b) all insurance loss runs or workmen's
compensation claims received for the past five policy years, and (c) the
following information with respect to all insurance policies currently carried
by the Company and previously carried by the Company within the last five years:
(i) insurer, (ii) type of policy, (iii) coverage period, and (iv) policy limits
and amount of deductible or loss retention. Except as set forth in Schedule
5.13, none of such policies are "claims made" policies. The policies described
in Schedule 5.13 for the current policy year provide adequate coverage against
the risks customarily involved in the Company's business based on historical
experiences and are currently in full force and effect. Any open claims as of
the Closing Date are recoverable under such policies, except to the extent of
any applicable deductible or loss retention as set forth on Schedule 5.13.
5.14 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 5.14 sets forth an
accurate schedule of all officers, directors and Stockholder employees of the
Company with annual salaries of $50,000 or more, listing the rate of
compensation (and the portions thereof attributable to salary, bonus, benefits
and other compensation, respectively) of each of such persons as of (a) the
Balance Sheet Date and (b) the date hereof. Neither the Company nor the
Stockholders have any knowledge that any of such individuals has any present
intention of terminating his or her employment or association with the Company.
Attached to Schedule 5.14 are true, complete and correct copies of each
employment or consulting agreement with any employee of the Company or the
Stockholders. Except as set forth in Schedule 5.14, the Company is not a party
to any agreement, nor has it established any plan, policy, practice or program,
requiring it to make a payment or provide any other form of compensation or
benefit or vesting rights to any officer, director, stockholder, member or
employee of the Company or other person performing services for the Company
which would not be payable or provided in the absence of this Agreement or the
consummation of the transactions contemplated hereby, including any parachute
payment under Section 280G of the Code.
5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS;
EMPLOYEE POLICIES. Schedule 5.15 sets forth all agreements containing
covenants not to compete or solicit employees or to maintain the confidentiality
of information to which the Company or any of the Stockholders is bound or under
which the Company or any of the Stockholders has any rights or obligations.
Schedule 5.15 lists all employee manuals and all material policies, procedures
and work-related rules that apply to any employee, director or officer of, or
any other individual performing consulting or other independent contractor
services for, the Company. The Company has provided U.S. Concrete with a copy
of all such written policies and procedures and a written description of all
such unwritten policies and procedures.
16
5.16 EMPLOYEE BENEFIT PLANS.
(a) Schedule 5.16 sets forth an accurate schedule of each "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (other than a "multiemployer
plan", as defined in Section 3(37) of ERISA), and all deferred compensation
or retirement funding arrangements, whether formal or informal and whether
legally binding or not, under which the Company or an ERISA Affiliate has
any current or future obligation or liability or under which any present or
former employee of the Company or an ERISA Affiliate, or such present or
former employee's dependents or beneficiaries, has any current or future
right to benefits (each such plan and arrangement referred to hereinafter
as a "Plan"). Company has provided to U.S. Concrete true and complete
copies of such Plans, arrangements and any trusts related thereto, and
classifications of employees covered thereby as of the Balance Sheet Date.
Except as set forth in Schedule 5.16, neither the Company nor any ERISA
Affiliate sponsors, maintains or contributes currently, or sponsored,
maintained or contributed at any time during the preceding five years, to
any plan, program, fund or arrangement that constitutes an employee pension
benefit plan. Except as set forth in Schedule 5.16, each Plan may be
terminated by the Company, or if applicable, by an ERISA Affiliate at any
time without any liability, cost or expense, other than costs and expenses
that are customary in connection with the termination of a Plan. For
purposes of this Agreement, the term "employee pension benefit plan" shall
have the meaning given that term in Section 3(2) of ERISA (other than a
multiemployer plan), and the term "ERISA Affiliate" means any corporation
or trade or business under common control with the Company as determined
under Section 414(b), (c), (m) or (o) of the Code.
(b) Each Plan listed in Schedule 5.16 is in compliance in all material
respects with the applicable provisions of ERISA, the Code and any other
applicable Law. Except as set forth in Schedule 5.16, with respect to each
Plan of the Company and each ERISA Affiliate, all reports and other
documents required under ERISA or other applicable Law to be filed with any
Governmental Authority, including without limitation all Forms 5500, or
required to be distributed to participants or beneficiaries, have been duly
and timely filed or distributed. True and complete copies of all such
reports and other documents with respect to the past three years for each
Plan have been provided to U.S. Concrete. No "accumulated funding
deficiency" (as defined in Section 412(a) of the Code) with respect to any
Plan has been incurred (without regard to any waiver granted under Section
412 of the Code), nor has any funding waiver from the Internal Revenue
Service been received or requested. Except as set forth in Schedule 5.16,
each Plan that is intended to be "qualified" within the meaning of Section
401(a) of the Code (a "Qualified Plan") is, and has been during the period
from its adoption to the date hereof, so qualified, both as to form and
operation and all necessary approvals of Governmental Authorities,
including a favorable determination as to the qualification under the Code
of each of such Qualified Plans and each amendment thereto, have been
timely obtained. Except as set forth in Schedule 5.16, all accrued
contribution obligations of the Company with respect to any Plan have
either been fulfilled in their entirety or are fully reflected in the
Financial Statements.
17
(c) No Plan has incurred or will incur, and neither the Company nor any ERISA
Affiliate has incurred or will incur, with respect to any Plan, any
liability for excise tax or penalty due to the Internal Revenue Service.
There have been no terminations, partial terminations or discontinuances of
contributions to any Qualified Plan during the preceding five years without
notice to and approval by the Internal Revenue Service and payment of all
obligations and liabilities attributable to such Qualified Plan.
(d) Except as set forth in Schedule 5.16, neither the Company nor any ERISA
Affiliate has made any promises of retirement or other benefits to
employees, except as set forth in the Plans, and neither the Company nor
any ERISA Affiliate maintains or has established any Plan that is a
"welfare benefit plan" within the meaning of Section 3(1) of ERISA that
provides for continuing benefits or coverage for any participant or any
beneficiary of a participant after such participant's termination of
employment, except as may be required by Part 6 of Subtitle B of Title I of
ERISA and Section 4980B of the Code and similar state Law provisions, and
at the expense of the participant or the beneficiary of the participant, or
retiree medical liabilities. Neither the Company nor any ERISA Affiliate
maintains, has established or has ever participated in a multiple employer
welfare benefit arrangement as described in Section 3(40)(A) of ERISA.
Except as set forth in Schedule 5.16, neither the Company nor any ERISA
Affiliate has any current or future obligation or liability with respect to
a Plan pursuant to the provisions of a collective bargaining agreement.
(e) Neither the Company nor any ERISA Affiliate has incurred, nor will it
incur as a result of past activities, any material liability to the Pension
Benefit Guaranty Corporation in connection with any Plan. Except as set
forth on Schedule 5.16, the assets of each Plan that are subject to Title
IV of ERISA are sufficient to provide the benefits under such Plan, the
payment of which the Pension Benefit Guaranty Corporation would guarantee
if such Plan were terminated, and such assets are also sufficient to
provide all other "benefits liabilities" (as defined in ERISA Section
4001(a)(16)) due under such Plan upon termination.
(f) No "reportable event" (as defined in Section 4043 of ERISA) has occurred
and is continuing with respect to any Plan. There are no pending, or to
the Company's and the Stockholders' knowledge, threatened claims, lawsuits
or actions (other than routine claims for benefits in the ordinary course)
asserted or instituted against, and neither the Company nor any ERISA
Affiliate has knowledge of any threatened litigation or claims against, the
assets of any Plan or its related trust or against any fiduciary of a Plan
with respect to the operation of such Plan. To the Company's and the
Stockholders' knowledge, there are no investigations or audits of any Plan
by any Governmental Authority currently pending and there have been no such
investigations or audits that have been concluded that resulted in any
liability to the Company or any ERISA Affiliate that has not been fully
discharged. Neither the Company nor any ERISA Affiliate has participated
in any voluntary compliance or closing agreement programs established with
respect to the form or operation of a Plan.
18
(g) Neither the Company nor any ERISA Affiliate has engaged in any prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of
the Code, in connection with any Plan for which exemption was not
available. No person or entity that was engaged by the Company or an ERISA
Affiliate as an independent contractor within the last five years
reasonably can or will be characterized or deemed to be an employee of the
Company or an ERISA Affiliate under applicable Laws for any purpose
whatsoever, including, without limitation, for purposes of federal, state
and local income taxation, workers' compensation and unemployment insurance
and Plan eligibility.
(h) Schedule 5.16 also sets forth an accurate schedule of each multiemployer
plan to which the Company or any ERISA Affiliate is, or ever has been, a
participant in or obligated to make any payment. With respect to each such
multiemployer plan: (i) none of the foregoing representations and
warranties of this Section 5.16 shall apply; and (ii) except as set forth
on Schedule 5.16, all contributions required to be made by the Company or
any ERISA Affiliate to such multiemployer plan have been made or are
accrued and fully reflected in the Financial Statements.
5.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in Schedule
5.17, there are no claims, actions, suits or proceedings, pending or, to the
knowledge of the Company and the Stockholders, threatened against or affecting
the Company, at law or in equity, or before or by any Governmental Authority
having jurisdiction over the Company. No written notice of any claim, action,
suit or proceeding, whether pending or threatened, has been received by the
Company and, to the Stockholders' and the Company's knowledge, there are no
facts or circumstances existing which, with delivery of notice or passage of
time or both would constitute such a claim, action, suit or proceeding. Except
to the extent set forth in Schedule 5.17, the Company has conducted and is
conducting its business in substantial compliance with all Laws applicable to
the Company, its assets or the operation of its business. Also listed on
Schedule 5.17 are all other instances where the Company is a plaintiff or
complaining or moving party, under any of the above types of proceedings.
5.18 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, service use, license, payroll,
franchise, transfer and recording taxes, fees and charges, imposed by the United
States or any state, local or foreign government or subdivision or agency
thereof, whether computed on a separate, consolidated, unitary, combined or any
other basis; and such term shall include any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any such taxes,
charges, fees, levies or other assessments. The Company has timely filed all
requisite federal, state, local and other tax returns for all fiscal periods
ended on or before the Closing, and has duly paid in full or made adequate
provision in the year-end Financial Statements for the payment of all Taxes for
all periods ending at or prior to the Closing Date. The Company has duly
withheld and paid or remitted all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other person or entity that required
withholding under any applicable Law, including, without limitation, any amounts
required to be withheld or collected with respect to social security,
unemployment compensation, sales or use taxes or workers' compensation. There
have not been during the past three years nor are there currently in
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progress any examinations, audits, proceedings, notices, waivers, asserted
deficiencies or disputed valuations or other claims against the Company relating
to Taxes for any period or periods prior to and including the Balance Sheet Date
and no notice of any claim for Taxes has been received. The Company has not
granted or been requested to grant any extension of the limitation period
applicable to any claim for Taxes or assessments with respect to Taxes. The
Company is not a party to any Tax allocation or sharing agreement and is not
otherwise liable or obligated to indemnify any person or entity with respect to
any Taxes. True and complete copies of (a) any tax examinations or audits, (b)
extensions of statutory limitations and (c) the federal, state and local Tax
returns of the Company for the last three fiscal years have been previously
provided to U.S. Concrete. There are no requests for ruling in respect of any
Tax pending between the Company and any Taxing authority. The Company has been
taxed under the provisions of Subchapter S of the Code since April 1, 1999. The
Company currently utilizes the accrual method of accounting for income tax
purposes. Such method of accounting has not changed in the past five years.
5.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set
forth in Schedule 5.19, the Company has conducted its operations in the ordinary
course and there has not been:
(a) any material adverse change in the business, operations, properties,
condition (financial or other), assets, liabilities (contingent or
otherwise), or results of operations of the Company;
(b) any damage, destruction or loss (whether or not coVered by insurance)
materially adversely affecting the assets, properties or business of the
Company;
(c) any change in the authorized capital stock of the Company or in its
outstanding securities or any change in the Stockholders' ownership
interests in the Company or any grant of any options, warrants, calls,
conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution in respect of
the capital stock or any direct or indirect redemption, purchase or other
acquisition of any of the capital stock of the Company;
(e) any increase in the compensation payable or to become payable by the
Company to the Stockholders or any of its officers, directors, employees,
consultants or agents, except for ordinary and customary bonuses and salary
increases for employees in accordance with past practice, which bonuses and
salary increases are set forth in Schedule 5.19;
(f) any work interruptions, labor grievances or claims filed;
(g) except for the Merger, any sale or transfer, or any agreement to sell or
transfer, any material assets, properties or rights of the Company to any
person or entity, including, without limitation, the Stockholders and their
Affiliates;
(h) any cancellation, or agreement to cancel, any indebtedness or other
obligation owing to the Company;
20
(i) any increase in the indebtedness of the Company, other than accounts
payable incurred in the ordinary course of business, consistent with past
practices, or incurred in connection with the transactions contemplated by
this Agreement;
(j) any plan, agreement or arrangement granting any preferential rights to
purchase or acquire any interest in any of the assets, properties or rights
of the Company or requiring consent of any party to the transfer and
assignment of any such assets, properties or rights;
(k) any purchase or acquisition of, or agreement, plan or arrangement to
purchase or acquire, any assets, properties or rights outside of the
ordinary course of the Company's business;
(l) any waiver of any material rights or claims of the Company; or
(m) any other material transaction by the Company outside the ordinary course
of business.
5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY. Schedule
5.20 sets forth an accurate schedule, as of the date of this Agreement, of (a)
the name of each financial institution or brokerage firm in which the Company
has accounts or safe deposit boxes; (b) the names in which the accounts or boxes
are held; (c) the type of account and the cash, cash equivalents and securities
held in such account as of the second business day prior to the Closing, none of
which assets have been withdrawn from such accounts since such date except for
bona fide business purposes in the ordinary course of the business of the
Company; and (d) the name of each person authorized to draw thereon or have
access thereto. Schedule 5.20 also sets forth the name of each person,
corporation, firm or other entity holding a general or special power of attorney
from the Company and a description of the terms thereof.
5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor the
Stockholders nor any of their respective Affiliates has given or offered to give
anything of value to any governmental official, political party or candidate for
government office that was illegal to give or offer to give nor has it otherwise
taken any action which would constitute a violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any similar Law.
5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth in Schedule 5.22, neither the Stockholders nor any other Affiliate of
the Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
Competitive Business, lessor, lessee, customer or supplier of the Company.
Except as set forth in Schedule 5.22, no officer or director of the Company nor
the Stockholders have, nor had any interest in any tangible or intangible assets
or real or personal property used in or pertaining to the business of the
Company.
5.23 INTANGIBLE PROPERTY. Schedule 5.23 sets forth an accurate list of
all patents, patent applications, trademarks, service marks, technology,
licenses, trade names, copyrights and other intellectual property or
proprietary property rights owned or used by the Company.
21
The Company owns or possesses, and the assets of the Company include, sufficient
legal rights to use all of such items without conflict with or infringement of
the rights of others.
5.24 CAPITAL EXPENDITURES. Schedule 5.24 sets forth the total amount of
capital expenditures currently budgeted to be incurred by the company in excess
of $25,000 in the aggregate during the balance of the Company's current fiscal
year.
5.25 INVENTORIES. Except as Schedule 5.25 sets forth: (i) all
inventories, net of reserves determined in accordance with GAAP, of the Company
which are classified as such on the Interim Balance Sheet are merchantable and
salable or usable in the ordinary course of business of the Company; and (ii)
the Company does not depend on any single vendor for its inventories the loss of
which could have a material adverse effect on the business or financial
condition of the Company or during the past five years has sustained a
difficulty material to the Company in obtaining its inventories.
5.26 TAX REORGANIZATION REPRESENTATION. The Surviving Corporation will
acquire substantially all of the properties of the Company within the meaning of
Section 368(a)(2)(D) of the Code.
5.27 ABSENCE OF INTEREST-BEARING DEBT. As of the Closing Date, Company
shall have no Interest-Bearing Debt and no Interest-Bearing Debt shall be
assumed by the Surviving Corporation.
5.28 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of the Stockholders
and the Company that U.S. Concrete and Newco are not making any representation
or warranty whatsoever, express or implied, other than those representations and
warranties of U.S. Concrete and Newco expressly set forth in this Agreement.
5.29 DISCLOSURE. The Stockholders and the Company have fully provided
U.S. Concrete or its representatives with all the information that U.S. Concrete
has requested in analyzing whether to consummate the Merger and the other
transactions contemplated by this Agreement. None of the information so
provided nor any representation or warranty of the Stockholders to U.S. Concrete
or Newco in this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements herein,
in light of the circumstances under which they were made, not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO
U.S. Concrete and Newco jointly and severally represent and warrant to the
Stockholders as follows:
6.01 ORGANIZATION. Each of U.S. Concrete and Newco is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, and is duly authorized and qualified under all applicable Laws to
carry on its business in the places and in the manner now conducted. Each of
U.S. Concrete and Newco has the requisite power and
22
authority to own, lease and operate its assets and properties and to carry on
its business as such business is currently being conducted.
6.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) Each of U.S. Concrete and Newco has the full legal right, power and
authority to enter into this Agreement and the ancillary documents and
agreements described herein and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement has been
approved by the boards of directors of U.S. Concrete and Newco and by U.S.
Concrete, as the sole stockholder of Newco. No additional corporate or
shareholder proceedings on the part of U.S. Concrete or Newco are necessary
to authorize the execution and delivery of this Agreement and the
consummation by U.S. Concrete and Newco of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
U.S. Concrete and Newco, and, assuming the due authorization, execution and
delivery by the Company and the Stockholders, constitutes valid and binding
agreements of U.S. Concrete and Newco, enforceable against U.S. Concrete
and Newco in accordance with its terms.
(b) The execution and delivery of this Agreement by U.S. Concrete and Newco
do not, and the consummation by U.S. Concrete and Newco of the transactions
contemplated hereby will not, violate or result in a breach of any
provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under any of the terms, conditions or
provisions of (i) the Certificate of Incorporation or By-Laws of U.S.
Concrete or Newco, (ii) any Law applicable to either U.S. Concrete or Newco
or any of its properties or assets or (iii) any material agreement, note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of
any kind to which U.S. Concrete or Newco is now a party or by which either
U.S. Concrete or Newco or any of its properties or assets may be bound or
affected.
(c) Except for the Merger Filings and such filings as may be required under
federal or state securities Laws, no declaration, filing or registration
with, or notice to, or authorization, consent or approval of, any
Governmental Authority or other person or entity is necessary for the
execution and delivery of this Agreement by U.S. Concrete and Newco or the
consummation by U.S. Concrete and Newco of the transactions contemplated
hereby.
6.03 U.S. CONCRETE COMMON STOCK. The shares of U.S. Concrete Common
Stock to be issued and delivered to the Stockholders pursuant to the Merger are
duly authorized and, when issued in accordance with the terms of the irrevocable
instruction letter contemplated by Section 3.03, will be validly issued, fully
paid and nonassessable. The issuance of U.S. Concrete Common Stock pursuant to
the Merger will transfer to the Stockholders valid title to such shares of U.S.
Concrete Common Stock, free and clear of all Encumbrances, except for any
Encumbrances created by the Stockholders.
23
6.04 TAX REORGANIZATION REPRESENTATIONS.
(a) Prior to the Merger, U.S. Concrete will be in control of Newco within the
meaning of Section 368(c) of the Code.
(b) U.S. Concrete has no plan or intention to cause the Surviving Corporation
to issue additional shares of its stock that would result in U.S. Concrete
losing control of the Surviving Corporation within the meaning of Section
368(c) of the Code.
(c) U.S. Concrete has no plan or intention to reacquire any of its stock
issued in the Merger.
(d) U.S. Concrete has no plan or intention to liquidate the Surviving
Corporation; to merge the Surviving Corporation with or into another
corporation; to sell or otherwise dispose of the stock of the Surviving
Corporation except for transfers of stock to another corporation controlled
by U.S. Concrete; or to cause the Surviving Corporation to sell or
otherwise dispose of any of its assets, except for dispositions made in the
ordinary course of business or transfers of assets to a corporation
controlled by U.S. Concrete.
(e) Following the Closing, U.S. Concrete's intention is that the Surviving
Corporation will continue the historic business of the Company or use a
significant portion of the historic business assets of the Company in a
business, all as required to satisfy the "continuity of business
enterprise" requirement under Section 368 of the Code.
(f) U.S. Concrete does not own, nor has it owned during the past five years,
any shares of the stock of the Company.
(g) Each of U.S. Concrete and Newco is undertaking the Merger for a bona fide
business purpose and not merely for the avoidance of federal income tax.
(h) Neither U.S. Concrete nor Newco is an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
(i) As of the Closing Date, the fair market value of the assets of Newco will
exceed the sum of Newco's liabilities plus the amount of other liabilities,
if any, to which Newco's assets are subject.
6.05 SEC FILINGS; DISCLOSURE. U.S. Concrete has filed with the SEC all
material forms, statements, reports and documents required to be filed by it
prior to the date hereof under each of the 1933 Act and the 1934 Act and the
respective rules and regulations thereunder, (a) all of which, as amended, if
applicable, complied when filed in all material respects with all applicable
requirements of the appropriate Act and the rules and regulations thereunder,
and (b) none of which, as amended, if applicable, contains any untrue statement
of material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made and at the time they were made, not
misleading. Since the date of the information provided in the most recent
filing,
24
there has been no material adverse change in the financial condition or
results of operations of U.S. Concrete, taken as a whole.
6.06 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of U.S. Concrete
and Newco that the Stockholders are not making any representation or warranty
whatsoever, express or implied, other than those representations and warranties
of the Stockholders expressly set forth in this Agreement.
6.07 DISCLOSURE. U.S. Concrete has fully provided the Stockholders or
their representatives with all the information that the Stockholders have
requested in analyzing whether to consummate the Merger. None of the
information so provided nor any representation or warranty of U.S. Concrete
contained in this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE VII
CERTAIN COVENANTS
7.01 Release From Guarantees. U.S. Concrete shall use its commercially
reasonable efforts to have the Stockholders released from the personal
guarantees of the Company's indebtedness identified in Schedule 7.01 on the
Closing Date and will continue such efforts after the Closing Date if not
released prior thereto. U.S. Concrete hereby agrees to indemnify and defend the
Stockholders and hold each Stockholder harmless for any amounts that such
Stockholder is required to pay in connection with the enforcement of any
obligations under such personal guarantees after the Closing, including without
limitation any reasonable attorneys' fees and expenses incurred in connection
therewith.
7.02 FUTURE COOPERATION; TAX MATTERS. The Stockholders and U.S. Concrete
shall each deliver or cause to be delivered to the other following the Closing
such additional instruments as the other may reasonably request for the purpose
of fully carrying out this Agreement. The Stockholders shall be responsible for
the payment of all Taxes attributable to all periods prior to and including the
Closing Date, including without limitation the period from the beginning of the
Company's current Tax year through the Closing Date. The Stockholders shall be
responsible for the preparation of all Tax returns covering the period from the
beginning of the Company's current Tax year through the Closing Date, and shall
be responsible for all costs and expenses incurred in connection with the
preparation of such Tax returns. The Surviving Corporation will cooperate with
the Stockholders in their preparation of all Tax returns covering the period
from the beginning of the Company's current Tax year through the Closing. In
addition, U.S. Concrete will provide the Stockholders with access to such of its
books and records as may be reasonably requested by the Stockholders in
connection with federal, state and local tax matters relating to periods prior
to the Closing. The Stockholders will cooperate and use their commercially
reasonable efforts to encourage the present officers, directors and employees of
the Company to cooperate with U.S. Concrete and the Surviving Corporation at and
after the Closing in furnishing information, evidence, testimony and other
assistance in connection with any actions, proceedings, arrangements or disputes
of any nature with respect to matters pertaining to all periods prior to the
Closing. The party requesting cooperation,
25
information or actions under this Section 7.02 shall reimburse the other party
for all reasonable out-of-pocket costs and expenses paid or incurred in
connection therewith, which costs and expenses shall not, however, include per
diem charges for employees or allocations of overhead charges.
7.03 EXPENSES. U.S. Concrete will pay the fees, expenses and
disbursements of U.S. Concrete and its agents, representatives, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement and any amendments hereto. The Company (as owned by U.S.
Concrete after Closing) will be responsible for the fees and expenses of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC, to deliver to U.S.
Concrete a legal opinion in form and substance acceptable to U.S. Concrete.
7.05 EMPLOYMENT AGREEMENTS. Concurrently with the execution of this
Agreement, the Surviving Corporation shall enter into a mutually acceptable
Employment Agreements with each of ▇▇▇▇▇▇▇▇▇ and Deneweth (collectively, the
"Employment Agreements").
7.06 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the
execution of this Agreement, (a) the Stockholders shall repay to the Company all
amounts outstanding as advances to or receivables from the Stockholders, each of
which advances or receivables is specifically reflected in Schedule 5.07, and
(b) the Company shall repay all amounts outstanding under loans to the Company
from the Stockholders, each of which loans to the Company is specifically
reflected in Schedule 5.06.
7.07 STOCK OPTIONS. U.S. Concrete shall grant nonqualified options to
purchase an aggregate of 12,500 shares of U.S. Concrete Common Stock as of the
Closing Date under U.S. Concrete's 1999 Incentive Plan (the "Incentive Plan") to
certain key employees of the Company (other than the Stockholders), as set forth
on Schedule 7.07 in the amounts listed thereon. Schedule 7.07 shall also
include the social security number and home address of each individual listed
thereon. Such options shall vest in equal annual increments for four years,
commencing on the first anniversary of the Closing Date.
7.08 PRE-CLOSING DISTRIBUTIONS. Prior to the Closing, the Company may
have distributed to the Stockholders the cash and other assets set forth on
Schedule 7.08. Any such distributions shall have been authorized by the Board
of Directors of the Company prior to the Closing, and the Company and the
Stockholders shall have used the respective best efforts to complete such
distributions prior to the Closing. Notwithstanding the foregoing, if any such
authorized distributions have not been completed prior to the Closing the
Surviving Corporation
26
shall use reasonable efforts to complete such authorized distributions after the
Closing. The Stockholders' sole recourse against the Surviving Corporation and
U.S. Concrete with respect to this Section 7.08 shall be to the assets to be
distributed.
7.09 WORKING CAPITAL ADJUSTMENT.
(a) As soon as practicable after the Closing Date, U.S. Concrete shall cause
to be prepared and delivered to the Stockholders a consolidated balance
sheet of ▇▇▇▇▇▇▇▇▇ Leasing, Inc., Dencor, Inc. and the Company
(collectively, the "Consolidated Companies") as of the Closing Date (the
"Closing Date Balance Sheet Date"), which has been prepared from the books
and records of the Consolidated Companies in conformity with GAAP (the
"Final Balance Sheet"), and a working capital adjustment schedule (the
"Adjustment Schedule"). The Adjustment Schedule will set forth the
computation of the Adjusted Working Capital Amount. As used in this
Section 7.09, capitalized terms not otherwise defined in this Agreement
shall have the following meanings:
"Adjusted Current Assets" means the amount of current assets of the
Consolidated Companies as set forth on the Closing Date Balance Sheet;
"Adjusted Current Liabilities" means the amount of current liabilities of the
Consolidated Companies as set forth on the Closing Date Balance Sheet less
the current portion of Interest-Bearing Debt (if any) as set forth on the
Closing Date Balance Sheet; and
"Adjusted Working Capital Amount" means the amount computed by subtracting
Adjusted Current Liabilities from Adjusted Current Assets as finally
determined in accordance with Section 7.09(c). Adjusted Working Capital
will exclude amounts relating to the 1999 ▇▇▇▇ Portable Plant and the
upgrade of the aggregate section of the Detroit batch plant (bins).
(b) If the Adjusted Working Capital Amount is less than $250,000, then the
Stockholders shall, no later than 15 days after delivery of the Adjustment
Schedule as finally determined in accordance with Section 7.09(c) by U.S.
Concrete, pay to the Surviving Corporation the amount by which $250,000
exceeds the Adjusted Working Capital Amount (the "Adjusted Working Capital
Shortfall"). If the Adjusted Working Capital Amount is greater than
$250,000, then the Surviving Corporation shall, no later than 15 days after
delivery of the Adjustment Schedule as finally determined in accordance
with Section 7.09(c), pay to the Stockholders, on a pro rata basis in
proportion to their percentage ownership of the Company Common Stock
outstanding immediately prior to the Closing, the amount by which the
Adjusted Working Capital Amount exceeds $250,000 (the "Adjusted Working
Capital Excess").
(c) The Closing Date Balance Sheet and Adjustment Schedule will be final and
binding on the parties hereto unless, within 30 days following the delivery
of the Adjustment Schedule by U.S. Concrete, the Stockholders notify U.S.
Concrete in writing that the Stockholders disagree with all or any portion
of the Closing Date Balance Sheet and/or the Adjustment Schedule. If the
Stockholders and U.S. Concrete cannot mutually resolve any such
disagreement within 30 days after the receipt by U.S. Concrete of the
27
Stockholders' notice of disagreement, then the Stockholders and U.S.
Concrete shall submit the dispute to a mutually agreeable certified public
accounting firm (the "Accountant") within 20 days after the end of such 30-
day period. If the Stockholders and U.S. Concrete are unable to agree upon
such an accounting firm within such 20-day period, then the Stockholders
and U.S. Concrete shall select a "Big Five" accounting firm by lot (after
excluding any of their respective regular Big Five accounting firms), which
accounting firm shall act as the Accountant. The Stockholders and U.S.
Concrete shall request that the Accountant audit the Closing Date Balance
Sheet and provide a computation of the Adjusted Working Capital Amount
within 30 days thereafter, and this computation will be final and binding
upon the parties hereto and used to compute the Adjusted Working Capital
Shortfall or Adjusted Working Capital Excess, as the case may be, the
payment of any of which shall be made within five days of delivery by U.S.
Concrete of the audited Closing Date Balance Sheet. In the event the
Stockholders and U.S. Concrete submit any unresolved objections to an
Accountant for resolution as provided in this Section 7.09, the
Stockholders and U.S. Concrete will each pay one-half of the fees and
expenses of the Accountant.
7.10 WASTEWATER DISCHARGE PERMIT. As soon as practicable following the
Closing, the Stockholders shall obtain for the benefit of the Surviving
Corporation, its successors and permitted assigns, at Stockholders' sole risk,
cost and expense, the City of Detroit Wastewater Discharge Permit (the
"Wastewater Permit") if finally determined by the City of Detroit to be
necessary for the legal operation of the Detroit facility. U.S. Concrete and
the Surviving Corporation agree to reasonably cooperate with Stockholders in
connection therewith; provided, however, U.S. Concrete shall not be required to
incur any expense and shall have no responsibility or liability in connection
with the absence or lack of the Wastewater Permit.
7.11 OTHER DOCUMENTS. At the Closing, U.S. Concrete shall receive the
following additional certificates, instruments and documents:
(a) Stock certificates representing all Company Common Stock duly
endorsed in blank by the Stockholders, or accompanied by stock powers duly
executed in blank by the Stockholders, and otherwise in a form acceptable
to U.S. Concrete.
(b) Written resignations of all directors and all officers of the
Company, such resignations to be effective concurrently with the Closing on
the Closing Date.
(c) Releases in form and substance satisfactory to U.S. Concrete
executed by the Stockholders releasing the Company from any liability or
obligation to the Stockholders.
(d) All of the Company's books and records, including, without
limitation, minute books, corporate charters, by-laws, stock records, bank
account records, computer records and all contracts with third parties;
provided, however, that all of the foregoing, other than the minute books,
corporate charters, by-laws and stock records, shall remain at the business
location of Company where they are currently maintained.
28
7.12 BENEFIT PLANS.
(a) U.S. Concrete shall not , and shall cause the Surviving Corporation not
to at any time prior to 60 days after the Closing Date, effectuate a "plant
closing" or "mass layoff" as those terms are defined in the Worker Adjustment
and Restraining Notification Act of 1988 ("WARN") affecting in whole or in part
any facility, site of employment, operating unit or employee of Company or any
Company Subsidiary without complying fully with the requirements of WARN.
(b) All health and welfare benefit plans of U.S. Concrete or the
Surviving Corporation in which the employees of Company or any Company
Subsidiary participate after the Effective Time shall (i) recognize
expenses and claims that were incurred by such employees in the year in
which the Effective Time occurs for purposes of computing deductible
amounts and co-payments under such health and welfare plans as of the
Effective Time, (ii) provide coverage for pre-existing health conditions to
the extent covered under the applicable plans or programs as of the
Effective Time, and (iii) credit any deductibles paid or co-payments made
by employees of Company or any Company Subsidiary prior to the Effective
Time for purposes of paying deductibles or making co-payments pursuant to
the health and welfare benefit plans of U.S. Concrete or the Surviving
Corporation. In addition, employees of the Surviving Corporation and its
subsidiaries shall receive credit for their prior service with Company for
eligibility and vesting purposes and for vacation accrual purposes under
all health and welfare, pension, 401(k) and other benefit programs.
ARTICLE VIII
INDEMNIFICATION
The Stockholders, U.S. Concrete and Newco each make the following
covenants:
8.01 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. Subject to
Section 8.05 and Section 8.06, the Stockholders covenant and agree that they
will jointly and severally (without any right of indemnification or contribution
from the Company) indemnify, defend, protect and hold harmless U.S. Concrete,
Newco and the Surviving Corporation, and their respective officers, directors,
employees, stockholders, agents, representatives and Affiliates, at all times
from and after the date of this Agreement from and against all Losses incurred
by any of such indemnified persons and entities as a result of or arising from
(a) until the Expiration Date any breach of the representations and warranties
of the Stockholders set forth herein or in the Schedules attached hereto, (b)
any breach or nonfulfillment of any covenant or agreement on the part of the
Stockholders under this Agreement, (c) all income Taxes payable by the Company
for all periods prior to and including the Closing Date, (d) all transfer Taxes
arising from the transactions contemplated by Section 7.08 of this Agreement,
(e) any litigation listed on Schedule 5.17, or (f) any failure of Company to
have obtained the Wastewater Permit prior to Closing or any inability of
Stockholders to obtain the Wastewater Permit after the Closing if finally
determined by the City of Detroit to be required for the legal operation of the
Detroit facility.
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8.02 INDEMNIFICATION BY U.S. CONCRETE. Subject to Section 8.06,
U.S. Concrete covenants and agrees that it will indemnify, defend, protect and
hold harmless the Stockholders and their respective agents, representatives,
Affiliates, beneficiaries and heirs and employees at all times from and after
the date of this Agreement from and against all Losses incurred by any of such
indemnified persons as a result of or arising from (a) until the Expiration
Date, any breach of the representations and warranties of U.S. Concrete or Newco
set forth herein or in the Schedules attached hereto or certificates delivered
in connection herewith or (b) any breach or nonfulfillment of any covenant or
agreement on the part of U.S. Concrete or Newco under this Agreement.
8.03 THIRD PERSON CLAIMS. Promptly after any party entitled to
indemnification under Sections 8.01 and 8.02 hereof (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person or entity not a party to this Agreement ("Third Person"), or the
commencement of any action or proceeding by a Third Person, which the
Indemnified Party believes in good faith is an indemnifiable claim under this
Agreement, the Indemnified Party shall give to the party obligated to provide
indemnification pursuant to Sections 8.01 or 8.02 hereof (hereinafter the
"Indemnifying Party") written notice of such claim or the commencement of such
action or proceeding. Such notice shall state the nature and the basis of such
claim and a reasonable estimate of the amount thereof. The Indemnifying Party
shall have the right to defend and settle, at its own expense and by its own
counsel reasonably acceptable to the Indemnified Party, any such matter so long
as the Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in all commercially
reasonable respects in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records and other information reasonably
requested by the Indemnifying Party and in the Indemnified Party's possession or
control. After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability, and for
so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability; provided, however, that the Indemnified Party shall
be entitled, at its expense, to participate in the defense of such asserted
liability and the negotiations of the settlement thereof. The Indemnifying
Party shall not settle any such Third Person claim without the consent of the
Indemnified Party (which consent shall not be unreasonably withheld), unless the
settlement thereof imposes no liability or obligation on, and includes a
complete release from liability of, the Indemnified Party. If the Indemnifying
Party desires to accept a final and complete settlement of any such Third Person
claim and the Indemnified Party refuses to consent to such settlement, then the
Indemnifying Party's liability under this Section with respect to such Third
Person claim shall be limited to the amount so offered in settlement by said
Third Person; provided, however, that notwithstanding the foregoing, the
Indemnified Party shall be entitled to refuse to consent to any such proposed
settlement and the Indemnifying Party's liability hereunder shall not be limited
by the amount of the proposed settlement if such settlement imposes any
liability or obligation on, or does not provide for the complete release of, the
Indemnified Party. If, upon receiving notice, the Indemnifying Party does not
timely undertake to defend such matter to which the Indemnified Party is
entitled to indemnification hereunder, or fails diligently to pursue such
defense, the Indemnified Party may undertake such defense through counsel of its
choice, at the cost and expense of the Indemnifying Party, and the
30
Indemnified Party may settle such matter, in its discretion, and the
Indemnifying Party shall reimburse the Indemnified Party for the amount paid in
such settlement and any other liabilities or expenses incurred by the
Indemnified Party in connection therewith.
8.04 NON-THIRD PERSON CLAIMS. In the event that any Indemnified
Party asserts the existence of a claim giving rise to Losses (but excluding
claims resulting from the assertion of liability by Third Persons), such party
shall give written notice to the Indemnifying Party. Such written notice shall
state that it is being given pursuant to this Section 8.04, specify the nature
and amount of the claim asserted, and indicate the date on which such assertion
shall be deemed accepted and the amount of the claim deemed a valid claim (such
date to be established in accordance with the next sentence). If such
Indemnifying Party, within 60 days after the mailing of notice by such
Indemnified Party, shall not give written notice to such Indemnified Party
announcing such Indemnifying Party's intent to contest such assertion of such
Indemnified Party, such assertion shall be deemed accepted and the amount of
such claim shall be deemed a valid claim. In the event, however, that such
Indemnifying Party contests such assertion of a claim by giving such written
notice to the Indemnified Party within said period, then the parties shall act
in good faith to reach agreement regarding such claim. If the parties cannot
resolve such dispute after good faith negotiations with respect thereto within
60 days after the notice provided by the Indemnifying Party, such dispute shall
be submitted to arbitration in accordance with the provisions of Section 13.11.
In the event that arbitration shall arise with respect to any such claim, the
prevailing party shall be entitled to reimbursement of costs and expenses
incurred in connection with such arbitration including reasonable attorneys'
fees.
8.05 INDEMNIFICATION DEDUCTIBLE. Neither U.S. Concrete, Newco nor
the Surviving Corporation shall be entitled to indemnification or other relief
from the Stockholders under the provisions of Section 8.01(a) until such time
as, and only to the extent that, the claims subject to indemnification by such
other party exceed, in the aggregate, $100,760 when combined with the Leasing
Merger Agreement and Dencor Stock Purchase Agreement. Notwithstanding the
foregoing, the limitations set forth in this Section 8.05 shall not apply to
fraudulent misrepresentations, the representation contained in Section 5.27 or
the covenant contained in Section 7.10.
8.06 LIABILITY LIMITATION. Subject to Section 8.05, the aggregate
obligation of the Stockholders, on the one hand, and of U.S. Concrete and the
Surviving Corporation (exclusive of the Merger Consideration), on the other
hand, for any and all claims arising under this Agreement, the Leasing Merger
Agreement, Dencor Stock Purchase Agreement, or under Sections 3 or 7 of the
Employment Agreements shall be limited to $10,076,029. Notwithstanding the
foregoing, the limitations set forth in this Section 8.06 shall not apply to
fraudulent misrepresentations, the representation contained in Section 5.27 or
the covenant contained in Section 7.10.
8.07 FORM OF INDEMNITY PAYMENT. Any payment required to be made by
the Stockholders pursuant to this Agreement shall first be made from the cash
portion of the Merger Consideration. In the event of a payment obligation which
exceeds such cash portion, then Stockholders may make payment by delivering to
U.S. Concrete such required number of shares of U.S. Concrete Common Stock
valued at the Average Closing Price.
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ARTICLE IX
NONCOMPETITION COVENANTS
9.01 PROHIBITED ACTIVITIES.
(a) For no additional consideration, each Stockholder will not
for five years following the Closing Date (the "Noncompete Term"),
directly or indirectly, for himself or on behalf of or in conjunction with
any other person, company, partnership, corporation or business or other
entity of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
investor, lender, guarantor, partner, joint venturer, or in a
managerial or advisory capacity, whether as an employee, independent
contractor, consultant or advisor, or as a sales representative,
dealer or distributor, in any Competitive Business within a radius of
100 air miles of any plant or other operating facility in which the
Company was engaged in business on the date immediately prior to the
Closing Date;
(ii) call upon or otherwise solicit any person, who is, at
that time, within the Territory, an employee or consultant of the
▇▇▇▇▇▇▇▇▇ Companies, U.S. Concrete, the Surviving Corporation or any
of their respective subsidiaries, for the purpose or with the intent
of enticing such employee or consultant out of the employ or contract
with the ▇▇▇▇▇▇▇▇▇ Companies, the Surviving Corporation or any of
their respective subsidiaries;
(iii) call upon or otherwise solicit any person or entity
which is, at that time, or which has been, within one year prior to
that time, a customer of the ▇▇▇▇▇▇▇▇▇ Companies, U.S. Concrete or the
Surviving Corporation or any of the subsidiaries of such parties
within the Territory for the purpose of soliciting or selling services
or products in a Competitive Business within the Territory; or
(iv) call upon or otherwise solicit any entity which the
Company or U.S. Concrete has called on in connection with the possible
acquisition by either of them of such entity or of which either of
them has made an acquisition analysis, with the knowledge of that
entity's status as an acquisition candidate of U.S. Concrete, for the
purpose of (A) acquiring that entity or arranging the acquisition of
that entity by any person or entity other than U.S. Concrete; and (B)
engaging in a Competitive Business within the Territory.
(b) Notwithstanding the above, Section 9.01(a) shall not be
deemed to prohibit any Stockholder from acquiring, as a passive investor
with no involvement in the operations of the business, not more than three
percent of the capital stock of a Competitive Business whose stock is
publicly traded on a national securities exchange, the NASDAQ National
Market or over-the-counter.
9.02 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses to U.S. Concrete and the Surviving Corporation as a result of a
breach of the foregoing covenant, because a breach of such covenant would
diminish the value of the assets, properties and
32
business of the Company being sold pursuant to this Agreement, and because of
the immediate and irreparable damage that could be caused to U.S. Concrete and
the Surviving Corporation for which it would have no other adequate remedy,
since monetary damages alone may not be an adequate remedy, each Stockholder
agrees that the foregoing covenant may be enforced against such individual by,
without limitation, injunctions, restraining orders and other equitable actions.
9.03 REASONABLE RESTRAINT. It is agreed by the parties hereto that
the foregoing covenants in this ARTICLE IX are necessary in terms of time,
activity and territory to protect U.S. Concrete's and the Surviving
Corporation's interest in the assets, properties and business being acquired
pursuant to the terms of this Agreement and impose a reasonable restraint on the
Stockholders in light of the activities and businesses of U.S. Concrete on the
date of the execution of this Agreement and the current plans of U.S. Concrete.
9.04 SEVERABILITY; REFORMATION. The covenants in this ARTICLE IX are
severable and separate, and the unenforceability of any specific covenant shall
not affect the continuing validity and enforceability of any other covenant. In
the event any court of competent jurisdiction shall determine that the scope,
time or territorial restrictions set forth in this ARTICLE IX are unreasonable
and therefore unenforceable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems reasonable
and this Agreement shall thereby be reformed.
9.05 MATERIAL AND INDEPENDENT COVENANT. The Stockholders acknowledge that
their agreements and the covenants set forth in this ARTICLE IX are material
conditions to U.S. Concrete's and Newco's agreements to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and that U.S.
Concrete and Newco would not have entered into this Agreement without such
covenants. All of the covenants in this ARTICLE IX shall be construed as an
agreement independent of any other provision in this Agreement. The existence of
any claim or cause of action by any Stockholder against U.S. Concrete, whether
predicated on this Agreement or otherwise, will not constitute a defense to the
enforcement by U.S. Concrete of any of the covenants of this ARTICLE IX.
ARTICLE X
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
10.01 GENERAL. The Stockholders recognize and acknowledge that they had in
the past, currently have, and in the future will have, access to certain
confidential information relating to the businesses of the Company, the
Surviving Corporation and/or U.S. Concrete, including, without limitation, lists
of customers, operational policies, and pricing and cost policies that are, and
following the Closing will be, valuable, special and unique assets of the
Surviving Corporation and U.S. Concrete. Each Stockholder agrees that he or she
will not use or disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose whatsoever, except as
is required in the course of performing his or her duties, if any, to the
Surviving Corporation and/or U.S. Concrete, unless (a) such information becomes
known to the public generally through no fault of the Stockholder or (b)
disclosure is required by Law, provided that prior to disclosing any information
pursuant to this clause (b) the disclosing Stockholder(s) shall give prior
written notice thereof to U.S. Concrete and the Surviving Corporation and
provide U.S. Concrete with the opportunity to contest such disclosure. In the
33
event of a breach or threatened breach by any Stockholder of the provisions of
this Section, U.S. Concrete shall be entitled to an injunction restraining such
Stockholder from disclosing, in whole or in part, such confidential information.
Nothing herein shall be construed as prohibiting U.S. Concrete from pursuing any
other available remedy for such breach or threatened breach, including, without
limitation, the recovery of damages.
10.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to U.S. Concrete and the Surviving Corporation as a result of the breach
of the foregoing covenant, because a breach of such covenant would diminish the
value of the assets, properties and business of the Company being sold pursuant
to this Agreement, and because of the immediate and irreparable damage that
would be caused for which the Surviving Corporation and/or U.S. Concrete would
have no other adequate remedy, since monetary damages alone may not be an
adequate remedy, each Stockholder agrees that the foregoing covenants may be
enforced against such individual by, without limitation, injunctions,
restraining orders and other equitable actions.
ARTICLE XI
INTENDED TAX TREATMENT
11.01 TAX-FREE REORGANIZATION. U.S. Concrete and the Stockholders are
entering into this Agreement with the intention that the Merger qualify as a
tax-free reorganization for federal income tax purposes, except to the extent of
any "boot" received, and neither U.S. Concrete nor the Stockholders will take
any actions that disqualify the Merger for such treatment.
ARTICLE XII
FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON
U.S. CONCRETE COMMON STOCK
12.01 Compliance with Law. The Stockholders acknowledge the shares
of U.S. Concrete Common Stock issued in accordance with the terms of this
Agreement (the "Restricted Shares") will not be registered under the 1933 Act
and therefore may not be resold without compliance with the 1933 Act. The
Restricted Shares are being or will be acquired by the Stockholders solely for
their own account, for investment purposes only, and with no present intention
of distributing, selling or otherwise disposing of them in connection with a
distribution. Each Stockholder covenants, warrants and represents that none of
the Restricted Shares held by such Stockholder will be, directly or indirectly,
offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all of the applicable provisions
of the 1933 Act and the rules and regulations of the SEC. Certificates
representing the Restricted Shares shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE NOT ISSUED IN A TRANSACTION
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"),
OR ANY APPLICABLE STATE SECURITIES LAWS. THE SHARES REPRESENTED HEREBY
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED UNLESS
SUCH SALE OR TRANSFER IS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE
OPINION OF
34
COUNSEL TO THE ISSUER, IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH LAWS.
12.02 ECONOMIC RISK; SOPHISTICATION; ACCREDITED INVESTORS. Each Stockholder
is able to bear the economic risk of an investment in the Restricted Shares and
can afford to sustain a total loss of such investment. Each Stockholder has such
knowledge and experience in financial and business matters that he or she is
capable of evaluating the merits and risks of the proposed investment and
therefore has the capacity to protect his or her own interests in connection
with the acquisition of the Restricted Shares pursuant hereto. Each Stockholder
represents to U.S. Concrete and Newco that he or she is an "accredited
investor," as that term is defined in Regulation D under the 1933 Act. Each
Stockholder or his or her representatives have had an adequate opportunity to
ask questions of, and receive answers from the appropriate officers and
representatives of U.S. Concrete and Newco concerning, among other matters, U.S.
Concrete, its management, business, operations and financial condition, its
plans for the operation of its business and potential additional acquisitions,
and to obtain any additional information requested by such Stockholder or his or
her representatives concerning such matters.
12.03 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the SEC that may permit the resale
of U.S. Concrete Common Stock to the public without registration, for a period
of two years after the Closing, U.S. Concrete agrees to use its commercially
reasonable efforts to:
(a) make and keep public information (as such terms are defined
in Rule 144) regarding U.S. Concrete available;
(b) file with the SEC in a timely manner all reports and other
documents required of U.S. Concrete under the 1933 Act and the 1934 Act;
and
(c) furnish to a Stockholder upon written request a written
statement by U.S. Concrete as to its compliance with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, a copy of the most
recent annual or quarterly report of U.S. Concrete, and such other reports
and documents so filed as such Stockholder may reasonably request in
availing himself or herself of any rule or regulation of the SEC allowing
such Stockholder to sell any such shares without registration.
12.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES. The
Stockholders covenant, warrant and represent that (i) none of the Restricted
Shares will be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of, directly or indirectly, during the two-year period
commencing on the Closing Date (the "Lockup Period"); (ii) after the Lockup
Period, the Restricted Shares may be offered, sold, assigned, pledged,
hypothecated, transferred or otherwise disposed of directly or indirectly, only
after full compliance with all of the applicable provisions of the 1933 Act and
the rules and regulations of the SEC; (iii) during the one-year period
commencing on the Closing Date, the Stockholders shall not engage in put, call,
short-sale, hedge, straddle, collar or similar transactions with respect to any
of the Restricted Shares intended to reduce the Stockholders' risk of owning
such Restricted Shares; and (iv) following the one-year period described in
clause (iii) and for the remainder of the Lockup Period, the Stockholders shall
not engage in put, call, short-sale, hedge, straddle, collar or similar
transactions with respect to 50% or more of the Restricted Shares intended to
reduce
35
the Stockholders' risk of owning such Restricted Shares. Certificates
representing the Restricted Shares shall bear the following legend, which shall
reflect the Lockup Period, in addition to the legend under Section 12.01:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL
RESTRICTION ON TRANSFER THAT EXPIRES ON FEBRUARY 7, 2002, AND MAY NOT BE
OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE
PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC.
12.05 PROSPECTUS DELIVERY. Each Stockholder represents and
acknowledges that he or she has been provided with the most current prospectus
of U.S. Concrete, dated May 25, 1999, at least 20 days prior to the date hereof.
12.06 REMOVAL OF LEGENDS. Upon expiration of the Lockup Period,
U.S. Concrete will cause its transfer agent to issue one or more certificates
without such legend as to any Restricted Shares that are no longer subject to
the legends set forth in Section 12.01 and 12.04, respectively; provided,
however, that U.S. Concrete shall not be deemed to be in breach of this Section
unless it fails to cause its transfer agent to issue such certificates after
receipt of written request from a Stockholder.
ARTICLE XIII
MISCELLANEOUS
13.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES. This Agreement
and the rights of the parties hereunder may not be assigned (except by operation
of Law) and shall be binding upon and shall inure to the benefit of the parties
hereto, the successors of U.S. Concrete, Newco, the Surviving Corporation and
the Company, and the heirs and legal representatives of the Stockholders.
Except as provided in ARTICLE VIII or in this Section 13.01, nothing in this
Agreement is intended or will be construed to confer upon or give any person or
entity other than the parties hereto any rights or remedies under or by reason
of this Agreement or any transaction contemplated hereby.
13.02 ENTIRE AGREEMENT. This Agreement (including the Schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the Stockholders,
the Company, Newco and U.S. Concrete and supersede any prior agreement and
understanding relating to the subject matter of this Agreement, including,
without limitation, the Letter of Intent. This Agreement may be modified or
amended only by a written instrument executed by the Stockholders, the Company,
Newco and U.S. Concrete. Any right hereunder may be waived only by a written
instrument executed by the party waiving such right.
13.03 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument. Facsimile
transmission of any signed original document and/or retransmission of any signed
facsimile transmission will be deemed the same as delivery of an
36
original. At the request of any party, the parties will confirm facsimile
transmission by signing a duplicate original document.
13.04 BROKERS AND AGENTS. Except for a fee payable to Stockholders' agent,
W.Y. ▇▇▇▇▇▇▇▇, which Stockholders will pay, each party hereto represents and
warrants that it employed no broker or agent in connection with the transactions
contemplated by this Agreement. Each party agrees to indemnify each other party
against all loss, cost, damages or expense arising out of claims for fees or
commissions of brokers employed or alleged to have been employed by such
indemnifying party.
13.05 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested (which will be deemed
given three business days after deposit), or by delivering the same in person to
an officer or agent of such party (which will be deemed given when actually
received), as follows:
If to U.S. Concrete, Newco or the Surviving Corporation, addressed to them
at:
U.S. Concrete, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Secretary
If to the Stockholders, addressed as follows:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee URTA of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Dated October 4, 1995
3279 Wendover
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy (which shall not constitute notice) to:
D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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
37
warranties set forth in Sections 5.03, 5.11, 5.16 and 5.18 hereof shall survive
until such time as the applicable statute of limitations period has run, which
shall be deemed to be the Expiration Date for Sections 5.03, 5.11, 5.16 and
5.18, as the case may be. The respective parties shall remain liable after the
Expiration Date for breaches of the representations and warranties set forth in
ARTICLE V and ARTICLE VI, provided such breaches are asserted in good faith by
notice in writing to the alleged breaching party prior to the Expiration Date.
13.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE. Except
as otherwise provided herein, no delay of or omission in the exercise of any
right, power or remedy accruing to any party as a result of any breach or
default by any other party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed as a waiver of or acquiescence in any
such breach or default, or of any similar breach or default occurring later; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default occurring before or after that waiver. No right, remedy or
election any term of this Agreement gives will be deemed exclusive, but each
will be cumulative with all other rights, remedies and elections available at
law or in equity, subject to the limitations set forth in Sections 8.05 and
8.06.
13.08 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable, but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
13.09 SECTION HEADINGS; GENDER. The Section headings contained in
this Agreement are inserted for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement. Words of the masculine
gender in this Agreement shall be deemed and construed to include correlative
words of the feminine and neuter genders and words of the neuter gender shall be
deemed and construed to include correlative words of the masculine and feminine
genders.
13.10 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware (except for its principles governing conflicts
of laws).
13.11 DISPUTE RESOLUTION.
(a) Except with respect to injunctive relief as provided in
Section 9.02 and Section 10.02 (which relief may be sought from any court
or administrative agency with jurisdiction with respect thereto), any
unresolved dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in accordance with
the rules of the American Arbitration Association then in effect. The
arbitration shall be conducted by a retired judge employed by the Chicago,
Illinois office of J.A.M.S./Endispute, Inc. ("JAMS"). The arbitration
shall be held in JAMS' Chicago, Illinois office.
38
(b) The parties shall obtain from JAMS a list of the retired judges
available to conduct the arbitration. The parties shall use their
reasonable efforts to agree upon a judge to conduct the arbitration. If the
parties cannot agree upon a judge to conduct the arbitration within 10 days
after receipt of the list of available judges, the parties shall ask JAMS
to provide the parties a list of three available judges (the "Judge List").
Within five days after receipt of the Judge List, each party shall strike
one of the names of the available judges from the Judge List and return a
copy of such list to JAMS and the other party. If two different judges are
stricken from the Judge List, the remaining judge shall conduct the
arbitration. If only one judge is stricken from the Judge List, JAMS shall
select a judge from the remaining two judges on the Judge List to conduct
the arbitration.
(c) The arbitrator shall not have the authority to add to, detract
from, or modify any provision hereof nor to award punitive damages to any
injured party. The arbitrator shall have the authority to order payment of
damages, reimbursement of costs, including those incurred to enforce this
Agreement, and interest thereon in the event the arbitrator determines that
a material breach of this Agreement has occurred. A decision by the
arbitrator shall be final and binding. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
U.S. CONCRETE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
________________________________
▇▇▇▇▇▇ ▇▇▇▇▇, Vice President
CONCRETE XIX ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
________________________________
▇▇▇▇▇▇ ▇▇▇▇▇, President
▇▇▇▇▇▇▇▇▇ FUEL & SUPPLY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
39
STOCKHOLDERS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Individually and
As Trustee URTA of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Dated October 4, 1995
40
EXHIBIT A
ALLOCATION OF CONSIDERATION
Stock Cash
----- ----
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ $1,194,604* $280,783
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ $1,194,604* $280,783
* 164,773 shares
41