STOCK PURCHASE AGREEMENT BY AND AMONG U.S. CONCRETE, INC., ALLIANCE HAULERS, INC., ALBERTA INVESTMENTS, INC., ATLAS CONCRETE INC. AND WILD ROSE HOLDINGS LTD., Dated as of June 27, 2006
EXHIBIT 2.1
Execution Version
BY AND AMONG
U.S. CONCRETE, INC.,
ALLIANCE HAULERS, INC.,
ALBERTA INVESTMENTS, INC.,
ATLAS CONCRETE INC.
AND
WILD ROSE HOLDINGS LTD.,
Dated as of June 27, 2006
TABLE OF CONTENTS
| ARTICLE I DEFINITIONS | 1 | |||||||
| 1.01 | Definitions |
1 | ||||||
| 1.02 | Other Defined Terms |
10 | ||||||
| 1.03 | Other Definitional Provisions |
10 | ||||||
| ARTICLE II SALE AND DELIVERY OF SHARES | 11 | |||||||
| 2.01 | Delivery of Shares |
11 | ||||||
| 2.02 | Endorsement of Companies Capital Stock |
11 | ||||||
| ARTICLE III CONSIDERATION FOR CAPITAL STOCK OF THE COMPANIES | 11 | |||||||
| 3.01 | Consideration |
11 | ||||||
| 3.02 | Delivery of Consideration |
11 | ||||||
| ARTICLE IV CLOSING; CONDITIONS TO CLOSING | 12 | |||||||
| 4.01 | Closing |
12 | ||||||
| 4.02 | Conditions to the Obligations of Each Party |
12 | ||||||
| 4.03 | Conditions to the Obligations of Shareholders |
12 | ||||||
| 4.04 | Conditions to the Obligations of Buyer |
13 | ||||||
| ARTICLE V REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS | 14 | |||||||
| 5.01 | Due Organization and Qualification |
14 | ||||||
| 5.02 | Authorization; Non-Contravention; Approvals |
15 | ||||||
| 5.03 | Capitalization and Ownership |
16 | ||||||
| 5.04 | Subsidiaries |
16 | ||||||
| 5.05 | Reports; Financial Statements |
16 | ||||||
| 5.06 | Liabilities and Obligations |
17 | ||||||
| 5.07 | Real Property |
18 | ||||||
| 5.08 | Personal Property |
19 | ||||||
| 5.09 | Material Customers and Contracts |
19 | ||||||
| 5.10 | Permits |
20 | ||||||
| 5.11 | Environmental Matters |
21 | ||||||
| 5.12 | Labor and Employee Relations; Employment Matters |
22 | ||||||
| 5.13 | Insurance |
23 | ||||||
| 5.14 | Compensation; Employment Agreements |
24 | ||||||
| 5.15 | Noncompetition, Confidentiality and Nonsolicitation
Agreements; Employee Policies |
24 | ||||||
| 5.16 | Employee Benefit Plans |
24 | ||||||
| 5.17 | Litigation and Compliance with Laws |
26 | ||||||
| 5.18 | Taxes |
26 | ||||||
| 5.19 | Absence of Changes |
27 | ||||||
| 5.20 | Accounts with Banks and Brokerages; Powers of Attorney |
29 | ||||||
| 5.21 | Absence of Certain Business Practices |
29 | ||||||
| 5.22 | Competing Lines of Business; Related-Party Transactions |
30 | ||||||
| 5.23 | Proprietary Rights |
30 | ||||||
i
| 5.24 | Capital Expenditures |
30 | ||||||
| 5.25 | Accounts and Notes Receivable |
30 | ||||||
| 5.26 | Inventories |
31 | ||||||
| 5.27 | Product Warranties |
31 | ||||||
| 5.28 | Disclosure |
31 | ||||||
| ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER | 31 | |||||||
| 6.01 | Organization |
31 | ||||||
| 6.02 | Authorization; Non-Contravention; Approvals |
31 | ||||||
| ARTICLE VII CERTAIN COVENANTS | 32 | |||||||
| 7.01 | Access and Cooperation; Due Diligence |
32 | ||||||
| 7.02 | Conduct of Business Pending the Closing; No Shop |
33 | ||||||
| 7.03 | Notification of Certain Matters |
35 | ||||||
| 7.04 | Bonuses |
36 | ||||||
| 7.05 | Public Announcements |
36 | ||||||
| 7.06 | Title Assurance |
37 | ||||||
| 7.07 | Expenses |
37 | ||||||
| 7.08 | Repayment of Related-Party Indebtedness |
37 | ||||||
| 7.09 | Governmental Filings |
37 | ||||||
| 7.10 | Future Cooperation; Tax Matters |
38 | ||||||
| 7.11 | Further Assurances |
39 | ||||||
| 7.12 | Adjustments to Consideration Paid at Closing |
39 | ||||||
| 7.13 | Limitation on Future Distributions by Shareholders |
40 | ||||||
| 7.14 | Pre-Closing Loan |
41 | ||||||
| 7.15 | Financing Commitments |
42 | ||||||
| ARTICLE VIII INDEMNIFICATION | 42 | |||||||
| 8.01 | Survival of Representations and Warranties and Covenants |
42 | ||||||
| 8.02 | Indemnification by Shareholders |
43 | ||||||
| 8.03 | Indemnification by Buyer |
44 | ||||||
| 8.04 | Third Person Claims |
44 | ||||||
| 8.05 | Non-Third Person Claims |
46 | ||||||
| 8.06 | Indemnification Threshold |
47 | ||||||
| 8.07 | Indemnification Limitation |
47 | ||||||
| 8.08 | Indemnification for Negligence of Indemnified Party |
47 | ||||||
| ARTICLE IX NONCOMPETITION COVENANTS | 48 | |||||||
| 9.01 | Prohibited Activities |
48 | ||||||
| 9.02 | Equitable Relief |
48 | ||||||
| 9.03 | Reasonable Restraint |
49 | ||||||
| 9.04 | Severability; Reformation |
49 | ||||||
| 9.05 | Material and Independent Covenant |
49 | ||||||
| ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION | 49 | |||||||
| 10.01 | General |
49 | ||||||
| 10.02 | Equitable Relief |
50 | ||||||
ii
| ARTICLE XI TERMINATION | 50 | |||||||
| 11.01 | Termination of This Agreement |
50 | ||||||
| 11.02 | Liabilities in Event of Termination |
52 | ||||||
| ARTICLE XII MISCELLANEOUS | 51 | |||||||
| 12.01 | Successors and Assigns; Rights of Parties |
51 | ||||||
| 12.02 | Entire Agreement; Amendment; Waivers |
51 | ||||||
| 12.03 | Counterparts; Facsimile Signatures |
51 | ||||||
| 12.04 | Brokers and Agents |
51 | ||||||
| 12.05 | Notices |
52 | ||||||
| 12.06 | Exercise of Rights and Remedies |
52 | ||||||
| 12.07 | Reformation and Severability |
53 | ||||||
| 12.08 | Captions |
53 | ||||||
| 12.09 | Governing Law |
53 | ||||||
| 12.10 | Dispute Resolution |
53 | ||||||
iii
THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of June 27, 2006 by and among U.S.
Concrete, Inc., a Delaware corporation (“Buyer”), Alliance Haulers, Inc., a Texas corporation
(“Alliance”), Alberta Investments Inc., a Texas corporation (“Alberta”), Atlas Concrete Inc., an
Alberta, Canada corporation (“Atlas”), and Wild Rose Holdings Ltd., a Jersey corporation (“Wild
Rose”). The term “Company” refers to each of Alliance and Alberta, and the term “Companies” refers
to both Alliance and Alberta. The term “Shareholder” refers to each of Atlas and Wild Rose, and
the term “Shareholders” refers to both Atlas and Wild Rose.
1.01 Definitions. Capitalized terms used in this Agreement (including the Schedules hereto) and not
otherwise defined herein shall have the following meanings:
“Acquired Business” means the combined business conducted by the Acquired Entities, viewed as
a single enterprise.
“Acquired Entity” means each of: Alliance; Alberta; Atlas Investments, Inc., a Nevada
corporation and wholly owned subsidiary of Alberta; Xxxxxx Enterprises Management, Inc., a Texas
corporation and wholly owned subsidiary of Alberta; Redi-Mix Management, Inc., a Texas corporation
and wholly owned subsidiary of Alberta; Xxxxxx Enterprises, L.P., a Texas limited partnership of
which Atlas Investments, Inc. is the sole limited partner and Xxxxxx Enterprises Management, Inc.
is the sole general partner; Redi-Mix, L.P., a Texas limited partnership of which Atlas
Investments, Inc. is the sole limited partner and Redi-Mix
Management, Inc. is the sole general partner; Redi-Mix GP, LLC, a Texas limited liability
company and wholly owned subsidiary of Redi-Mix, L.P.; and Redi-Mix Concrete, L.P., a Texas limited
partnership of which Redi-Mix GP, LLC is the sole general partner and Redi-Mix, L.P. is the sole
limited partner.
“Acquisition Proposal” has the meaning set forth in Section 7.02.
“Affiliate” of, or “Affiliated” with, a specified Person means a Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is under common
control with, the specified Person. As used in this definition, “control” means the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies
of a Person (whether through ownership of Capital Stock of that Person, by contract or otherwise).
“Agreement” has the meaning set forth in the preamble hereto.
“Alberta” has the meaning set forth in the preamble hereto.
“Alberta/Atlas Investments Distribution” has the meaning set forth in Section 7.14.
“Alliance” has the meaning set forth in the preamble hereto.
“Atlas” has the meaning set forth in the preamble hereto.
“Balance Sheet Date” has the meaning set forth in Section 5.05(b)(ii).
“Bank Debt” means borrowings by one or more of the Acquired Entities from a line of credit
extended to such Acquired Entity or Entities by a bank or similar financial institution.
“Buyer” has the meaning set forth in the preamble hereto.
“Capital Stock” means, with respect to: (i) any corporation, any share, or any depositary
receipt or other certificate representing any share, of an equity ownership interest in that
corporation; and (ii) any other Entity, any share, membership or other percentage interest, unit of
participation or other equivalent (however designated) of an equity interest in that Entity.
“Claim Notice” has the meaning set forth in Section 8.04(a).
“Closing” has the meaning set forth in Section 4.01.
“Closing Date” means the date on which the Closing occurs.
“Code” means the Internal Revenue Code of 1986.
“Companies” has the meaning set forth in the preamble hereto.
“Companies Capital Stock” means the common stock, $1.00 par value per share, of Alliance, all
of the common stock, $.01 par value per share, of Alberta, and all of the preferred stock, $.01 par
value per share, of Alberta.
2
“Company Reports” has the meaning set forth in Section 5.05(a).
“Competitive Business” means any business that competes, directly or indirectly, with the
Acquired Entities, including any business that involves the production and sale of ready-mixed
concrete (including truck-mixed concrete) and other cement mixtures; pre-cast concrete products,
concrete block or slag products; retail sales of concrete products, equipment, tools, accessories
and other concrete-related building materials and products; aggregate production, storage and
sales; and any logical extension of or business activity reasonably related to any of the
foregoing.
“Consideration” has the meaning set forth in Section 3.01.
“Consideration Adjustment” means the sum of: (i) the Final Dividend Adjustment; (ii) the
Final Interest-Bearing Debt Adjustment; and (iii) the Final Pre-Closing Earnings Adjustment.
“Consideration Adjustment Schedule” has the meaning set forth in Section 7.12(a).
“Effective Date” means July 1, 2006 if the Closing occurs in July 2006 and August 1, 2006 if
the Closing occurs in August 2006.
“Effective Date Financial Statements” has the meaning set forth in Section 7.12(a).
“Effective Time” means 12:01 a.m., Central Time, on the Effective Date.
“Election Period” has the meaning set forth in Section 8.04(b).
“Employment Agreements” has the meaning set forth in Section 4.04(c).
“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.
“Encumbered” means to be subject to one or more Encumbrances.
“Entity” means any sole proprietorship, corporation, partnership of any kind having a separate
legal status, limited liability company, business trust, unincorporated organization or
association, mutual company, joint stock company or joint venture.
“Environmental Laws” means any and all Laws relating to (a) the protection, preservation or
restoration of the environment (including, without limitation, ambient air, surface water
(including water management and runoff), groundwater, drinking water supply, surface land,
subsurface strata, plant and animal life or any other natural resource) or human health, (b)
emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes (including, without limitation, Hazardous
Substances) into the environment or (c) the exposure to, or the use, storage, recycling, treatment,
manufacture, generation, transport, processing, handling, labeling, production, removal or disposal
of any pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes
(including, without limitation, Hazardous Substances), in each case as amended from
3
time to time. The term “Environmental Laws” includes, without limitation, (i) the United
States Federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery
Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste
Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, the Safe Drinking Water
Act, the Atomic Energy Act and the Hazardous Materials Transportation Act and any other comparable
or similar applicable state or local Law, in each case as amended from time to time, and any other
Laws relating to any of the foregoing, and (ii) any common law doctrine that may impose liability
or obligations for injuries or damages due to, or as a result of, the actual or threatened presence
or effects of, or exposure to, any Hazardous Substance.
“ERISA” has the meaning set forth in Section 5.16(a).
“ERISA Affiliate” has the meaning set forth in Section 5.16(a).
“Estimated Adjustments Notice” means a written notice delivered by Shareholders to Buyer not
later than the third business day immediately preceding the Closing Date, which notice shall set
forth the Estimated Dividend Adjustment, the Estimated Interest-Bearing Debt Adjustment and the
Estimated Pre-Closing Earnings Adjustment.
“Estimated Dividend Adjustment” means the amount estimated by Shareholders, in good faith, as
set forth in the Estimated Adjustments Notice, as the amount by which the aggregate amount of all
cash and property (valued at fair market value, in accordance with GAAP) transferred (via dividend,
distribution or otherwise (but excluding any payments of management fees taken into account in
determining the Estimated Pre-Closing Earnings Adjustment and excluding the Alberta/Atlas
Investments Distribution)) to either Shareholder or any of their Affiliates (other than the
Acquired Entities) during the period from (and including) January 1, 2006 through the Effective
Time exceeds $1,000,000.
“Estimated Interest-Bearing Debt Adjustment” means the amount estimated by Shareholders, in
good faith, as set forth in the Estimated Adjustments Notice, as
(i) the Interest Bearing Debt as of the Effective Time, minus
(ii) the aggregate of all amounts incurred by any of the Acquired Entities since
December 31, 2005 which constitute Interest-Bearing Debt as of the Effective Time (for the
avoidance of doubt, such aggregate of amounts so incurred to be net of any repayments
thereof made prior to the Effective Time), to the extent (and only to the extent) such
aggregate amounts do not exceed the greater of (a) the aggregate of all amounts consisting
of regularly scheduled amortization payments actually paid by any of the Acquired Entities
(without duplication) from (and including) January 1, 2006 through the Effective Time with
respect to Interest-Bearing Debt outstanding as of December 31, 2005 and (b) $3,000,000.
4
“Estimated Pre-Closing Earnings Adjustment” means the lesser of: (i) the amount estimated by
Shareholders, in good faith, as set forth in the Estimated Adjustments Notice, as the positive
amount (if any) of the combined after-tax net income of the Acquired Entities for the period from
(and including) January 1, 2006 through the Effective Time, after giving effect to the bonuses and
management fees paid or to be paid in accordance with Sections 7.02(b)(iv) and 7.04, all as
determined in accordance with GAAP; and (ii) $4,000,000.
“Expiration Date” has the meaning set forth in Section 8.01(a).
“Final Dividend Adjustment” means, as determined from the Effective Date Financial Statements,
the amount by which:
(i) the excess of (a) the aggregate amount of all cash and property (valued at fair
market value, in accordance with GAAP) transferred (via dividend, distribution or otherwise
(but excluding any payments of management fees taken into account in determining the Final
Pre-Closing Earnings Adjustment and excluding the Alberta/Atlas Investments Distribution))
to either Shareholder or any of their Affiliates (other than the Acquired Entities) during
the period from (and including January 1, 2006 through the Effective Time over (b)
$1,000,000; exceeds or is exceeded by
(ii) the Estimated Dividend Adjustment;
provided, that, if the amount referred to in clause (ii) exceeds the amount referred to in clause
(i) of this sentence, the Final Dividend Adjustment will be expressed as a negative amount.
“Final Interest-Bearing Debt Adjustment” means, as determined from the Effective Date
Financial Statements, the amount by which:
(i) the amount determined as
(a) the Interest-Bearing Debt as of the Effective Time, minus
(b) the aggregate of all amounts incurred by any of the Acquired Entities since
December 31, 2005 which constitute Interest-Bearing Debt as of the Effective Time
(for the avoidance of doubt, such aggregate of amounts so incurred to be net of any
repayments thereof made prior to the Effective Time), to the extent (and only to the
extent) such aggregate amounts do not exceed the greater of (1) the aggregate of all
amounts consisting of regularly scheduled amortization payments actually paid by any
of the Acquired Entities (without duplication) from (and including) January 1, 2006
through the Effective Time with respect to Interest-Bearing Debt outstanding as of
December 31, 2005 and (2) $3,000,000; exceeds or is exceeded by
(ii) the Estimated Interest-Bearing Debt Adjustment;
provided, that, if the amount referred to in clause (ii) exceeds the amount referred to in clause
(i) of this sentence, the Final Interest-Bearing Debt Adjustment will be expressed as a negative
amount.
5
“Final Pre-Closing Earnings Adjustment” means, as determined from the Effective Date Financial
Statements, the amount by which:
(i) the lesser of (a) the positive amount (if any) of the combined after-tax net income
of the Acquired Entities for the period from (and including) January 1, 2006 through the
Effective Time, after giving effect to the bonuses and management fees paid or to be paid in
accordance with Sections 7.02(b)(iv) and 7.04, all as determined in accordance with GAAP,
and (b) $4,000,000; exceeds or is exceeded by
(ii) the Estimated Pre-Closing Earnings Adjustment;
provided, that, if the amount referred to in clause (ii) exceeds the amount referred to in clause
(i) of this sentence, the Final Pre-Closing Earning Adjustment will be expressed as a negative
amount.
“Financial Statements” has the meaning set forth in Section 5.05(b)(ii).
“Financing” means one or more public offerings or private placements by Buyer of its equity or
debt securities (or any combination thereof) completed after the date hereof but on or prior to the
Closing Date, with aggregate gross proceeds to Buyer (before deducting discounts and commissions
and offering-related expenses) of not less than $75,000,000.
“GAAP” means generally accepted accounting principles and practices in the United States as in
effect from time to time which have been or are applied on a basis consistent with the most recent
audited financial statements included in the Year End Financial Statements.
“Governmental Approval” means at any time any authorization, consent, approval, permit,
franchise, certificate, license, implementing order or exemption of, or registration or filing
with, any Governmental Authority at that time.
“Governmental Authority” means any federal, state, county, local or foreign government,
political subdivision or governmental or regulatory authority, agency, board, bureau, commission,
instrumentality or court or quasi-governmental authority.
“Hazardous Substances” means any and all substances presently listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any
Environmental Law. The term “Hazardous Substances” includes, without limitation, any substance to
which exposure is regulated by any Governmental Authority or any Environmental Law including,
without limitation, any toxic waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, petroleum or any derivative or by-product thereof, radon, regulated radioactive
material, asbestos or asbestos containing material, urea formaldehyde foam insulation, lead or
polychlorinated biphenyls.
“Indemnified Party” has the meaning set forth in Section 8.04(a).
“Indemnifying Party” has the meaning set forth in Section 8.04(a).
6
“Interest-Bearing Debt” means (i) all indebtedness of the Acquired Entities for borrowed money
outstanding at that time (including, without limitation, Bank Debt (offset, in the case of the
determination of Bank Debt as of the Effective Time, by an amount equal to any deposits not yet
cleared in any of the Acquired Entities’ respective bank accounts, to the extent such deposits are
directly related to sales by the Acquired Entities to customers on credit; provided, however, such
offset shall not exceed $725,000), equipment debt, bank overdrafts and any other indebtedness for
borrowed money), and (ii) all capital lease obligations of the Acquired Entities outstanding at
that time (together with any prepayment penalties that are or will become payable with respect
thereto if such obligations are terminated on the Closing Date or within 60 days thereafter), but
shall not include the Loan.
“Interim Balance Sheet” has the meaning set forth in Section 5.05(b)(ii).
“Interim Financial Statements” has the meaning set forth in Section 5.05(b)(ii).
“Land” means all real property currently owned or leased by the Acquired Entities.
“Laws” means any and all federal, state, local or foreign statutes, laws, ordinances,
published proclamations, codes, regulations, licenses, permits, authorizations, rulings, approvals,
consents, agreements, legal doctrines, published requirements, orders, decrees, judgments,
injunctions and rules of or with any Governmental Authority, including, without limitation, those
covering environmental, Tax, energy, safety, health, transportation, bribery, recordkeeping,
zoning, discrimination, antitrust and wage and hour matters, in each case as amended.
“Letter of Intent” means that certain letter of intent dated April 12, 2006, by and among
Buyer, the Companies, Shareholders and the other parties named therein, as amended or supplemented.
“Listed Agreements” has the meaning set forth in Section 5.09(a).
“Loan” has the meaning set forth in Section 7.14.
“Loan Documents” has the meaning set forth in Section 7.14.
“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).
“Material Adverse Effect” means a material adverse effect on (i) the condition (financial or
otherwise), properties, business or results of operations of the Acquired Business or the Acquired
Entities, taken as a whole, or (ii) the ability of any of the Acquired Entities or either
Shareholder to consummate the transactions this Agreement contemplates.
“Material Customers” has the meaning set forth in Section 5.09(a).
“Order” means any writ, judgment, decree, injunction or other order of any Governmental
Authority (in each case whether preliminary or final).
7
“Permits” has the meaning set forth in Section 5.10.
“Permitted Encumbrances” means: (i) all liens for general and special real property Taxes and
special district levies and assessments, in all cases not yet delinquent, (ii) all liens of
mechanics, materialmen, carriers, warehousemen or other like statutory or common law liens securing
payment obligations incurred in good faith in the ordinary course of business and that are not yet
due and payable, (iii) all covenants, conditions, restrictions, reservations, rights,
rights-of-way, easements and other Encumbrances, and other matters of record, of whatever kind or
nature that do not have a material adverse effect on the value of the property affected of its
usefulness for the purposes for which it is being presently used and (iv) the provisions of all
applicable land use laws, ordinances, rules, regulations, zoning restrictions and permits affecting
any of the property owned by any of the Acquired Entities or governing the use thereof.
“Person” means any natural person, Entity, estate, trust, union or employee organization or
Governmental Authority or, for the purpose of the definition of “ERISA Affiliate,” any trade or
business.
“Plan” has the meaning set forth in Section 5.16(a).
“Pre-Closing Taxes” means:
(a) all Taxes of an Acquired Entity for periods that end on or before the Tax Effective Date
(including Taxes in respect of transactions that occur on or before the Tax Effective Date, such as
Taxes on such Acquired Entity’s share of the income that is recognized on or prior to the Tax
Effective Date by any entity that is a partnership for federal, state, local or other income tax
purposes in which that Acquired Entity owns an interest);
(b) any Tax that is payable by an Acquired Entity by reason of the transactions for which
provision is made in this Agreement (such as any Tax that is imposed by reason of Section 355(e)
of the Code or any Tax (including a withholding Tax) that is imposed on any one or more of the
Acquired Entities in connection with the Loan or the Alberta/Atlas Investments Distribution or the
implementation of either);
(c) the portion of the Taxes of an Acquired Entity with respect to a Straddle Period that
relates to the period ending with the Tax Effective Date; provided that: (i) in the case of any Tax
based upon or related to income or receipts, the portion of such Tax that relates to the period
ending with the Tax Effective Date shall be equal to the amount that would be payable if the
relevant period ended with the Tax Effective Date (and shall include Taxes on such Acquired
Entity’s share of income that is recognized on or prior to the Tax Effective Date by any entity
that is a partnership for federal, state, local or other income tax purposes in which that Acquired
Entity owns an interest); and (ii) in the case of any real or personal property Tax or any other
Tax not described in the next sentence or in the immediately preceding clause (i), the portion of
such Tax that relates to the period ending with the Tax Effective Date shall be equal to the amount
of such Tax for the entire taxable period multiplied by a fraction, the numerator of which is the
number of days in the taxable period ending on and including the Tax Effective Date, and the
denominator of which is the number of days in the entire taxable period. Sales and use taxes
8
shall be deemed to accrue in the period in which the property is purchased, sold, used or
transferred, as reflected in the books and records of the Acquired Business.
“Proprietary Rights” means (i) patent applications, patents and any reissues or reexaminations
thereof, trademarks, service marks, trademark/service xxxx registrations and applications,
corporate names, business names, brand names, trade names, all other names and slogans embodying
business or product goodwill (or both), trade styles or dress, copyright registrations, mask works,
copyrights, works of authorship, moral rights of authorship, rights in designs, trade secrets,
technology, inventions, discoveries, improvements, know-how, program materials, manuals,
proprietary rights, processes, methods, confidential and proprietary information, and all other
intellectual and industrial property rights, whether or not subject to statutory registration or
protection, and, in the case of any Acquired Entity, (ii) all agreements relating to the
technology, know-how or processes used or held for use in any business of any Acquired Entity.
“Release” shall include any meaning given such term under any Environmental Law.
“Scheduled Proprietary Rights” has the meaning set forth in Section 5.23.
“Shareholder” has the meaning set forth in the preamble hereto.
“Straddle Period Return” has the meaning set forth in Section 7.10(c).
“Subsidiary” of any specified Person at any time means any Entity a majority of the Capital
Stock of which the specified Person owns or controls at that time, directly or indirectly, through
another Subsidiary of the specified Person.
“Tax” or “Taxes” shall mean all taxes, however denominated, including any interest or
penalties that may become payable in respect thereof, imposed by any federal, state, local or
non-U.S. government or any agency or political subdivision of any such government, which taxes
shall include, without limiting the generality of the foregoing, all income, excise, franchise,
gains, capital, real property, goods and services, transfer, value added, gross receipts, personal
property, sales, use, license, stamp, documentary stamp, mortgage recording, employment, payroll,
unemployment, social security, environmental, estimated or withholding taxes, and all customs and
import duties.
“Tax Audit” means any audit or assessment of Taxes, any examination or investigation by any
Tax Authority or any other administrative proceeding or appeal relating to Taxes.
“Tax Authority” means the Internal Revenue Service and any other domestic or foreign
Governmental Authority responsible for the administration of any Tax.
“Tax Effective Date” means the date that immediately precedes the Effective Date.
“Tax Return” means any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any such document prepared on a consolidated, combined or
unitary basis and also includes any schedule, attachment or amendment thereto.
9
“Third Person” has the meaning set forth in Section 8.04(a).
“Third Person Claim” has the meaning set forth in Section 8.04(a).
“Wild Rose” has the meaning set forth in the preamble hereto.
“Year End Financial Statements” has the meaning set forth in Section 5.05(b)(i).
1.02 Other Defined Terms. Words and terms not defined above that this Agreement uses and which other
Sections of this Agreement define are used in this Agreement as those other Sections define them.
1.03 Other Definitional Provisions. For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) all references herein to any specified Law, including the Code and any specified
Environmental Law, are references to that Law, as the same may have been amended or supplemented
from time to time through the Closing Date, and any rules or regulations promulgated thereunder;
(b) the terms defined in Section 1.01 and elsewhere in this Agreement include the plural as
well as the singular and vice versa, and a reference to one gender includes the other gender and
the neuter;
(c) all accounting terms not otherwise defined herein have the meanings ascribed to them in
accordance with GAAP;
(d) 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, and the
words “Article,” “Section,” “Schedule” and “Exhibit” refer to Articles and Sections of, and
Schedules and Exhibits to, this Agreement; and
(e) the word “including” (and, with correlative meaning, the word “include”) means including,
without limiting the generality of any description preceding that word, and the words “shall” and
“will” are used interchangeably and have the same meaning;
(f) the term “business day” means any day other than a day on which commercial banks are
authorized or required to close in either Dallas or Houston, Texas;
(g) the phrase “to the knowledge of the Companies and Shareholders” or phrases with similar
wording, to qualify any representation or warranty set forth in Article V, means the collective
knowledge, after reasonable investigation, of each person who holds a management position with, any
of the Acquired Entities as of the date hereof and Xxxxxx X. Berkhold;
(h) all references to “dollars” or “$” mean United States dollars; and
10
(i) the language used in this Agreement shall be deemed to be the language the parties hereto
have chosen to express their mutual intent, and no rule of strict construction will be applied
against any party hereto.
2.01 Delivery of Shares. Upon the terms and subject to the conditions set forth in this Agreement,
Shareholders shall, at the Closing, sell and deliver to Buyer certificates representing all the
issued and outstanding Companies Capital Stock. Shareholders shall deliver the Companies Capital
Stock to Buyer free and clear of all Encumbrances.
2.02 Endorsement of Companies Capital Stock. Shareholders shall deliver at Closing the certificates
representing the Companies Capital Stock, duly endorsed in blank by Shareholders as appropriate or
accompanied by stock powers duly endorsed in blank and with all necessary transfer tax and other
revenue stamps, acquired at Shareholders’ expense, affixed and cancelled. Shareholders, at their
sole expense, agree to cure any deficiencies with respect to the endorsement of the certificates or
other documents of conveyance with respect to the Companies Capital Stock.
3.01 Consideration. In consideration of the sale to Buyer in accordance with this Agreement of the
certificates representing the Companies Capital Stock, as well as the covenants set forth in
Article VII, Buyer shall pay to Shareholders at the Closing, in accordance with the allocation set
forth on Exhibit A, an aggregate of (a) $165,000,000, plus (b) the Estimated Pre-Closing Earnings
Adjustment, minus (c) the Estimated Interest-Bearing Debt Adjustment, minus (d) the Estimated
Dividend Adjustment, minus (e) the amount, if any, of the Loan outstanding immediately prior to the
Effective Time, plus (f) the amount that would be payable as interest, at the rate of 5% per annum,
on a loan equal to the total amount computed pursuant to clauses (a) through (e) of this sentence
for the period from (and including) the Effective Time to (but excluding) the Closing Date
(calculated on the basis of a 365-day year for the actual number of days elapsed) (such aggregate
amount, subject to adjustment as provided in Section 7.12, being the “Consideration”).
3.02 Delivery of Consideration. At the Closing, Buyer shall deliver to Shareholders the Consideration
payable on the Closing Date pursuant to Section 3.01, in accordance with the allocation set forth
on Exhibit A, by wire transfer of immediately available funds in accordance with the wiring
instructions Shareholders provide Buyer at least two business days prior to the Closing Date.
11
4.01 Closing. The delivery of the Consideration payable on the Closing Date pursuant to Section 3.01
and the other transactions this Agreement contemplates will occur on the Closing Date (the
“Closing”) shall take place simultaneously at the offices of Xxxxx Xxxxx L.L.P., 000 Xxxxxxxxx,
Xxxxxxx, Xxxxx 00000 or at such other place or by such other means (e.g., by facsimile or overnight
delivery of original execution materials) as shall be mutually agreed to by the parties, on the
first date after the Effective Date that the parties hereto reasonably agree is practicable
following the satisfaction or, if permissible, waiver of the conditions set forth in this Article
IV (except for those conditions that by their express terms are not capable of being satisfied
until the Closing, but subject to the satisfaction or waiver of those conditions); provided,
however, that nothing in this Section 4.01 shall require any party hereto to waive any of the
conditions to its obligation hereunder, as set forth in Sections 4.02, 4.03 and 4.04, as
applicable.
4.02 Conditions to the Obligations of Each Party. The obligation of each party hereto to take the
actions contemplated to be taken by that party at the Closing is subject to the satisfaction on or
before the Closing Date, or written waiver under Section 12.02, of each of the following
conditions:
4.03 Conditions to the Obligations of Shareholders. The obligations of Shareholders with respect to the
actions to be taken by them on or before the Closing Date are subject to the satisfaction on or
before the Closing Date, or the written waiver by Shareholders under Section 12.02, of (i) all the
conditions set forth in Section 4.02 and (ii) all the following conditions:
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4.04 Conditions to the Obligations of Buyer. The obligations of Buyer with respect to actions to be
taken by it on or before the Closing Date are subject to the satisfaction on or before the Closing
Date, or the written waiver by Buyer under Section 12.02, of (i) all the conditions set forth in
Section 4.02 and (ii) all the following conditions:
(1) an officer’s certificate signed by an executive officer of Atlas and a director of Wild
Rose respecting the representations and warranties of Shareholders in this Agreement and compliance
with the covenants of Shareholders;
(2) an opinion dated the Closing Date and addressed to Buyer from Xxxxx Xxxxxxx & Xxxx LLP,
counsel for the Companies and Shareholders, in the form of Exhibit B,
provided that any of the legal opinions set forth in such exhibit, to the extent they relate
to matters of the laws of Canada, Jersey or the State of Nevada, may be set forth in one or more
opinions dated the Closing Date of other counsel reasonably acceptable to Buyer;
(3) a certificate of the secretary or any assistant secretary of each Shareholder and each
Company respecting, and to which is attached, (A) the charter documents of that Entity;
13
(B) the
resolutions of the board of directors of that Entity respecting this Agreement and the transactions
this Agreement contemplates; and (C) a certificate respecting the incumbency and true signatures of
the officers who execute this Agreement on behalf of that Entity;
(4) a copy of a statement issued by Alliance pursuant to Treas. Reg. § 1.897-2(h) certifying
that the stock of Alliance is not a United States real property interest, a copy of a statement
issued by Alberta pursuant to Treas. Reg. § 1.897-2(h) certifying that the stock of Alberta is not
a United States real property interest, and a properly completed Internal Revenue Service Form
W-8BEN as to each Shareholder;
(5) from each officer and director of each Acquired Entity, a notice of resignation from his
position or positions as such (subject to any exceptions as Buyer may specify in writing prior to
the Closing);
(6) a certificate, dated as of a recent date not more than five business days prior to the
Closing Date, duly issued by the appropriate Governmental Authorities in the jurisdiction of
incorporation of each Acquired Entity and, in each other jurisdiction Schedule 5.01 lists, showing
that Acquired Entity to be in good standing and authorized to do business in its jurisdiction of
incorporation and those other jurisdictions;
(7) the original stock book and stock ledger, minute books and seal (if any) of each Acquired
Entity; and
(8) evidence reasonably satisfactory to Buyer that (a) all amounts outstanding as advances to
or receivables from Shareholders to the Acquired Entities as reflected in Schedule 5.25 and (b) all
amounts outstanding under loans to the Acquired Entities from Shareholders as reflected in Schedule
7.05 have been repaid in full.
Shareholders, jointly and severally, represent and warrant to Buyer as follows:
5.01 Due Organization and Qualification. Schedule 5.01 sets forth, for each Acquired Entity, its form
of organization, legal name, assumed name (if any), jurisdiction of organization and each
jurisdiction in which it does business. Each Acquired Entity is duly organized, validly existing
and in good standing under the Laws of its jurisdiction of organization and is duly authorized and
qualified to do business and in good standing as a foreign Entity to carry on its business in the
places and in the manner as now conducted except where the failure to be so qualified has not had
or would not have,
individually or in the aggregate, a Material Adverse Effect. Each Acquired Entity has all
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. No Acquired Entity owns, leases or
operates any assets or properties or carries on any of the Acquired Business in any jurisdiction
not listed on Schedule 5.01. Except as described on Schedule 5.01, each Acquired Entity that is a
Subsidiary of another Acquired Entity is a wholly owned Subsidiary of that other Acquired Entity.
Each Acquired Entity is in compliance with the provisions of its articles or certificate of
incorporation,
14
certificate of limited partnership, bylaws, limited partnership agreement or other
governing documents, as applicable. True, complete and correct copies of all stock records and
minute books of each Acquired Entity have been provided to Buyer. Except as set forth in Schedule
5.01, none of the Acquired Entities has been a Subsidiary or division of another Entity (other than
another Acquired Entity) during the past 10 years.
(a) Each Company has all requisite corporate or other organizational power and authority to
execute, deliver and perform this Agreement and the ancillary documents and agreements described
herein. Each Shareholder has all requisite legal right, power and authority to execute, deliver
and perform this Agreement. The execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been duly approved by the board of directors or similar
governing body of each Acquired Entity and each Shareholder. No additional corporate or other
proceedings on the part of any Acquired Entity or Shareholders are necessary to authorize the
execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by each of the Companies
and each Shareholder and, assuming the due authorization, execution and delivery hereof by Buyer,
constitutes a valid and binding agreement of each or the Companies and Shareholders, enforceable
against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating
to or affecting creditors’ rights and to general equity principles.
(b) The execution, delivery and performance of this Agreement by each Company and each
Shareholder do not, and the consummation by each Company and each Shareholder of the transactions
contemplated hereby will not, violate or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any Encumbrance upon any
of the properties or assets of any Acquired Entity or the Acquired Business under any of the terms,
conditions or provisions of, (i) the organizational documents of any Acquired Entity, (ii) any Law
applicable to Shareholders, any Acquired Entity or the Acquired Business or any of the properties
or assets of Shareholders, any Acquired Entity or the Acquired Business, or (iii) except as set
forth in Schedule 5.02, any agreement, note, bond, mortgage, indenture, deed of trust, license,
franchise, Permit (hereinafter defined), concession, lease or other instrument, obligation or
agreement of any kind to which either Shareholder, any Acquired Entity or the Acquired Business is
now a party or by which the Acquired Business, any Acquired Entity or any of their respective
properties or assets may be bound or affected, except, in the case of clauses (ii) and (iii) above,
for any such violations, breaches, defaults, terminations, accelerations
or Encumbrances that would not have, individually or in the aggregate, a Material Adverse
Effect.
(c) Except as set forth in Schedule 5.02, no declaration, filing or registration with, or
notice to, or authorization, consent or approval of, any Governmental Authority or other third
party is necessary for the execution and delivery of this Agreement by the Companies and
Shareholders or the consummation by the Companies and Shareholders of the transactions
15
contemplated
hereby, except those as to which the failure to make or obtain would not have, individually or in
the aggregate, a Material Adverse Effect. Except as set forth in Schedule 5.02, none of the
contracts or agreements with Material Customers (hereinafter defined) or contracts providing for
purchases or services to or by any Acquired Entity individually in excess of $100,000, or in the
aggregate in excess of $200,000, or other agreements, licenses or Permits to which any Acquired
Entity is a party requires notice to, or the consent or approval of, any Governmental Authority or
other third party for the execution and delivery of this Agreement by either of the Companies or
either Shareholder or to the consummation any of the transactions contemplated hereby, except those
as to which the failure to provide notice or to obtain consent or approval would not have,
individually or in the aggregate, a Material Adverse Effect.
5.03 Capitalization and Ownership. The authorized capital stock of Alliance consists solely of
1,000,000 shares of common stock, of which 1,000 shares are issued and outstanding and owned
beneficially and of record by Wild Rose. The authorized capital stock of Alberta consists solely
of 500 shares of Series B common stock, of which 15 shares are issued and outstanding and owned
beneficially and of record by Wild Rose, and 1,000 shares of Series A preferred stock, of which 330
shares are issued and outstanding and owned beneficially and of record by Atlas. The authorized
and issued Capital Stock of each Subsidiary of Alberta is as set forth in Schedule 5.03. All of
the issued and outstanding shares of Capital Stock of each of the Acquired Entities have been duly
authorized and validly issued, are fully paid and nonassessable and were offered and sold by the
respective Acquired Entities in compliance with all applicable Laws, including those Laws
concerning the issuance of securities. None of such shares were issued in violation of the
preemptive rights of any past or present shareholder of any Acquired Entity or any other third
party. As of the Closing, Buyer will obtain good, valid title in the shares of the Companies
Capital Stock owned by Shareholders, free and clear of all Encumbrances except for those created by
Buyer. No shares of Companies Capital Stock are held by any Acquired Entity as treasury shares,
and no subscription, option, warrant, call, convertible or exchangeable security, other conversion
right or commitment of any kind exists which obligates any Acquired Entity to issue any of its
capital stock or Shareholders to transfer any of the equity interests in any Acquired Entity.
5.04 Subsidiaries. Except as set forth in Schedule 5.04, no Acquired Entity owns, of record or
beneficially, or controls, directly or indirectly, or is a party to any agreement obligating it to
purchase, any capital stock, securities convertible into or exchangeable for capital stock or any
other equity interest in any Entity. Except as set forth in Schedule 5.04, no Acquired Entity is,
directly or indirectly, a participant in any joint venture, limited liability company, partnership
or other noncorporate Entity.
(a) The Shareholders have provided to Buyer the Alberta Investments, Inc. 2005 Annual Report,
the 2004 Annual Report and the 2003 Annual Report, the Alberta Investments, Inc. First Quarter 2006
Financial Report and the Alberta Investments, Inc. Profit Plan (collectively, the “Company
Reports”). Each of the Company Reports does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were made, not misleading.
16
(b) The Acquired Entities have delivered to Buyer true, complete and correct copies of the
following financial statements:
(i) the audited consolidated balance sheets of the Acquired Business as of December 31,
2003, 2004 and 2005 and the related audited consolidated statements of income, shareholders’
equity and cash flows for the three-year period ended December 31, 2005, together with the
related notes, schedules and reports of the Acquired Entities’ independent accountants (such
combined balance sheets, the related consolidated statements of income, shareholders’ equity
and cash flows and the related notes and schedules are referred to herein as the “Year-End
Financial Statements”); and
(ii) the unaudited consolidated balance sheet (the “Interim Balance Sheet”) of the
Acquired Business as of March 31, 2006 (the “Balance Sheet Date”) and the related unaudited
consolidated statements of income, shareholders’ equity and cash flows for the three-month
period ended on the Balance Sheet Date, together with the related notes and schedules (such
combined balance sheet, the related combined statements of income, shareholders’ equity and
cash flows and the related notes and schedules are referred to herein as the “Interim
Financial Statements”). The Year-End Financial Statements and the Interim Financial
Statements of the Acquired Business (collectively, the “Financial Statements”) are attached
as Schedule 5.05 to this Agreement;
(c) Except as set forth in Schedule 5.05, the Financial Statements are true, correct and
complete, have been prepared from the books and records of the Acquired Entities in conformity with
GAAP applied on a consistent basis throughout the periods covered thereby, except, with respect to
the Interim Financial Statements, for footnotes and normal, recurring year-end audit adjustments,
and fairly present in all material respects the financial position, results of operations and cash
flow of each Acquired Entity as of the dates of such statements and for the periods covered
thereby. The books of account of each Acquired Entity have been kept accurately in all material
respects in the ordinary course of business, the transactions entered therein represent bona fide
transactions, and the revenues, expenses, assets and liabilities of each Acquired Entity have been
properly recorded therein in all material respects. Within the past five fiscal years of each
Acquired Entity, that Acquired Entity has not received any correspondence from its accountants,
including management letters, which have indicated or disclosed that there is a “material weakness”
in or “reportable condition” (as those terms are defined under GAAP) with respect to the financial
condition of that Acquired Entity.
(a) Except as set forth in Schedule 5.06, as of the Balance Sheet Date, no Acquired Entity
had, or had incurred since that date, any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of any nature, except (i) liabilities, obligations or contingencies that
are adequately accrued or reserved against in the Financial Statements or reflected in the notes
thereto, (ii) liabilities, obligations or contingencies that are of a nature not required to be
reflected in the Financial Statements and that do not exceed or reasonably could be expected to
exceed $50,000 individually or $100,000 in the aggregate, and (iii) trade payables that were
incurred after the Balance Sheet Date and were incurred in the ordinary course of business,
consistent with past practices.
17
(b) Set forth on Schedule 5.06 is a summary of each Acquired Entity’s outstanding indebtedness
for borrowed money (including overdrafts), letters of credit, installment purchase agreements,
capital leases and other indebtedness as of the date hereof including outstanding principal
amounts, accrued interest, interest rates, account and creditor information and applicable
prepayment penalties. Since the Balance Sheet Date, each Acquired Entity has paid, discharged or
satisfied all claims, liabilities and obligations in the ordinary and usual course of business and
consistent with past practice.
5.07 Real Property. Schedule 5.07 contains a true and complete list of all Land. Except as set forth
in Schedule 5.07, the respective Acquired Entities have good and indefeasible fee or leasehold
title to each parcel of the Land set forth on such schedule, including all mineral rights
appurtenant thereto and subject to no liens or other Encumbrances, except for Permitted
Encumbrances, that could materially adversely affect the value or use of the Land for the purposes
for which it is presently being used. Except as set forth on Schedule 5.07 or in any title
commitment or policy issued in connection with the owned Land that has been provided to Buyer on or
prior to the date of this Agreement and set forth on Schedule 5.07:
(i) The Land is licensed, permitted and authorized in all material respects for the
operation of the Acquired Business as currently conducted under all Laws relating to the
protection of the environment and the conduct of such business thereon (including all zoning
restrictions and land use requirements).
(ii) The Land is usable for its current uses and can be used by Buyer after the Closing
for such uses without violating any applicable Law or, to the knowledge of the Companies and
Shareholders, any private restriction, and such uses are legal and conforming uses. There
are no proceedings or amendments pending and brought by or, to the knowledge of the
Companies and Shareholders, threatened by any third party that would result in a change in
the allowable uses of the Land or that would modify the right of the applicable Acquired
Entity to use the Land for its current uses.
(iii) There is public ingress and egress to and from each parcel of the Land and all
public utilities required for the operation of the Land as presently utilized by each
Acquired Entity are installed and operational in all material respects.
(iv) No third party has a material unrecorded present or future right to possession of
all or any part of the Land, except for the applicable landlord of any parcel of Land that
is leased.
(v) No portion of any improvements on any parcel of the Land materially encroach onto
neighboring properties and no improvements from neighboring properties materially encroach
onto any portion of the Land.
(vi) No portion of the Land contains any areas that could be characterized as
disturbed, undisturbed or man made wetlands or as “waters of the United States” pursuant to
any Applicable Laws or the procedural manuals of the Environmental Protection Agency, U.S.
Army Corps of Engineers or the Texas Commission on Environmental Quality.
18
(vii) There are no mechanics’ liens of record affecting the Land and no work has been
performed thereon at the request of any Acquired Entity within 120 days of the date hereof
for which a mechanic’s lien could be filed.
(viii) There are no levied or pending special assessments affecting all or any part of
the Land and, to the knowledge of the Companies and Shareholders, none is threatened.
(ix) There are no pending or, to the knowledge of the Companies and Shareholders,
threatened condemnation or eminent domain proceedings affecting all or any part of the Land.
(a) The Acquired Entities have, and immediately following the Closing will continue to have,
good and valid title to their assets presently owned thereby, or in the case of assets and
properties they lease, valid rights by lease to use, all tangible personal assets and properties
used or held for use by the Acquired Entities to conduct their business as currently conducted;
(b) The combined fixed assets of the Acquired Entities (together with the real property assets
and leased assets) constitute all of the real and personal property necessary for the operation of
the Acquired Business by Buyer following the Closing and include all of the Permits, licenses,
franchises, consents and other approvals necessary to operate such business both before and after
Closing; and
(c) At the Closing, the Acquired Entities together shall have good and marketable title to all
personal property reflected in the Financial Statements, free and clear of all Encumbrances and
Interest-Bearing Debt, except as set forth on Schedule 5.08.
(a) Schedule 5.09 (i) sets forth an accurate list of all customers representing 5% or more of
the Acquired Business’s revenues for each of the fiscal year ended December 31, 2005 and the
interim period ended on the Balance Sheet Date (the “Material Customers”), and (ii) sets
forth an accurate list of the following agreements, instruments or other documents (the
“Listed Agreements”): (A) all customer contracts providing for payments or obligations in excess
of $175,000, individually, or $300,000 in the aggregate; (B) contracts with any labor
organizations; (C) leases providing for annual rental payments in excess of $50,000, individually,
or $150,000 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) operating agreements, joint venture, partnership or
cost-sharing agreements; (L) options to purchase real or personal property; (M) agreements relating
to the purchase or sale by any Acquired Entity of assets or securities for more than $50,000,
individually, or $150,000 in the aggregate or that commit or will commit the Acquired Business for
a fixed term of 12 months or more; (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 shareholders’ agreements; (P) agreements providing for the purchase from a
supplier of all or substantially all the requirements of any Acquired Entity of a particular
19
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
$100,000 that cannot be canceled upon 90 days’ or less notice without penalty or premium or any
continuing obligation or liability. Prior to the date hereof, the Acquired Entities have made
available to Buyer true, complete and correct copies and of all the Listed Agreements.
(b) Except as set forth in Schedule 5.09, since December 31, 2005 (i) no Material Customer has
canceled or substantially reduced or, to the knowledge of the Companies and Shareholders, is
threatening to cancel or substantially reduce its purchases of the Acquired Business’s products or
services, and (ii) none of the Acquired Entities or 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 applicable Acquired Entity and, to the knowledge of the Companies and
Shareholders, the other parties thereto in accordance with their respective terms.
(c) No Acquired Entity is a party to any governmental contracts subject to price
redetermination or renegotiation. Except to the extent set forth in Schedule 5.09, no Acquired
Entity is required to provide any bonding or other financial security arrangements in any material
amount in connection with any transactions with any of its customers or suppliers.
(d) Except as set forth in Schedule 5.09, none of the Acquired Business, the Acquired
Entities, Shareholders or any officer, employee, shareholder, director, representative or agent
thereof is a party to any contract, arrangement, commitment or understanding among themselves or
with any customer of any Acquired Entity or the Acquired Business for the repurchase of products,
sharing of fees, rebating of charges, bribes, kickbacks or other similar arrangements.
(e) Except as set forth in Schedule 5.09, none of the Companies nor Shareholders 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.
5.10 Permits. The Acquired Entities possess all licenses, franchises, permits, authorizations,
approvals, certificates, transportation authorities and other governmental authorizations and
intangible assets, including permits, licenses and operating authorizations, titles (including
motor vehicle titles and current registrations), fuel permits, franchises, certificates,
trademarks, trade names, patents, patent applications and copyrights, in each case that are
material to the conduct of the Acquired Business and the ownership of the assets and properties of
the Acquired Business and required by applicable Law (collectively, the “Permits”). The Permits
are valid, and the Acquired Entity holding each such Permit has not received any written notice
that any Governmental Authority intends to cancel, terminate, suspend, not renew or change in any
material respect the terms of any such Permit. The Acquired Entities have conducted and currently
are conducting the Acquired Business in substantial compliance with the requirements, standards,
criteria and conditions set forth in its Permits, as well as the applicable orders, approvals and
variances related thereto, and is not in violation of any of the foregoing,
20
except for any
instances of noncompliance or violations that have not had and would not have, individually or in
the aggregate, a Material Adverse Effect. Except as specifically provided in Schedule 5.10, the
transactions contemplated by this Agreement will not result in any default under, breach or
violation of, termination of, or adverse effect on the rights and benefits afforded to the Acquired
Business by, any of its Permits, which defaults, breaches, violations, terminations or adverse
effects would have, individually or in the aggregate, a Material Adverse Effect. None of the
Permits require notice to, or the consent or approval of, any Governmental Authority to the Closing
or to the use of such Permit by the Acquired Entities after the Closing.
5.11 Environmental Matters. Except as set forth in Schedule 5.11, (a) each Acquired Entity has complied
with and is currently in compliance with all Environmental Laws, (b) each Acquired Entity has
obtained and complied with all 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 that
Acquired Entity where Hazardous Substances have been treated, stored, disposed of or otherwise
handled, (c) there has been no Release of any Hazardous Substance at, from, in, to, under or on any
property currently or previously owned or operated by any Acquired Entity or the Acquired Business,
except in amounts and concentrations that do not require reporting under applicable Environmental
Laws and except, with respect to any such property that is no longer either owned, operated or
owned and operated by an Acquired Entity, for any such Release that occurred after the date of such
Acquired Entity’s disposition of such property or (if later) its cessation of operations on such
property, (d) there is no on-site or off-site location to which any Acquired Entity has transported
or disposed of Hazardous Substances or arranged for the transportation or disposal of Hazardous
Substances which is or, based on existing facts and circumstances as of the Closing Date, would be
the subject of any federal, state, local or foreign enforcement action or any other investigation
which could lead to any claim against Buyer or any of its affiliates 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, (e) none of the Acquired Entities or the Acquired Business has
received any notice, claim, demand, warning, inquiry, Order or request for information, regarding
any actual, threatened or potential action or
liability under Environmental Laws or regarding any actual or threatened Release of Hazardous
Substances, (f) none of the Acquired Entities or the Acquired Business has any liability in
connection with any release or disposal of any Hazardous Substance into the environment, and (g)
there are no underground storage tanks (active or abandoned) under property presently owned or
operated by any Acquired Entity or by the Acquired Business. None of the past or present sites
owned or operated by any Acquired Entity or the Acquired Business is currently or has ever been
designated as a treatment, storage and/or disposal facility, nor has any such facility, during the
time it was owned or operated by an Acquired Entity, ever applied for a permit, license,
authorization or other approval designating it as a treatment, storage and/or disposal facility,
under any Environmental Law. Each Acquired Entity has provided Buyer with copies (or, if not
available, accurate written summaries) of all environmental investigations, studies, audits,
reviews and other analyses in the possession of that Acquired Entity respecting any facility site
or other property previously or presently owned or operated by the Acquired Business.
21
(a) Except as set forth in Schedule 5.12, no Acquired Entity is bound by or subject to any
arrangement with any labor union. Except as set forth in Schedule 5.12, no employees of any
Acquired Entity are represented by any labor union or covered by any collective bargaining
agreement nor, to the knowledge of the Companies and Shareholders, 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 knowledge of the Companies and
Shareholders, threatened labor dispute involving any Acquired Entity and any group of its employees
nor has any Acquired Entity experienced any significant labor interruptions over the past five
years. None of the Companies or Shareholders has any knowledge of any issues or problems in
connection with the relationship of any Acquired Entity with its employees, except for any such
issues and problems as do not and would not have, individually or in the aggregate, a Material
Adverse Effect. Each Acquired Entity 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 Companies and Shareholders, threatened against or
otherwise affecting any Acquired Entity, (ii) no action, suit, complaint, charge, arbitration,
inquiry, proceeding or investigation by or before any Governmental Authority brought by or on
behalf of any employee, prospective employee, former employee, retiree, labor organization or other
representative of any Acquired Entity’s employees is pending or, to the knowledge of the Companies
and Shareholders, threatened against that Acquired Entity, (iii) no labor or employment grievance
is pending or, to the knowledge of the Companies and Shareholders, threatened against any Acquired
Entity, (iv) no Acquired Entity is a party to, or otherwise bound by, any consent decree with, or
citation by, any Governmental Authority relating to employees or employment practices, (v) each
Acquired Entity is in compliance in all material respects with and has complied in all material
respects with all applicable Laws, agreements, contracts and policies relating to employment,
employment practices, wages, hours and terms and conditions of employment, (vi) each Acquired
Entity has paid in full to, or accrued in its financial books and records, with respect to all
employees of that Acquired Entity, 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) each
Acquired Entity is in compliance with its obligations pursuant to the Worker Adjustment and
Retraining Notification Act of 1988 and all other notification and bargaining obligations arising
under any collective bargaining agreement, statute or otherwise.
(c) The Acquired Entities have complied in all material respects with the applicable
provisions of the Immigration Reform and Control Act of 1986 (“IRCA”). Except as set forth in
Schedule 5.12, no Acquired Entity (i) employs (or by reason of any contract, subcontract or
exchange is considered for purposes of the IRCA to employ) an alien in the United States to perform
labor or services with knowledge (as determined in accordance with the IRCA) that the alien is an
unauthorized alien with respect to performing that labor or those services or (ii) is otherwise in
violation of the IRCA, except for any such instances of employment or violations as would not have,
individually or in the aggregate, a Material Adverse Effect. The Acquired Entities maintain and
have made available to Buyer true, correct and complete copies of Form I-9 for each current
employee of each Acquired Entity. Each Acquired Entity has obtained,
22
completed correctly and
maintained Forms I-9 in accordance with, and has otherwise complied with the record keeping
requirements of, the IRCA.
5.13 Insurance. The Acquired Entities maintain policies of fire and casualty, liability and other forms
of insurance in such amounts, with such deductibles and against such risks and losses, as set forth
on Schedule 5.13, and will continue such insurance in effect (or renew such issuance policies or
reasonably equivalent terms) through the Closing. True and complete copies of such policies have
been provided to Buyer. Schedule 5.13 contains the following information with respect to all
insurance policies carried by any Acquired Entity for each of the last five policy years: (i)
insurer, (ii) type of policy, (iii) coverage period and (iv) policy limits and deductibles,
self-insured retentions or retrospective loss limits. None of such policies provides for
retrospective premium adjustments. Except as set forth in Schedule 5.13, none of such policies are
“claims made” policies. All the policies shown as current policies on Schedule 5.13 are in full
force and effect, all premiums due and payable thereon have been paid and no written or oral notice
of cancellation or termination has been received with respect to any such policy. Schedule 5.13
sets forth an accurate list of all claims or losses valued within the last 90 days provided by each
applicable insurance company showing all property, marine, inland marine, fidelity, aviation,
liability, auto or other insurance claims relating to any event or occurrence that took place or
was discovered at any time during the past five policy years. 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 list of all officers,
directors and employees of each Acquired Entity, 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 May 1, 2006, and Shareholders will supplement that schedule with updated
information as of a date within five business days prior to the Closing Date. None of the
Companies or Shareholders has any knowledge that any of such individuals has any present intention
of terminating his or her employment or association with an Acquired Entity. Attached to Schedule
5.14 are true,
complete and correct copies of each employment or consulting agreement with any employee of any
Acquired Entity or either Shareholder, other than standard form employment letters generally signed
by new employees, a sample of which is included in Schedule 5.14. Except as set forth in Schedule
5.14, no Acquired Entity is a party to any agreement, nor has it established any plan, policy,
practice or program, requiring it to make a payment or provide any other form of compensation or
benefit or vesting rights to any officer, director, shareholder, member or employee of any Acquired
Entity or other person performing services for any Acquired Entity that 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 any Acquired Entity or either Shareholder is bound or
under which any Acquired Entity or either Shareholder 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 Acquired
23
(a) Schedule 5.16 sets forth an accurate schedule of each “employee benefit plan,” as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and
other compensation or benefit plans or arrangements, and all related funding arrangements or
trusts, whether formal or informal and whether legally binding or not, under which any Acquired
Entity or an ERISA Affiliate thereof has any current or future obligation or liability or under
which any present or former employee of any Acquired Entity or an ERISA Affiliate thereof, or such
present or former employee’s dependents or beneficiaries, has any current or future right to
benefits (each such employee benefit plan or arrangement and funding arrangement or trust referred
to hereinafter as a “Plan”), together with true and complete copies of such Plans or trusts and
classifications of employees covered thereby as of the Balance Sheet Date. Except as set forth in
Schedule 5.16, no Acquired Entity nor any of their ERISA Affiliates sponsors, maintains or
contributes to currently, or sponsored, maintained or contributed at any time during the preceding
five years, any plan, program, fund or arrangement that constitutes an “employee pension benefit
plan.” Each Plan may be terminated by the applicable Acquired Entity 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. None of the Acquired Entities nor
any ERISA Affiliate thereof has any obligation to contribute to, or accrue or pay any benefits
under, any Plan on behalf of any employee or employees (such as, for example, and without
limitation, any individual retirement account or annuity, retiree medical benefits, “excess benefit
plan” within the meaning of Section 3(36) of ERISA or any nonqualified deferred compensation
arrangements). For purposes of this Agreement, the term “employee pension benefit plan” shall have
the meaning given that term in Section 3(2) of
ERISA, and the term “ERISA Affiliate” means any corporation or trade or business under common
control with an Acquired Entity as determined under Section 414(b), (c), (m) or (o) of the Code.
Except as set forth in Schedule 5.16, none of the Acquired Entities or any ERISA Affiliate thereof
has sponsored, maintained or contributed to any Plan pursuant to the provisions of any collective
bargaining agreement at any time during the preceding five years.
(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 Acquired Entities and each ERISA Affiliate thereof
(other than a “multiemployer plan,” as defined in Section 4001(a)(3) of ERISA), all reports and
other documents required under ERISA or other applicable Law to be filed with any Governmental
Authority, including all Forms 5500, or required to be distributed to participants or
beneficiaries, have been duly and timely filed or distributed. 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 letter or opinion letter, as applicable, as to the
qualification under the Code of each of such Qualified Plans and each amendment thereto, have been
timely obtained. True and complete copies of all such reports, other documents and favorable
determinations with respect to the past three years for each Plan have been provided to
24
Buyer.
Except as set forth in Schedule 5.16, all accrued contribution obligations of the Acquired Entities
and each ERISA Affiliate with respect to any Plan have either been fulfilled in their entirety or
are fully reflected in the Financial Statements. Schedule 5.16 contains a list of each Plan which
provides nonqualified deferred compensation and may be subject to Section 409A of the Code, and
each such Plan is either exempt from Section 409A of the Code under current Internal Revenue
Service guidance or has been operated in good faith compliance with Section 409A of the Code and
the Internal Revenue Service guidance issued thereunder.
(c) No Plan has incurred or will incur, and none of the Acquired Entities or any ERISA
Affiliate thereof 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, no Acquired Entity nor any ERISA Affiliate has made
any promises of benefits to employees, except as set forth in the Plans, and no Acquired Entity 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. No Acquired Entity nor any ERISA Affiliate maintains, has
established or has ever participated in a multiple employer welfare arrangement as described in
Section 3(40)(A) of ERISA.
(e) None of the Acquired Entities or any ERISA Affiliate has at any time contributed to or had
an obligation to contribute to a Plan subject to either Section 412 of the Code or Title IV of
ERISA.
(f) There are no pending or, to the knowledge of the Companies and Shareholders, threatened
claims, lawsuits or actions (other than routine claims for benefits in the ordinary course)
asserted or instituted 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 knowledge of the Companies and
Shareholders, there are no investigations or audits of any Plan by any Governmental Authority
currently pending and there have been no such investigations or audits that have been concluded
that resulted in any liability to any Acquired Entity or any ERISA Affiliate thereof that has not
been fully discharged. None of the Acquired Entities or any ERISA Affiliate thereof has
participated in any voluntary compliance or closing agreement programs established with respect to
the form or operation of a Plan.
(g) None of the Acquired Entities or any ERISA Affiliate thereof has engaged in any prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, in connection
with any Plan for which exemption was not available. Except as set forth in Schedule 5.16, none of
the Acquired Entities or any ERISA Affiliate thereof is, or ever has been, a participant in or is
obligated to make any payment to a multiemployer plan. To the knowledge of the Companies and
Shareholders, no Person that was engaged by any Acquired Entity or an
25
ERISA Affiliate thereof as an
independent contractor within the last five years reasonably can or will be characterized or deemed
to be an employee of any Acquired Entity or an ERISA Affiliate thereof under applicable Laws for
any purpose whatsoever, including, for purposes of federal, state and local income taxation,
workers’ compensation and unemployment insurance and Plan eligibility.
(h) The Acquired Entities and each ERISA Affiliate have the right to, in any manner, and
without the consent of any employee, former employee, participant, beneficiary, dependent,
employees’ organization or any other Person, terminate, modify or amend any Plan (or their
participation in such Plan) at any time, effective as of any date on or after the Closing Date
except to the extent that any retroactive amendment would be prohibited by Section 204(g) of ERISA,
would adversely affect an accrued benefit or a previously granted award under any such Plan not
subject to Section 204(g) of ERISA or would be otherwise prohibited by applicable Law.
5.17 Litigation and Compliance with Laws. Except as set forth in Schedule 5.17, there are no claims,
actions, suits or proceedings, pending or, to the knowledge of the Companies and Shareholders,
threatened against or affecting any Acquired Entity, at law or in equity, or before or by any
Governmental Authority having jurisdiction over that Acquired Entity with respect to which the
dollar amount in controversy exceeds $50,000 individually or $100,000 in the aggregate. No written
notice of any claim, action, suit or proceeding, whether pending or threatened, has been received
by any Acquired Entity and, to the knowledge of the Companies and Shareholders, there are no facts
or circumstances existing which, with delivery of notice or passage of time or both would be
reasonably likely to form the basis of such a claim, action, suit or proceeding. Except to the
extent set forth in Schedule 5.17, each Acquired Entity has conducted and is conducting its
business in compliance with all Laws applicable to that Acquired Entity, its assets or the
operation of its business, except for such instances of noncompliance as would not have,
individually or in the aggregate, a Material Adverse Effect. Schedule 5.17 sets forth all
instances where any Acquired Entity is a plaintiff or complaining or moving party, under any of the
above types of proceedings.
5.18 Taxes. Except as set forth on Schedule 5.18:
(a) each Acquired Entity has timely filed all Tax Returns that are due on or before the
Closing Date (taking into account any extension validly obtained) and has duly paid in full all
Taxes in respect of a period for which such a Tax Return is required to be filed. All such Tax
returns are true, correct and complete. True and complete copies of the federal, state and local
Tax Returns of each Acquired Entity for the last three taxable years thereof have been previously
provided to Buyer. Each Acquired Entity 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 Person under any
applicable Law, including any amounts required to be withheld or collected with respect to social
security, unemployment compensation, sales or use taxes or workers’ compensation or in respect of
distributions that have been paid to Atlas or any other foreign person;
(b) there have not been during the past five years nor is there currently in progress any Tax
Audit or other claim against any Acquired Entity relating to Taxes and no notice of any
26
such Tax
Audit or claim for Taxes, whether pending or, to the knowledge of the Companies and Shareholders,
threatened, has been received; no Acquired Entity has been granted or been requested to grant any
extension of the limitation period applicable to any claim for Taxes or assessments with respect to
Taxes; nor has any Acquired Entity waived any statute of limitations with respect to Taxes; and no
Acquired Entity is a party to any Tax allocation or sharing agreement or is otherwise liable or
obligated to indemnify any Person with respect to any Tax;
(c) the amounts shown as accruals for Taxes on the Interim Financial Statements as of the
Balance Sheet Date are sufficient for the payment of all Taxes for all periods ended on or before
that date;
(d) neither of Alliance or Alberta is a United States real property holding corporation,
within the meaning of Section 897(c)(2) of the Code;
(e) there is no request for ruling pending in respect of any Tax between any of the Acquired
Entities and any Tax Authority; each Acquired Entity currently utilizes the accrual method of
accounting for income tax purposes; there is no lien for Taxes upon any property or asset of any
Acquired Entity, except for liens for Taxes not yet due; no Acquired Entity has engaged in any
“reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b); no
Acquired Entity has agreed to make any adjustment pursuant to Section 481(a) of the Code (or any
predecessor provision or comparable provision of other law) by reason of any change in accounting
method; and no Acquired Entity has an application pending as to any
such change in accounting method and no Tax Authority has proposed such a change in accounting
method;
(f) no Acquired Entity is either a distributing corporation or a controlled corporation, in
either case within the meaning of Section 355(a)(1)(A) of the Code, as to a distribution that
constitutes part of the plan (or a series of related transactions) of the transaction for which
provision is made in this Agreement; and no payment that is made pursuant to this Agreement will be
an “excess parachute payment” within the meaning of Section 280G of the Code; and
(g) no asset of any Acquired Entity is “tax exempt use property”, within the meaning of
Section 168(h) of the Code or “tax exempt bond financed property”, within the meaning of Section
168(g)(5) of the Code or is otherwise subject to a provision of applicable law which extends the
period over which the cost thereof may be recovered for purposes of any Tax.
5.19 Absence of Changes. Since December 31, 2005, except as set forth in Schedule 5.19, each Acquired
Entity has conducted its operations in the ordinary course and there has not been:
(a) any change in the business, operations, properties, condition (financial or other),
assets, liabilities (contingent or otherwise) or results of operations of any Acquired Entity that
has resulted in, or would result in, individually or in the aggregate a Material Adverse Effect;
(b) any incurrence of liability or obligations (absolute, accrued, contingent or otherwise)
that is material, either individually or in the aggregate, except any such liabilities of
obligations incurred in the ordinary and usual course of business and consistent with past
practice;
27
(c) any payment, discharge or satisfaction of any claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) that is material, either individually or in the
aggregate, other than the payment, discharge or satisfaction in the ordinary and usual course of
business and consistent with past practice of liabilities and obligations incurred in the ordinary
and usual course of business and consistent with past practice;
(d) any damage, destruction or loss (whether or not covered by insurance) materially adversely
affecting the assets, properties or business of any Acquired Entity individually or in the
aggregate or the Acquired Business;
(e) any change in the authorized Capital Stock of any Acquired Entity or in its outstanding
securities or any change in either Shareholder’s ownership interests in that Acquired Entity or any
grant of any options, warrants, calls, conversion rights or commitments;
(f) except as may be expressly contemplated by this Agreement with respect to the
Alberta/Atlas Investments Distribution, any declaration or payment of any dividend or distribution
in respect of the capital stock or any direct or indirect redemption, purchase or other acquisition
of any of the capital stock of any Acquired Entity;
(g) any increase in the compensation payable or to become payable by any Acquired Entity to
Shareholders or any of its respective 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;
(h) any work interruptions, labor grievances or claims filed;
(i) any proposed Law or event or condition of any character materially adversely affecting the
assets, properties or business of any Acquired Entity or the Acquired Business;
(j) except for the transactions contemplated by this Agreement, any sale or transfer, or any
agreement to sell or transfer, any material assets, properties or rights of any Acquired Entity to
any Person, including Shareholders and their Affiliates;
(k) any cancellation, or agreement to cancel, any indebtedness or other obligation owing to
any Acquired Entity;
(l) except as may be expressly contemplated by this Agreement with respect to the
Alberta/Atlas Investments Distribution, any increase in the indebtedness of any Acquired Entity,
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;
(m) any plan, agreement or arrangement granting any preferential rights to purchase or acquire
any interest in any of the assets, properties or rights of any Acquired Entity or requiring consent
of any party to the transfer and assignment of any such assets, properties or rights;
(n) 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 Acquired Entities’ business;
28
(o) any waiver of any material rights or claims of any Acquired Entity or the Acquired
Business;
(p) any practice that is not in the ordinary course of business related to the timing of
collection of receivables, payment of payables or any similar disbursements that would affect any
Acquired Entity’s net working capital;
(q) any change in any method of accounting or accounting practice;
(r) any single capital expenditure commitment in excess of $125,000 for additions to property,
plant, equipment or intangible capital assets or made capital expenditure commitments in excess of
$250,000 in the aggregate for additions to property, plant, equipment or tangible capital assets;
(s) any change in the manner in which products or services have been developed or marketed,
except in the ordinary course of business consistent with past practice;
(t) any payment of any pension, retirement allowance or other employee benefit not required by
any plan, policy or program identified on Schedule 5.16;
(u) any adoption, agreement to adopt or any announcement regarding the adoption of (i) any new
pension, retirement or other employee benefit plan, program or policy, or (ii) any amendment to any
existing plan, policy or program as identified on Schedule 5.16, unless required by applicable Law;
(v) any events affecting any of its assets in any way as a result of fire, explosion or other
casualty (whether or not covered by insurance) that have had or would have, individually or in the
aggregate, a Material Adverse Effect;
(w) any material breach, amendment or termination of any Listed Agreement, Permit or other
right to which any Acquired Entity is a party or any of its property is subject; or
(x) any other material transaction by any Acquired Entity or the Acquired Business 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 each Acquired Entity has accounts or safe deposit boxes; (b) the names in
which the accounts or boxes are held; (c) the type of account; and (d) the name of each Person
authorized to draw thereon or have access thereto. Schedule 5.20 also sets forth the name of each
Person holding a general or special power of attorney from any Acquired Entity and a description of
the terms thereof, each of which shall be terminated as of the Closing.
5.21 Absence of Certain Business Practices. None of the Acquired Entities or Shareholders 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 have any of them otherwise taken any action which would constitute a violation of the
Foreign Corrupt Practices Act of 1977 or any similar Law.
29
5.22 Competing Lines of Business; Related-Party Transactions. Except as set forth in Schedule
5.22, neither Shareholders nor any other Affiliate of the Acquired Entities owns, directly or
indirectly, any interest in, or is an officer, director, employee or consultant of or otherwise
receives remuneration from, any Competitive Business, lessor, lessee, customer or supplier of any
Acquired Entity. Except as set forth in Schedule 5.22, neither any officer or director of any
Acquired Entity nor Shareholders have, nor had any interest in any tangible or intangible assets or
real or personal property used in or pertaining to the Acquired Business.
5.23 Proprietary Rights. Schedule 5.23 (i) lists the material Proprietary Rights used in the
Acquired Business as currently conducted or currently proposed to be conducted by the Acquired
Entities (the “Scheduled Proprietary Rights”) (it being acknowledged by the Companies and
Shareholders that Buyer is relying on the completeness of such listing for purposes of the
representations and warranties set forth in the following provisions of this Section 5.23) and (ii)
indicates those of the Scheduled Proprietary Rights that one or more of the Acquired Entities own
and, for those not listed as so owned, the agreement or other arrangement under which they are
possessed. Except as set forth in Schedule 5.23, each Acquired Entity owns or has the legal right
to use, free and clear of all Liens the Scheduled Proprietary Rights listed in Schedule 5.23 as
being owned or used by that Entity, in each case free of any claims or infringements known to the
Companies or either Shareholder. Except as set forth in Schedule 5.23, (i) each Acquired Entity is
the only owner of each of the Scheduled Proprietary Rights listed in Schedule 5.23 as being owned
by that Entity and is entitled to the exclusive use of each of those Proprietary Rights and the
uninterrupted use of each of those Proprietary Rights in the Acquired Business as currently
conducted or as currently proposed to be conducted by the Acquired Entities, subject to the
expiration of any of those Proprietary Rights pursuant to any applicable Laws (in accordance with
those Laws), without payment of any royalty or license or other fees, (ii) no Person (other than an
Acquired Entity) has any right, title or interest in any of the Scheduled Proprietary Rights, (iii)
each Acquired Entity has diligently protected its legal rights to its Scheduled Proprietary Rights,
(iv) there is no governmental prohibition or restriction on the use of any of the Scheduled
Proprietary Rights, except for any prohibitions or restrictions imposed by any Law pursuant to
which those Proprietary Rights have been established, (v) no claim against any of the Acquired
Entities or other claim involving any of the Acquired Entities regarding any Proprietary Rights is
pending or threatened, (vi) no consent of any Person will be required for the use of any of the
Scheduled Proprietary Rights by Buyer or any Subsidiary of Buyer in connection with the conduct of
the Acquired Business following the Closing and (vii) no governmental registration of any of the
Scheduled Proprietary Rights has lapsed or expired or been canceled, abandoned, opposed or the
subject of any reexamination request.
5.24 Capital Expenditures. The Company Reports set forth the total amount of capital expenditures
currently budgeted to be incurred by the Acquired Business in excess of $25,000 in the aggregate
during the balance of the Acquired Business’s current fiscal year.
5.25 Accounts and Notes Receivable. Schedule 5.25 sets forth an accurate list of the accounts and
notes receivable of the Acquired Business as of the Balance Sheet Date and will set forth a list 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, Shareholders and any Persons related to or Affiliates of
Shareholders are separately identified in Schedule 5.25. Schedule 5.25
30
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 Acquired Business, including those classified as current assets on the Interim Balance Sheet,
are bona fide receivables, were acquired in the ordinary course of business, and are stated in
accordance with GAAP.
5.26 Inventories. Except as reflected in the Company Reports, all inventories, net of reserves
determined in accordance with GAAP, of the Acquired Business which are classified as such on the
Interim Balance Sheet are merchantable and salable or usable in the ordinary course of business of
the Acquired Entities. Except as set forth on Schedule 5.26, the Acquired Business does not depend
on any single vendor for its inventories the loss of which could have a Material Adverse Effect or
during the past five years has sustained a difficulty material to the Acquired Business in
obtaining its inventories.
5.27 Product Warranties. Schedule 5.27 sets forth copies of all of the terms and conditions of all
product or service warranties and guarantees given by each Acquired Entity. The aggregate amount
of losses and expenses incurred by reason of allowances, customer dissatisfaction or liabilities
arising under such warranties and guarantees did not exceed $200,000 during any of the five years
ended December 31, 2005, and there has been no material adverse change in that experience since
December 31, 2005.
5.28 Disclosure. Shareholders and the Acquired Entities have fully provided Buyer or its
representatives with all the information that Buyer has requested in writing in analyzing whether
to consummate the transactions contemplated by this Agreement. None of the information so provided
nor any representation or warranty of Shareholders to Buyer in this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary in order to make the
statements herein, in light of the circumstances under which they were made, not misleading.
Buyer represents and warrants to Shareholders as follows:
6.01 Organization. Buyer is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware.
(a) Buyer 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. All corporate proceedings on the part of Buyer necessary to authorize the execution and
delivery of this Agreement and the consummation by Buyer of the transactions contemplated hereby
has been taken. This Agreement has been duly and validly executed and delivered by Buyer, and,
assuming the due authorization, execution and delivery by the Companies and Shareholders,
constitutes valid and binding agreements of Buyer, enforceable against Buyer in accordance with its
terms.
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(b) The execution and delivery of this Agreement by Buyer do not, and the consummation by
Buyer 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 Buyer, (ii) any Law applicable
to Buyer or any of its properties or assets or (iii) any material note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract, lease or other instrument,
obligation or agreement of any kind to which Buyer is now a party or by which Buyer or any of its
properties or assets may be bound or affected.
(c) Except for such filings as may be required under federal or state securities Laws, no
declaration, filing or registration with, or notice to, or authorization, consent or approval of,
any Governmental Authority is necessary for the execution and delivery of this Agreement by Buyer
or the consummation by Buyer of the transactions contemplated hereby.
(a) From the date hereof and until the Closing, Shareholders will and will cause the Acquired
Entities to (i) afford to the representatives of Buyer reasonable access, upon reasonable prior
notice, to all the key employees, sites, properties and other assets, books and records of the
Acquired Business, (ii) provide Buyer with such additional financial, operating and other
information relating to the business, properties and other assets of the Acquired Business as Buyer
may from time to time reasonably request and (iii) cooperate with Buyer and its representatives in
the preparation of any documents or other material that may be reasonably required in connection
with this Agreement. Buyer and Shareholders will use their reasonable best efforts to (i) secure,
as soon as practicable after the date hereof, all approvals or consents of third parties as may be
necessary to consummate the transactions this Agreement contemplates and (ii) satisfy, on or before
the Closing Date, the conditions this Agreement sets forth. Without limiting the generality of the
foregoing, Shareholders will and will cause the Acquired Entities to provide such cooperation in
connection with the contemplated Financing referred to in Section 6.03 as may be reasonably
requested by Buyer, including (i) participation in meetings, drafting sessions and due diligence
sessions with Buyer’s advisors, (ii) furnishing Buyer and its advisors and prospective investors
with such financial information relating to the Acquired Business as they may reasonably request,
(iii) assisting Buyer and its advisors in the preparation of offering documents and related
materials, including materials for rating agency presentations, (iv) using reasonable best efforts
to obtain consents of accountants for use of their reports in offering documents relating to
Buyer’s contemplated financing arrangements, as well as such accountants’ comfort letters as may be
reasonably requested by Buyer and (v) facilitating the pledge of collateral.
(b) Notwithstanding the foregoing, (i) such requested cooperation shall not unreasonably
interfere with the ongoing operations of the Acquired Entities and (ii) the Acquired Entities shall
not be required to pay any commitment or other similar fee or incur any other
32
liability in connection with the Financing prior to the Closing (unless such fee or liability
is subject to reimbursement as described in the immediately succeeding sentence or such commitment
fee or liability is conditional on the occurrence of the Closing). Buyer shall indemnify and hold
harmless Shareholders and the Acquired Entities and their representatives from and against any and
all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and
penalties suffered or incurred by any of them in connection with the arrangement of the Financing
and any information utilized in connection therewith (other than historical information relating to
the Acquired Entities approved thereby for use therein).
(a) From the date hereof and until the Closing, unless the prior written consent of Buyer is
obtained, Shareholders will and will cause each of the Acquired Entities to:
(i) conduct the operations of the Acquired Business in accordance with its ordinary
course of business reasonably consistent with past practice;
(ii) use all commercially reasonable efforts to preserve intact its present business
organization;
(iii) maintain all its properties and facilities, including those held under leases, in
as good working order and condition as at present, ordinary wear and tear excepted, and
maintain all its material rights and franchises;
(iv) keep available the services of its current officers and key employees;
(v) preserve its relationships with material customers, suppliers and others having
business dealings with it in such a manner that its goodwill and ongoing businesses are not
materially impaired;
(vi) comply with all applicable Laws;
(vii) keep in full force and effect without interruption all its present insurance
policies or other comparable insurance coverage; and
(viii) except as this Agreement requires or expressly permits, maintain the instruments
and agreements governing its outstanding Interest Bearing Debt and leases on their present
terms and not enter into any new or amended instruments or agreements relating to Interest
Bearing Debt or lease instruments or agreements without the prior written consent of Buyer
(which consent Buyer will not unreasonably withhold).
(b) From the date hereof and until the Closing, unless the prior written consent of Buyer is
obtained, none of the Acquired Entities shall, nor shall the Shareholders or any of the Acquired
Entities permit any of the Acquired Entities to:
(i) enter into any new material line of business;
(ii) make any change in its articles or certificate of incorporation or bylaws;
33
(iii) issue any of its Capital Stock or issue or otherwise create any securities
convertible into, or exchangeable or exercisable for, any of its Capital Stock;
(iv) except as expressly contemplated by this Agreement with respect to the
Alberta/Atlas Investments Distribution or with respect to management fees in amounts that
are consistent with historic practices, as reflected in the Company Reports, declare, pay or
otherwise make any dividends or other distributions to Shareholders which, when taken
together with all other dividends or other distributions to Shareholders since December 31,
2005, exceed $1,000,000 in the aggregate; provided, however, that no such management fees,
dividends or distributions may be made after the Effective Time (and the Shareholders
acknowledge that neither of them nor any of their Affiliates shall have any entitlement with
respect to any such management fees, dividends or distributions from and after the Effective
Time);
(v) make any investments in the Capital Stock or securities convertible into, or
exchangeable or exercisable for, any Capital Stock of any other Entity or in any
indebtedness of any other Person;
(vi) without the prior written consent of Buyer (which consent Buyer will not
unreasonably withhold): (A) make, or enter into any contract or commitment to make, any
capital expenditures (1) in a single transaction or a series of related transactions
involving an aggregate amount of more than $75,000 or (2) involving an aggregate total
amount of more than $150,000, and that is not consistent in all material respects with the
budget included in the Company Reports; or (B) incur, or enter into any contract or
commitment to incur, any other liabilities otherwise than in the ordinary course of its
business and reasonably consistent with its recent past practices;
(vii) increase or commit or promise to increase the compensation payable or to become
payable to any officer, director, shareholder, employee or agent, consultant or independent
contractor of any Acquired Entity or make any discretionary bonus or management fee payment
to any such Person, except as expressly contemplated by this Agreement;
(viii) create, assume or permit to be created or imposed any Encumbrances upon any of
its properties or other assets, whether now owned or hereafter acquired, except for purchase
money liens incurred in connection with the acquisition of equipment with an aggregate cost
not in excess of $50,000 and necessary or desirable for the conduct of the Acquired
Business;
(ix) (A) adopt, establish, amend or terminate any Plan or (B) take any discretionary
action, or omit to take any contractually required action, if that action or omission could
either (1) deplete the assets of any Plan or (2) increase the liabilities or obligations
under any such Plan;
(x) sell, assign, lease or otherwise transfer or dispose of any of its owned or leased
property, inventory, equipment or other assets otherwise than in the ordinary course of its
business and reasonably consistent with its recent past practices;
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(xi) negotiate for the acquisition of any business or the start-up of any new business;
(xii) merge, consolidate or effect a share exchange with, or agree to merge,
consolidate or effect a share exchange with, any other Entity;
(xiii) waive any of its rights or claims that in the aggregate are material to the
Acquired Business, provided that it may negotiate and adjust bills in the course of good
faith disputes with customers, vendors and suppliers in a manner reasonably consistent with
its recent past practices;
(xiv) commit breaches of Listed Agreements that in the aggregate are material to the
Acquired Business or amend or terminate any material agreement of the Acquired Business or
any of its Governmental Approvals; or
(xv) enter into any transaction outside the ordinary course of business and not
described above.
(c) Prior to the Closing Date, the Companies will (i) satisfy any requirement for notice of
the transactions this Agreement contemplates under applicable collective bargaining agreements and
(ii) provide Buyer with proof that any required notice has been sent.
(d) Each of the Companies and each Shareholder agrees that, from the date hereof and until the
first to occur of the Closing or the termination of this Agreement in accordance with Article XII,
neither of the Companies nor either Shareholder, nor any of their respective officers or directors
will, and each of the Companies and each Shareholder will direct and use their best efforts to
cause each of their respective representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or offer with respect to
a merger, acquisition, consolidation or similar transaction involving, or any purchase of all or
any significant portion of the assets or any equity securities of, any Acquired Entity (any such
proposal or offer being an “Acquisition Proposal”) or engage in any activities, discussions or
negotiations concerning, or provide any confidential information respecting, the Acquired Business
or any of the Acquired Entities to, or have any discussions with, any Person relating to an
Acquisition Proposal or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal. Each of the Companies and each Shareholder will: (i) immediately cease and
cause to be terminated any existing activities, discussions or negotiations with any Persons
conducted heretofore with respect to any of the foregoing, and each will take the steps necessary
to inform the Persons to which the first sentence of this Section 7.02(d) refers of the obligations
undertaken in this Section 7.02(d); and (ii) notify Buyer immediately if any such inquiries or
proposals are received by, any such information is requested from or any such discussions or
negotiations are sought to be initiated or continued with either of the Companies or either
Shareholder.
7.03 Notification of Certain Matters. From the date hereof and until the Closing, Shareholders
will give prompt notice to Buyer of (i) the existence or occurrence of each condition or state of
facts which, to the knowledge of the Companies and Shareholders, will cause any representation or
warranty of Shareholders or the Companies contained herein to be
35
untrue or incorrect in any material respect on the Closing Date and (ii) any material failure of a
Shareholder or any Acquired Entity to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by that party hereunder as of the Closing Date. From the date
hereof and until the Closing, Buyer will give prompt notice to Shareholders of (i) the existence or
occurrence of each condition or state of facts which will or reasonably could be expected to cause
any representation or warranty of Buyer contained herein to be untrue or inaccurate on or prior to
the Closing Date and (ii) any material failure of Buyer to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder. The delivery of any
notice under this Section 7.03 will not be deemed to (i) modify the representations or warranties
herein of the party delivering that notice, or any other party, (ii) modify the conditions set
forth or referred to in Article IV or (iii) limit or otherwise affect the remedies available
hereunder to the party receiving that notice.
7.04 Bonuses. Within 10 days following the determination of the Consideration Adjustment or 75
days following the Closing, whichever shall occur first, Redi-Mix, L.P. and Xxxxxx Enterprises,
L.P. (the “Partnerships”) will pay bonuses to the employees listed on Schedule 7.04 relating to the
period through the Closing Date, with the aggregate amount of such bonuses, as well as the amount
to be paid to each of them, to be determined in the reasonable discretion of Shareholders but not
to exceed 50% of the pre-tax earnings generated by the Acquired Entities during the period from
January 1, 2006 through the Effective Time (determined in accordance with GAAP, and after giving
effect to the accrual of the obligation to pay such bonuses) (such limitation being the “50%
Pre-Tax Earnings Limitation”); provided, however, that if the determination of the aggregate amount
of such bonuses is made prior to the determination of the Consideration Adjustment, such
determination shall be made using an estimate of the 50% Pre-Tax Earnings Limitation prepared by
Shareholders and approved by Buyer (which approval shall not be unreasonably withheld). To the
extent the bonuses paid in accordance with this Section 7.04 exceed the 50% Pre-Tax Earnings
Limitation, as determined from the Effective Date Financial Statements following final
determination of the Consideration Adjustment, if any, Shareholders shall pay to the applicable
Partnership the amount of such excess within 10 days of receipt of the final determination of the
Consideration Adjustment, and the obligation of the Shareholders to make such payment shall be
joint and several and shall not be subject to any indemnification threshold or limitation set forth
in Article VIII. Notwithstanding the foregoing: (i) with respect to the individuals listed on the
bonus exhibit to Schedule 7.04, payment of amounts in accordance with this Section 7.04 shall be
contingent upon the execution of a written consent of the partners in each Partnership; and (ii)
the execution of any such consent is not a condition of Closing. The Acquired Entities will use
their reasonable best efforts to cause each employee that is to receive a bonus to execute, as a
condition to receipt of such bonus, a release of the Shareholders and their Affiliates in the form
set forth in Schedule 7.04 and heretofore approved by the Shareholders and each such employee.
7.05 Public Announcements. Prior to the Closing, Buyer on the one hand and Shareholders on the
other hand will consult with and obtain the approval (not to be unreasonably withheld or delayed)
of the other party before issuing any press release or otherwise making any public statements with
respect to this Agreement and the transactions it contemplates; provided, however, that no such
consultation or approval shall be required where the release or announcement is required by
applicable law; and provided, further, that either Buyer or Shareholders may respond to inquiries
by the press or others regarding the transactions this
36
Agreement contemplates as long as such responses are consistent with and limited to the party’s
previously issued press releases.
7.06 Title Assurance. Following the Closing Date, Shareholders shall provide Buyer at Buyer’s
expense with such reasonable cooperation as Buyer may request in connection with Buyer’s
acquisition of extended coverage policies of title insurance insuring title to the Land to be in
the applicable Acquired Entities, subject only to Permitted Encumbrances. Buyer shall pay all of
the premiums and associated out-of-pocket costs relating to such title policies.
7.07 Expenses. Buyer will pay the fees, expenses and disbursements of Buyer and its agents,
representatives, accountants and counsel incurred in connection with the execution, delivery and
performance of this Agreement and any amendments hereto. Shareholders will pay their fees,
expenses and disbursements and those of their and the Acquired Entities’ 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. Shareholders will also pay any costs associated with business brokers or
other advisors engaged by Shareholders or any Acquired Entity.
7.08 Repayment of Related-Party Indebtedness. Prior to or at the Effective Time, (a) Shareholders
shall repay to each Acquired Entity all amounts outstanding as advances to or receivables from
Shareholders, each of which advances or receivables is specifically reflected in Schedule 5.25, and
(b) each Acquired Entity shall repay all amounts outstanding under loans to that Acquired Entity
from Shareholders, each of which loans is specifically reflected in Schedule 7.08.
(a) Buyer, the Acquired Entities and Shareholders shall cooperate with one another and assist
each other:
(i) in determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals, or waivers are
required to be obtained from any Governmental Authority in connection with the consummation
of the transactions contemplated by this Agreement; and
(ii) in taking such actions or making any such filings, furnishing information required
in connection therewith and seeking timely to obtain any such actions, consents, approvals
or waivers.
Each of Buyer, the Acquired Entities and Shareholders, as appropriate or required, shall:
cooperate with the other party or parties in connection with any filings or submissions to, or
conferences with, any Governmental Authorities with respect to the Acquisition; keep the other
party reasonably and promptly informed of all developments and communications with any Governmental
Authority with respect to the Acquisition; provide copies of all documents and correspondence filed
or submitted to any Governmental Authority with respect to the Acquisition to the non-filing party
or parties and its or their advisors prior to filing and, if requested, accept all reasonable
modifications suggested in connection therewith; not participate in any meeting
37
with any Governmental Authority concerning the Acquisition unless it consults with the other
party or parties in advance (to the extent permitted by such Governmental Authority and subject to
the confidentiality provisions of this Agreement); and resist vigorously, at their respective cost
and expense, any assertion that the transactions contemplated herein constitute a violation of any
of the antitrust laws, all to the end of expediting consummation of the transactions contemplated
herein; provided, however, that Buyer shall not be required to (i) institute or defend legal
proceedings or to limit, curtail or divest of any of its existing businesses or the business it
conducts with any of its customers in order to obtain any such approval or (ii) restructure the
transactions contemplated hereby in any material respect.
(a) Shareholders and Buyer 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. Shareholders and Buyer will cooperate and use their reasonable
best efforts to have the present and future officers, directors and employees of the Acquired
Entities cooperate with Shareholders and Buyer at and after the Closing in furnishing information,
evidence, testimony and other assistance in connection with any actions, proceedings, arrangements
or disputes of any nature with respect to matters pertaining to all periods prior to the Closing.
Buyer will provide Shareholders with access to such of its books and records as may be reasonably
requested by Shareholders in connection with federal, state and local tax matters relating to
periods prior to the Closing. The party requesting cooperation, information or actions under this
Section 7.10 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.
(b) Following the Closing, Shareholders shall pay to Buyer (i) the amount of all Pre-Closing
Taxes to the extent such Taxes were not paid by the Acquired Entities prior to Closing or reflected
on the balance sheet included in the Effective Date Financial Statements and (ii) all Taxes of any
such Shareholder or any Affiliate thereof (other than an Acquired Entity) that are collected by
any Tax Authority from Buyer, any Affiliate of Buyer or any Acquired Entity.
(c) Following the Closing, Shareholders shall be responsible for the preparation of all Tax
Returns of an Acquired Entity covering the period from the beginning of each Acquired Entity’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. To the extent the Shareholders
have any liability for Pre-Closing Taxes pursuant to Section 7.10(b) with respect to such Tax
Returns, the Shareholders shall pay such Taxes to Buyer; and the Taxes on such Tax Returns shall be
paid by the Acquired Entities. Shareholders shall not make any irrevocable elections on such Tax
Returns that may impact future Tax Returns of Buyer or any of the Acquired Entities without the
prior written consent of Buyer (which consent Buyer may withhold in its sole discretion if such
election is inconsistent with past elections (or determinations not to elect) of the applicable
Acquired Entity or Acquired Entities). Shareholders shall not cause an Acquired Entity to file any
Tax Return without the prior written consent of Buyer, which consent shall not be unreasonably
withheld or delayed. Buyer will cooperate with Shareholders in their preparation of all Tax
returns covering the period from the beginning of each Acquired Entity’s
38
current Tax year through the Closing Date. Buyer shall prepare and timely file all Tax
Returns in respect of an Acquired Entity with respect to taxable periods that begin before and end
after the Tax Effective Date (“Straddle Period Returns”). To the extent that Shareholders have any
liability for Pre-Closing Taxes pursuant to Section 7.10(b) on any Straddle Period Return, such
Straddle Period Return shall be subject to the written approval of Shareholders, which approval
shall not be unreasonably withheld or delayed; provided that such consent may not be withheld (and
will be deemed to have been provided) if such Straddle Period Return is prepared in a manner
consistent with past practices. The portions of the Straddle Period Returns relating to taxable
periods ending on or before the Tax Effective Date shall reflect the practices of the Acquired
Entity in respect of the Tax Returns for prior periods.
(d) Following the Closing, Shareholders shall be entitled to any Tax refunds payable with
respect to (i) any period ending on or before the Tax Effective Date and (ii) the portion of any
Straddle Period ending on the Tax Effective Date, in each case only to the extent such refunds are
not reflected on the balance sheet included in the Effective Date Financial Statements and do not
arise from tax elections or tax positions taken by Buyer on or after the Closing Date or results of
operations after the Tax Effective Date. Buyer will cooperate with Shareholders in filing any Tax
Return required to claim any such refund provided that (i) Shareholders shall incur all costs and
expenses of filing such Tax Returns and (ii) the filing of any such Tax Return shall not negatively
impact the Tax Returns of Buyer.
7.11 Further Assurances. Subject to the terms and conditions of this Agreement, each of Buyer,
Shareholders and the Acquired Entities shall use reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary under applicable laws and
regulations to consummate and make effective the transactions contemplated by this Agreement,
including providing information and using reasonable efforts to obtain all necessary exemptions,
rulings, consents, authorizations, approvals and waivers to effect all necessary registrations and
filings and to lift any injunction or other legal bar to the transactions contemplated hereby as
promptly as practicable.
(a) As soon as practicable after the Closing Date, Buyer and the Acquired Entities (with the
reasonable cooperation of and input from Shareholders) shall cause to be prepared and delivered to
Shareholders a consolidated balance sheet of the Acquired Business as of the Effective Time and a
consolidated income statement of the Acquired Business for the period from (and including) January
1, 2006 through the Effective Time, in each case prepared from the books and records of the
Acquired Entities in conformity with GAAP (the “Effective Date Financial Statements”). Within 10
days of the delivery of the Effective Date Financial Statements, Buyer shall deliver to
Shareholders a schedule (the “Consideration Adjustment Schedule”) setting forth the amount of each
of the Final Dividend Adjustment, the Final Interest-Bearing Debt Adjustment, the Final Pre-Closing
Earnings Adjustment and the resulting net Consideration Adjustment.
(b) The Effective Date Financial Statements and Consideration Adjustment will be final and
binding on the parties hereto unless, within 10 days following Buyer’s delivery of the calculation
of the Consideration Adjustment, Shareholders notify Buyer in writing that
39
Shareholders disagree with all or any portion of the Effective Date Financial Statements
and/or the Consideration Adjustment. If Shareholders and Buyer cannot mutually resolve any such
disagreement within 15 days after the receipt by Buyer of Shareholders’ notice of disagreement,
then Shareholders and Buyer shall submit the dispute to a mutually agreeable certified public
accounting firm (the “Accountant”) within 10 days after the end of such 15-day period. If
Shareholders and Buyer are unable to agree upon such an accounting firm within such 10-day period,
then Shareholders and Buyer shall select a “Big Four” accounting firm (excluding
PricewaterhouseCoopers LLP) by lot, which accounting firm shall act as the Accountant.
Shareholders and Buyer shall request that the Accountant audit the Effective Date Financial
Statements and provide a computation of the Consideration Adjustment within 60 days thereafter, and
this computation will be final and binding upon the parties hereto, and the payment of the
Consideration Adjustment shall be made within five days of delivery by of this computation by the
Accountant. In the event Shareholders and Buyer submit any unresolved objections to an Accountant
for resolution as provided in this Section 7.12, Shareholders and Buyer will each pay one half of
the fees and expenses of the Accountant.
(c) If the Consideration Adjustment (as finally determined in accordance with Section 7.12(b))
is a positive number, then Buyer shall pay that amount to Shareholders, in accordance with their
respective shares set forth in Schedule 7.12(c), in cash within 10 days after the final
determination thereof in accordance with Section 7.12(b). If the Consideration Adjustment (as
finally determined in accordance with Section 7.12(b)) is a negative number, then Shareholders
shall pay, in accordance with their respective shares set forth in Schedule 7.12(c), that amount to
Buyer in cash within 10 days after the final determination thereof in accordance with Section
7.12(b).
7.13 Limitation on Future Distributions by Shareholders. In order to ensure the ability of
Shareholders to satisfy any indemnification obligations that may become due from them to Buyer
pursuant to the provisions of Article VIII, each Shareholder agrees that, from the Closing through
the fifth anniversary of the Closing Date, without the prior written consent of Buyer, which shall
not be unreasonably withheld, such Shareholder shall not authorize, pay or make any payment of a
dividend or other distribution to its shareholders or other owners or repurchase any of its Capital
Stock (any such dividend, distribution or repurchase being a “Shareholder Distribution”) if, at the
time of declaration or payment of such Shareholder Distribution, such Shareholder is or would be
(after giving effect to such Shareholder Distribution) insolvent under any applicable fraudulent
conveyance or transfer law. Without limiting the foregoing covenant: (i) from the Closing through
the second anniversary of the Closing Date, without the prior written consent of Buyer, which shall
not be unreasonably withheld, neither Shareholder shall authorize, pay or make one or more
Shareholder Distributions that would cause such Shareholder to have net cash or fair value of net
tangible assets (that are not Encumbered) in an amount less than 20% of the Consideration received
thereby; (ii) from the Closing through the fifth anniversary of the Closing Date, without the prior
written consent of Buyer, which shall not be unreasonably withheld, neither Shareholder shall
authorize, pay or make one or more Shareholder Distributions that would cause such Shareholder to
have net cash or fair value of net tangible assets (that are not Encumbered) in an amount less than
5% of the Consideration received thereby; and (iii) without the prior written consent of Buyer,
which shall not be unreasonably withheld, in no event shall either Shareholder authorize, pay or
make any Shareholder Distribution after the Closing Date at the time any indemnification
40
claim or claims made in good faith by Buyer or any other Indemnified Party against either or both
Shareholders pursuant to Article VIII is pending if, as a result of such Shareholder Distribution,
the net cash or fair value of net tangible assets (that are not Encumbered) would be less than the
aggregate amount reasonably determined by the Shareholders after consultation with counsel to be at
issue pursuant to such indemnification claim or claims. Because of the fact that a breach of the
foregoing covenants would diminish the value of the assets of Shareholders available to satisfy
their indemnification obligations under this Agreement, and because of the immediate and
irreparable damage that would be caused to Buyer for which Buyer would have no other adequate
remedy, since monetary damages alone may not be an adequate remedy, each Shareholder agrees that
the foregoing covenant may be enforced against such Shareholder by, without limitation,
injunctions, restraining orders and other equitable actions.
(a) So long as none of the Companies or Shareholders are in breach of any of their obligations
hereunder or the documents executed in connection herewith (the “Loan Documents”) and subject to
the other conditions described in this Agreement, Atlas Investments, Inc. may request that Buyer
provide a loan to Atlas Investments, Inc. not more than two days prior to the scheduled date of the
Closing in a principal amount of not more than $33,000,000 (the “Loan”). The Loan shall be
evidenced by a promissory note, in substantially the form of Exhibit C, dated the date the Loan is
made in the original principal amount of the Loan advanced and made payable to the order of Buyer.
The Loan shall be scheduled to mature on the earlier of the date of the Closing and the second day
after the Loan is made and the principal amount thereof shall bear interest at 5% per annum,
accruing from the date the Loan is made; provided, that in the event that the Closing does not
occur as scheduled as a result of the failure of a condition set forth in Section 4.03 or the
failure of Buyer to obtain the Financing, interest shall not be deemed to accrue for the period
that the Loan is outstanding. All accrued and unpaid interest and principal of the Loan shall be
due and payable on the maturity date of the Loan. The Loan and the obligations of the Shareholders
and Companies with respect to this Agreement and the Loan Documents shall be secured by a first
priority security interest on all of the Capital Stock (and related rights) of Alberta, Alliance,
Atlas Investments, Inc., Redi-Mix Management, Inc., Redi-Mix GP, LLC and Xxxxxx Enterprises
Management, Inc., pursuant to a pledge and security agreement in substantially the form of Exhibit
D. The conditions to the Loan shall include such conditions as are reasonably requested by Buyer,
including (i) the receipt of a certificate of the Shareholder and Companies stating that at such
time and after giving effect to the Loan and the transactions contemplated thereby all
representations of the Shareholders and Companies contained herein and the Loan Documents are and
shall be true and correct and that no breach of the obligations of the Shareholders or Companies
has occurred under this Agreement and the Loan Documents, (ii) the execution and delivery of Loan
Documents, together with stock powers satisfactory to Buyer, and (iii) the receipt of evidence
reasonably satisfactory to Buyer as to the enforceability of the note, the loan agreement, pledges
and other Loan Documents, the validity, perfection and priority of such security interests and the
ability of the parties thereto affiliated with Alberta and Atlas Investments, Inc. to enter into
the transactions contemplated by the Loan Documents.
(b) Buyer acknowledges that, and the promissory note evidencing the Loan and the related
pledge and security agreement shall permit that, the proceeds of the Loan may be used by
41
Atlas Investments, Inc. to effect a distribution to Alberta and by Alberta to effect a
distribution to Atlas with respect to the outstanding shares of preferred stock of Alberta (the
“Alberta/Atlas Investments Distribution”).
(c) In the event that the Closing shall occur prior to repayment of the Loan, (i) Buyer shall
reduce the Consideration to be paid as of the Closing by the amount of the Loan and (ii) in the
event the Loan is used to effect the Alberta/Atlas Investments Distribution, each party hereto
agrees to disregard for United States federal income Tax purposes the Loan and the Alberta/Atlas
Investments Distribution and to treat the proceeds of the Loan as a payment of a portion of the
consideration paid by Buyer to Shareholders in respect of the Companies Capital Stock; provided
that Section 5.18 (as to representations by Shareholders as to Taxes) shall for all purposes of
this Agreement be deemed to include a representation by Shareholders that such treatment is proper
for such purposes and for all other United States Tax purposes so that the Shareholders shall be
responsible pursuant to the other provisions hereof for any failure of such representation to be
true and without loss of generality shall so be responsible for any Tax (such as a withholding Tax)
that is imposed upon Alberta, Atlas or any other Acquired Entity by reason of one or both of the
Loan and Alberta/Atlas Distribution not properly being disregarded for United States federal income
tax purposes or for any other United States Tax purpose.
7.15 Financing Commitments. Buyer will use reasonable best efforts to enter into definitive
agreements with respect to and obtain the Financing prior to Closing. At Shareholders’ request,
Buyer shall keep Shareholders reasonably informed with respect to all material activity concerning
the status of the Financing and shall give Shareholders prompt notice of any material adverse
change with respect to such Financing. Buyer will furnish correct and complete copies of such
definitive agreements to the Shareholders promptly upon their execution.
(a) Notwithstanding any investigation at any time made by or on behalf of any party hereto,
the representations and warranties set forth in Article V and Article VI and in any certificate
delivered in connection with this Agreement with respect to any of those representations and
warranties shall survive the Closing for a period of two years from the Closing Date (the
“Expiration Date”), except that (i) the representations and warranties set forth in Sections 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 5.11, 5.16 and 5.18, as the
case may be, and (ii) the representations and warranties in Section 5.03 shall survive indefinitely
and shall not expire. Any representation or warranty as to which a party has given notice in
writing describing in reasonable detail the alleged breach prior to the applicable Expiration Date
shall survive until the earlier of payment in full or judicial termination of any claim relating
thereto. 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 and in reasonable detail to the alleged breaching party
prior to the Expiration Date.
42
(b) The covenants set forth in Article VII, other than in Sections 7.07, 7.10, 7.11 and 7.12,
will terminate immediately following the Closing.
(a) Subject to Section 8.06 and Section 8.07, Shareholders covenant and agree that they will
jointly and severally (without any right of indemnification or contribution from any of the
Acquired Entities) indemnify, defend, protect and hold harmless Buyer and its 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,
whether asserted prior to, at or after the Closing, arising out of or resulting from any facts,
circumstances or events occurring (or not occurring) on or before the Closing Date relating to:
(i) any breach of the representations and warranties of Shareholders or the Companies set forth
herein or in the Schedules attached hereto (it being understood that, notwithstanding anything to
the contrary contained in this Agreement, to determine the amount of Losses arising from an
inaccuracy or breach of a representation or warranty of Shareholders (but not to determine whether
or not such a breach has occurred), such representation or warranty shall be read as if it were not
qualified by materiality); (ii) any breach or nonfulfillment of any covenant or agreement on the
part of Shareholders or the Companies under this Agreement; (iii) all transfer Taxes arising from
the transactions this Agreement contemplates (including all transfer and other Taxes arising from
the Alberta/Atlas Investments Distribution, whether paid or payable by any of the Acquired Entities
or any Shareholder) and all other Taxes for which a Shareholder is liable under this Agreement;
(iv) any of the matters referred to on Schedule 8.02, to the extent such Losses exceed any specific
reserves for such Losses reflected in the balance sheet included in the Effective Date Financial
Statements, subject to any applicable limitation with respect thereto set forth in Schedule 8.02;
or (v) any condition, circumstance or state of facts set forth in Schedule 5.11 or any other
existing condition, circumstance or state of facts in existence on or before the Closing Date which
Section 5.11 calls for disclosure in Schedule 5.11 (the “Existing Environmental Conditions”) to the
extent such Losses exceed any specific reserves for such Losses reflected in the balance sheet
included in the Effective Date Financial Statements; provided, however, that, except with respect
to the completion of any Remediation Activities (as defined below) with respect to any of the
Existing Environmental Conditions initiated at any time prior to the Closing Date: (A) any
responsibility of Shareholders for Losses with respect to any investigation, removal, abatement,
response, cleanup or groundwater monitoring activities (collectively, “Remediation Activities”)
with respect to any of the Existing Environmental Conditions in connection with the indemnification
provided pursuant to this clause (v) shall apply only to the extent such Remediation Activities are
required under any applicable Environmental Law that is in effect on the date hereof or by
directive or order of any Governmental Authority having jurisdiction; and (B) Buyer agrees that
neither it nor any of the Acquired Entities may seek indemnification pursuant to this clause (v)
with respect to any previously unreported Environmental Condition the discovery or existence of
which Buyer or an Acquired Entity reports to any Governmental Authority after the Closing Date
unless Buyer or an Acquired Entity determines in good faith that such a report is required under
applicable Environmental Law.
(b) If Atlas Investments, Inc., Alberta, Buyer or any Person who is then an Affiliate of Buyer
and who is an Indemnified Person receives any claim from the Internal Revenue
43
Service or other Governmental Authority as to the payment of any withholding Tax or other Tax
by reason of the Loan or the Alberta/Atlas Distribution (or both), then, notwithstanding any
provision hereof to the contrary, the Shareholders shall promptly either (i) pay the amount of such
claim to such Indemnified Person who shall pay the amount so received to the Internal Revenue
Service or such Governmental Authority, as the case may be, or (ii) provide security that is
satisfactory to Buyer in its reasonable judgment for the payment of such claim and any interest or
additional Tax that may accrue thereafter on such claim during the next two years (and shall, each
six months thereafter, increase the amount that is so provided as security so that an amount that
is equal to interest or additional Tax on such for two years after such date is also so held);
provided, however, that if Atlas Investments, Inc., Alberta, Buyer or any Person who is then an
Affiliate of Buyer pays any such amounts (including during the pendency of any dispute with the
Internal Revenue Service or other Governmental Authority relating thereto and whether or not it is
obligated to do so), then Shareholders shall make prompt payment to Buyer or any Affiliate of Buyer
designated by Buyer of the amount so paid to the Internal Revenue Service or other Governmental
Authority. If the Shareholders breach their obligations pursuant to this Section 8.02(b), then
Buyer may in its sole discretion pay (or cause to be paid) the amount of such claim and Buyer (or
any Affiliate of Buyer that makes such payment) shall then be entitled to full indemnification from
Shareholders hereunder as to the amount so paid and Shareholders shall have no right to delay
payment thereof. In the event the Shareholders pay any amounts pursuant to this Section 8.02(b)
either directly to the Internal Revenue Service or other Governmental Authority, or to Atlas,
Alberta, Buyer or any Person who is then an Affiliate of Buyer to reimburse any such party for a
payment to the Internal Revenue Service or other Governmental Authority, Buyer and its Affiliates
will cooperate with the Shareholders at the cost and expense of Shareholders in filing any refund
claim based on such payment provided that (i) the Shareholders shall incur all costs and expenses
of filing and prosecuting such refund claim and (ii) the filing of such refund claim does not in
the reasonable judgment of Buyer adversely affect Buyer or its Affiliates. The obligations of
Shareholders pursuant to this Section 8.02(b) shall be joint and several.
8.03 Indemnification by Buyer. Subject to Section 8.06 and Section 8.07, Buyer covenants and
agrees that it will indemnify, defend, protect and hold harmless Shareholders 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 Buyer set forth herein or in the Schedules attached hereto or
certificates delivered in connection herewith or (b) any breach or nonfulfillment of any covenant
or agreement on the part of Buyer under this Agreement.
8.04 Third Person Claims. (a) Promptly after any party entitled to indemnification under Sections
8.02 or 8.03 hereof (in such capacity, an “Indemnified Party”) has received notice of or has
knowledge of any claim by a Person not a party to this Agreement (a “Third Person”), or of the
commencement of any action or proceeding by a Third Person, which the Indemnified Party believes in
good faith is an indemnifiable claim under this Agreement (a “Third Person Claim”), the Indemnified
Party shall give to the party obligated to provide indemnification pursuant to Sections 8.02 or
8.03 hereof (in such capacity, the “Indemnifying Party”) prompt written notice of such claim or the
commencement of such action or proceeding (a “Claim Notice”). Such Claim Notice shall state the
nature and the basis of such Third Person
44
Claim and (to the extent feasible) a reasonable estimate of the amount being claimed (which
estimate will not be conclusive of the final amount of such Third Person Claim). Except as Section
8.01 sets forth, the failure to promptly deliver a Claim Notice will not relieve the Indemnifying
Party of its obligations to the Indemnified Party with respect to the related Third Person Claim
except to the extent that the resulting delay is prejudicial to the defense of that Third Person
Claim. Notwithstanding the foregoing and the following provisions of Section 8.04(b), Buyer shall
be deemed to have delivered a sufficiently detailed Claim Notice with respect to each of the items
set forth in Schedule 8.02 and with respect to each of the Existing Environmental Conditions
referenced in clause (v) of Section 8.02(a) as to which Remediation Activities have been initiated
prior to the Closing Date, and, to the extent any such items may involve any defense of any Third
Person Claims, Shareholders shall be deemed to have elected to assume the defense of such Third
Person Claims in accordance with the provisions of Section 8.04(b).
(b) Within 30 days after receipt of any Claim Notice (the “Election Period”), the Indemnifying
Party must notify the Indemnified Party (i) whether the Indemnifying Party disputes its potential
liability to the Indemnified Party under this Article VIII with respect to the related Third Person
Claim and (ii) if the Indemnifying Party does not dispute its potential liability to the
Indemnified Party with respect to that Third Person Claim, whether the Indemnifying Party desires,
at the sole cost and expense of the Indemnifying Party, to defend the Indemnified Party against
that Third Person Claim. If the Indemnifying Party does not dispute its potential liability to the
Indemnified Party and notifies the Indemnified Party within the Election Period that the
Indemnifying Party elects to assume the defense of a Third Person Claim specified in a Claim
Notice, then the Indemnifying Party will have the right to defend, at its sole cost and expense,
that Third Person Claim by all appropriate proceedings, which proceedings the Indemnifying Party
must prosecute diligently to a final conclusion or settle at its discretion in accordance with this
Section 8.04, and the Indemnified Party will furnish the Indemnifying Party with all information in
its possession with respect to such claim and otherwise cooperate with the Indemnifying Party in
the defense of that Third Person Claim. After the Indemnifying Party has notified the Indemnified
Party of its intention to undertake to defend or settle any Third Person Claim, 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 thereof; provided, however, that the Indemnified Party shall be entitled, at its
expense, to participate in the defense of that Third Person Claim and the negotiation of any
settlement thereof. The Indemnifying Party shall not settle any such Third Person Claim without
the consent of the Indemnified Party (which consent may be withheld in the sole discretion of that
Indemnified Party), unless the settlement thereof does not cause any adverse Tax consequences to
the Indemnified Party or its affiliates for which the Indemnifying Party does not indemnify the
Indemnified Party, imposes no liability or obligation on the Indemnified Party, and includes a
complete release from liability benefiting the Indemnified Party. The Indemnified Party may
participate in, but not control, any defense or settlement of any Third Person Claim the
Indemnifying Party controls under this Section 8.04 and will bear its own costs and expenses with
respect to that participation; provided, however, that if the named parties to any such action
(including any impleaded parties) include both the Indemnifying Party and the Indemnified Party,
and the Indemnified Party has been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the Indemnifying
Party, then the Indemnified Party may employ
45
separate counsel at the expense of the Indemnifying Party, and, on its written notification of
that employment, the Indemnifying Party will not have the right to assume or continue the defense
of that action on behalf of the Indemnified Party; provided, further, that the Indemnified Party is
hereby authorized, at the sole cost and expense of the Indemnifying Party, to file, during the
Election Period, any motion, answer or other pleadings that the Indemnified Party deems necessary
or appropriate to protect its interests or those of the Indemnifying Party.
(c) If with respect to a claim for indemnification under this Article VIII involving a Third
Person Claim, the Indemnifying Party (i) within the applicable Election Period (A) disputes its
potential liability to the Indemnified Party under this Article VII, (B) elects not to defend the
Indemnified Party under Section 8.04(b) or (C) fails to notify the Indemnified Party that the
Indemnifying Party elects to defend the Indemnified Party under Section 8.04(b) or (ii) elects to
defend the Indemnified Party under Section 8.04(b), but fails diligently and promptly to prosecute
or settle the Third Person Claim, then the Indemnified Party will have the right to defend, at the
sole cost and expense of the Indemnifying Party (if the Indemnified Party is entitled to
indemnification hereunder), the Third Person Claim by all appropriate proceedings, which
proceedings the Indemnified Party must promptly and vigorously prosecute to a final conclusion or
settle. The Indemnified Party will have full control of such defense and proceedings.
Notwithstanding the foregoing, if the Indemnifying Party has delivered a written notice to the
Indemnified Party to the effect that the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article VIII and if that dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party will not be required to bear the costs and expenses of
the Indemnified Party’s defense under this Section 8.04 or of the Indemnifying Party’s
participation therein at the Indemnified Party’s request. The Indemnifying Party may participate
in, but not control, any defense or settlement the Indemnified Party controls under this Section
8.04(c), and the Indemnifying Party will bear its own costs and expenses with respect to that
participation.
(d) Payments of all amounts owing by an Indemnifying Party under this Article VIII relating to
a Third Person Claim will be made within 10 days after the latest of (i) the settlement of that
claim, (ii) the expiration of the period for appeal of a final adjudication of that claim or (iii)
the expiration of the period for appeal of a final adjudication of the Indemnifying Party’s
liability to the Indemnified Party under this Agreement in respect of that claim.
8.05 Non-Third Person Claims. In the event that any Indemnified Party asserts the existence of a
claim giving rise to Losses (but excluding Third Person Claims), such party shall give written
notice to the Indemnifying Party. Such written notice shall state that it is being given pursuant
to this Section 8.05, 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 30 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
46
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 12.10. 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.
8.06 Indemnification Threshold. Neither Shareholders, on the one hand, nor Buyer, on the other
hand, have any indemnification obligation to the other under the provisions of Section 8.02 (other
than clauses (iii), (iv) and (v) of Section 8.02(a), Section 8.02(b) and the indemnification
obligations with respect to any breach of the representations and warranties set forth in Section
5.07, as they pertain to parcels of Land in which the Acquired Entities hold fee title, or the
covenants set forth in Section 7.10, as to which the condition set forth in this sentence shall not
apply) or Section 8.03, as the case may be, until such time as the aggregate amount of such
obligations exceed $1,000,000, at which time the indemnification obligations shall be effective as
to all amounts, including the initial $1,000,000. Notwithstanding the foregoing, the foregoing
provisions of this Section 8.06 shall not apply to any fraudulent misrepresentation.
8.07 Indemnification Limitation. Subject to the last sentence of Section 8.06, (i) the aggregate
joint and several indemnification obligations of Shareholders under Section 8.02 and (ii) the
aggregate indemnification obligations of Buyer under Section 8.03 shall, in each case, be limited
to an amount equal to the Consideration (as determined after giving effect to the Consideration
Adjustment pursuant to Section 7.12). Notwithstanding the foregoing, the limitations set forth in
this Section 8.07 shall not apply to fraudulent misrepresentations. Any amount that becomes
payable pursuant to this Article VIII in respect of indemnification for any damages, loss, cost or
expense shall be reduced by the amount of any insurance proceeds, including title insurance,
actually received by the party suffering the damages, loss, cost or expense with respect thereto
(net of any resulting increase in insurance premiums); provided, however, that nothing herein shall
obligate Buyer or any Acquired Entity to maintain such insurance policies after the Closing or to
insure any particular risk after the Closing, and nothing herein shall require Buyer or any
Acquired Entity to make application to any insurance of Buyer or of any Acquired Entity that is
obtained or maintained on its behalf after the Closing. The parties to this Agreement agree to
treat all payments made in respect of indemnification for any damages, loss, cost or expense
pursuant to this Article VIII as adjustments to the Consideration for Tax purposes, except to the
extent otherwise required by applicable Law, in which event any amount that is payable pursuant
hereto shall be increased by the amount that causes the aggregate payment, when reduced by all
Taxes payable in respect of the receipt of the payment, to be equal to such damages, loss, cost or
expense.
8.08 Indemnification for Negligence of Indemnified Party. THE RIGHTS TO INDEMNIFICATION UNDER THIS
ARTICLE VIII INCLUDE RIGHTS TO INDEMNIFICATION FOR THE RESULTS OF AN INDEMNIFIED PARTY’S ACTUAL OR
ALLEGED SOLE OR CONTRIBUTORY NEGLIGENCE OR STRICT LIABILITY, IF SUCH INDEMNIFIED PARTY WOULD
OTHERWISE BE ENTITLED TO INDEMNIFICATION HEREUNDER.
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(a) Except as set forth on Schedule 9.01, each Shareholder (which term, for purposes of this
Article IX and Article X only, shall include each individual shareholder or Affiliate of Atlas who
has joined in the execution of this Agreement, as reflected on the signature pages hereto) will
not, for five years following the Closing Date (such period being herein referred to as the
“Noncompete Term”), directly or indirectly, for itself or himself or on behalf of or in conjunction
with any other Person or:
(i) engage, as an officer, director, shareholder, owner, investor, lender, 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 in the State of Texas or within a radius of 100 air miles of any
plant or other operating facility in which any Acquired Entity or Buyer was engaged in
business on the date immediately prior to the Closing Date (collectively, the “Territory”);
(ii) call upon or otherwise solicit any person, who is, at that time, an employee or
consultant of Buyer or any of its Affiliates, for the purpose or with the intent or effect
of enticing such employee or consultant away from or out of the employ or contract with
Buyer or any of its Affiliates;
(iii) call upon or otherwise solicit any Person which is, at that time, or which has
been, within two years prior to that time, a customer of the Acquired Business, Buyer or any
of the Affiliates 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 Acquired Business or Buyer 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 Buyer, for the purpose of acquiring that Entity or
arranging the acquisition of that Entity by any Person other than Buyer
(b) Notwithstanding the above, Section 9.01(a) shall not be deemed to prohibit any Shareholder
from acquiring, as a passive investor with no involvement in the operations of the business, not
more than five percent of the capital stock of a Competitive Business whose stock is publicly
traded on a national securities exchange or the NASDAQ National Market.
9.02 Equitable Relief. Because of the difficulty of measuring economic losses to Buyer as a result
of a breach of the foregoing covenant, because a breach of such covenant would diminish the value
of the assets, properties and business of the Acquired Business being sold pursuant to this
Agreement, and because of the immediate and irreparable damage that would be caused to Buyer for
which Buyer would have no other adequate remedy, since monetary damages alone may not be an
adequate remedy, each Shareholder agrees that the foregoing
48
covenant may be enforced against such individual or Entity 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 Buyer’s interest in
the assets, properties and business being acquired pursuant to the terms of this Agreement and
impose a reasonable restraint on Shareholders in light of the activities and businesses of Buyer on
the date of the execution of this Agreement and the current plans of Buyer.
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. Shareholders acknowledge that their agreements and the
covenants set forth in this Article IX are material conditions to Buyer’s agreements to execute and
deliver this Agreement and to consummate the transactions contemplated hereby and that Buyer would
not have entered into this Agreement without such covenants. All of the covenants in this Article
IX shall be construed as an agreement independent of any other provision in this Agreement. The
existence of any claim or cause of action by any Shareholder against Buyer, whether predicated on
this Agreement or otherwise, will not constitute a defense to the enforcement by Buyer of any of
the covenants of this Article IX. It is specifically agreed that the time period Section 9.01
specifies will be computed in the case of each Shareholder by excluding from that computation any
time during which that Shareholder is in violation of any provision of Section 9.01. The covenants
this Article IX contains will not be affected by any breach of any other provision hereof by any
party hereto.
10.01 General. Each Shareholder recognizes and acknowledges that he had in the past, currently
has, and in the future will have, access to certain confidential information relating to the
Acquired Entities, the Acquired Business and/or Buyer, including lists of customers, operational
policies, and pricing and cost policies that are, and following the Closing will be, valuable,
special and unique assets of Buyer and the Acquired Entities. Each Shareholder agrees that he or
she will not use or disclose such confidential information to any Person, for any purpose
whatsoever, except as is required in the course of performing his or her duties, if any, to Buyer,
unless (a) such information becomes known to the public generally through no fault of any
Shareholder, or (b) disclosure is required by Law, provided that prior to disclosing any
information pursuant to this clause (b) the disclosing party shall give prior written notice
thereof to Buyer and provide Buyer with the opportunity to contest such disclosure.
49
10.02 Equitable Relief. Because of the difficulty of measuring economic losses to Buyer as a
result of the breach of the foregoing covenant, because a breach of such covenant would diminish
the value of the assets, properties and business of the Acquired Business being sold pursuant to
this Agreement, and because of the immediate and irreparable damage that would be caused to Buyer
for which it would have no other adequate remedy, since monetary damages alone may not be an
adequate remedy, each Shareholder agrees that the foregoing covenants may be enforced against such
individual or Entity by, without limitation, injunctions, restraining orders and other equitable
actions. Nothing herein shall be construed as prohibiting Buyer from pursuing any other available
remedy for such breach or threatened breach, including, without limitation, the recovery of
damages.
11.01 Termination of This Agreement. This Agreement may be terminated at any time prior to the
Closing solely:
(a) by the mutual written consent of Buyer and Shareholders;
(b) by Buyer, on the one hand, or by Shareholders, acting together, on the other hand, if the
transactions this Agreement contemplates will take place at the Closing shall not have been
consummated by August 31, 2006, unless the failure of those transactions to be consummated results
from the willful failure of the party (or in the case of Shareholders, any of them or any of the
Acquired Entities) seeking to terminate this Agreement to perform or adhere to any covenant or
agreement required hereby to be performed or adhered to by it or them prior to or at the Closing;
(c) by Buyer if (i) either Shareholder or any Acquired Entity shall have failed to perform in
any material respect any of its respective covenants and agreements contained in this Agreement
which failure would give rise to the failure of the condition set forth in Section 4.04(b) or (ii)
the respective representations and warranties of Shareholders and the Companies contained in this
Agreement are or shall become untrue (without giving effect to any materiality qualification or
standard contained in any such representations and warranties) in any respect, which untruth would
give rise to the failure of the condition set forth in Section 4.04(a), except, in either case,
where the failure to perform or to be true and correct, individually or in the aggregate, would not
have a Material Adverse Effect; or
(d) by Shareholders if (i) Buyer shall have failed to perform in any material respect any of
its respective covenants and agreements contained in this Agreement which failure would give rise
to the failure of the condition set forth in Section 4.03(b), or (ii) the representations and
warranties of Buyer contained in this Agreement are or shall become untrue(without giving effect to
any materiality qualification or standard contained in any such representations and warranties) in
any respect, which untruth would give rise to the failure of the condition set forth in Section
4.03(a), except where the failure to perform or to be true and correct, individually or in the
aggregate, would not have a material adverse effect on the ability of Buyer to perform its
obligations hereunder.
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11.02 Liabilities in Event of Termination. If this Agreement is terminated under Section 11.01,
there shall be no liability or obligation on the part of any party hereto except (i) as Section
7.07 provides and (ii) to the extent that such liability is based on the breach by that party of
any of its covenants this Agreement sets forth. Nothing in this Article XI will release Buyer,
Shareholders or the Companies from liability for any breach of this Agreement prior to its
termination.
12.01 Successors and Assigns; Rights of Parties. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of Law) without the prior written consent of the
other parties hereto; provided, however, that Buyer may, without the prior written consent of any
Acquired Entity or either Shareholder, assign its rights and obligations under this Agreement to
(i) any of its Affiliates or (ii) any of Buyer’s lenders or holders of debt instruments of Buyer
for collateral security purposes only. Subject to the previous sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto, the successors of Buyer and the
Companies, and the respective successors, heirs and legal representatives of Shareholders. Except
as expressly provided in Article VIII or in this Section 12.01, nothing in this Agreement is
intended or will be construed, deemed or interpreted to confer upon or give any Person other than
the parties hereto any rights or remedies under or by reason of this Agreement or any transaction
contemplated hereby.
12.02 Entire Agreement; Amendment; Waivers. This Agreement (including the Exhibits and Schedules
hereto) and the documents delivered pursuant hereto constitute the entire agreement and
understanding among Shareholders, the Companies and Buyer and supersede any prior agreement and
understanding relating to the subject matter of this Agreement, including the Letter of Intent.
This Agreement may be modified or amended only by a written instrument executed by Shareholders,
the Companies and Buyer, acting through their respective officers, duly authorized by their
respective Boards of Directors. Any right hereunder may be waived only by a written instrument
executed by the party waiving such right. The waiver of any of the terms and conditions hereof
shall not be construed or interpreted as, or deemed to be, a waiver of any other term or condition
hereof.
12.03 Counterparts; Facsimile Signatures. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which together shall
constitute but one and the same instrument. Facsimile transmission of any signed original document
and/or retransmission of any signed facsimile transmission will be deemed the same as delivery of
an original. At the request of any party, the parties will confirm facsimile transmission by
signing a duplicate original document.
12.04 Brokers and Agents. Each party hereto represents and warrants that it employed no broker or
agent in connection with the transactions contemplated by this Agreement. Each party agrees,
without regard to any threshold or limitation Article VIII sets forth, to indemnify each other
party hereto 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 in
connection with the transactions contemplated by this Agreement.
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12.05 Notices. All notices and communications required or permitted hereunder shall be in writing
and may be given by overnight delivery or 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, or by delivering the same in person to an officer or agent of such party as
follows:
If to Buyer, addressed as follows:
U.S. Concrete, Inc.
0000 Xxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Corporate Secretary
0000 Xxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Corporate Secretary
with a copy to:
Xxxxx Xxxxx L.L.P.
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxx X. Paris
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxx X. Paris
If to Shareholders, addressed as follows:
Atlas Concrete, Inc.
850, 000 Xxxxxx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Xxxxxx
Attn: Xxxxxx X. Berkhold
850, 000 Xxxxxx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Xxxxxx
Attn: Xxxxxx X. Berkhold
with a copy (which shall not constitute notice) to:
Xxxxx Liddell & Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxx Xxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxx Xxxxxxx
or such other address as any party hereto shall specify pursuant to this Section 12.05 from time to
time. Notice, when addressed and sent as above, shall be deemed given and effective three days
after deposit in the U.S. mail, when actually received if delivered in person or on the next
business day after deposit for overnight delivery.
12.06 Exercise of Rights and Remedies. 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 provided by any term of this Agreement will be
52
deemed exclusive, but each will be cumulative with all other rights, remedies and elections
available at law or in equity.
12.07 Reformation and Severability. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, it shall, to the extent possible, be modified in such manner as to be
valid, legal and enforceable, but so as to most nearly retain the intent of the parties, and if
such modification is not possible, such provision shall be severed from this Agreement, and in
either case, the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
12.08 Captions. The Article and Section headings contained in this Agreement are inserted for
convenience of reference only and shall not affect the meaning or interpretation of this Agreement.
12.09 Governing Law. This Agreement shall be construed in accordance with the laws of the State of
Texas (without regard to any conflicts of laws provisions thereof that would result in the
application of the laws of any other jurisdiction).
(a) Except with respect to injunctive relief as provided in Section 7.13, 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 with commercial litigation experience employed by the Dallas, Texas office of
J.A.M.S./Endispute, Inc. (“JAMS”). The arbitration shall be held in JAMS’ Dallas, Texas office.
(b) The parties shall obtain from JAMS a list of the retired judges available to conduct the
arbitration. The parties shall use their reasonable efforts to agree upon a judge to conduct the
arbitration. If the parties cannot agree upon a judge to conduct the arbitration within 10 days
after receipt of the list of available judges, the parties shall ask JAMS to provide the parties a
list of three available judges (the “Judge List”). Within five days after receipt of the Judge
List, each party shall strike one of the names of the available judges from the Judge List and
return a copy of such list to JAMS and the other party. If two different judges are stricken from
the Judge List, the remaining judge shall conduct the arbitration. If only one judge is stricken
from the Judge List, JAMS shall select a judge from the remaining two judges on the Judge List to
conduct the arbitration.
(c) The arbitrator shall not have the authority to add to, detract from, or modify any
provision hereof nor to award punitive damages to any injured party. The arbitrator shall have the
authority to order payment of damages, reimbursement of costs, including those incurred to enforce
this Agreement, and interest thereon in the event the arbitrator determines that a material breach
of this Agreement has occurred. A decision by the arbitrator shall be final and binding. Judgment
may be entered on the arbitrator’s award in any court having jurisdiction. The arbitrator shall
issue a reasonably detailed statement of his findings of fact and conclusions of law. The parties
shall be entitled to discovery.
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[Signature Page Follows]
54
| U.S. CONCRETE, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| Xxxxxx X. Xxxxx | ||||
| Senior Vice President and Chief Financial Officer | ||||
| ALLIANCE HAULERS, INC. |
||||
| By: | /s/ G.A. Berkhold | |||
| Name: | G.A. Berkhold | |||
| Title: | Director | |||
| ALBERTA INVESTMENTS, INC. |
||||
| By: | /s/ G.A. Berkhold | |||
| Name: | G.A. Berkhold | |||
| Title: | President | |||
| ATLAS CONCRETE INC. |
||||
| By: | /s/ G.A. Berkhold | |||
| Name: | G.A. Berkhold | |||
| Title: | President | |||
| WILD ROSE HOLDINGS LTD. |
||||
| By: | /s/ G.A. Berkhold | |||
| Name: | G.A. Berkhold | |||
| Title: | Director | |||
55
Atlas Investments, Inc., a Nevada corporation and a wholly owned subsidiary of Alberta, hereby
joins in the execution of this Agreement for the purpose of acknowledging and agreeing to the terms
of Section 7.14 hereof (and, to the extent applicable, Article XII).
| ATLAS INVESTMENTS, INC. |
||||
| By: | /s/ G.A. Berkhold | |||
| Name: | G.A. Berkhold | |||
| Title: | Director | |||
Each of Xx. Xxxxx Berkhold, Xxxx Xxxxxxxx, Xxxxxx X. Xxxxxx, and H. Xxxxxxx Xxxxxx hereby
joins in the execution of this Agreement for the purpose of agreeing to become bound by the
provisions of Articles IX and X (and, to the extent applicable, Article XII).
| /s/ Xxxxx Berkhold | ||||
| Xxxxx Berkhold | ||||
| /s/ Xxxx Xxxxxxxx | ||||
| Xxxx Xxxxxxxx | ||||
| /s/ Xxxxxx X. Xxxxxx | ||||
| Xxxxxx X. Xxxxxx | ||||
| /s/ H. Xxxxxxx Xxxxxx | ||||
| H. Xxxxxxx Xxxxxx | ||||
56
EXHIBIT A
The Consideration shall be allocated as follows: $33 million shall be allocated to Atlas; and
the balance shall be allocated to Wild Rose, of which $5 million shall be consideration for the
Alliance common stock and the balance shall be consideration for the Alberta common stock.
EXHIBIT B
July [ ], 2006
U.S. Concrete, Inc.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
We have acted as special counsel to Alliance Haulers, Inc., a Texas corporation (“Alliance”),
Alberta Investments Inc., a Texas corporation (“Alberta”), Atlas Concrete Inc., an Alberta, Canada
corporation (“Atlas”), and Wild Rose Holdings Ltd., a Jersey corporation (“Wild Rose”), in
connection with the Stock Purchase Agreement, dated as of [ ], 2006, to which U.S. Concrete, Inc.,
a Delaware corporation (“Buyer”), Alliance, Alberta, Atlas and Wild Rose are parties (the
“Stock Purchase Agreement”). We deliver this opinion letter to you pursuant to Section
4.04(e)(2) of the Stock Purchase Agreement in connection with the closing of the sale to Buyer in
accordance with the Stock Purchase Agreement of the certificates representing the Companies Capital
Stock. Capitalized terms this opinion letter uses, but does not define, have the respective
meanings the Stock Purchase Agreement specifies.
We have examined the executed originals, or copies certified or otherwise identified to our
satisfaction, of the Stock Purchase Agreement, the Promissory Note dated [ ], 2006 relating to the
Loan from Buyer to Atlas Investments, Inc., a Nevada corporation (“AII”), pursuant to
Section 7.14 of the Stock Purchase Agreement (the “Promissory Note”), the Pledge and
Security Agreement, dated as of [ ], 2006, by and among Atlas, Wild Rose and Alberta in favor of
Buyer (the “Pledge Agreement”) relating to the Loan and the related guaranties provided by
Atlas, Wild Xxxx, Xxxxxxx and Alliance pursuant to the Promissory Note (the “Guaranties”), the
organizational documents of each of the Companies, the Shareholders and AII, each as amended to
date, minute books and certain other records of each of the Companies, the Shareholders and AII,
certificates of public officials and of representatives of each of the Companies, the Shareholders
and AII, and such statutes and other instruments and documents as we have deemed necessary as a
basis for the opinions hereinafter expressed. The Stock Purchase Agreement, the Promissory Note
(including the Guaranties set forth therein) and the Pledge Agreement are hereinafter referred to
as the “Transaction Documents.”
In rendering the following opinions, we have relied as to matters of fact on certificates of
the officers of the Companies and the Shareholders. We have assumed, without independent
investigation, the legal capacity of natural persons, the authenticity of all documents and records
submitted to us as originals, the conformity to original documents and records of all documents and
records submitted to us as copies or by facsimile or electronic transmission and the authenticity
of the original of such copies, and the accuracy and authenticity of certificates of public
officials. Our opinions expressed in opinion paragraph 1 as to the existence and good
standing of each entity described therein are based solely on our review of certificates of
public officials of the applicable jurisdictions.
We have further assumed, to the extent relevant to our opinions expressed below, that (i) the
Transaction Documents constitute the legal, valid and binding obligations of each party thereto
(except that we have not made this assumption with respect to the Companies, the Shareholders or
AII) and (ii) all terms, provisions and conditions relating to the transactions referred to in this
opinion letter are completely and correctly reflected in the Stock Purchase Agreement.
On the basis of the foregoing, and subject to the assumptions, limitations, qualifications and
exceptions herein set forth, we are of the opinion that:
| 1. | Each Company, each Shareholder and AII is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate 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. | ||
| 2. | Each of the Companies, the Shareholders and AII has all requisite corporate power and authority to execute, deliver and perform its respective obligations under the Transaction Documents and to effectuate the transactions the Transaction Documents contemplate, including, without limitation: (i) the borrowing by AII pursuant to the Loan and AII’s execution and delivery to Buyer of the Promissory Note; (ii) the Guaranties by each of Atlas, Wild Xxxx, Xxxxxxx and Alliance and the execution and delivery to Buyer of the Promissory Note by each of Atlas, Wild Xxxx, Xxxxxxx and Alliance to evidence the Guaranties; (iii) AII’s use of the proceeds of the Loan to effect a distribution to Alberta; and (iv) Alberta’s use of those proceeds to effect a distribution to Atlas with respect to the outstanding shares of preferred stock of Alberta. The execution and delivery by each Company, each Shareholder and AII of the Transaction Documents to which it is a party and the performance by that entity of its respective obligations thereunder have been duly authorized by all necessary corporate action and proceedings required under that entity’s charter documents and all applicable Laws. | ||
| 3. | Each of the Transaction Documents to which either Company is a party has been duly and validly executed and delivered by that Company and constitutes its valid and binding agreement, enforceable against that party in accordance with its terms. Each of the Transaction Documents to which either Shareholder is a party has been duly and validly executed and delivered by that Shareholder and constitutes its valid and binding agreement, enforceable against that party in accordance with its terms. Each of the Transaction Documents to which AII is a party has been duly and validly executed and delivered by AII and constitutes its valid and binding agreement, enforceable against that party in accordance with its terms. |
2
| 4. | The execution, delivery and performance by each of the Companies, the Shareholders and AII of the Transaction Documents to which it is a party and the consummation by that party of the transactions contemplated thereby (including, without limitation, the transactions referred to in clauses (i) through (iv) of the first sentence of paragraph 2, above) will not violate or result in a breach of any provision of, or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation of any Encumbrance upon any of the properties or assets of any Acquired Entity or the Acquired Business under any of the terms, conditions or provisions of (i) the organizational documents of any Acquired Entity, (ii) any Law applicable to any Shareholder, any Acquired Entity, the Acquired Business or any of the properties or assets of any Shareholders, any Acquired entity or the Acquired Business or (iii) 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 either Shareholder, any Acquired Entity or the Acquired Business is now a party or by which the Acquired Business, any Acquired Entity or any of their respective properties or assets may be bound or affected (including, without limitation, the Listed Agreements), other than, in the case of clause (iii), the Encumbrances expressly created by the terms of the Promissory Note and the Pledge Agreement. | ||
| 5. | Except as disclosed pursuant to the Stock Purchase Agreement, no Governmental Approvals are required to be obtained, and no reports or notices or filings with any Governmental Authority are required to be made by, either Company, either Shareholder or AII under any Applicable Governmental Requirement for the execution, delivery or performance by them of the Transaction Documents or the effectuation of the transactions described therein. | ||
| 6. | To our knowledge, there are no outstanding subscriptions, options, warrants, calls, convertible or exchangeable securities, other conversion rights or commitments of any kind that obligate any Acquired Entity to issue any of its capital stock or Shareholders to transfer any of the equity interests in any Acquired Entity. To our knowledge, except as disclosed pursuant to the Stock Purchase Agreement, none of the Companies or the Shareholders is a party to or bound by any agreement, instrument, contract, commitment or understanding of any character, except for the Stock Purchase Agreement, providing for the sale, assignment, conveyance, encumbrance, transfer or delivery of any Capital Stock of any Acquired Entity or all or substantially all the assets of any Acquired Entity. | ||
| 7. | To our knowledge, there are no claims, actions, suits or proceedings, pending or threatened against or affecting any Acquired Entity that (a) questions the validity of the Stock Purchase Agreement or any action taken or to be taken by either Company or either Shareholder in connection with the Stock Purchase Agreement, at law or in equity, before or by any Governmental Authority or before any arbitrator, or (b) if adversely determined, would have a material |
3
| adverse effect on the ability of either Company or either Shareholder to perform its respective obligations under the Stock Purchase Agreement. | |||
| 8. | On the date hereof: (a) the authorized capital stock of Alliance consists solely of 1,000,000 shares of common stock, of which 1,000 shares are issued and outstanding and owned beneficially and of record by Wild Rose, and the authorized capital stock of Alberta consists solely of 1,000 shares of Series B common stock, of which 330 shares are issued and outstanding and owned beneficially and of record by Wild Rose, and 500 shares of Series A preferred stock, of which 15 shares are issued and outstanding and owned beneficially and of record by Atlas; (b) the authorized, issued and outstanding capitalization of each of the other Acquired Entities is as set forth on Schedule 5.03 to the Stock Purchase Agreement; and (c) all of the issued and outstanding shares of Capital Stock of each of the Acquired Entities (i) have been duly authorized and validly issued, (ii) are fully paid and nonassessable, except, as to any Acquired Entity that is a Texas limited partnership, as to the general partner interests therein and as such nonassessability may be affected by Sections 3.03, 5.02 and 6.07 of the Texas Revised Limited Partnership Act, and (iii) to our knowledge, have not been issued in violation of any preemptive or other similar rights. |
4
The opinions expressed above are subject to the following qualifications, limitations and
exceptions.
The validity and enforceability of the Transaction Documents may be limited by bankruptcy,
insolvency, reorganization, rearrangement, moratorium, liquidation, and other similar laws now or
hereafter in effect and affecting creditors’ rights generally, and by general principles of equity
(including, without limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance, injunctive relief or other
equitable remedies), regardless of whether such validity, binding effect and enforceability are
considered in a proceeding in equity or at law.
For purposes of this opinion letter, we have reviewed only those laws, rules and regulations
that in our experience are normally applicable to transactions of the type described in the
Transaction Documents and, to the extent relevant to any of our opinions, only those agreements,
judgments and orders brought to our attention by the Company.
We neither express nor imply any opinion regarding: (i) the validity or enforceability of any
provision of any Transaction Document that purports to: (a) release a party from liability for its
own negligence, or in cases where the party released is strictly liable, or to the extent that any
such release provisions are inconsistent with public policy; (b) exclude all conflicts-of-law
rules; (c) prohibit the non-written waiver or modification of any provision of any Transaction
Document; (d) confer, waive or consent to the jurisdiction of any court; (e) waive the objection of
inconvenient forum; (f) provide for severability and reformation or (g) restrict the ability of any
Person to engage in any business or trade activities in competition with another Person; or (ii)
the validity or enforceability of provisions relating to delay or omission of enforcement of rights
or remedies.
In rendering our opinions, we have made no independent investigation as to the accuracy or
completeness of any representation, warranty, data or other information, written or oral, that may
have been made by or on behalf of any party to the Transaction Documents. We have not made any
examination of any accounting or financial matters, and we express no opinion with respect thereto.
With respect to any opinion expressed herein that is qualified by the phrase “to our
knowledge” or is otherwise qualified by words of like import, we are referring to the conscious
awareness of the lawyers currently practicing law with this Firm who have had involvement in
representing the Company in connection with the transactions described in the Transaction
Documents.
Our opinions herein are limited in all respects to the applicable Governmental Requirements of
the United States of America, the State of Texas, the Delaware General Corporation Law, the Nevada
Business Corporation Act, the Companies (Jersey) Law 1991 and the Alberta Business Corporations
Act, in each case as currently in effect. No opinion is expressed as to any matter that may be
governed by the laws of any other jurisdiction, and we assume no responsibility as to the
applicability to or effect on any of the matters covered herein
5
of the laws of any other jurisdiction. This opinion letter speaks as of its date, and we
undertake no (and hereby disclaim any) obligation to inform you of facts that may hereafter come to
our attention or changes in law occurring after the date of this opinion letter that might affect
the opinions expressed herein.
This opinion letter is solely for your benefit and may be relied upon only by you in
connection with the transactions described in the Transaction Documents. Without our prior written
consent, the opinion letter may not be relied upon by you for any other purpose or by any other
person for any purpose.
Very truly yours,
6
EXHIBIT C
This Promissory Note has not been registered under the Securities Act of 1933 and may be sold or
otherwise transferred only if the holder hereof complies with that law and other applicable
securities laws.
PROMISSORY NOTE
| $[33],000,000.00 | July [___], 0000 Xxxxxx, Xxxxx |
FOR VALUE RECEIVED, Atlas Investments, Inc., a Nevada corporation (herein referred to as the
“Maker”), hereby promises and agrees to pay to the order of U.S. Concrete, Inc., a Delaware
corporation (the “Holder”), the principal amount of [____________] MILLION DOLLARS ($[33],000,000),
together with interest on the unpaid principal sum from (and including) the date hereof until (but
excluding) the date on which that unpaid principal sum shall become due and payable (whether on the
Maturity Date (as hereinafter defined) or upon acceleration thereof pursuant to the provisions of
Section 3(b)), at the rate of five percent (5.0%) per annum as hereinafter provided; provided,
however that, notwithstanding the foregoing, if the Closing (as hereinafter defined) under the
Stock Purchase Agreement (as hereinafter defined) does not occur as a result of the failure of a
condition set forth in Section 4.03 of the Stock Purchase Agreement or the failure of the Holder to
obtain the Financing (as defined in the Stock Purchase Agreement), no such interest shall accrue.
Any past due principal and interest owing under this Promissory Note (this “Note”) shall bear
interest from and after the date such obligations first become payable until paid at a per annum
rate equal to the lesser of (i) eighteen percent (18.0%) or (ii) the maximum nonusurious rate
allowed under applicable law (the “Highest Lawful Rate”), which interest shall be payable upon
demand. All interest hereunder shall be calculated on the basis of a 365-day year for the actual
number of days elapsed. References in this Note to the “Stock Purchase Agreement” mean that
certain Stock Purchase Agreement made as of June 27, 2006 by and among the Holder, Atlas Concrete
Inc., an Alberta, Canada corporation (“Atlas”), Wild Rose Holdings Ltd., a Jersey corporation
(“Wild Rose”), Alberta Investments Inc., a Texas corporation of which the Maker is a direct, wholly
owned subsidiary (“Alberta”), Alliance Haulers, Inc., a Texas corporation (“Alliance”), and the
Maker.
| 1. | Payment Obligations. |
| (a) | Principal and Interest. Subject to Section 3(b), the principal amount of this Note shall be due and payable in full immediately upon the first to occur of (i) the time of the Closing (as defined in the Stock Purchase Agreement) or (ii) 9:00 A.M., Central Time, on July [___], 2006 (the date of the first such time to occur is referred to herein as the “Maturity Date”). Interest on the unpaid principal amount of this Note shall accrue and shall be payable as provided above. Payments of principal and interest shall be made in lawful money of the United States of America, by wire transfer of immediately available funds to such bank account of the Holder as the Holder may designate from time to time by written notice to the Maker. Any check, draft or other instrument given in payment of all or any |
| portion of this Note may be accepted by the Holder and handled in collection in a customary manner, but the same shall not constitute payment hereunder or diminish any rights of the Holder except to the extent that actual cash proceeds of such instruments are unconditionally received by the Holder. Any payment (excluding any prepayment) on or in respect of this Note shall be applied first to accrued but unpaid interest and then to the principal balance hereof. The unpaid principal may, at the option of the Maker, be prepaid, in whole or in part, at any time without premium or penalty, through the payment of an amount equal to 100% of the principal amount being prepaid, together with all accrued and unpaid interest on this Note to (but excluding) the date of the prepayment. At such time as this Note is paid or prepaid in full, it shall be surrendered to the Maker and cancelled and shall not be reissued. | |||
| (b) | As further provided in Section 5, each of Atlas, Wild Xxxx, Xxxxxxx and Alliance (each, a “Guarantor”) is guaranteeing the payment obligations of the Maker under this Note. Pursuant to the provisions of the Pledge and Security Agreement dated as of the date of this Note to which Atlas, Wild Xxxx, Xxxxxxx and the Holder are parties (the “Pledge Agreement”), the guarantee obligations of the Guarantors are being secured by a security interest in all of the outstanding capital stock of each of Alberta, Alliance and the subsidiaries of Alberta specified in the Pledge Agreement (the “Collateral”). Each of the Maker and the Guarantors sometimes is referred to herein as an “Obligor.” | ||
| (c) | Regardless of any provision contained herein, or in any other document executed in connection with this Note, the Holder shall never be entitled to contract for, charge, take, reserve, receive, collect, or apply, as interest on any obligation payable under this Note, any unearned interest or any amount in excess of the Highest Lawful Rate, and in the event the holder hereof ever contracts, for charges, takes, reserves, receives, collects or applies, as interest, any unearned interest or any such excess, such amount shall be deemed a partial prepayment of principal, and, if the principal hereof is paid in full, any remaining excess shall forthwith be refunded to the Maker. |
| 2. | Certain Covenants. The Obligors hereby covenant and agree as follows, after the date of the Note and until such time as this Note has been paid in full in cash: |
| (a) | Maintenance of existence. Each Obligor shall maintain its corporate or other legal entity existence and remain in good standing in its jurisdiction of formation. | ||
| (b) | Continuation of business. Each Obligor shall continue its principal lines of business carried on as of the date of this Note. |
2
| (c) | Maintenance of insurance. Each Obligor shall maintain or cause to be maintained insurance with respect to its property and business against such liabilities and risks, in such types and amounts and with such deductibles or self-insurance risk retentions, in each case as is customary in its respective industries. | ||
| (d) | Maintenance of books and records. Each Obligor shall maintain its accounting books and records in accordance with accounting principles generally accepted in the United States (“GAAP”) in all material respects. | ||
| (e) | Compliance with laws. Each Obligor shall comply with all laws and governmental regulations applicable to it, except to the extent that the failure to so comply would not have a material adverse effect on the business, financial condition, or results of operations of such Obligor and its subsidiaries, taken as a whole. | ||
| (f) | Notification of default. Each Obligor shall notify the Holder, immediately after receipt by such Obligor, of any notice of default received by it under any Interest-Bearing Debt (as defined in the Stock Purchase Agreement) or any agreement or instrument governing or creating any Interest-Bearing Debt or any material Indebtedness (as hereinafter defined) of such Obligor or any of its consolidated subsidiaries. As used in this Note, “Indebtedness” means, with respect to any Obligor, without duplication: |
| (i) | indebtedness of such Obligor for borrowed money; | ||
| (ii) | obligations of such Obligor evidenced by bonds, debentures, promissory notes, or other similar instruments; | ||
| (iii) | obligations of such Obligor in respect of letters of credit, bankers’ acceptances, or other similar instruments, excluding obligations in respect of trade letters of credit, bankers’ acceptances, or other similar instruments issued in respect of trade payables or similar obligations to the extent not drawn upon or presented, or, if drawn upon or presented, the resulting obligation of such Obligor is paid within three days; | ||
| (iv) | obligations of such Obligor to pay the deferred and unpaid purchase price of property or services which are recorded as liabilities in accordance with GAAP, excluding trade payables, advances on contracts, deferred compensation and similar liabilities arising in the ordinary course of business of such Obligor; and | ||
| (v) | rent obligations of such Obligor as lessee under any lease arrangement classified as a capital lease on the balance sheet of such Obligor in accordance with GAAP. |
3
| (g) | Restrictions on issuances of capital stock and divestitures, mergers and consolidations. Except pursuant to the terms of the Stock Purchase Agreement or the Pledge Agreement: (i) none of the Obligors shall issue or sell any shares of their capital stock or other equity interests, except to the Holder pursuant to the terms of the Stock Purchase Agreement; and (ii) Alberta shall not sell, transfer or pledge any capital stock of the Maker to any person or entity. None of the Obligors shall enter into any merger or consolidation transaction pursuant to which any of them may be acquired by an entity other than the Holder. Neither the Maker nor any other Obligor shall sell all of its assets or its assets substantially as an entirety (whether in a single transaction or a series of related transactions). | ||
| (h) | Subordination of additional Indebtedness. Any Indebtedness incurred by the Maker after the date of this Note will be expressly subordinated (pursuant to customary subordination provisions) to the indebtedness under this Note. | ||
| (i) | Prohibitions on incurrence of new liens. No Obligor shall grant any liens on its assets to secure any Indebtedness. | ||
| (j) | Restrictions on certain guaranties. No Obligor shall provide a guaranty of the obligations of any person or entity. | ||
| (k) | Restrictions on transactions with affiliates. No Obligor shall engage in any transactions with affiliated persons or entities, except as permitted by Section 2(l). | ||
| (l) | Restricted payments. No Obligor shall pay any dividends or make any similar distributions to Alberta; provided, however, that this covenant shall not restrict (i) the Maker from making, declaring and paying to Alberta a one-time cash dividend in the amount of $33,000,000 or (ii) Alberta from making, declaring and paying a one-time cash dividend in the amount of $33,000,000 in respect of its outstanding series A preferred stock. | ||
| (m) | Prohibition on loans. No Obligor shall make loans to any person or entity. |
| (a) | Events of Default. So long as this Note has not been paid in full in cash, each of the following events will constitute an “Event of Default”: |
| (i) | any default in the payment of the principal or accrued interest payable under this Note, as and when the same shall become due and payable; | ||
| (ii) | any breach of any of the covenants contained in Section 2; |
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| (iii) | commencement of an involuntary case or other proceeding against any Obligor seeking (A) liquidation, reorganization, or other relief with respect to it or its debts under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect or (B) the appointment of a receiver, liquidator, custodian, or trustee of any Obligor or for all or substantially all the property and other assets of any Obligor; or | ||
| (iv) | (A) commencement of a voluntary case by any Obligor under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, (B) consent by any Obligor to the entry of an order for relief in an involuntary case against such Obligor under any such law, (C) consent by any Obligor to the appointment or taking possession by a receiver, liquidator, custodian, or trustee of such Obligor or for all or substantially all its assets or (D) a general assignment by any Obligor for the benefit of its creditors. |
| (b) | Remedies. If an Event of Default shall occur, then, without any notice to the Maker or any other act by the Holder, the entire principal amount of this Note (together with all accrued interest thereon) shall become immediately due and payable without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived by the Maker. | ||
| (c) | Expenses. If an Event of Default shall occur, the Maker shall pay, and save the Holder harmless against liability for the payment of, all reasonable expenses, including reasonable attorneys’ fees, incurred by the Holder in enforcing its rights hereunder. |
| 4. | Waivers; Amendments. To the extent permitted by applicable law, each Obligor, for itself and its legal representatives, successors and assigns, hereby expressly waives demand for payment, presentment, notice of dishonor, notice of intent to demand, notice of acceleration, notice of intent to accelerate, protest, notice of protest and diligence in collecting and the bringing of suit against the Maker or any other Obligor with respect to this Note. The Obligors agree that the Holder may extend the time for repayment or accept partial payment an unlimited number of times without discharging or releasing any of the Obligors from their respective obligations under this Note (including the Guaranties). No delay or omission on the part of the Holder in exercising any power or right in connection herewith shall operate as a waiver of such right or any other right under this Note (including the Guaranties), nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. No amendment, modification, or waiver of any provision of this Note (including the Guaranties), nor any consent to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the person against whom enforcement thereof is to be |
5
| sought, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Each Obligor also hereby expressly waives, as a defense, any counterclaim, setoff or claim which such Obligor may now or hereafter have against the Holder. | |||
| 5. | Guaranties. (a) Subject to the terms and conditions of this Note, the Guarantors hereby, jointly and severally, unconditionally guarantee to the Holder the prompt and complete payment in cash when due of all the Maker’s payment obligations to the Holder under this Note (the “Obligations”). An Event of Default under this Note shall constitute an event of default under the guaranties of the Guarantors provided in this Section 5 (the “Guaranties”), and shall entitle the Holder to accelerate the obligations of the Guarantors hereunder in the same manner and to the same extent as the Obligations. The Guaranties constitute guarantees of payment when due and not of collection. |
| (b) | Anything herein to the contrary notwithstanding, the maximum liability of each Guarantor hereunder shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws relating to fraudulent transfers or conveyances or to the insolvency of debtors (after giving effect to any right of contribution from the other Guarantor). | ||
| (c) | The Guarantors shall not exercise any rights which they may acquire by way of subrogation to the rights of the Holder hereunder until all the Obligations shall have been paid in full in cash. Subject to the foregoing, upon payment of all the Obligations, the Guarantors shall be subrogated to the rights of the Holder against the Maker, and the Holder agrees to take such steps as the Guarantors may reasonably request to implement such subrogation. | ||
| (d) | To the maximum extent permitted by applicable law, the Guarantors understand and agree that the Guaranties shall be construed as continuing, complete, absolute, and unconditional guarantees of payment without regard to, and each Guarantor hereby waives any defense of a surety or guarantor or any other obligor on any obligations arising in connection with or in respect of, and hereby agrees that its obligations hereunder shall not be discharged or otherwise affected as a result of, any of the following: (i) any defense, setoff, or counterclaim (other than the defense of payment or performance in full) which may at any time be available to or be asserted by the Maker against the Holder; (ii) the insolvency, bankruptcy arrangement, reorganization, adjustment, composition, liquidation, disability, dissolution, or lack of power of the Maker or any of the other Guarantors, or any sale, lease, or transfer of any or all of the assets of the Maker or any of the other Guarantors, or any change in the shareholders or other equity owners of the Maker or any of the other Guarantors; (iii) any change in the corporate or other existence, structure, or ownership of any other Obligor; (iv) the absence of any attempt to collect the Obligations or |
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| any part of them from any other Obligor; or (v) any other circumstance or act which constitutes, or might be construed to constitute, an equitable or legal discharge of the Maker for the Obligations, or of such Guarantor under its Guaranty, in bankruptcy or in any other instance (other than the defense of payment or performance in full). When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against either Guarantor, the Holder may, but shall be under no obligation to, join or make a similar demand on or otherwise pursue or exhaust such rights and remedies as it may have against the Maker or any of the other Guarantors, and any failure by the Holder to make any such demand, to pursue such other rights or remedies, or to collect any payments from the Maker or any of the other Guarantors, or any release of the Maker or any of the other Guarantors, shall not relieve such Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied, or available as a matter of law, of the Maker against such Guarantor. |
| 6. | Certain Representations. The Maker hereby represents that: (a) it is duly incorporated, validly existing, and in good standing under the laws of the State of Nevada and has full corporate power and authority to execute and deliver this Note; (b) its execution and delivery of this Note has been duly authorized by all necessary corporate action on its part; (c) as of the time of the execution and delivery of this Note, and after giving effect to the incurrence of the indebtedness and the other transactions contemplated hereby, all representations of the Obligors contained in the Stock Purchase Agreement and the Pledge Agreement are and shall be true and correct and no breach of the obligations of any of the Obligors has occurred under the Stock Purchase Agreement or the Pledge Agreement; and (d) this Note constitutes a legal, valid, and binding obligation of the Maker, enforceable against the Maker in accordance with the terms hereof, except as such enforceability may be limited by: (i) bankruptcy, insolvency, reorganization, fraudulent transfer or conveyance, and other laws of general applicability relating to or affecting creditors’ rights; and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). | ||
| 7. | Entire Agreement; Assignment. This Note, the Stock Purchase Agreement and the Pledge Agreement constitute the entire agreement and understanding among the Holder and the Obligors with respect to the subject matter of this Note and supersede all prior agreements and understandings, oral or written, among such parties with respect to the subject matter of this Note. The Holder may transfer or assign this Note or any of its rights to payment hereunder to any third party without the consent of the Maker (including, without limitation, to the administrative or collateral agent for any secured credit facility enter into by Holder prior to, on or after the date hereof, in connection with the security arrangements relating thereto), and any such transfer or assignment shall be binding on the Maker, and any assignee of the Holder shall be entitled to enforce all the rights of the original Holder so transferred or assigned to such assignee. |
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| The Maker may not assign any of its rights or obligations under this Note without the prior written consent of the Holder. | |||
| 8. | Notices. All notices and communications provided for hereunder shall be in writing and sent (a) by facsimile if the sender on the same day sends a confirming copy of such notice by a recognized overnight-delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight-delivery service (with charges prepaid). Any such notice shall be sent: |
| (i) | if to the Holder, addressed to it at 0000 Xxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, to the attention of Xxxxxx X. Xxxxx, or at such other address as the Holder may hereafter specify to the Obligors in writing; or | ||
| (ii) | if to any Obligor, addressed to it at 000, 000 Xxxxxx Xxxxxx X.X., Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0, to the attention of Xxxxx X. Berkhold, or at such other address as the Obligors may hereafter specify to the Holder in writing. |
| 9. | Captions; Interpretation. The captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Note. Except where the context otherwise requires, the defined terms used in this Note shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall” and both “will” and “shall” are used in the mandatory and imperative sense. Unless otherwise stated or the context otherwise requires: (i) the words “herein,” “hereof,” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof; and (ii) all references herein to sections shall be construed to refer to sections of this Note. | ||
| 10. | Severability. If any provision contained in this Note shall for any reason be held to be invalid, illegal, or unenforceable in any respect, that provision will, 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 hereto as expressed herein, and if such a modification is not possible, that provision will be severed from this Note, and in either case the validity, legality, and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby. |
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| 11. | Governing Law. The construction, validity, and enforceability of this Note shall be governed by the substantive laws of the State of Texas, without giving effect to any principles of conflicts of laws thereof that would result in the application of the laws of any other jurisdiction. |
* * *
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| MAKER: | ||||
| ATLAS INVESTMENTS, INC. | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| GUARANTORS: | ||||
| ATLAS CONCRETE INC. | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| WILD ROSE HOLDINGS LTD. | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| ALBERTA INVESTMENTS INC. | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| ALLIANCE HAULERS, INC. | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
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EXHIBIT D
Pledge and Security Agreement, dated as of July ___, 2006, by and among Atlas Concrete
Inc., an Alberta, Canada corporation (“Atlas”), Wild Rose Holdings Ltd., a Jersey corporation
(“Wild Rose”), and Alberta Investments Inc., a Texas corporation ( “Alberta” and, together with
Atlas and Wild Rose, the “Pledgors”), in favor of U.S. Concrete, Inc., a Delaware corporation (the
“Lender”).
W i t n e s s e t h:
Whereas, as contemplated by the Stock Purchase Agreement, it is a condition precedent
to the obligation of the Lender to make the Loan to the Borrower under the Note that the Pledgors
shall have executed and delivered this Agreement to the Lender;
Now, therefore, in consideration of the premises and to induce the Lender to enter
into the Stock Purchase Agreement and to make the Loan to Borrower as contemplated thereby, the
Pledgors hereby agree with the Lender as follows:
ARTICLE I DEFINED TERMS
Section 1.1. Definitions
(a) Unless otherwise defined herein, terms defined in the Stock Purchase Agreement and used
herein have the respective meanings given to them in the Stock Purchase Agreement.
(b) Terms used herein without definition that are defined in the UCC have the respective
meanings given to them in the UCC, including the following terms (which are capitalized herein):
“Certificated Security”
“General Intangible”
“Instruments”
“Proceeds”
“Security”
“Security Entitlement”
The following terms shall have the following respective meanings:
“Agreement” means this Pledge and Security Agreement.
“Collateral” has the meaning specified in Section 2.1 (Collateral).
“Constituent Documents” means, with respect to any Person, (a) the articles of incorporation,
certificate of incorporation, constitution or certificate of formation (or the equivalent
organizational documents) of such Person, (b) the by-laws or operating agreement (or the equivalent
governing documents) of such Person and (c) any document setting forth the manner of election and
duties of the directors, managers or managing members (or any equivalent managers) of such Person
(if any) and the designation, amount or relative rights, limitations and preferences of any class
or series of such Person’s Stock.
“Event of Default” has the meaning assigned to such term in the Note.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“LLC” means each limited liability company in which a Pledgor has an interest.
“LLC Agreement” means each operating agreement with respect to an LLC, as such agreement has
heretofore been, and may hereafter be, amended, restated, supplemented or otherwise modified from
time to time.
“Loan Documents” means the Stock Purchase Agreement, the Note, this Agreement and any other
documents securing the Secured Obligations or executed in connection therewith.
“Partnership” means each partnership in which a Pledgor has an interest.
“Partnership Agreement” means each partnership agreement governing a Partnership, as each such
agreement has heretofore been, and may hereafter be, amended, restated, supplemented or otherwise
modified.
“Pledged Certificated Stock” means all Certificated Securities and any other Stock or Stock
Equivalent of a Person evidenced by a certificate, Instrument or other equivalent document, in each
case owned by a Pledgor, including all Stock listed on Schedule 3 (Pledged Collateral).
“Pledged Collateral” means, collectively, the Pledged Stock and any certificates or other
Instruments representing any of the Pledged Stock and all Security Entitlements of any of the
Pledgors in respect of any of the foregoing.
“Pledged Stock” means all Pledged Certificated Stock and all Pledged Uncertificated Stock.
“Pledged Uncertificated Stock” means any Stock or Stock Equivalent of any Person that is not a
Pledged Certificated Stock, including all right, title and interest of any Pledgor as a limited or
general partner in any Partnership or as a member of any LLC and all right, title and interest of
any Pledgor in, to and under any Partnership Agreement or LLC Agreement to which it is a party.
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“Secured Obligations” means the Loan and all other amounts, obligations, covenants and duties
owing by Borrower, any Pledgor or any of their affiliates (collectively, the “Loan Parties”) to the
Lender, of every type and description (whether by reason of a loan or other extension of credit,
guaranty, indemnification or otherwise), present or future, arising under this Agreement, or any
other Loan Document, whether direct or indirect (including those acquired by assignment), absolute
or contingent, due or to become due, now existing or hereafter arising and however acquired and
whether or not evidenced by any note, guaranty or other instrument or for the payment of money,
including all letter of credit, cash management and other fees, interest, charges, expenses,
attorneys’ fees and disbursements, and other sums chargeable to Borrower under this Agreement, or
any other Loan Document and any and all obligations of any and all of the Borrower and the Pledgors
under any Loan Document.
“Securities Act” means the Securities Act of 1933, as amended.
“Stock” means shares of capital stock (whether denominated as common stock or preferred
stock), beneficial, partnership or membership interests, participations or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited liability company or
equivalent entity, whether voting or non-voting.
“Stock Equivalents” means all securities convertible into or exchangeable for Stock and all
warrants, options or other rights to purchase or subscribe for any Stock, whether or not presently
convertible, exchangeable or exercisable.
“UCC” means the Uniform Commercial Code as from time to time in effect in the State of Texas;
provided, however, that, in the event that, by reason of mandatory provisions of law, any of the
attachment, perfection or priority of the Lender’s security interest in any Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Texas, the
term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
(a) In this Agreement, in the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including” and the words “to” and “until” each mean
“to but excluding” and the word “through” means “to and including.”
(b) The terms “herein,” “hereof,” “hereto” and “hereunder” and similar terms refer to this
Agreement as a whole and not to any particular Article, Section, subsection or clause in this
Agreement.
(c) References herein to an Annex, Schedule, Article, Section, subsection or clause refer to
the appropriate Annex or Schedule to, or Article, Section, subsection or clause in this Agreement.
(d) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.
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(e) Where the context requires, provisions relating to any Collateral, when used in relation
to a Pledgor, shall refer to that Pledgor’s Collateral or any relevant part thereof.
(f) Any reference in this Agreement to a Loan Document shall include all appendices, exhibits
and schedules thereto, and, unless specifically stated otherwise all amendments, restatements,
supplements or other modifications thereto, and as the same may be in effect at any time such
reference becomes operative.
(g) The term “including” means “including without limitation” except when used in the
computation of time periods.
(h) The terms “Lender,” “Pledgors,” and “Borrower” include their respective successors and
permitted assigns.
(i) References in this Agreement to any statute shall be to such statute as amended or
modified and in effect from time to time.
ARTICLE II GRANT OF SECURITY INTEREST
Section 2.1 Collateral
For the purposes of this Agreement, all of the following property now owned or at any time
hereafter acquired by any Pledgor or in which a Pledgor now has or at any time in the future may
acquire any right, title or interests is collectively referred to as the “Collateral”:
(a) all the Pledged Collateral;
(b) all General Intangibles respecting the Pledged Collateral;
(c) all Instruments respecting the Pledged Collateral;
(d) all books and records pertaining to the other property described in this Section 2.1;
(e) all property of any Pledgor held by the Lender, including all property of every
description, in the possession or custody of or in transit to the Lender for any purpose, including
safekeeping, collection or pledge, for the account of any of the Pledgors or as to which any
Pledgor may have any right or power; and
(f) to the extent not otherwise included, all Proceeds.
Section 2.2 Grant of Security Interest in Collateral
The Pledgors, as collateral security for the full, prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations,
hereby mortgage, pledge and hypothecate to the Lender, and grant to the Lender a lien on and
security interest in, all of their respective rights, titles and interests in, to and under the
Collateral.
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ARTICLE III REPRESENTATIONS AND WARRANTIES
To induce the Lender to make the Loan, each Pledgor hereby represents and warrants each of the
following to the Lender:
Section 3.1 Title; No Other Liens
Except for the liens granted to the Lender pursuant to this Agreement, each Pledgor (a) is the
record and beneficial owner of the Collateral pledged by it hereunder constituting Instruments or
Certificated Securities, and (b) has rights in or the power to transfer each other item of
Collateral in which a Lien is granted by it hereunder, free and clear of any other Lien.
Section 3.2 Perfection and Priority
The security interest granted pursuant to this Agreement shall constitute a valid and
continuing perfected first priority security interest in favor of the Lender in the Collateral upon
(i) in the case of all Collateral in which a security interest may be perfected by filing a
financing statement under the UCC, the completion of the filings and other actions specified on
Schedule 1 (Filings) (which, in the case of all filings and other documents referred to on such
schedule, have been delivered to the Lender in completed and duly executed form), and (ii) the
delivery to the Lender of all Collateral consisting of Instruments and Certificated Securities, in
each case properly endorsed for transfer to the Lender or in blank.
Section 3.3 Jurisdiction of Organization; Chief Executive Office
Each Pledgor’s jurisdiction of organization, legal name, organizational identification number,
if any, and the location of each Pledgor’s chief executive office or sole place of business, in
each case as of the date hereof, is correctly specified on Schedule 2 (Pledgor Information) and
such Schedule 2 (Pledgor Information) also correctly lists all jurisdictions of incorporation,
legal names and locations of each Pledgor’s chief executive office or sole place of business for
the five years preceding the date hereof. Each Pledgor is duly organized, validly existing, and in
good standing under the laws of its jurisdiction of organization, as set forth on Schedule 2
(Pledgor Information), and has full corporate, limited liability or partnership power and authority
to execute and deliver this Agreement. No Pledgor has, within the period of 180 days prior to the
date hereof, changed its name or the jurisdiction or form of its organization.
Section 3.4 Pledges of Collateral
(a) Each Pledgor has duly authorized the execution, delivery and performance of this Agreement
and each other Loan Document to which it is a party and this Agreement and each other Loan Document
to which it is a party has been duly executed and delivered by each Pledgor and constitutes the
legal, valid and binding obligation of each Pledgor with respect thereto, enforceable against each
Pledgor in accordance with its terms, subject to the effects of applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights generally, and general equitable principles (whether considered in a proceeding
in equity or at law). The Pledged Stock pledged hereunder by each Pledgor is listed on Schedule 3
(Pledged Collateral) and constitutes that percentage of
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the issued and outstanding equity of all classes of each issuer thereof as set forth on
Schedule 3 (Pledged Collateral).
(b) All of the Pledged Stock has been duly authorized, validly issued and is fully paid and
nonassessable.
(c) All of the Pledged Stock constitutes the legal, valid and binding obligation of the
obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors’ rights generally, and general equitable principles
(whether considered in a proceeding in equity or at law).
(d) All Pledged Collateral pledged by the Pledgors, consisting of Certificated Securities or
Instruments has been delivered to the Lender in accordance with Section 4.4(a) (Pledged
Collateral).
(e) Other than Pledged Stock pledged by the Pledgors constituting General Intangibles, there
is no Pledged Collateral that the Obligors have not delivered into the possession of the Lender.
The execution, delivery and performance by each Pledgor of this Agreement and each other Loan
Document to which it is a party do not violate any statute, rule, regulation, order or other law
binding upon that Pledgor or its property or conflict with the Constituent Documents of that
Pledgor or any issuer of the Collateral or any agreement or other document to which that Pledgor is
a party or by which it or its property is bound.
ARTICLE IV COVENANTS
Each Pledgor agrees with the Lender to the following, as long as any Secured Obligation
remains outstanding and, in each case, unless the Lender otherwise consents in writing (for itself
and its property only):
Section 4.1 Generally
Each Pledgor shall (a) not use or permit its Collateral to be used unlawfully or in violation
of any provision of this Agreement, any other Loan Document, any related document, any requirement
of applicable law or any policy of insurance covering the Collateral, (b) not enter into any
agreement or undertaking restricting the right or ability of any Pledgor or the Lender to sell,
assign or transfer any Collateral and (c) promptly notify the Lender of its entry into any
agreement or assumption of undertaking that restricts the ability to sell, assign or transfer any
Collateral.
Section 4.2 Maintenance of Perfected Security Interest; Further Documentation
(a) Each Pledgor shall maintain each security interest created by this Agreement as a
perfected security interest having at least the priority described in Section 3.2 (Perfection and
Priority) and Section 2.2 (Grant of Security Interest in Collateral) and shall defend such security
interest and such priority against the claims and demands of all Persons.
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(b) Each Pledgor shall furnish to the Lender from time to time statements and schedules
further identifying and describing the Collateral and such other reports in connection with the
Collateral as the Lender may reasonably request, all in reasonable detail and in form and substance
satisfactory to the Lender.
(c) At any time and from time to time, upon the written request of the Lender, and at the sole
expense of the Pledgors, each Pledgor shall promptly and duly execute and deliver, and have
recorded, such further instruments and documents and take such further action as the Lender may
reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement
and of the rights and powers herein granted, including the filing of any financing or continuation
statement under the UCC (or other similar laws) in effect in any jurisdiction with respect to the
security interest created hereby and the execution and delivery of deposit account control
agreements and securities account control agreements.
Section 4.3 Changes in Locations, Name, Etc.
(a) No Pledgor shall do any of the following:
(i) change its jurisdiction of organization or its location, in each case from that
referred to in Section 3.3 (Jurisdiction of Organization; Chief Executive Office); or
(ii) change its legal name or organizational identification number, if any, or
corporation, limited liability company or other organizational structure to such an extent
that any financing statement filed in connection with this Agreement would become
misleading.
(b) Each Pledgor shall keep and maintain at its own cost and expense satisfactory and complete
records of its Collateral, including a record of all payments received and all credits granted with
respect to the Collateral and all other dealings with the Collateral.
Section 4.4 Pledged Collateral
(a) Each Pledgor shall deliver to the Lender, all certificates and Instruments representing or
evidencing any of its Pledged Collateral, whether now existing or hereafter acquired, in suitable
form for transfer by delivery or, as applicable, accompanied by the Pledgor’s endorsement, where
necessary, or duly executed instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to the Lender, or such other documentation acceptable to the
Lender. Upon the occurrence and during the continuance of an Event of Default, the Lender shall
have the right, at any time in its discretion and without notice to any of the Pledgors, to
irrevocably transfer to or to register in its name or in the name of its nominees any Pledged
Collateral. The Lender shall have the right at any time to exchange any certificate or instrument
representing or evidencing any Pledged Collateral for certificates or instruments of smaller or
larger denominations.
(b) Except as provided in Article V (Remedial Provisions) or the Stock Purchase Agreement,
the Pledgors shall be entitled to receive any cash dividend paid in respect of their respective
Pledged Collateral (other than liquidating or dissolution dividends), provided such
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dividend is declared and paid in compliance with all applicable provisions of the Stock
Purchase Agreement and not in contravention of any of the provisions or the Stock Purchase
Agreement. Any sums paid upon or in respect of any Pledged Collateral upon the liquidation or
dissolution of any issuer of any Pledged Collateral, any distribution of capital made on or in
respect of any Pledged Collateral or any property distributed upon or with respect to any Pledged
Collateral pursuant to the recapitalization or reclassification of the capital of any issuer of
Pledged Collateral or pursuant to the reorganization thereof shall, unless otherwise subject to a
perfected security interest in favor of the Lender, be delivered to the Lender to be held by it
hereunder as additional collateral security for the Secured Obligations. If any sum of money or
property so paid or distributed in respect of any Pledged Collateral shall be received by any
Pledgor, that Pledgor shall, until such money or property is paid or delivered to the Lender, hold
such money or property in trust for the Lender, segregated from other funds of that Pledgor, as
additional security for the Secured Obligations.
(c) Except as provided in Article V (Remedial Provisions) or the Stock Purchase Agreement,
each Pledgor shall be entitled to exercise all voting, consent and corporate, partnership, limited
liability company and similar rights with respect to its Pledged Collateral; provided, however,
that no vote shall be cast, consent given or right exercised or other action taken by any Pledgor
that would impair the Collateral, result in any violation of any provision of the Stock Purchase
Agreement, this Agreement or any other Loan Document. No Pledgor shall enable or permit any issuer
of Pledged Collateral to issue any Stock or other equity Securities of any nature or to issue any
other securities convertible into or granting the right to purchase or exchange for any Stock or
other equity Securities of any nature of any issuer of Pledged Collateral.
(d) No Pledgor shall grant “control” (within the meaning of such term under Article 9-106 of
the UCC) over any Collateral to any Person other than the Lender.
(e) If any Pledgor is a holder of any Stock or Stock Equivalent in any Person that is an
issuer of Stock or Stock Equivalents to be pledged to the Lender under the Stock Purchase
Agreement, that Pledgor consents to (i) the exercise of the rights granted to the Lender hereunder
(including those described in Section 5.2 (Pledged Collateral)) or under such pledges, and (ii) the
pledge by each other Pledgor, pursuant to the terms hereof or the Stock Purchase Agreement, of the
Pledged Stock in such Person and to the transfer of such Pledged Stock to the Lender or its nominee
and to the substitution of the Lender or its nominee as a holder of such Pledged Stock with all the
rights, powers and duties of other holders of Pledged Stock of the same class and, if the Pledgor
having pledged such Pledged Stock hereunder had any right, power or duty at the time of such pledge
or at the time of such substitution beyond that of such other holders, with all such additional
rights, powers and duties. Each Pledgor agrees to execute and deliver to the Lender such
certificates, agreements and other documents as may be necessary to evidence, formalize or
otherwise give effect to the consents given in this clause (e).
(f) No Pledgor shall, without the consent of the Lender, agree to any amendment of any
Constituent Document that in any way adversely affects the perfection of the security interest of
the Lender in the Pledged Collateral pledged by that Pledgor hereunder, including any amendment
electing to treat any membership interest or partnership interest that is part of the
8
Pledged Collateral as a “security” under Section 8-103 of the UCC, or any election to turn any
previously uncertificated Stock that is part of the Pledged Collateral into certificated Stock.
Section 4.5 Payment of Obligations
Each Pledgor shall pay and discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as well as all claims of
any kind against or with respect to the Collateral.
ARTICLE V REMEDIAL PROVISIONS
Section 5.1 Code and Other Remedies
During the continuance of an Event of Default, the Lender may exercise, in addition to all
other rights and remedies granted to it in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Secured Obligations, all rights and remedies of a secured
party under the UCC or any other applicable law. Without limiting the generality of the foregoing,
the Lender, without demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or upon any Pledgor or
any other Person (all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and realize upon any
Collateral, and may forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver any Collateral (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, at any exchange, broker’s board or office of the Lender
or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of any credit risk. The
Lender shall have the right upon any such public sale or sales, and, to the extent permitted by the
UCC and other applicable law, upon any such private sale or sales, to purchase the whole or any
part of the Collateral so sold, free of any right or equity of redemption of any Pledgor, which
right or equity is hereby waived and released. The Lender shall apply the net proceeds of any
action taken by it pursuant to this Section 5.1, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith or incidental to the care or safekeeping of any
Collateral or in any way relating to the Collateral or the rights of the Lender, including
reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Secured
Obligations, in such order as the Lender shall prescribe, and only after such application and after
the payment by the Lender of any other amount required by any provision of law, need the Lender
account for the surplus, if any, to the Pledgors. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH
PLEDGOR WAIVES ALL CLAIMS, DAMAGES AND DEMANDS IT MAY ACQUIRE AGAINST THE LENDER ARISING OUT OF THE
EXERCISE BY THE LENDER OF ANY RIGHTS HEREUNDER EXCEPT TO THE EXTENT SUCH LIABILITY IS DETERMINED IN
A FINAL, NON-APPEALABLE JUDGMENT IN A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY
FROM SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be deemed reasonable
and proper if given at least 10 days before such sale or other disposition.
9
Section 5.2 Pledged Collateral
(a) During the continuance of an Event of Default, upon notice by the Lender to the Pledgors,
(i) the Lender shall have the right to receive any Proceeds of the Pledged Collateral and make
application thereof to the Secured Obligations in the order determined by the Lender and (ii) the
Lender or its nominee may exercise (A) any voting, consent, corporate and other right pertaining to
the Pledged Collateral at any meeting of shareholders, partners or members, as the case may be, of
the relevant issuer or issuers of Pledged Collateral or otherwise and (B) any right of conversion,
exchange and subscription and any other right, privilege or option pertaining to the Pledged
Collateral as if it were the absolute owner thereof (including the right to exchange at its
discretion any of the Pledged Collateral upon the merger, amalgamation, consolidation,
reorganization, recapitalization or other material change in the corporate, limited liability or
partnership structure of any issuer of Pledged Stock, the right to deposit and deliver any Pledged
Collateral with any committee, depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as the Lender may determine), all without liability except to
account for property actually received by it; provided, however, that the Lender shall have no duty
to any of the Pledgors to exercise any such right, privilege or option and shall not be responsible
for any failure to do so or delay in so doing.
(b) In order to permit the Lender to exercise the voting and other consensual rights that it
may be entitled to exercise pursuant hereto and to receive all dividends and other distributions
that it may be entitled to receive hereunder, (i) each Pledgor shall promptly execute and deliver
(or cause to be executed and delivered) to the Lender all such proxies, dividend payment orders and
other instruments as the Lender may from time to time reasonably request and (ii) without limiting
the effect of clause (i) above, each Pledgor hereby grants to the Lender an irrevocable proxy to
vote all or any part of the Pledged Collateral and to exercise all other rights, powers, privileges
and remedies to which a holder of the Pledged Collateral would be entitled (including giving or
withholding written consents of shareholders, partners or members, as the case may be, calling
special meetings of shareholders, partners or members, as the case may be, and voting at such
meetings), which proxy shall be effective, automatically and without the necessity of any action
(including any transfer of any Pledged Collateral on the record books of the issuer thereof) by any
other person (including the issuer of such Pledged Collateral or any officer or agent thereof),
during the continuance of an Event of Default and which proxy shall only terminate upon the payment
in full of the Secured Obligations.
(c) Each Pledgor hereby expressly authorizes and instructs each issuer of any Pledged
Collateral pledged hereunder by that Pledgor to (i) comply with any instruction received by it from
the Lender in writing that (A) states that an Event of Default has occurred and is continuing and
(B) is otherwise in accordance with the terms of this Agreement, without any other or further
instructions from that Pledgor, and each Pledgor agrees that such issuer shall be fully protected
in so complying and (ii) unless otherwise expressly permitted hereby, pay any dividend or other
payment with respect to such Pledged Collateral directly to the Lender.
Section 5.3 Registration Rights
(a) Each Pledgor recognizes that the Lender may be unable to effect a public sale of any
Pledged Collateral by reason of certain prohibitions contained in the Securities Act and
10
applicable state securities laws or otherwise or may determine that a public sale is
impracticable or not commercially reasonable and, accordingly, may resort to one or more private
sales thereof to a restricted group of purchasers that shall be obliged to agree, among other
things, to acquire such securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Pledgor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Lender shall be under no obligation to delay a sale
of any Pledged Collateral for the period of time necessary to permit the issuer thereof to register
such securities for public sale under the Securities Act, or under applicable state securities
laws, even if such issuer would agree to do so.
(b) Each Pledgor agrees to use its best efforts to do or cause to be done all such other acts
as may be necessary to make such sale or sales of all or any portion of the Pledged Collateral
pursuant to this Section 5.3 valid and binding and in compliance with all other applicable
requirements of law; provided that no Pledgor shall be required by the terms of this Agreement to
make any kind of filing under the Securities Act, the Exchange Act or any state securities law if
the Lender, in its sole discretion, determines that a private sale is practicable and commercially
reasonable. Each Pledgor further agrees that a breach of any covenant contained in this Section
5.3 will cause irreparable injury to the Lender, that the Lender has no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant contained in this
Section 5.3 shall be specifically enforceable against that Pledgor, and each Pledgor hereby waives
and agrees, to the extent permitted by law, not to assert any defense against an action for
specific performance of such covenants except for a defense that no Event of Default has occurred.
Section 5.4 Deficiency
The Pledgors shall remain jointly and severally liable for any deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to pay the Secured Obligations and
the reasonable fees and disbursements of any attorney employed by the Lender to collect such
deficiency.
Section 5.5 Waivers
Each Pledgor hereby waives any and all rights that it may otherwise have (whether any such
right is contractual or exists pursuant to the articles of incorporation or bylaws of any relevant
entity or under applicable law) that would breach this Agreement or interfere with the exercise by
the Lender of any rights or remedies granted to it pursuant to this Agreement.
ARTICLE VI THE LENDER
Section 6.1 Lender’s Appointment as Attorney-in-Fact
(a) Each Pledgor hereby irrevocably constitutes and appoints the Lender and any officer or
agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of that Pledgor and in the name of that
Pledgor or in its own name, for the purpose of carrying out the terms of this Agreement,
11
to take any appropriate action and to execute any document or instrument that may be necessary
or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of
the foregoing, each Pledgor hereby gives the Lender the power and right, on behalf of that Pledgor,
without notice to or assent by that Pledgor, to do any of the following:
(i) in the name of that Pledgor or its own name, or otherwise, take possession of and
indorse and collect any check, draft, note, acceptance or other instrument for the payment
of moneys due under any account or General Intangible or with respect to any other
Collateral and file any claim or take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Lender for the purpose of collecting any such
moneys due under any account or General Intangible or with respect to any other Collateral
whenever payable;
(ii) pay or discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repair or pay any insurance called for by the terms of this Agreement
(including all or any part of the premiums therefor and the costs thereof);
(iii) execute, in connection with any sale provided for in Section 5.1 (Code and Other
Remedies) or 5.3 (Registration Rights), any endorsement, assignment or other instrument of
conveyance or transfer with respect to the Collateral; or
(iv) (A) direct any party liable for any payment under any Collateral to make payment
of any moneys due or to become due thereunder directly to the Lender or as the Lender shall
direct, (B) ask or demand for, collect, and receive payment of and receipt for, any moneys,
claims and other amounts due or to become due at any time in respect of or arising out of
any Collateral, (C) sign and indorse any invoice, draft against debtors, assignment,
verification, notice and other document in connection with any Collateral, (D) commence and
prosecute any suit, action or proceeding at law or in equity in any court of competent
jurisdiction to collect any Collateral and to enforce any other right in respect of any
Collateral, (E) defend any suit, action or proceeding brought against that Pledgor with
respect to any Collateral, (F) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, give such discharges or releases as the Lender may
deem appropriate, and (G) generally, sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any Collateral as fully and completely as though the
Lender were the absolute owner thereof for all purposes, and do, at the Lender’s option and
the Pledgors’ expense, at any time, or from time to time, all acts and things that the
Lender deems necessary to protect, preserve or realize upon the Collateral and the Lender’s
security interests therein and to effect the intent of this Agreement, all as fully and
effectively as that Pledgor might do.
Anything in this clause (a) to the contrary notwithstanding, the Lender agrees that it shall not
exercise any right under the power of attorney provided for in this clause (a) unless an Event of
Default shall be continuing.
(b) If any Pledgor fails to perform or comply with any of its agreements contained herein, the
Lender, at its option, but without any obligation so to do, may perform or comply, or otherwise
cause performance or compliance, with such agreement.
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(c) The reasonable expenses of the Lender incurred in connection with actions undertaken as
provided in this Section 6.1, together with interest thereon at a rate per annum equal to the rate
per annum at which interest would then be payable on past due principal under the Note, from the
date of payment by the Lender to the date reimbursed by the Pledgors, shall be jointly and
severally payable by the Pledgors to the Lender on demand.
(d) The Pledgors hereby ratify all that said attorneys shall lawfully do or cause to be done
by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated and the security interests
created hereby are released.
Section 6.2 Duty of Lender
The Lender’s sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession shall be to deal with it in the same manner as the Lender deals
with similar property for its own account. Neither the Lender, nor any of its respective officers,
directors, employees or agents shall be liable for failure to demand, collect or realize upon any
Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of any Pledgor or any other Person or to take any other
action whatsoever with regard to any Collateral. The powers conferred on the Lender hereunder are
solely to protect the Lender’s interest in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers, and neither the Lender nor any of its
respective officers, directors, employees or agents shall be responsible to any Pledgor for any act
or failure to act hereunder, except for its own gross negligence or willful misconduct.
Section 6.3 Authorization of Financing Statements
Each Pledgor authorizes the Lender and its affiliates, counsel and other representatives, at
any time and from time to time, to file or record financing statements, amendments to financing
statements, and other filing or recording documents or instruments with respect to the Collateral
in such form and in such offices as the Lender reasonably determines appropriate to perfect the
security interests of the Lender under this Agreement. Each Pledgor hereby also authorizes the
Lender and its affiliates, counsel and other representatives, at any time and from time to time, to
file continuation statements with respect to previously filed financing statements. A photographic
or other reproduction of this Agreement shall be sufficient as a financing statement or other
filing or recording document or instrument for filing or recording in any jurisdiction.
Section 6.4 Authority of Lender
Each Pledgor acknowledges that the rights and responsibilities of the Lender under this
Agreement with respect to any action taken by the Lender or the exercise or non-exercise by the
Lender of any option, voting right, request, judgment or other right or remedy provided for herein
or resulting or arising out of this Agreement shall be conclusively presumed to be acting with full
and valid authority so to act or refrain from acting, and no Pledgor shall be under any obligation,
or entitlement, to make any inquiry respecting such authority.
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ARTICLE VII MISCELLANEOUS
Section 7.1 Amendments in Writing
None of the terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except in a writing signed by the Pledgors and Lender.
Section 7.2 Notices
All notices, requests and demands to or upon the Lender or any Pledgor hereunder shall be
effected in the manner provided for in Section 12.05 (Notices) of the Stock Purchase Agreement.
Section 7.3 No Waiver by Course of Conduct; Cumulative Remedies
The Lender shall not by any act (except by a written instrument pursuant to Section 7.1
(Amendments in Writing)), delay, indulgence, omission or otherwise, be deemed to have waived any
right or remedy hereunder or to have acquiesced in any default or Event of Default. No failure to
exercise, nor any delay in exercising, on the part of the Lender, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. A waiver by the Lender of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy that the Lender would otherwise
have on any future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or remedies provided by
law.
Section 7.4 Successors and Assigns
This Agreement shall be binding upon the successors and assigns of each Pledgor and shall
inure to the benefit of the Lender and its successors and assigns; provided, however, that no
Pledgor may assign, transfer or delegate any of its rights or obligations under this Agreement
without the prior written consent of the Lender. The Lender may transfer or assign this Agreement
or any of its rights hereunder to any third party without the consent of any Obligor (including,
without limitation, to the administrative or collateral agent for any secured credit facility
entered into by the Lender prior to, on or after the date hereof, in connection with the security
arrangements relating thereto), and any such transfer or assignment shall be binding on all of the
Obligors, and any such assignee of the Lender shall be entitled to enforce all the rights of the
Lender hereunder so transferred or assigned to such assignee.
Section 7.5 Counterparts
This Agreement may be executed by one or more of the parties to this Agreement on any number
of separate counterparts (including by telecopy), each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same agreement.
Signature pages may be detached from multiple counterparts and attached to a single counterpart so
that all signature pages are attached to the same document. Delivery of an
14
executed counterpart by telecopy shall be effective as delivery of a manually executed
counterpart.
Section 7.6 Severability
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction.
Section 7.7 Section Headings
The Article and Section titles contained in this Agreement are, and shall be, without
substantive meaning or content of any kind whatsoever and are not part of the agreement of the
parties hereto.
Section 7.8 Entire Agreement
This Agreement together with the other Loan Documents represents the entire agreement of the
parties and supersedes all prior agreements and understandings relating to the subject matter
hereof.
Section 7.9 Governing Law
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT
TO ANY PRINCIPLES OF CONFLICTS OF LAWS THEREOF THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF
ANY OTHER JURISDICTION.
Section 7.10 Reinstatement
Each Pledgor further agrees that, if any payment made by any Loan Party or other Person and
applied to the Secured Obligations is at any time annulled, avoided, set aside, rescinded,
invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or
repaid, or the proceeds of Collateral are required to be returned by the Secured Party to such Loan
Party, its estate, trustee, receiver or any other party, including that Pledgor, under any
bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such
payment or repayment, any Lien or other Collateral securing such liability shall be and remain in
full force and effect, as fully as if such payment had never been made or, if prior thereto the
Lien granted hereby or other Collateral securing such liability hereunder shall have been released
or terminated by virtue of such cancellation or surrender), such Lien or other Collateral shall be
reinstated in full force and effect, and such prior cancellation or surrender shall not diminish,
release, discharge, impair or otherwise affect any Lien or other Collateral securing the
obligations of that Pledgor in respect of the amount of such payment.
15
In witness whereof, each of the undersigned has caused this Pledge and Security
Agreement to be duly executed and delivered as of the date first above written.
| Pledgors: ATLAS CONCRETE INC |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| WILD ROSE HOLDINGS LTD. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| ALBERTA INVESTMENTS INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
Lender
U.S. Concrete, Inc.
By: |
||||
| Name: | ||||
| Title: |
16
Each of the undersigned is an issuer of Pledged Collateral and agrees to be bound by the terms of
this Agreement relating to the Pledged Collateral issued by it and shall comply with such terms
insofar as such terms are applicable to it.
| ALBERTA INVESTMENTS INC |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| ALLIANCE HAULERS INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| ATLAS INVESTMENTS INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| REDI-MIX MANAGEMENT, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| XXXXXX ENTERPRISES MANAGEMENT, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
17
Schedule 1
Filings
Schedule 2
Pledgor Information
| Chief | Principal | |||||||||
| Jurisdiction of | Executive | Place | ||||||||
| Legal Name | Organization | _________ No. | Former Name | Officer | of Business | |||||
Atlas Concrete Inc.
|
Alberta, Canada | |||||||||
Wild Rose Holdings Ltd.
|
New Jersey | |||||||||
Alberta Investments Inc.
|
Texas |
2
Schedule 3
Pledged Collateral
| No. of | Certificate | Percent | Percent | |||||||||||||||
| Owner | Issuer | Class of Stock | Shares | Nos. | Owned | Pledged | ||||||||||||
Atlas Concrete Inc.
|
Alberta Investments Inc. (a Texas corporation) | Series A Preferred Stock | 15 | [___] | 100 | % | 100 | % | ||||||||||
Wild Rose Holdings Ltd.
|
Alberta Investments Inc. (a Texas corporation) | Series B Common Stock | 330 | [___] | 100 | % | 100 | % | ||||||||||
Wild Rose Holdings Ltd.
|
Alliance Haulers, Inc. (a Texas corporation) | Common Stock | 1,000 | [___] | 100 | % | 100 | % | ||||||||||
Alberta Investments Inc.
|
Atlas Investments Inc. (a Nevada corporation) | Common Stock | [___] | [___] | 100 | % | 100 | % | ||||||||||
Alberta Investments Inc.
|
Redi-Mix Management, Inc. (a Texas corporation) | Common Stock | [___] | [___] | 100 | % | 100 | % | ||||||||||
Alberta Investments Inc.
|
Xxxxxx Enterprises Management, Inc. (a Texas corporation) | Common Stock | [___] | [___] | 100 | % | 100 | % | ||||||||||
3