Exhibit 2.9
STOCK PURCHASE AGREEMENT
BY AND AMONG
U.S. CONCRETE, INC.,
B. XXXXXX XXXXXX, AS TRUSTEE UNDER TRUST AGREEMENT DATED FEBRUARY 20, 1986 FOR
B. XXXXXX XXXXXX,
XXXXX X. XXXXXX, AS TRUSTEE UNDER TRUST AGREEMENT DATED FEBRUARY 27, 1990 FOR
XXXXX X. XXXXXX,
B. XXXXXX XXXXXX,
B. XXXXXX XXXXXX, CUSTODIAN UNDER MICHIGAN UNIFORM GIFTS TO MINORS ACT FOR THE
BENEFIT OF XXXXXXX X. XXXXXX,
XXXXXXX X. XXXXX,
XXXXXXX X. XXXXXX, AND
XXXXXXX X. XXXXXX
Dated as of November 5, 1999
TABLE OF CONTENTS
ARTICLE I DEFINITIONS...................................................................................... 1
1.01 DEFINITIONS........................................................................................ 1
1.02 INTERPRETATION..................................................................................... 6
ARTICLE II SALE; PURCHASE PRICE............................................................................ 6
2.01 SALE AND TRANSFER OF COMPANIES SHARES.............................................................. 6
2.02 PURCHASE PRICE..................................................................................... 7
2.03 DELIVERY OF CONSIDERATION.......................................................................... 7
ARTICLE III CLOSING........................................................................................ 7
3.01 CLOSING............................................................................................ 7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.............................................. 7
4.01 DUE ORGANIZATION AND QUALIFICATION................................................................. 8
4.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS........................................................ 8
4.03 CAPITALIZATION AND OWNERSHIP....................................................................... 9
4.04 SUBSIDIARIES....................................................................................... 9
4.05 FINANCIAL STATEMENTS............................................................................... 9
4.06 LIABILITIES AND OBLIGATIONS........................................................................ 11
4.07 ACCOUNTS AND NOTES RECEIVABLE...................................................................... 11
4.08 PROPERTIES AND ASSETS.............................................................................. 12
4.09 MATERIAL CUSTOMERS AND CONTRACTS................................................................... 13
4.10 PERMITS............................................................................................ 14
4.11 ENVIRONMENTAL MATTERS.............................................................................. 15
4.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS................................................... 15
4.13 INSURANCE.......................................................................................... 16
4.14 COMPENSATION; EMPLOYMENT AGREEMENTS................................................................ 16
4.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS; EMPLOYEE POLICIES.................. 17
4.16 EMPLOYEE BENEFIT PLANS............................................................................. 17
4.17 LITIGATION AND COMPLIANCE WITH LAW................................................................. 19
4.18 TAXES.............................................................................................. 20
4.19 ABSENCE OF CHANGES................................................................................. 20
4.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY............................................. 22
4.21 ABSENCE OF CERTAIN BUSINESS PRACTICES.............................................................. 22
4.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS............................................ 22
4.23 INTANGIBLE PROPERTY................................................................................ 22
4.24 CAPITAL EXPENDITURES............................................................................... 22
4.25 INVENTORIES........................................................................................ 22
4.26 NO IMPLIED REPRESENTATIONS......................................................................... 22
4.27 DISCLOSURE......................................................................................... 23
4.29 YEAR 2000 COMPLIANCE............................................................................... 23
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO...................................... 23
5.01 ORGANIZATION....................................................................................... 23
5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS........................................................ 24
5.03 U.S. CONCRETE COMMON STOCK......................................................................... 24
5.04 SEC FILINGS; DISCLOSURE............................................................................ 24
5.05 NO IMPLIED REPRESENTATIONS......................................................................... 24
5.06 DISCLOSURE......................................................................................... 24
ARTICLE VI CERTAIN COVENANTS.............................................................................. 25
6.01 RELEASE FROM GUARANTEES............................................................................ 25
6.02 FUTURE COOPERATION; TAX MATTERS.................................................................... 25
6.03 EXPENSES........................................................................................... 25
6.04 LEGAL OPINION...................................................................................... 25
6.05 EMPLOYMENT AGREEMENTS.............................................................................. 25
6.06 OTHER DOCUMENTS.................................................................................... 25
6.07 REPAYMENT OF RELATED PARTY INDEBTEDNESS............................................................ 25
6.08 STOCK OPTIONS...................................................................................... 26
6.09 SECTION 338(H)(10) ELECTION........................................................................ 26
6.10 WORKING CAPITAL ADJUSTMENT......................................................................... 26
6.11 PRE-CLOSING DISTRIBUTIONS.......................................................................... 26
6.12 LEASE AGREEMENTS................................................................................... 26
ARTICLE VII INDEMNIFICATION............................................................................... 28
7.01 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS......................................................... 28
7.02 INDEMNIFICATION BY U.S. CONCRETE.................................................................... 29
7.03 THIRD PERSON CLAIMS................................................................................. 29
7.04 NON-THIRD PERSON CLAIMS............................................................................. 30
7.05 INDEMNIFICATION DEDUCTIBLE.......................................................................... 30
7.06 INDEMNIFICATION LIMITATION.......................................................................... 30
7.07 INDEMNIFICATION FOR NEGLIGENCE OF INDEMNIFIED PARTY................................................. 30
ARTICLE VIII NONCOMPETITION COVENANTS........................................................................ 31
8.01 PROHIBITED ACTIVITIES............................................................................... 31
8.02 EQUITABLE RELIEF.................................................................................... 32
8.03 REASONABLE RESTRAINT................................................................................ 32
8.04 SEVERABILITY; REFORMATION........................................................................... 32
8.05 MATERIAL AND INDEPENDENT COVENANT................................................................... 32
ARTICLE IX NONDISCLOSURE OF CONFIDENTIAL INFORMATION....................................................... 33
9.01 GENERAL............................................................................................. 33
9.02 EQUITABLE RELIEF.................................................................................... 33
ARTICLE X FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON STOCK............... 33
10.01 COMPLIANCE WITH LAW................................................................................ 33
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10.02 ECONOMIC RISK; SOPHISTICATION; ACCREDITED INVESTORS................................................ 34
10.03 RULE 144 REPORTING................................................................................. 34
10.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES......................................... 34
ARTICLE XI MISCELLANEOUS................................................................................... 35
11.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES.......................................................... 35
11.02 ENTIRE AGREEMENT................................................................................... 35
11.03 COUNTERPARTS....................................................................................... 35
11.04 BROKERS AND AGENTS................................................................................. 36
11.05 NOTICES............................................................................................ 36
11.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................................................... 37
11.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE............................................... 37
11.08 REFORMATION AND SEVERABILITY....................................................................... 37
11.09 SECTION HEADINGS; GENDER........................................................................... 37
11.10 GOVERNING LAW...................................................................................... 38
11.11 DISPUTE RESOLUTION................................................................................. 38
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of November 5,
1999, by and among U.S. Concrete, Inc., a Delaware corporation ("U.S.
Concrete"), and B. Xxxxxx Xxxxxx, as Trustee under the Trust Agreement dated
February 20, 1986 for B. Xxxxxx Xxxxxx, Xxxxx X. Xxxxxx, as Trustee under the
Trust Agreement dated February 27, 1990 for Xxxxx X. Xxxxxx, B. Xxxxxx Xxxxxx,
B. Xxxxxx Xxxxxx, Custodian under the Michigan Uniform Gifts to Minors Act for
the benefit of Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxx and
Xxxxxxx X. Xxxxxx (such individuals, trustees and trusts are collectively
referred to hereinafter as the "Stockholders"), with the Stockholders being the
only stockholders of Fendt Transit Mix, Inc., a Michigan corporation ("Fendt"),
AFTM Corporation, a Michigan corporation ("AFTM"), and Hunter Equipment Company,
a Michigan corporation ("Hunter") (Fendt, AFTM and Hunter are collectively
referred to hereinafter as the "Companies"),.
WHEREAS, the Stockholders are the owners and holders of the issued and
outstanding (i) shares (the "Fendt Shares") of common stock of Fendt, no par
value (the "Fendt Common Stock"), (ii) shares (the "AFTM Shares") of common
stock of AFTM, no par value (the "AFTM Common Stock") and (iii) shares (the
"Hunter Shares") of common stock of Hunter, no par value (the "Hunter Common
Stock") set forth opposite his or her name on Schedule 4.03 (the Fendt Shares,
AFTM Shares and Hunter Shares are collectively referred to herein as the
"Companies Shares"), which Companies Shares in the aggregate constitute one
hundred percent (100%) of the issued and outstanding capital stock of Fendt,
AFTM and Hunter.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. Capitalized terms used in this Agreement shall have the
following meanings:
"Affiliate" of, or "Affiliated" with, a specified person or entity means a
person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the specified person or entity.
"AFTM" has the meaning set forth in the first paragraph of this Agreement.
"AFTM Common Stock" has the meaning set forth in the second paragraph of
this Agreement.
"AFTM Financial Statements" has the meaning set forth in Section 4.05.
"AFTM Interim Balance Sheet" has the meaning set forth in Section 4.05.
"AFTM Interim Financial Statements" has the meaning set forth in Section
4.05.
"AFTM Shares" has the meaning set forth in the second paragraph of this
Agreement.
"AFTM Year-End Financial Statements" has the meaning set forth in Section
4.05.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Balance Sheet Date" has the meaning set forth in Section 4.05.
"Cash" means all cash and cash equivalents of the Companies.
"Closing" has the meaning set forth in ARTICLE III.
"Closing Date" has the meaning set forth in ARTICLE III.
"Code" means the Internal Revenue Code of 1986, as amended.
"Companies" has the meaning set forth in the first paragraph of this
Agreement.
"Companies Common Stock" has the meaning set forth in Section 4.03.
"Companies Shares" has the meaning set forth in the second paragraph of
this Agreement.
"Company" means any of the Companies.
"Competitive Business" means any business that involves the production and
sale of any building material that competes with any building material produced
and sold by any Company, including without limitation, any business that
involves the production and sale of ready-mixed concrete (including truck-mixed
concrete) and other cement mixtures and pre-cast concrete products and any
logical extension of or business activity reasonably related to any of the
foregoing.
"Employee benefit plan" has the meaning set forth in Section 4.16.
"Employee pension benefit plan" has the meaning set forth in Section 4.16.
"Employment Agreements" has the meaning set forth in Section 6.05.
"Encumbrances" means all liens, encumbrances, mortgages, pledges, security
interests, conditional sales agreements, charges, options, preemptive rights,
rights of first refusal, reservations, restrictions or other encumbrances or
defects in title.
"Environmental Laws" means any and all Laws or agreements with any
Governmental Authority relating to (a) the protection, preservation or
restoration of the environment (including, without
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limitation, ambient air, surface water (including water management and runoff),
groundwater, drinking water supply, surface land, subsurface strata, plant and
animal life or any other natural resource) or human health or safety, (b)
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
(including, without limitation, Hazardous Substances) or noxious noise or odor
into the environment or (c) the exposure to, or the use, storage, recycling,
treatment, manufacture, generation, transport, distribution, processing,
handling, labeling, production, removal, release or disposal of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
(including, without limitation, Hazardous Substances), in each case as amended
and as now or hereafter in effect. The term "Environmental Laws" includes,
without limitation, (i) the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA), the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic
Substances Control Act, the Federal Insecticide Fungicide and Rodenticide Act,
the Federal Occupational Safety and Health Act of 1970, the Safe Drinking Water
Act, the Atomic Energy Act and the Hazardous Materials Transportation Act, each
as amended from time to time, and any other Laws now or hereafter relating to
any of the foregoing, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result of, the
presence of, effects of or exposure to any Hazardous Substance.
"ERISA" has the meaning set forth in Section 4.16.
"ERISA Affiliate" has the meaning set forth in Section 4.16.
"Expiration Date" has the meaning set forth in Section 11.06.
"Fendt" has the meaning set forth in the first paragraph of this Agreement.
"Fendt Common Stock" has the meaning set forth in the second paragraph of
this Agreement.
"Fendt Financial Statements" has the meaning set forth in Section 4.05.
"Fendt Interim Balance Sheet" has the meaning set forth in Section 4.05.
"Fendt Interim Financial Statements" has the meaning set forth in Section
4.05.
"Fendt Shares" has the meaning set forth in the second paragraph of this
Agreement.
"Fendt Year-End Financial Statements" has the meaning set forth in Section
4.05.
"Financial Statements" has the meaning set forth in Section 4.05.
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"GAAP" means generally accepted accounting principles as currently applied
by the respective party on a basis consistent with preceding years and
throughout the periods involved.
"Governmental Authority" means any federal, state, local or foreign
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or quasi-
governmental authority.
"Hazardous Substances" means any and all substances presently listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law. The term "Hazardous
Substances" includes, without limitation, any substance to which exposure is
regulated by any Governmental Authority or any Environmental Law including,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial substance
or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos or asbestos containing material, urea formaldehyde foam
insulation, lead or polychlorinated biphenyls.
"Hunter" has the meaning set forth in the first paragraph of this
Agreement.
"Hunter Common Stock" has the meaning set forth in the fourth paragraph of
this Agreement.
"Hunter Financial Statements" has the meaning set forth in Section 4.05.
"Hunter Interim Balance Sheet" has the meaning set forth in Section 4.05.
"Hunter Interim Financial Statements" has the meaning set forth in Section
4.05.
"Hunter Shares" has the meaning set forth in the second paragraph of this
Agreement.
"Hunter Year-End Financial Statements" has the meaning set forth in Section
4.05.
"Incentive Plan" has the meaning set forth in Section 6.07.
"Indemnified Party" has the meaning set forth in Section 7.03.
"Indemnifying Party" has the meaning set forth in Section 7.03.
"Initial Lockup Period" has the meaning set forth in Section 10.04.
"Interim Balance Sheets" has the meaning set forth in Section 4.05.
"Interim Financial Statements" has the meaning set forth in Section 4.05.
"IRCA" has the meaning set forth in Section 4.12.
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"Laws" means any and all federal, state, local or foreign statutes, laws,
ordinances, proclamations, codes, regulations, licenses, permits,
authorizations, rulings, approvals, consents, legal doctrines, published
requirements, orders, decrees, judgments, injunctions and rules of any
Governmental Authority, including, without limitation, those covering
environmental, Tax, energy, safety, health, transportation, bribery, record
keeping, zoning, discrimination, antitrust and wage and hour matters, in each
case as amended and in effect from time to time.
"Listed Agreements" has the meaning set forth in Section 4.09.
"Lockup Periods" has the meaning set forth in Section 10.04.
"Losses" means any and all liabilities, losses, claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, fees, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees and
costs and expenses of investigation), net of (i) income Tax effects with respect
thereto (including, without limitation, income Tax benefits recognized in
connection therewith and income Taxes upon any indemnification recovery thereof)
and (ii) insurance recoveries.
"Material Customers" has the meaning set forth in Section 4.09.
"Noncompete Term" has the meaning set forth in Section 8.01(a).
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Options" has the meaning set forth in Section 6.08.
"Permits" has the meaning set forth in Section 4.10.
"Permitted Encumbrances" means any and all (a) Encumbrances reserved
against in the Interim Balance Sheet, (b) Encumbrances for property or ad
valorem Taxes not yet due and payable or which are being contested in good faith
and by appropriate proceedings if adequate reserves with respect thereto are
maintained on the Companies' books in accordance with GAAP, and (c) obligations
under operating and capital leases described in Schedule 4.09.
"Plan" has the meaning set forth in Section 4.16.
"Qualified Plan" has the meaning set forth in Section 4.16.
"Restricted Shares" has the meaning set forth in Section 10.01.
"Rule 144" means Rule 144 as promulgated under the 1933 Act.
"SEC" means the Securities and Exchange Commission.
5
"Secondary Lockup Period" has the meaning set forth in Section 10.04.
"Section 338(h)(10) Election" has the meaning set forth in Section 6.09.
"Stockholder" means any of the Stockholders.
"Stockholders" has the meaning set forth in the first paragraph of this
Agreement.
"Structures" has the meaning set forth in Section 4.08.
"Taxes" has the meaning set forth in Section 4.18.
"Territory" has the meaning set forth in Section 8.01.
"Third Person" has the meaning set forth in Section 7.03.
"U.S. Concrete" has the meaning set forth in the first paragraph of this
Agreement.
"U.S. Concrete Common Stock" means U.S. Concrete's Common Stock, par value
$.001 per share.
"Year-End Financial Statements" has the meaning set forth in Section 4.05.
"Year 2000 Compliant" has the meaning set forth in Section 4.28.
1.02 INTERPRETATION. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in Section 1.01 and elsewhere in this Agreement
include the plural as well as the singular and vice versa;
(b) all accounting terms not otherwise defined herein have the
meanings ascribed to them in accordance with GAAP; and
(c) the words "herein," "hereof," and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE II
SALE; PURCHASE PRICE
2.01 SALE AND TRANSFER OF COMPANIES SHARES. Subject to the terms and
conditions of this Agreement, the Stockholders shall sell, convey and deliver to
U.S. Concrete, and U.S. Concrete shall purchase and accept from the
Stockholders, all of the right, title and interest of the Stockholders in and to
the Companies Shares.
6
2.02 PURCHASE PRICE. In consideration for the sale of the Companies Shares
owned by the Stockholders to U.S. Concrete, U.S. Concrete shall pay to the
Stockholders at Closing an aggregate purchase price (the "Purchase Price") of
$17,247,308, consisting of (i) $13,797,846 in cash and (ii) an aggregate of
549,715 shares of U.S. Concrete Common Stock. Schedule 2.02 attached hereto
sets forth the portion of the Purchase Price that is to be paid to each
Stockholder.
2.03 DELIVERY OF CONSIDERATION. At the Closing, (a) the Stockholders shall
furnish to U.S. Concrete the certificates representing their Companies Shares,
duly endorsed in blank by each Stockholder or accompanied by duly executed blank
stock powers, and (b) U.S. Concrete shall deliver to each Stockholder his or her
portion of the cash portion of the Purchase Price (by wire transfer of
immediately available funds in accordance with the wiring instructions for such
Stockholder set forth on Schedule 2.02) and a copy of an irrevocable instruction
letter to U.S. Concrete's transfer agent directing that certificates
representing such Stockholder's portion of the U.S. Concrete Common Stock
portion of the Purchase Price be delivered to such Stockholder. Each
Stockholder agrees promptly to cure any deficiencies with respect to the
endorsement of the certificates or other documents of conveyance with respect to
the Companies Shares or with respect to the stock powers accompanying such
stock.
ARTICLE III
CLOSING
3.01 CLOSING. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of U.S. Concrete, 0000
Xxxx Xxx Xxxx., Xxxxx 0000, Xxxxxxx, Xxxxx 00000, concurrently with the
execution of this Agreement or at such other time and date as U.S. Concrete and
the Stockholders may mutually agree, which date is herein referred to as the
"Closing Date."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders, jointly and severally, represent and warrant to U.S.
Concrete as follows:
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4.01 DUE ORGANIZATION AND QUALIFICATION. Each Company is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Michigan and is duly authorized and qualified to do business under all
applicable Laws and to carry on its business in the places and in the manner as
now conducted. Each Company has the requisite power and authority to own, lease
and operate its assets and properties and to carry on its business as such
business is currently being conducted. Schedule 4.01 includes (a)
certificate(s) of existence and good standing for each Company issued by the
appropriate Governmental Authorities of the State of Michigan, (b) a list of all
jurisdictions in which each Company is authorized or qualified to do business
and (c) certificate(s) of qualification or authority to do business (or similar
certificates) for each Company issued by the appropriate Governmental
Authorities of each of the jurisdictions in which each Company is authorized or
qualified to do business. No Company owns, leases or operates any assets or
properties or carries on any business in any jurisdiction that Schedule 4.01
does not list. True, complete and correct copies of the Articles of
Incorporation and Bylaws, each as amended, of each Company are attached hereto
as Schedule 4.01, and no breach of such Articles of Incorporation or Bylaws has
occurred and is continuing. True, complete and correct copies of all stock
records and minute books of each Company have been provided to U.S. Concrete.
4.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) Each Stockholder has the full legal right, power and authority to enter
into this Agreement. The execution, delivery and performance of this Agreement
and the transactions contemplated hereby have been approved. This Agreement has
been duly and validly executed and delivered by each Stockholder, and, assuming
the due authorization, execution and delivery hereof by U.S. Concrete,
constitutes a valid and binding agreement of each Stockholder, enforceable
against each of them in accordance with its terms, subject to (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting or relating to
the enforcement of creditors' rights generally and (b) general equitable
principles.
(b) The execution and delivery of this Agreement by the Stockholders does
not, and the consummation by each Company and the Stockholders of the
transactions contemplated hereby will not, violate or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any Encumbrance
upon any of the properties or assets of any Company under any of the terms,
conditions or provisions of, (i) the Articles of Incorporation or Bylaws of each
Company, (ii) any Law applicable to any Stockholder or any Company or any of the
properties or assets of any Stockholder or any Company, except for circumstances
that taken in the aggregate could not reasonably be expected to have a material
adverse effect on the Companies, or (iii) except as set forth in Schedule 4.02,
any agreement, note, bond, mortgage, indenture, deed of trust, license,
franchise, Permit, concession, lease or other instrument, obligation or
agreement of any kind to which any Stockholder or any Company is now a party or
by which any Company or any of its properties or assets may be bound or
affected.
(c) Except as set forth in Schedule 4.02, no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
Governmental Authority or other person or entity is necessary for the execution
and delivery of this Agreement by the Companies and the Stockholders or
8
the consummation by them of the transactions contemplated hereby. Except as set
forth in Schedule 4.02, none of the contracts or agreements with Material
Customers or contracts providing for purchases or services individually in
excess of $25,000, or in the aggregate in excess of $50,000, or other
agreements, licenses or Permits to which any Company is a party requires notice
to, or the consent or approval of, any Governmental Authority or other person or
entity for the execution and delivery of this Agreement by any Company or any
Stockholder or to the consummation by any Company or any Stockholder of any of
the transactions contemplated hereby to remain in full force and effect
following such transaction.
4.03 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of Fendt
consists solely of 60,000 shares of Fendt Common Stock, of which 1,000 shares
are issued and outstanding. The authorized capital stock of AFTM consists
solely of 60,000 shares of AFTM Common Stock, of which 1,000 shares are issued
and outstanding. The authorized capital stock of Hunter consists solely of
60,000 shares of Hunter Common Stock, of which 1,000 shares are issued and
outstanding. The Fendt Common Stock, AFTM Common Stock and Hunter Common Stock
are collectively referred to herein as the "Companies Common Stock". All of the
issued and outstanding shares of the Companies Common Stocks are owned
beneficially and of record by the Stockholders as set forth in Schedule 4.03.
All of the issued and outstanding shares of the Companies Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable, and were
offered, issued, sold and delivered by the appropriate Company in compliance
with all applicable Laws, including, without limitation, those Laws concerning
the issuance of securities. None of such shares were issued in violation of the
preemptive rights of any past or present stockholder of any Company. Upon
consummation of the transactions contemplated hereby, U.S. Concrete will acquire
good, valid and marketable title to the Companies Shares, free and clear of all
Encumbrances except for those created by U.S. Concrete. Except as set forth in
Schedule 4.03, (a) no shares of the Companies Common Stock are held by any
Company as treasury shares, and (b) no subscription, option, warrant, call,
convertible or exchangeable security, other conversion right or commitment of
any kind exists which obligates any Company to issue any of its capital stock or
the Stockholders to transfer any of the capital stock of any Company.
4.04 SUBSIDIARIES. Except as set forth in Schedule 4.04, the Companies do
not own, of record or beneficially, or control, directly or indirectly, any
capital stock, securities convertible into or exchangeable for capital stock or
any other equity interest in any corporation, association or other business
entity. Except as set forth in Schedule 4.04, no Company is, directly or
indirectly, a participant in any joint venture, limited liability company,
partnership or other noncorporate entity.
4.05 FINANCIAL STATEMENTS.
(a) The Companies have delivered to U.S. Concrete true, complete and
correct copies of the following financial statements:
(i) the reviewed balance sheets of Fendt as of January 31, 1997,
December 31, 1997, and December 31, 1998 and the related reviewed
statements of income and retained earnings for the three-year period ended
December 31, 1998, together with the related notes, schedules and report of
Fendt's independent accountants (such balance sheets, the related
statements of income
9
and retained earnings and the related notes, schedules and reports are
collectively referred to herein as the "Fendt Year-End Financial
Statements");
(ii) the unaudited balance sheet (the "Fendt Interim Balance Sheet")
of Fendt as of July 31, 1999 (the "Balance Sheet Date") and the related
unaudited statements of income and retained earnings for the seven-month
period ended on the Balance Sheet Date, together with the related notes and
schedules (such balance sheet, the related statements income and retained
earnings and the related notes and schedules are collectively referred to
herein as the "Fendt Interim Financial Statements"). The Fendt Year-End
Financial Statements and the Fendt Interim Financial Statements
(collectively, the "Fendt Financial Statements") are attached as Schedule
4.05 to this Agreement;
(iii) the reviewed balance sheets of AFTM as of January 31, 1997,
December 31, 1997, and December 31, 1998 and the related reviewed
statements of income and retained earnings for the three-year period ended
December 31, 1998, together with the related notes, schedules and report of
AFTM's independent accountants (such balance sheets, the related statements
of income and retained earnings and the related notes, schedules and
reports are collectively referred to herein as the "AFTM Year-End Financial
Statements");
(iv) the unaudited balance sheet (the "AFTM Interim Balance Sheet") of
AFTM as of the Balance Sheet Date and the related unaudited statements of
income and retained earnings for the seven-month period ended on the
Balance Sheet Date, together with the related notes and schedules (such
balance sheet, the related statements of income and retained earnings and
the related notes and schedules are referred to herein as the "AFTM Interim
Financial Statements"). The AFTM Year-End Financial Statements and the
AFTM Interim Financial Statements (collectively, the "AFTM Financial
Statements") are attached as Schedule 4.05 to this Agreement;
(v) the compiled balance sheets of Hunter as of December 31, 1996,
1997 and 1998 and the related compiled statements of income and retained
earnings for the three-year period ended December 31, 1998, together with
the report of Hunter's independent accountants (such balance sheets, the
related statements of income and retained earnings and the reports are
collectively referred to herein as the "Hunter Year-End Financial
Statements") (the Fendt Year-End Financial Statements, AFTM Financial
Statements and Hunter Year-End Financial Statements are collectively
referred to herein as the "Year-End Financial Statements"); and
(vi) the unaudited balance sheet (the "Hunter Interim Balance Sheet")
of Hunter as of the Balance Sheet Date (the Fendt Interim Balance Sheet,
AFTM Interim Balance Sheet and Hunter Interim Balance Sheet are
collectively referred to herein as the "Interim Balance Sheets") and the
related unaudited statements of income and retained earnings for the seven-
month period ended on the Balance Sheet Date (such balance sheet, the
related statements of income and retained earnings are referred to herein
as the "Hunter Interim Financial Statements") (the Fendt Interim Financial
Statements, AFTM Interim Financial Statements and Hunter Interim Financial
Statements are collectively referred to herein as the "Interim Financial
Statements"). The AFTM Year-End Financial Statements and the AFTM Interim
Financial Statements (collectively, the
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"AFTM Financial Statements") are attached as Schedule 4.05 to this
Agreement (the Fendt Financial Statements, AFTM Financial Statements and
Hunter Financial Statements are collectively referred to herein as the
"Financial Statements").
(b) Except as set forth in Schedule 4.05, the Financial Statements have
been prepared from the books and records of each Company substantially in
conformity with GAAP and present fairly the financial position and results of
operations of each respective Company as of the dates of such statements and for
the periods covered thereby. The books of account of each Company have been
kept accurately in all material respects in the ordinary course of business, the
transactions entered therein represent bona fide transactions, and the revenues,
expenses, assets and liabilities of each Company have been properly recorded
therein in all material respects.
4.06 LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule 4.06, as
of the Balance Sheet Date the Companies do not have, nor have they incurred
since that date, any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of any nature, except liabilities, obligations or
contingencies (a) that are reflected or accrued or reserved against in the
Financial Statements or reflected in the notes thereto, (b) that are of a nature
not required to be reflected in the Financial Statements and that do not exceed
or reasonably could be expected to exceed $10,000 individually or $25,000 in the
aggregate and (c) that were incurred after the Balance Sheet Date and were
incurred in the ordinary course of business, consistent with past practices.
Schedule 4.06 contains a reasonable estimate by each Company and the
Stockholders of the maximum amount that may be payable with respect to
liabilities which are not fixed. For each such liability for which the amount
is not fixed or is contested, each Company has provided a summary description of
the liability together with copies of all relevant documentation relating
thereto. Schedule 4.06 sets forth each Company's outstanding principal amount
of indebtedness for borrowed money (including overdrafts) as of the date hereof.
Except as set forth in Schedule 4.06, there are no prepayment penalties,
termination fees or other payments triggered by the prepayment or termination of
any loan or indebtedness of any Company.
4.07 ACCOUNTS AND NOTES RECEIVABLE. Schedule 4.07 sets forth an accurate
list of the accounts and notes receivable of each Company as of the Balance
Sheet Date and of those generated between the Balance Sheet Date and the second
business day preceding the Closing Date, including any such amounts which are
not reflected in the Interim Balance Sheet. Receivables from and advances to
employees, the Stockholders and any entities or persons related to or Affiliates
of the Stockholders are separately identified in Schedule 4.07. Schedule 4.07
also sets forth an accurate aging of all accounts and notes receivable of each
Company as of the Balance Sheet Date, showing amounts due in 30-day aging
categories. The trade and other accounts receivable of the Companies, including
without limitation those classified as current assets on the Interim Balance
Sheets, are bona fide receivables, were acquired in the ordinary course of
business, are stated in accordance with GAAP and, in the good faith belief of
the Stockholders, are collectible in the amounts shown on Schedule 4.07, net of
reserves reflected in the Interim Financial Statements with respect to the
accounts receivable as of the Balance Sheet Date, and net of reserves reflected
in the books and records of the Companies (consistent with the methods used in
the Interim Financial Statements) with respect to receivables of the Companies
after the Balance Sheet Date.
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4.08 PROPERTIES AND ASSETS.
(a) Schedule 4.08 sets forth an accurate list of all real and personal
property included in "property and equipment" on the Interim Balance Sheets and
all other tangible assets of the Companies with a book value in excess of
$10,000 (i) owned by the Companies as of the Balance Sheet Date and (ii)
acquired since the Balance Sheet Date. Schedule 4.08 also sets forth an
accurate list of all real and personal property currently leased by the
Companies, and includes complete and correct copies of leases for significant
equipment and for all real property leased by the Companies and descriptions of
all real property (as currently owned or leased by the Companies) on which
plants, buildings, warehouses, workshops, garages and other structures
(collectively, the "Structures") and vehicles used in the operation of the
business of the Companies are situated and, for each of those properties, the
address thereof, the type and approximate square footage of each Structure
located thereon and the use thereof in the business of the Companies. Schedule
4.08 indicates which properties and assets used in the operation of the
businesses of the Companies are currently owned by the Stockholders or
Affiliates of the Companies or the Stockholders. Except as specifically
identified in Schedule 4.08, all of the tangible assets, plants, Structures,
vehicles and other significant machinery and equipment owned or leased by the
Companies listed in Schedule 4.08 are in satisfactory working order and
condition, ordinary wear and tear excepted, are in a commercially satisfactory
state of repair given the use to which they are put, ordinary wear and tear
excepted, and are adequate for the purpose for which they presently are being
used or held for use. Except as specifically described in Schedule 4.08, all
properties and fixed assets used by any Company in its business are either owned
by such Company or leased under agreements identified in Schedule 4.08 and are
affixed only to one or more of the real properties Schedule 4.08 lists. All
leases set forth in Schedule 4.08 are in full force and effect and constitute
valid and binding agreements of the Company that is a party thereto, and to the
knowledge of the Stockholders, the other parties thereto in accordance with
their respective terms, and all amounts currently payable thereunder have been
paid. No Company that is a party thereto, and to the knowledge of the
Stockholders, no the other party to the leases set forth in Schedule 4.08 is or
has been asserted to be in default, violation or breach of any such lease, and
no event has occurred and is continuing that constitutes or, with notice or the
passage of time or both, would constitute a default, violation or breach under
any such lease. Each Company has good, valid and marketable title to the
tangible and intangible assets, personal property and real property owned and
used in its business, including, without limitation, the properties identified
in Schedule 4.08 as owned real property (each of which such Company owns in
fee), free and clear of all Encumbrances other than Permitted Encumbrances and
those set forth in Schedule 4.08. Schedule 4.08 contains true, complete and
correct copies of all title reports and title insurance policies received or
owned by the Companies with respect to the real property owned or leased by the
Companies. Schedule 4.08 includes a summary description of all commitments of
each Company involving the opening of new operations, expansion of existing
operations or the acquisition of any real property or existing business, to
which management of such Company has devoted any significant effort or
expenditure in the two-year period prior to the date of the Agreement.
(b) Except as specifically described in Schedule 4.08, all uses of the real
property owned and leased by the Companies conform in all material respects to
all applicable Laws and do not violate any instrument of record or agreement
affecting any such property. Except as specifically described on
12
Schedule 4.08, neither any of the Companies nor the Stockholders have received
any notice or communication from any Governmental Authority or other person or
entity indicating that any condition exists with respect to any of the real
property owned or leased by any Company or with respect to the improvements
thereon that violates any Law, including without limitation, any Environmental
Law. No Companies nor the Stockholders have received from any insurance carrier
insuring or proposing to insure any of the real property owned or leased by any
Company or any other person or entity any notice or other communication noting
any dangerous or illegal condition at any such property or any other condition
at any of such properties otherwise requiring corrective action. Except as
otherwise described on Schedule 4.08, all of the real property owned and leased
by any Company is in satisfactory condition, and all such real properties can be
used for their intended purposes. No Companies nor the Stockholders have
received any notice nor have any knowledge that any of the real property owned
or leased by any Company is or will be affected by any special assessments,
condemnation, eminent domain, off-site improvements to be constructed, change in
grade of public streets or similar proceedings. There is no writ, injunction,
decree, order or judgment outstanding, nor any action, claim, suit or
proceeding, pending or, to the knowledge of the Stockholders, threatened,
relating to the ownership, lease, use, occupancy or operation of any real
property owned or leased by any Company.
(c) There is ingress and egress to and from each of the real properties
owned and leased by any Company of record adequate for the use of such
properties as currently operated by such Company. Neither any of the Companies
nor the Stockholders have received any notice stating that any Company will not
be able to obtain adequate supplies of water to operate its business on any such
properties as presently conducted, or that the provision of utilities violates
any public or private easement. Except as otherwise described on Schedule 4.08,
neither any of the Companies nor the Stockholders have received notice that any
part of any improvements on the real property owned or leased by any Company
(including any of the Structures thereon) encroaches upon any property adjacent
thereto or upon any easement, nor is there any encroachment or overlap upon the
real property owned or leased by any Company. Each of the real property leases
listed in Schedule 4.08 grants the Company that is a party thereto the exclusive
right to use and occupy the demised premises thereunder, and such Company enjoys
peaceful and undisturbed possession under its respective real property leases
listed on Schedule 4.08 for the real property leased by such Company. No person
or entity is in possession of any of the real property owned or leased by any
Company other than such Company. Except as otherwise disclosed on Schedule
4.08, to the knowledge of the Stockholders there are no contracts outstanding
for the sale, exchange, lease or transfer of any of the real property owned or
leased by any Company, or any other right of a third party to acquire any
interest therein.
4.09 MATERIAL CUSTOMERS AND CONTRACTS.
(a) Schedule 4.09 (i) sets forth an accurate list of all customers
representing 5% or more of each Company's revenues for each of the fiscal year
ended in 1998 and the interim period ended on the Balance Sheet Date (the
"Material Customers"), and (ii) sets forth an accurate list and briefly
describes all of the following contracts, warranties, commitments and similar
agreements to which any Company is currently a party or by which it or any of
its properties is bound (collectively, the "Listed Agreements"): (A) all
customer contracts in excess of $10,000, individually, or $25,000 in the
aggregate, (B) contracts with any labor organizations, (C) leases providing for
annual rental payments in excess of $10,000, individually, or $25,000 in the
aggregate, (D) loan agreements, (E) pledge and
13
security agreements, (F) financing agreements, (G) indemnity or guaranty
agreements or obligations, (H) bonds, debentures and indentures, (I) notes, (J)
mortgages, (K) joint venture, partnership or cost-sharing agreements, (L)
options to purchase real or personal property, (M) agreements relating to the
purchase or sale by any Company of assets or securities for more than $10,000,
individually, or $25,000 in the aggregate or which contain, or commit or will
commit such Company for a fixed term, (N) agreements, which, by their terms,
require the consent of any party thereto to the consummation of the transactions
contemplated hereby, (O) voting trust agreements or similar stockholders'
agreements, (P) agreements providing for the purchase from a supplier of all or
substantially all the requirements of the Company of a particular product,
material or service and (Q) any other contracts, warranties, commitments,
understandings, instruments and similar agreements and arrangements which
involve aggregate payments in excess of $10,000 that cannot be canceled in 30
days' or less notice without penalty or premium or any continuing obligation or
liability. Prior to the date hereof, the each Company has made available to U.S.
Concrete true, complete and correct copies of all the Listed Agreements.
(b) Except as set forth in Schedule 4.09, since December 31, 1998 (i) no
Material Customer has canceled or substantially reduced or, to the knowledge of
the Companies and the Stockholders, is threatening to cancel or substantially
reduce its purchases of any Company's products or services, and (ii) no party to
any Listed Agreement is or has been asserted to be in default, violation or
breach of any such Listed Agreement and, to the knowledge of the Stockholders,
no event has occurred and is continuing that constitutes or with notice or the
passage of time or both, would constitute a default, violation or breach under
any such Listed Agreement. The Listed Agreements are in full force and effect
and constitute valid and binding agreements of the parties thereto in accordance
with their respective terms.
(c) Except as set forth in Schedule 4.09, no Company is a party to any
contracts subject to price redetermination or renegotiation. Except to the
extent set forth in Schedule 4.09, no Company is required to provide any bonding
or other financial security arrangements in any material amount in connection
with any transactions with any of its customers or suppliers.
(d) Except as set forth in Schedule 4.09, neither any Company, the
Stockholders nor any officer, employee, stockholder, director, representative or
agent thereof is a party to any contract, arrangement, commitment or
understanding among themselves or with any of such Company's customers for the
repurchase of products, sharing of fees, rebating of charges, bribes, kickbacks
or other similar arrangements.
(e) Except as set forth in Schedule 4.09, neither any of the Companies nor
the Stockholders have any knowledge of any plan or intention of any other party
to any Listed Agreement to exercise any right to cancel or terminate that Listed
Agreement, and no Companies nor the Stockholders have any knowledge of any
condition or state of facts which would justify the exercise of such a right.
4.10 PERMITS. Except as specifically provided otherwise on Schedule 4.10,
Schedule 4.10 contains an accurate list, summary description and copies of all
licenses, franchises, permits, approvals, certificates, transportation
authorities and other governmental authorizations and intangible assets held by
any Company that are material to the conduct of its business, including, without
limitation, permits, licenses and operating authorizations, titles (including
motor vehicle titles and current registrations), fuel
14
permits, franchises, certificates, trademarks, trade names, patents, patent
applications and copyrights owned or held by any Company (collectively, the
"Permits"). Except as specifically provided in Schedule 4.10, the Permits are
valid, and no Company has received any written notice that any Governmental
Authority intends to cancel, terminate or not renew any such Permit. Except as
specifically provided in Schedule 4.10, the Permits are all the permits,
licenses, operating authorizations, franchises, approvals, certificates,
transportation authorities and other governmental authorizations and intangible
assets that are required by Law for the operation of the businesses of the
Companies as conducted at the Balance Sheet Date and the ownership of the assets
and properties of the Companies. Except as specifically provided in Schedule
4.10, each Company has conducted and is conducting its business in substantial
compliance with the requirements, standards, criteria and conditions set forth
in the Permits, as well as the applicable orders, approvals and variances
related thereto, and is not in violation of any of the foregoing. Except as
specifically provided in Schedule 4.10, the transactions contemplated by this
Agreement will not result in a default under, a breach or violation of, a
termination of, or adversely affect the rights and benefits afforded to the
Companies by, any Permits.
4.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 4.11, (a)
each Company has complied with and is in compliance with all Environmental Laws,
(b) each Company has obtained and complied with all necessary permits, licenses,
authorizations and other approvals necessary to treat, transport, store, dispose
of and otherwise handle Hazardous Substances and has reported, to the extent
required by all Environmental Laws, all past and present sites owned or operated
by such Company where Hazardous Substances have been treated, stored, disposed
of or otherwise handled, (c) there have been no "releases" or threats of
"releases" (as defined in any Environmental Laws) at, from, in, to, under or on
any property currently or previously owned or operated by any Company at any
time during the period that any Company owned or operated any such property, (d)
there is no on-site or off-site location to which any Company has transported or
disposed of Hazardous Substances or arranged for the transportation or disposal
of Hazardous Substances which is the subject of any federal, state, local or
foreign enforcement action or any other known investigation that arose out of
any action or inaction that occurred on or after any Company's respective date
of incorporation and which could lead to any claim against any Company or U.S.
Concrete for any clean-up cost, remedial work, damage to natural resources or
personal injury, including, but not limited to, any claim under any
Environmental Law and (e) no Company has any contingent liability in connection
with any release or disposal of any Hazardous Substance into the environment
occurring on or after its respective date of incorporation. None of the past or
present sites owned or operated by any Company is currently or has ever been
designated as a treatment, storage and/or disposal facility, nor has any such
facility ever applied for a permit, license, authorization or other approval
designating it as a treatment, storage and/or disposal facility, under any
Environmental Law. The Companies have provided U.S. Concrete with copies (or,
if not available, accurate written summaries) of all environmental
investigations, studies, audits and reviews which are in the possession, of any
Company respecting any facility site or other property previously or presently
owned or operated by any Company.
4.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS.
(a) Except as set forth in Schedule 4.12, no Company is bound by or subject
to any arrangement with any labor union. Except as set forth in Schedule 4.12,
no employees of the Companies are represented by any labor union or covered by
any collective bargaining agreement nor, to the
15
Companies' or the Stockholders' knowledge, is any campaign to establish such
representation in progress nor has there been any campaign to establish such
representation within the last three years. There is no pending or, to the
Companies' or the Stockholders' knowledge, threatened labor dispute involving
any Company and any group of its employees nor has any Company experienced any
significant labor interruptions over the past five years. No Company nor the
Stockholders have any knowledge of any significant issues or problems in
connection with the relationship of such Company with its employees. Each
Company considers its relationship with its employees to be good.
(b) Except as set forth in Schedule 4.12, (i) there is no unfair labor
practice charge or complaint pending or, to the knowledge of the Companies or
the Stockholders, threatened against or otherwise affecting any Company, (ii) no
action, suit, complaint, charge, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority brought by or on behalf of
any employee, prospective employee, former employee, retiree, labor organization
or other representative of any Company's employees is pending or threatened
against such Company, (iii) no grievance is pending or, to the knowledge of the
Stockholders, threatened against any Company, (iv) to the knowledge of the
Stockholders, no Company is a party to, or otherwise bound by, any consent
decree with, or citation by, any Governmental Authority relating to employees or
employment practices, (v) each Company has paid in full to, or accrued in its
financial books and records, all employees of such Company all wages, salaries,
commissions, bonuses, benefits and other compensation due to such employees or
otherwise arising under any policy, practice, agreement, plan, program, statute
or other Law and (vi) each Company is in substantial compliance with its
obligations pursuant to the Worker Adjustment and Retraining Notification Act of
1988, and all other notification and bargaining obligations arising under any
collective bargaining agreement, statute or otherwise.
(c) Except as set forth in Schedule 4.12, all employees of each Company are
(i) citizens of the United States or (ii) not citizens of the United States,
but, in accordance with the Immigration Reform and Control Act of 1986 ("IRCA")
and other applicable Laws are either (A) immigrants authorized to work in the
United States or (B) nonimmigrants authorized to work in the United States for
such Company in their specific jobs.
4.13 INSURANCE. Schedule 4.13 sets forth an accurate list as of the
Balance Sheet Date of (a) all insurance policies carried by each Company, copies
of which are attached as Schedule 4.13, (b) all insurance loss runs or workmen's
compensation claims received for the past three policy years, and (c) the
following information with respect to all insurance policies currently carried
by each Company and previously carried by each Company within the last three
years: (i) insurer, (ii) type of policy, (iii) coverage period, and (iv) policy
limits and amount of deductible or loss retention. Except as set forth in
Schedule 4.13, none of such policies are "claims made" policies. The Companies
do not carry environmental pollution insurance. The policies described in
Schedule 4.13 are in full force and effect. Any open claims as of the Closing
Date are recoverable under such policies, except to the extent of any applicable
deductible or loss retention as set forth on Schedule 4.13.
4.14 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 4.14 sets forth an
accurate schedule of all officers, directors and Stockholder employees of each
Company with annual salaries of $50,000 or more, listing the rate of
compensation (and the portions thereof attributable to salary, bonus, benefits
and other compensation, respectively) of each of such persons as of (a) the
Balance Sheet Date
16
and (b) the date hereof. No Company nor the Stockholders have any knowledge
that any of such individuals has any present intention of terminating his or her
employment or association with any Company. Attached to Schedule 4.14 are true,
complete and correct copies of each employment or consulting agreement with any
employee of a Company or any Stockholder. Except as set forth in Schedule 4.14,
no Company is a party to any agreement, nor has it established any plan, policy,
practice or program, requiring it to make a payment or provide any other form of
compensation or benefit or vesting rights to any officer, director, stockholder,
member or employee of such Company or other person performing services for such
Company which would not be payable or provided in the absence of this Agreement
or the consummation of the transactions contemplated hereby, including any
parachute payment under Section 280G of the Code.
4.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS;
EMPLOYEE POLICIES. Schedule 4.15 sets forth all agreements containing covenants
not to compete or solicit employees or to maintain the confidentiality of
information to which any Company or any of the Stockholders is bound or under
which any Company or any of the Stockholders has any rights or obligations.
4.16 EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.16 sets forth an accurate schedule of each "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and all deferred compensation or retirement
funding arrangements, whether formal or informal, that are currently in force or
under which any Company has any current or future obligation or liability or
under which any present or former employee of any Company, or such present or
former employee's dependents or beneficiaries, has any current or future right
to benefits (each such plan and arrangement referred to hereinafter as a
"Plan"), together with true and complete copies of such Plans (other than a
multiemployer plan), arrangements and any trusts related thereto. Except as set
forth in Schedule 4.16, no Company sponsors, maintains or contributes currently,
or sponsored, maintained or contributed at any time during the preceding five
years, to any plan, program, fund or arrangement that constitutes an employee
pension benefit plan. Each Plan other than a multiemployer plan may be
terminated by the respective Company at any time without any liability, cost or
expense, other than costs and expenses that are customary in connection with the
termination of a Plan. No present or past employee of any Company is or was
eligible to participate in any employee benefit plan (i) sponsored, maintained
or contributed to by an ERISA Affiliate currently or at any time in the past or
(ii) under which any ERISA Affiliate has any current or future obligation or
liability (each such plan described in (i) and (ii) of this sentence shall be
referred to hereinafter as an "ERISA Affiliate Plan"). Neither any Company nor
any ERISA Affiliate sponsors or sponsored a single-employer plan insured by the
Pension Benefit Guaranty Corporation. No Company has incurred nor will incur
any liability as a result of any ERISA Affiliate Plan maintained now or in the
past by any ERISA Affiliate. For purposes of this Agreement, the term "employee
pension benefit plan" shall have the meaning given that term in Section 3(2) of
ERISA, the term "ERISA Affiliate" means any corporation or trade or business
under common control with any Company as determined under Section 414(b), (c),
(m) or (o) of the Code and the term "multiemployer plan" shall have the meaning
given that term in Section 4001(a)(3) of ERISA.
17
(b) Each Plan listed in Schedule 4.16 other than a multiemployer plan is in
compliance in all material respects with the applicable provisions of ERISA, the
Code and any other applicable Law. Except as set forth in Schedule 4.16, with
respect to each Plan of the Companies (other than a multiemployer plan), all
reports and other documents required under ERISA or other applicable Law to be
filed with any Governmental Authority, including without limitation all Forms
5500, or required to be distributed to participants or beneficiaries, have been
duly and timely filed or distributed, except for any failures to timely file or
distribute such reports and other documents as would not in the aggregate result
in a material liability to any Company or U.S. Concrete. True and complete
copies of all such reports and other documents with respect to the past five
years for each Plan have been provided to U.S. Concrete. No "accumulated
funding deficiency" (as defined in Section 412(a) of the Code) with respect to
any Plan has been incurred (without regard to any waiver granted under Section
412 of the Code), nor has any funding waiver from the Internal Revenue Service
been received or requested. Except as set forth in Schedule 4.16, each Plan
other than a multiemployer plan that is intended to be "qualified" within the
meaning of Section 401(a) of the Code (a "Qualified Plan") is so qualified and
has been determined by the Internal Revenue Service to be so qualified. To the
extent that any Qualified Plans have not been amended to comply with applicable
requirements of Governmental Authorities, the remedial amendment period
permitting retroactive amendment of these Qualified Plans has not expired and
will not expire within 120 days of after the Closing Date. Except as set forth
in Schedule 4.16, all accrued contribution obligations of each Company with
respect to any Plan have either been fulfilled in their entirety or are fully
reflected in the Financial Statements.
(c) No Plan has incurred or will incur (the foregoing representation being
made to the knowledge of the Companies and the Stockholders with respect only to
any multiemployer plan), and no Company has incurred or will incur, with respect
to any Plan, any liability for excise tax or penalty due to the Internal Revenue
Service. There have been no terminations, partial terminations or
discontinuances of contributions to any Qualified Plan during the preceding five
years without notice to and approval by the Internal Revenue Service and payment
of all obligations and liabilities attributable to such Qualified Plan.
(d) Except as set forth in Schedule 4.16, no Company has made any promises
of retirement or other benefits to employees, except as set forth in the Plans,
and no Company maintains or has established any Plan that is a "welfare benefit
plan" within the meaning of Section 3(1) of ERISA that provides for (i)
continuing benefits or coverage for any participant or any beneficiary of a
participant after such participant's termination of employment, except as may be
required by Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the
Code and similar state Law provisions, and at the expense of the participant or
the beneficiary of the participant, or (ii) retiree medical liabilities. Except
as set forth in Schedule 4.16, no Company maintains, has established or has ever
participated in a multiple employer welfare benefit arrangement as described in
Section 3(40)(A) of ERISA. Except as set forth in Schedule 4.16, no Company has
any current or future obligation or liability with respect to a Plan pursuant to
the provisions of a collective bargaining agreement.
(e) No Company has incurred, nor will it incur as a result of past
activities, any material liability under Title IV of ERISA in connection with
any Plan other than a multiemployer plan. The assets of each Plan other than a
multiemployer plan that are subject to Title IV of ERISA are sufficient to
provide the benefits under such Plan, the payment of which the Pension Benefit
Guaranty Corporation
18
would guarantee if such Plan were terminated, and such assets are also
sufficient to provide all other "benefits liabilities" (as defined in ERISA
Section 4001(a)(16)) due under such Plan upon termination.
(f) No "reportable event" (as defined in Section 4043 of ERISA) has
occurred within the last four years with respect to any Plan (the foregoing
representation being made to the knowledge of the Companies and the Stockholders
with respect only to any multiemployer plan). There are no pending, or to the
Companies' and the Stockholders' knowledge, threatened claims, lawsuits or
actions (other than routine claims for benefits in the ordinary course) asserted
or instituted against, and no Company nor any ERISA Affiliate has knowledge of
any threatened litigation or claims against, the assets of any Plan or its
related trust or against any fiduciary of a Plan with respect to the operation
of such Plan. To the Companies' and the Stockholders' knowledge, there are no
investigations or audits of any Plan by any Governmental Authority currently
pending and there have been no such investigations or audits that have been
concluded that resulted in any liability to any Company that has not been fully
discharged. No Company has participated in any voluntary compliance or closing
agreement programs established with respect to the form or operation of a Plan.
(g) No Company has engaged in any prohibited transaction, within the
meaning of Section 406 of ERISA or Section 4975 of the Code, in connection with
any Plan for which exemption was not available. No person or entity that was
engaged by any Company as an independent contractor during the period beginning
on such Company's date of incorporation and ending on the Closing Date
reasonably can or will be characterized or deemed to be an employee of such
Company under applicable Laws for any purpose whatsoever, including, without
limitation, for purposes of federal, state and local income taxation, workers'
compensation and unemployment insurance and Plan eligibility.
(h) Except as set forth on Schedule 4.16, no Company is, or at any time
during the period beginning on its date of incorporation and ending on the
Closing Date was, obligated to contribute to a multiemployer plan. All
contributions required to be made by any Company to a multiemployer plan have
been timely made and each Company is, and at all times during the period
beginning on its date of incorporation and ending on the Closing Date has been,
in compliance with any obligation it has or has had with respect to its
participation in a multiemployer plan, except for violations which in the
aggregate could not reasonably be expected to have a material adverse effect on
such Company. No Company nor any ERISA Affiliate has made a complete or partial
withdrawal from a multiemployer plan so as to incur withdrawal liability as
defined in Section 4201 of ERISA. Schedule 4.16 states for each multiemployer
plan it lists or should list the Companies' best estimate of the amount of
withdrawal liability that would be incurred if any Company was to make a
complete withdrawal from that multiemployer plan as of the Closing Date.
Neither U.S. Concrete nor any Company will be responsible for any withdrawal or
other liability that may arise or has arisen with respect to any multiemployer
plan for which any ERISA Affiliate contributes, or at any time has contributed,
on behalf of such ERISA Affiliate's employees.
4.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in Schedule
4.17, there are no claims, actions, suits or proceedings, pending or, to the
knowledge of the Companies and the Stockholders, threatened against or affecting
any Company, at law or in equity, or before or by any Governmental Authority
having jurisdiction over such Company. Except as set forth on Schedule 4.17, no
written notice of any claim, action, suit or proceeding, whether pending or
threatened, has been received by any Company and, to the Stockholders'
knowledge, there is no basis therefor. Except to the
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extent set forth in Schedule 4.17, each Company has conducted and is conducting
its business in compliance with all Laws applicable to such Company, its assets
or the operation of its business, except for violations which in the aggregate
could not reasonably be expected to have a material adverse effect on such
Company.
4.18 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, service use, license, payroll,
franchise, transfer and recording taxes, fees and charges, imposed by the United
States or any state, local or foreign government or subdivision or agency
thereof, whether computed on a separate, consolidated, unitary, combined or any
other basis; and such term shall include any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any such taxes,
charges, fees, levies or other assessments. Each Company has timely filed all
requisite federal, state, local and other tax returns for all fiscal periods
ended on or before the Closing, and has duly paid in full or made adequate
provision in the Financial Statements for the payment of all Taxes for all
periods ending at or prior to the Closing Date. Each Company has duly withheld
and paid or remitted all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other person or entity that required withholding under
any applicable Law, including, without limitation, any amounts required to be
withheld or collected with respect to social security, unemployment
compensation, sales or use taxes or workers' compensation. Except for the
Internal Revenue Service audits for Fendt and AFTM for the years ending January
31, 1996 and a notice of a potential audit from the State of Michigan for AFTM,
there have not been during the past three years nor are there currently any
examinations, audits, proceedings, notices, waivers, asserted deficiencies or
disputed valuations in progress or claims against any Company relating to Taxes
for any period or periods prior to and including the Balance Sheet Date and no
notice of any claim for Taxes, whether pending or threatened, has been received.
No Company has granted or been requested to grant any extension of the
limitation period applicable to any claim for Taxes or assessments with respect
to Taxes. No Company is a party to any Tax allocation or sharing agreement or
is otherwise liable or obligated to indemnify any person or entity with respect
to any Taxes. The amounts shown as accruals for Taxes on the Interim Financial
Statements as of the Balance Sheet Date are sufficient for the payment of all
Taxes for all fiscal periods ended on or before that date. True, complete and
correct copies of (a) any tax examinations or audits, (b) extensions of
statutory limitations and (c) the federal, state and local Tax returns of the
Companies for the last three fiscal years have been previously provided to U.S.
Concrete. There are no requests for ruling in respect of any Tax pending
between any Company and any Taxing authority. Each Company has been taxed under
the provisions of Subchapter S of the Code since February 1, 1997. Each Company
currently utilizes the accrual method of accounting for income tax purposes.
Such method of accounting has not changed in the past four years.
4.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
in Schedule 4.19, each Company has conducted its operations in the ordinary
course and there has not been:
(a) any material adverse change in the business, operations, properties,
condition (financial or other), assets, liabilities (contingent or otherwise),
results of operations or prospects of any Company;
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(b) any damage, destruction or loss (whether or not covered by insurance)
materially adversely affecting the assets, properties or business of any
Company;
(c) any change in the authorized capital stock of any Company or in its
outstanding securities or any change in the Stockholders' ownership interests in
any Company or any grant of any options, warrants, calls, conversion rights or
commitments;
(d) except for the pre-Closing distributions contemplated by Section 6.11,
any declaration or payment of any dividend or distribution in respect of the
capital stock or any direct or indirect redemption, purchase or other
acquisition of any of the capital stock of any Company;
(e) except for the pre-Closing distributions contemplated by Section 6.11,
any increase in the compensation payable or to become payable by any Company to
the Stockholders or any of its officers, directors, employees, consultants or
agents, except for ordinary and customary bonuses and salary increases for
employees in accordance with past practice, which bonuses and salary increases
are set forth in Schedule 4.19;
(f) any work interruptions, material labor grievances or claims filed;
(g) any proposed law, regulation or event or condition of any character
materially adversely affecting the assets, properties or business of any
Company;
(h) except for as contemplated by this Agreement or as set forth on
Schedule 4.19, any sale or transfer, or any agreement to sell or transfer, any
material assets, properties or rights of any Company to any person or entity,
including, without limitation, the Stockholders and their Affiliates;
(i) any cancellation, or agreement to cancel, any indebtedness or other
obligation owing to any Company;
(j) any increase in the indebtedness of any Company, other than accounts
payable incurred in the ordinary course of business, consistent with past
practices, or incurred in connection with the transactions contemplated by this
Agreement;
(k) any plan, agreement or arrangement granting any preferential rights to
purchase or acquire any interest in any of the assets, properties or rights of
any Company or requiring consent of any party to the transfer and assignment of
any such assets, properties or rights;
(l) any purchase or acquisition of, or agreement, plan or arrangement to
purchase or acquire, any assets, properties or rights outside of the ordinary
course of any Company's business;
(m) any waiver of any material rights or claims of any Company;
(n) any material breach, amendment or termination of any Listed Agreement,
Permit or other right to which any Company is a party or any of its property is
subject; or
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(o) any other material transaction by any Company outside the ordinary
course of business.
4.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY. Schedule 4.20
sets forth an accurate schedule, as of the date of this Agreement, of (a) the
name of each financial institution or brokerage firm in which any Company has
accounts or safe deposit boxes; (b) the names in which the accounts or boxes are
held; (c) the type of account and the cash, cash equivalents and securities held
in such account as of the second business day prior to the Closing, none of
which assets have been withdrawn from such accounts since such date except for
bona fide business purposes in the ordinary course of the business of such
Company and except for the pre-Closing distributions of Cash contemplated by
Section 6.11; and (d) the name of each person authorized to draw thereon or have
access thereto. Schedule 4.20 also sets forth the name of each person,
corporation, firm or other entity holding a general or special power of attorney
from any Company and a description of the terms thereof.
4.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. No Company nor the
Stockholders nor any of their respective Affiliates has given or offered to give
anything of value to any governmental official, political party or candidate for
government office that was illegal to give or offer to give nor has it otherwise
taken any action which would constitute a violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any similar Law.
4.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth in Schedule 4.22, neither the Stockholders nor any other Affiliate of
any Company owns, directly or indirectly, any interest in, or is an officer,
director, employee or consultant of or otherwise receives remuneration from, any
Competitive Business, lessor, lessee, customer or supplier of any Company.
Except as set forth in Schedule 4.22, no officer or director of the Company nor
the Stockholders have, nor had any interest in any tangible or intangible assets
or property, real or personal, used in or pertaining to the business of any
Company.
4.23 INTANGIBLE PROPERTY. Schedule 4.23 sets forth an accurate list of all
patents, patent applications, trademarks, service marks, technology, licenses,
trade names, copyrights and other intellectual property or proprietary property
rights owned or used by any Company. Each Company owns or possesses, and the
assets of each Company include, sufficient legal rights to use all of such items
without conflict with or infringement of the rights of others.
4.24 CAPITAL EXPENDITURES. Schedule 4.24 sets forth the total amount of
capital expenditures currently budgeted to be incurred by each Company in excess
of $25,000 in the aggregate during the balance of such Company's current fiscal
year.
4.25 INVENTORIES. Except as Schedule 4.25 sets forth: (i) all inventories
of each Company are salable or usable in the ordinary course of business of such
Company; and (ii) no Company depends on any single vendor for its inventories
the loss of which could have a material adverse effect on the business or
financial condition of such Company or during the past five years has sustained
a difficulty material to such Company in obtaining its inventories.
4.26 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of the Stockholders
and each Company that U.S. Concrete is
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not making any representation or warranty whatsoever, express or implied, other
than those representations and warranties of U.S. Concrete expressly set forth
in this Agreement.
4.27 DISCLOSURE. The Stockholders and each Company have fully provided to
U.S. Concrete or its representatives, to the extent reasonably available or
produceable, all material information that U.S. Concrete has requested in
analyzing whether to consummate the transactions contemplated by this Agreement.
No representation or warranty of the Stockholders to U.S. Concrete in this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein, in light of the
circumstances under which they were made, not misleading.
4.28 YEAR 2000 COMPLIANCE. To the knowledge of the Stockholders after
reasonable investigation, all devices, systems, machinery, information
technology, computer software and hardware, and other date sensitive technology
(jointly and severally its "systems") owned or leased or licensed by any Company
and used in its business as presently conducted are Year 2000 Compliant. For
purposes hereof, "Year 2000 Compliant" means that such systems are designed to
be used prior to, during and after the Gregorian calendar year 2000 A.D. and
will operate during each such time period without error relating to date data,
specifically including any error relating to, or the product of, date data which
represents or references different centuries or more than one century.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE
U.S. Concrete represents and warrants to the Stockholders as follows:
5.01 ORGANIZATION. U.S. Concrete is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware, and is
duly authorized and qualified under all applicable Laws to carry on its business
in the places and in the manner now conducted. U.S. Concrete has the requisite
power and authority to own, lease and operate its assets and properties and to
carry on its business as such business is currently being conducted.
5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) U.S. Concrete has the full legal right, power and authority to enter
into this Agreement and the ancillary documents and agreements described herein
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement has been approved by the board of directors of
U.S. Concrete. No additional corporate proceedings on the part of U.S. Concrete
are necessary to authorize the execution and delivery of this Agreement and the
consummation by U.S. Concrete of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by U.S. Concrete,
and, assuming the due authorization, execution and delivery by each Company and
the Stockholders, constitutes a valid and binding agreement of U.S. Concrete,
enforceable against U.S. Concrete in accordance with its terms, subject to (a)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (b)
general equitable principles.
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(b) The execution and delivery of this Agreement by U.S. Concrete does not,
and the consummation by U.S. Concrete of the transactions contemplated hereby
will not, violate or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under any of the terms, conditions or provisions of (i) the Certificate of
Incorporation or By-Laws of U.S. Concrete, (ii) any Law applicable to U.S.
Concrete or any of its properties or assets or (iii) any material note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which U.S. Concrete is now a party or by which U.S. Concrete or any of its
properties or assets may be bound or affected.
(c) Except for such filings as may be required under federal or state
securities Laws, no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any Governmental Authority is necessary
for the execution and delivery of this Agreement by U.S. Concrete or the
consummation by U.S. Concrete of the transactions contemplated hereby.
5.03 U.S. CONCRETE COMMON STOCK. The shares of U.S. Concrete Common Stock
to be issued to the Stockholders pursuant to the transactions contemplated
hereby are duly authorized and, when issued in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable. The issuance
of U.S. Concrete Common Stock pursuant to the transactions contemplated hereby
will transfer to the Stockholders valid title to such shares of U.S. Concrete
Common Stock, free and clear of all Encumbrances, except for any Encumbrances
created by the Stockholders.
5.04 SEC FILINGS; DISCLOSURE. U.S. Concrete has filed with the SEC all
material forms, statements, reports and documents required to be filed by it
prior to the date hereof under each of the 1933 Act and the 1934 Act and the
respective rules and regulations thereunder, (a) all of which, as amended, if
applicable, complied when filed in all material respects with all applicable
requirements of the appropriate Act and the rules and regulations thereunder,
and (b) none of which, as amended, if applicable, contains any untrue statement
of material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made and at the time they were made, not
misleading.
5.05 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary
contained in this Agreement, it is the express understanding of U.S. Concrete
that the Stockholders are not making any representation or warranty whatsoever,
express or implied, other than those representations and warranties of the
Stockholders expressly set forth in this Agreement.
5.06 DISCLOSURE. U.S. Concrete has fully provided the Stockholders or
their representatives with all the information that the Stockholders have
requested in analyzing whether to consummate the transactions contemplated by
this Agreement. None of the information so provided nor any representation or
warranty of U.S. Concrete contained in this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading.
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ARTICLE VI
CERTAIN COVENANTS
6.01 Release From Guarantees. At the Closing, U.S. Concrete shall use its
commercially reasonable efforts to have the Stockholders released from the
personal guarantees of the Companies' indebtedness identified in Schedule 6.01.
To the extent that U.S. Concrete is unable to secure such releases at Closing,
U.S. Concrete shall continue to use its commercially reasonable efforts to
secure such releases after Closing and in any event within 90 days after the
Closing Date. Without limiting the foregoing, U.S. Concrete hereby agrees to
indemnify and defend the Stockholders and hold each Stockholder harmless for any
amounts that such Stockholder is required to pay in connection with the
enforcement of any obligations under such personal guarantees after the Closing,
including without limitation any reasonable attorneys' fees and expenses
incurred in connection therewith.
6.02 FUTURE COOPERATION; TAX MATTERS. The Stockholders and U.S. Concrete
shall each deliver or cause to be delivered to the other following the Closing
such additional instruments as the other may reasonably request for the purpose
of fully carrying out this Agreement. The Stockholders will cooperate and use
their commercially reasonable best efforts to have the present officers,
directors and employees of the Companies cooperate with U.S. Concrete at and
after the Closing in furnishing information, evidence, testimony and other
assistance in connection with any actions, proceedings, arrangements or disputes
of any nature with respect to matters pertaining to all periods prior to the
Closing. In addition, U.S. Concrete will provide the Stockholders with access
to such of its books and records as may be reasonably requested by the
Stockholders in connection with federal, state and local tax matters relating to
periods prior to the Closing. The party requesting cooperation, information or
actions under this Section 6.02 shall reimburse the other party for all
reasonable out-of-pocket costs and expenses paid or incurred in connection
therewith, which costs and expenses shall not, however, include per diem charges
for employees or allocations of overhead charges.
6.03 EXPENSES. U.S. Concrete will pay the fees, expenses and disbursements
of U.S. Concrete and its agents, representatives, accountants and counsel
incurred in connection with the execution, delivery and performance of this
Agreement and any amendments hereto, including the fees and expenses of Xxxxxx
Xxxxxxxx LLP's audit or audit related procedures in connection with the
transactions contemplated hereby. The Stockholders will pay their fees,
expenses and disbursements and those of their and the Companies' agents,
representatives, financial advisors, accountants and counsel incurred in
connection with the execution, delivery and performance of this Agreement and
any amendments hereto and the consummation of the transactions contemplated
hereby, including, without limitation, accounting fees and related expenses
attributable to the final Tax returns of the Companies and the Stockholders for
periods through the Closing. The Stockholders will also pay any costs
associated with business brokers or other advisors engaged by any Stockholder or
any Company, including without limitation the fees and expenses of W.Y. Xxxxxxxx
& Company.
6.04 LEGAL OPINION. At the Closing, the Companies and the Stockholders
shall cause their legal counsel, Xxxxxxxxx Xxxxxx PLLC, to deliver to U.S.
Concrete a legal opinion substantially in the form of Exhibit A to this
Agreement.
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6.05 EMPLOYMENT AND CONSULTING AGREEMENTS. Concurrently with the Closing
under this Agreement, one or more of the Companies shall enter into a mutually
acceptable Employment Agreement with the individual identified on Schedule 6.05
and a mutually acceptable Consulting Agreement with the individual identified on
Schedule 6.05, substantially in the forms of Exhibit B and Exhibit C,
respectively, to this Agreement.
6.06 OTHER DOCUMENTS. At the Closing, U.S. Concrete shall receive the
following additional certificates, instruments and documents:
(a) The stock certificates representing the Companies Shares duly endorsed
in blank by the Stockholders, or accompanied by stock powers duly executed in
blank by the Stockholders, and otherwise in a form acceptable to U.S. Concrete
for transfer on the books of the Companies.
(b) The written resignations of all directors and all officers of each of
the Companies, such resignations to be effective concurrently with the Closing
on the Closing Date.
(c) Releases in form and substance satisfactory to U.S. Concrete executed
by the Stockholders releasing the Companies from any liability or obligation to
the Stockholders.
(d) All of the Companies' books and records, including without limitation,
minute books, corporate charters, by-laws, stock records, bank account records,
computer records and all contracts with third parties.
6.07 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the
execution of this Agreement, (a) the Stockholders shall repay to the Companies
all amounts outstanding as advances to or receivables from the Stockholders,
each of which advances or receivables is specifically reflected in Schedules
4.07, and (b) the Companies shall repay all amounts outstanding under loans to
the Company from the Stockholders, each of which loans to the Companies is
specifically reflected in Schedules 4.06.
6.08 STOCK OPTIONS. U.S. Concrete shall grant nonqualified options to
purchase an aggregate of 50,000 shares of U.S. Concrete Common Stock (the
"Options") as of the Closing Date under U.S. Concrete's 1999 Incentive Plan (the
"Incentive Plan") to certain key employees of the Company other than the
Stockholders, except for Xxxxxxx Xxxxx who shall be granted 30,000 such Options,
all as set forth on Schedule 6.08 in the amounts listed thereon. Schedule 6.08
shall also include the social security number and home address of each
individual listed thereon. Such options shall vest in equal annual increments
for four years, commencing on the first anniversary of the Closing Date.
6.09 SECTION 338(H)(10) ELECTION. At U.S. Concrete's option, each of the
Companies and the Stockholders will join with U.S. Concrete in making an
election under Section 338(h)(10) of the Code (and any corresponding election
under state, local and foreign Tax law) with respect to the purchase and sale of
the Companies Shares pursuant to this Agreement (a "Section 338(h)(10)
Election"). If such election is made, the Stockholders and U.S. Concrete agree
to allocate the modified aggregate deemed sales price in accordance with
Schedule 6.09, which the parties agree is in accordance with Treasury
Regulations Section 1.338(b)-2T. The Stockholders will include any income,
gain, loss, deduction or other Tax item resulting from the Section 338(h)(10)
Election on their Tax returns and shall pay any Tax
26
attributable to such items. The Stockholders shall also pay any Tax imposed on
the Companies attributable to the making of the Section 338(h)(10) Election with
respect to the Companies, including, but not limited to, (a) any Tax imposed
under Section 1374 of the Code, (b) any Tax imposed under Section 1.338(h)(10)-
1(e)(5) of the Treasury Regulations promulgated under the Code or (c) any state,
local or foreign Tax imposed on the Companies' gain, and the Stockholders shall
indemnify U.S. Concrete against any loss, cost or other adverse consequence
arising out of any failure of the Stockholders to pay any such Taxes.
6.10 WORKING CAPITAL ADJUSTMENT. As soon as practicable, and in any event
within 75 days after the Closing Date, U.S. Concrete shall cause to be prepared
and delivered to the Stockholders a balance sheet of the Companies as of the
Closing Date (the "Closing Date Balance Sheet") and a working capital adjustment
schedule (the "Adjustment Schedule") using the same policies and procedures as
those used by the Companies to prepare their May 31, 1999 balance sheet
consistently applied. The Adjustment Schedule will set forth the amount of net
working capital of the Company at the Closing Date (computed by subtracting
current liabilities net of current debt from current assets net of Cash listed
on the Closing Date Balance Sheet) (the "Adjusted Working Capital Amount"). If
the Adjusted Working Capital Amount (the "Adjusted Amount") is less than
$1,449,865, then the Stockholders shall, no later than 15 days after delivery of
the Adjustment Schedule by U.S. Concrete, pay to the Companies the amount by
which $1,449,865 exceeds the Adjusted Amount (the "Shortfall"). If the
Adjusted Amount is greater than $1,449,865, then the Companies shall, no later
than 15 days after delivery of the Adjustment Schedule, pay to the Stockholders,
on a pro rata basis in proportion to their percentage ownership of the Companies
Common Stock outstanding immediately prior to the Closing, the aggregate amount
by which the Adjusted Amount exceeds $1,449,865 (the "Excess"). The Closing
Date Balance Sheet and Adjustment Schedule will be final and binding on the
parties hereto unless, within 15 days following the delivery of the Adjustment
Schedule by U.S. Concrete, the Stockholders notify U.S. Concrete in writing that
the Stockholders disagree with all or any portion of the Closing Date Balance
Sheet and/or the Adjustment Schedule. If the Stockholders and U.S. Concrete
cannot mutually resolve any such disagreement within 15 days after the
expiration of the Stockholders' notice of disagreement, then the Stockholders
and U.S. Concrete shall submit the dispute to a mutually agreeable "Big Five"
independent certified public accountant (the "Accounting Firm") within 10 days
after the end of such 15-day period. If the Stockholders and U.S. Concrete are
unable to agree upon such an accountant within such 10-day period, then the
Stockholders and U.S. Concrete shall each select a "Big Five" accountant and
within five days after their selection, those two accountants shall select a
third "Big Five" accountant, which third accountant shall act as the Accounting
Firm. The Stockholders and U.S. Concrete shall request that the Accounting Firm
audit the Closing Date Balance Sheet and provide a computation of the Adjusted
Working Capital Amount within 30 days thereafter, and this computation will be
final and binding upon the parties hereto and used to compute the Shortfall or
the Excess, as the case may be, the payment of which shall be made within five
days of delivery by U.S. Concrete of the audited Closing Date Balance Sheet.
6.11 PRE-CLOSING DISTRIBUTIONS. Prior to the Closing, the Companies may
have distributed to the Stockholders the Cash and other assets set forth on
Schedule 6.11. Any such distributions shall have been authorized by the
respective Boards of Directors of the Companies prior to the Closing, and the
Companies and the Stockholders shall have used their respective best efforts to
complete such
27
distributions prior to the Closing. Notwithstanding the foregoing, if any such
authorized distributions have not been completed prior to the Closing the
Companies shall use reasonable efforts to complete such authorized distributions
after the Closing. The Stockholders' sole recourse against the Companies with
respect to this Section 6.11 shall be to the assets distributed.
6.12 LEASE AGREEMENTS. Concurrently with the execution of this Agreement,
Fendt and AFTM shall enter into Lease Agreements with Hunter Development
Company, for the properties located in Novi, Michigan and Howell, Michigan,
respectively, substantially in the forms of Exhibit D and Exhibit E,
respectively.
6.13 Interest-Bearing Debt Adjustment. As soon as practicable, and in any
event within 75 days after the Closing Date, U.S. Concrete shall deliver to the
Stockholders a schedule (the "Debt Schedule") which sets forth the amount of the
Company's Interest Bearing Debt as of the Closing Date (the "Closing Date
Interest-Bearing Debt Amount"). If the Closing Date Interest Bearing Debt
Amount is greater than $0, then the Stockholders shall, no later than 15 days
after delivery of the Debt Schedule by U.S. Concrete, pay to the Companies the
amount by which the Closing Date Interest-Bearing Debt Amount exceeds $0.
6.14 Relocation Expenses. The Stockholders covenant and agree that if at
any time within five (5) years after the Closing Date Fendt is required by the
City of Novi, Michigan to move its existing operations from its existing site
having a street address of 00000 Xxxxx Xxxx, Xxxx, Xxxxxxxx 00000, or is
otherwise unable to conduct its existing operations from such site, because such
existing operations constitute a nonconforming use under existing zoning
ordinances or other Laws governing land use, the Stockholders will provide or
make available to Fendt or an Affiliate of Fendt suitable real estate within
twenty (20) miles of the present Fendt site or, in the event Fendt determines in
its sole discretion that it does not desire to be located on such real estate
provided or made available by the Stockholders, Fendt or an Affiliate may lease
or purchase any real estate it deems suitable in its sole discretion within
twenty (20) miles of the present Fendt site, and, if the annual rental cost of
any such land (or 10% of the purchase price for any land purchased by Fendt or
an Affiliate) and establishment of a comparable batch plant, equipment and other
facilities thereon necessary for the continued operation of Fendt's business as
conducted immediately prior to the relocation (such batch plant, equipment and
other facilities amortized on a twenty (20) year straight-line basis) together
exceeds $85,000 per year, the Stockholders will pay to Fendt such excess amount,
not to exceed $50,000 per year for the remainder of such five (5) year period.
ARTICLE VII
INDEMNIFICATION
The Stockholders and U.S. Concrete each make the following covenants:
7.01 General Indemnification by the Stockholders. Subject to Section 7.05
and Section 7.06, the Stockholders covenant and agree that they will jointly and
severally (without any right of indemnification or contribution from the
Companies) indemnify, defend, protect and hold harmless U.S. Concrete and its
officers, directors, employees, stockholders, agents, representatives and
Affiliates (including, without limitation, the Companies), at all times from and
after the date of this Agreement from and against all Losses incurred by any of
such indemnified persons and entities to the extent such
28
Losses result or arise from (a) until the Expiration Date any breach of the
representations and warranties of the Stockholders set forth herein or in the
Schedules attached hereto, (b) any breach or nonfulfillment of any covenant or
agreement on the part of the Stockholders under this Agreement, (c) all income
Taxes payable by the Company for all periods prior to and including the Closing
Date, (d) all transfer and other Taxes arising from the transactions
contemplated by this Agreement, (e) any debt, liability or obligation of, or any
claim, action, suit or proceeding against, All Star Circle Limited Partnership,
a Michigan limited partnership, or (f) the matters set forth on Schedule 7.01,
to the extent they exceed the respective threshold amounts specified on Schedule
7.01.
7.02 INDEMNIFICATION BY U.S. CONCRETE. Subject to Section 7.05 and Section
7.06, U.S. Concrete covenants and agrees that it will indemnify, defend, protect
and hold harmless the Stockholders and their respective agents, representatives,
Affiliates, beneficiaries and heirs and employees at all times from and after
the date of this Agreement from and against all Losses incurred by any of such
indemnified persons to the extent such Losses result or arise from (a) until the
Expiration Date, any breach of the representations and warranties of U.S.
Concrete set forth herein or in the Schedules attached hereto or (b) any breach
or nonfulfillment of any covenant or agreement on the part of U.S. Concrete
under this Agreement.
7.03 THIRD PERSON CLAIMS. Promptly after any party entitled to
indemnification under Sections 7.01 and 7.02 hereof (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person or entity not a party to this Agreement ("Third Person"), of the
commencement of any action or proceeding by a Third Person, which the
Indemnified Party believes in good faith is an indemnifiable claim under this
Agreement, the Indemnified Party shall give to the party obligated to provide
indemnification pursuant to Sections 7.01 or 7.02 hereof (hereinafter the
"Indemnifying Party") written notice of such claim or the commencement of such
action or proceeding. Such notice shall state the nature and the basis of such
claim and a reasonable estimate of the amount thereof. The Indemnifying Party
shall have the right to defend and settle, at its own expense and by its own
counsel reasonably acceptable to the Indemnified Party, any such matter so long
as the Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in all commercially
reasonable respects in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records and other information reasonably
requested by the Indemnifying Party and in the Indemnified Party's possession or
control. After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability, and for
so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability; provided, however, that the Indemnified Party shall
be entitled, at its expense, to participate in the defense of such asserted
liability and the negotiations of the settlement thereof. The Indemnifying
Party shall not settle any such Third Person claim without the consent of the
Indemnified Party, unless the settlement thereof imposes no liability or
obligation on, and includes a complete release from liability of, the
Indemnified Party. If the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person claim and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section with respect to such Third Person claim shall be limited to
the amount
29
so offered in settlement by said Third Person; provided, however, that
notwithstanding the foregoing, the Indemnified Party shall be entitled to refuse
to consent to any such proposed settlement and the Indemnifying Party's
liability hereunder shall not be limited by the amount of the proposed
settlement if such settlement imposes any liability or obligation on, or does
not provide for the complete release of, the Indemnified Party. If, upon
receiving notice, the Indemnifying Party does not timely undertake to defend
such matter to which the Indemnified Party is entitled to indemnification
hereunder, or fails diligently to pursue such defense, the Indemnified Party may
undertake such defense through counsel of its choice, at the cost and expense of
the Indemnifying Party, and the Indemnified Party may settle such matter, in its
discretion, and the Indemnifying Party shall reimburse the Indemnified Party for
the amount paid in such settlement and any other liabilities or expenses
incurred by the Indemnified Party in connection therewith.
7.04 Non-Third Person Claims. In the event that any Indemnified Party
asserts the existence of a claim giving rise to Losses (but excluding claims
resulting from the assertion of liability by Third Persons), such party shall
give written notice to the Indemnifying Party. Such written notice shall state
that it is being given pursuant to this Section 7.04, specify the nature and
amount of the claim asserted, and indicate the date on which such assertion
shall be deemed accepted and the amount of the claim deemed a valid claim (such
date to be established in accordance with the next sentence). If such
Indemnifying Party, within 60 days after the mailing of notice by such
Indemnified Party, shall not give written notice to such Indemnified Party
announcing such Indemnifying Party's intent to contest such assertion of such
Indemnified Party, such assertion shall be deemed accepted and the amount of
such claim shall be deemed a valid claim. In the event, however, that such
Indemnifying Party contests such assertion of a claim by giving such written
notice to the Indemnified Party within said period, then the parties shall act
in good faith to reach agreement regarding such claim.
7.05 INDEMNIFICATION DEDUCTIBLE. Except as specifically provided in
Schedule 7.05, neither the Stockholders, on the one hand, nor U.S. Concrete, on
the other hand, shall be entitled to indemnification from the other under the
provisions of Section 7.01(a) or Section 7.02(a), as the case may be, until such
time as, and only to the extent that, the claims subject to indemnification by
such other party exceed, in the aggregate $172,473. Notwithstanding the
foregoing, the limitations set forth in this Section 7.05 shall not apply to
fraudulent misrepresentations.
7.06 INDEMNIFICATION LIMITATION. Except as specifically provided in
Schedule 7.06, and subject to Section 7.05, the aggregate indemnification
obligation of the Stockholders under Section 7.01(a) and of U.S. Concrete under
Section 7.02(a) shall be limited to $17,247,308. Notwithstanding the foregoing,
the limitations set forth in this Section 7.06 shall not apply to fraudulent
misrepresentations.
7.07 Indemnification for Negligence of Indemnified Party. THE RIGHTS TO
INDEMNIFICATION UNDER THIS ARTICLE VII INCLUDE RIGHTS TO INDEMNIFICATION FOR THE
RESULTS OF AN INDEMNIFIED PARTY'S ACTUAL OR ALLEGED NEGLIGENCE, IF SUCH
INDEMNIFIED PARTY WOULD OTHERWISE BE ENTITLED TO INDEMNIFICATION HEREUNDER.
30
ARTICLE VIII
NONCOMPETITION COVENANTS
8.01 PROHIBITED ACTIVITIES.
(a) For no additional consideration, except as set forth in Schedule 8.01
each Stockholder will not for five years following the Closing Date and, if any
Stockholder is party to an Employment Agreement or Consulting Agreement, if
longer, one year following such Stockholder's termination of employment with or
engagement by any Company or its Affiliates (with the applicable period being
herein referred to as the "Noncompete Term"), directly or indirectly, for
himself or herself or on behalf of or in conjunction with any other person,
company, partnership, corporation or business or other entity of whatever
nature:
(i) engage, as an officer, director, shareholder, owner, investor,
partner, joint venturer, or in a managerial or advisory capacity, whether
as an employee, independent contractor, consultant or advisor, or as a
sales representative, dealer or distributor, in any Competitive Business
within any Territory surrounding any plant or other operating facility in
which any Company was engaged in business on the date immediately prior to
the Closing Date (for purposes of this ARTICLE VIII, the "Territory"
surrounding any plant or other operating facility will be: (A) the city,
town or village in which that plant or facility is located, (B) the county
or parish in which that plant or facility is located, (C) the counties or
parishes contiguous to the county or parish in which that plant or facility
is located, (D) the area located within 50 miles of that plant or facility,
(E) the area located within 100 miles of that plant or facility and (F) the
area in which that plant or facility regularly provides products or
services at the locations of its customers).
(ii) call upon or otherwise solicit any person, who is, at that time,
an employee or consultant of U.S. Concrete or any Company or any of their
respective subsidiaries, for the purpose or with the intent or effect of
enticing such employee or consultant away from or out of the employ or
contract with U.S. Concrete or any Company or any of their respective
subsidiaries;
(iii) call upon or otherwise solicit any person or entity which is,
at that time, or which has been, within two years prior to that time, a
customer of U.S. Concrete or any Company or any of the subsidiaries of such
parties within the Territory for the purpose of soliciting or selling
services or products in a Competitive Business within the Territory; or
(iv) call upon or otherwise solicit any entity which any Company or
U.S. Concrete has called on in connection with the possible acquisition by
either of them of such entity or of which either of them has made an
acquisition analysis, with the knowledge of that entity's status as an
acquisition candidate of U.S. Concrete, for the purpose of acquiring that
entity or arranging the acquisition of that entity by any person or entity
other than U.S. Concrete.
(b) Notwithstanding the above, Section 8.01(a) shall not be deemed to
prohibit any Stockholder from acquiring, as a passive investor with no
involvement in the operations of the business,
31
not more than one percent of the capital stock of a Competitive Business whose
stock is publicly traded on a national securities exchange, the Nasdaq National
Market or over-the-counter.
8.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to U.S. Concrete as a result of a breach of the foregoing covenant,
because a breach of such covenant would diminish the value of the assets,
properties and business of the Companies being sold pursuant to this Agreement,
and because of the immediate and irreparable damage that could be caused for
which the Companies and/or U.S. Concrete would have no other adequate remedy,
each Stockholder agrees that the foregoing covenant may be enforced against such
Stockholder by injunctions, restraining orders and other equitable actions.
8.03 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this ARTICLE VIII are necessary in terms of time,
activity and territory to protect U.S. Concrete's interest in the assets,
properties and business being acquired pursuant to the terms of this Agreement
and impose a reasonable restraint on the Stockholders in light of the activities
and businesses of the Companies on the date of the execution of this Agreement
and the current plans of the Companies.
8.04 SEVERABILITY; REFORMATION. The covenants in this ARTICLE VIII are
severable and separate, and the unenforceability of any specific covenant shall
not affect the continuing validity and enforceability of any other covenant. In
the event any court of competent jurisdiction shall determine that the scope,
time or territorial restrictions set forth in this ARTICLE VIII are unreasonable
and therefore unenforceable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems reasonable
and this Agreement shall thereby be reformed.
8.05 MATERIAL AND INDEPENDENT COVENANT. The Stockholders acknowledge that
their agreements and the covenants set forth in this ARTICLE VIII are material
conditions to U.S. Concrete's agreement to execute and deliver this Agreement
and to consummate the transactions contemplated hereby and that U.S. Concrete
would not have entered into this Agreement without such covenants. All of the
covenants in this ARTICLE VIII shall be construed as an agreement independent of
any other provision in this Agreement. The existence of any claim or cause of
action by any Stockholder against U.S. Concrete, whether predicated on this
Agreement or otherwise, will not constitute a defense to the enforcement by U.S.
Concrete of any of the covenants of this ARTICLE VIII. It is specifically
agreed that the time period Section 8.01 specifies will be computed in the case
of each Stockholder by excluding from that computation any time during which
that Stockholder is in violation of any provision of Section 8.01. The
covenants this ARTICLE VIII contains will not be affected by any breach of any
other provision hereof by any party hereto.
32
ARTICLE IX
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
9.01 General. Each Stockholder recognizes and acknowledges that he or she
had in the past, currently has, and in the future will have, access to certain
confidential information relating to the businesses of the Companies, including,
without limitation, lists of customers, operational policies, and pricing and
cost policies that are, and following the Closing will be, valuable, special and
unique assets of the Companies and U.S. Concrete. Each Stockholder agrees that
he or she will not use or disclose such confidential information to any person,
firm, corporation, association or other entity for any purpose whatsoever,
except as is required in the course of performing his or her duties, if any, to
any of the Companies and/or U.S. Concrete, unless (a) such information becomes
known to the public generally through no fault of such Stockholder or (b)
disclosure is required by Law, provided that prior to disclosing any information
pursuant to this clause (b) such Stockholder shall give prior written notice
thereof to U.S. Concrete and the Companies and provide U.S. Concrete with the
opportunity to contest such disclosure. In the event of a breach or threatened
breach by any Stockholder of the provisions of this Section, U.S. Concrete shall
be entitled to an injunction restraining such Stockholder from disclosing, in
whole or in part, such confidential information. Nothing herein shall be
construed as prohibiting U.S. Concrete from pursuing any other available remedy
for such breach or threatened breach, including, without limitation, the
recovery of damages.
9.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to U.S. Concrete as a result of the breach of the foregoing covenant,
because a breach of such covenant would diminish the value of the assets,
properties and business of the Companies being sold pursuant to this Agreement,
and because of the immediate and irreparable damage that would be caused for
which the Companies and/or U.S. Concrete would have no other adequate remedy,
each Stockholder agrees that the foregoing covenants may be enforced against
such Stockholder by injunctions, restraining orders and other equitable actions.
ARTICLE X
FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON
STOCK
10.01 Compliance with Law. The Stockholders acknowledge the shares of
U.S. Concrete Common Stock issued in accordance with the terms of this Agreement
(the "Restricted Shares") will not be registered under the 1933 Act and
therefore may not be resold without compliance with the 1933 Act. The
Restricted Shares are being or will be acquired by the Stockholders solely for
their own account, for investment purposes only, and with no present intention
of distributing, selling or otherwise disposing of them in connection with a
distribution. Each Stockholder covenants, warrants and represents that none of
the Restricted Shares held by such Stockholder will be, directly or indirectly,
offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all of the applicable provisions
of the 1933 Act and the rules and regulations of the SEC. Certificates
representing the Restricted Shares shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE NOT ISSUED IN A TRANSACTION
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"),
OR ANY APPLICABLE
33
STATE SECURITIES LAWS. THE SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER
IS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS OR, IN THE OPINION OF COUNSEL TO THE
ISSUER, IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND SUCH LAWS.
10.02 ECONOMIC RISK; SOPHISTICATION; ACCREDITED INVESTORS. Each
Stockholder is able to bear the economic risk of an investment in the Restricted
Shares and can afford to sustain a total loss of such investment. Each
Stockholder has such knowledge and experience in financial and business matters
that he or she is capable of evaluating the merits and risks of the proposed
investment and therefore has the capacity to protect his or her own interests in
connection with the acquisition of the Restricted Shares pursuant hereto. Each
Stockholder represents to U.S. Concrete that he or she is an "accredited
investor," as that term is defined in Regulation D under the 1933 Act. Each
Stockholder or his or her representatives have had an adequate opportunity to
ask questions of, and receive answers from the appropriate officers and
representatives of U.S. Concrete concerning, among other matters, U.S. Concrete,
its management, business, operations and financial condition, its plans for the
operation of its business and potential additional acquisitions, and to obtain
any additional information requested by such Stockholder or his or her
representatives concerning such matters.
10.03 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the SEC that may permit the resale of U.S.
Concrete Common Stock to the public without registration, for a period of two
years after the Closing, U.S. Concrete agrees to use its commercially reasonable
efforts to:
(a) make and keep public information (as such terms are defined in
Rule 144) regarding U.S. Concrete available;
(b) file with the SEC in a timely manner all reports and other
documents required of U.S. Concrete under the 1933 Act and the 1934 Act;
and
(c) furnish to a Stockholder upon written request a written statement
by U.S. Concrete as to its compliance with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, a copy of the most recent annual
or quarterly report of U.S. Concrete, and such other reports and documents
so filed as such Stockholder may reasonably request in availing himself or
herself of any rule or regulation of the SEC allowing such Stockholder to
sell any such shares without registration.
10.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES. The
Stockholders covenant, warrant and represent that (i) none of the Restricted
Shares will be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of, directly or indirectly, during the one-year period
commencing on the Closing Date (the "Initial Lockup Period") and (ii) 50% of the
Restricted Shares will not be offered, sold, assigned, pledged, hypothecated,
34
transferred or otherwise disposed of, directly or indirectly, during the two-
year period commencing on the Closing Date (the "Secondary Lockup Period" and
together with the Initial Lockup Period, the "Lockup Periods") and, after the
applicable Lockup Period, the Restricted Shares may be offered, sold, assigned,
pledged, hypothecated, transferred or otherwise disposed of directly or
indirectly, only after full compliance with all of the applicable provisions of
the 1933 Act and the rules and regulations of the SEC; and, during the
applicable Lockup Period, the Stockholders shall not engage in put, call, short-
sale, hedge, straddle or similar transactions intended to reduce the
Stockholders' risk of owning the Restricted Shares subject to the applicable
Lockup Period. Certificates representing 50% of the Restricted Shares shall
bear the following legend, which shall reflect the Initial Lockup Period, in
addition to the legend under Section 10.01:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL
RESTRICTION ON TRANSFER THAT EXPIRES ON NOVEMBER 5, 2000 AND MAY NOT BE
OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE
PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC.
Certificates representing the remaining 50% of the Restricted Shares shall bear
the following legend, which shall reflect the Secondary Lockup Period, in
addition to the legend under Section 10.01:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL
RESTRICTION ON TRANSFER THAT EXPIRES ON NOVEMBER 5, 2001 AND MAY NOT BE
OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE
PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC.
ARTICLE XI
MISCELLANEOUS
11.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES. This Agreement and the
rights of the parties hereunder may not be assigned (except by operation of Law)
and shall be binding upon and shall inure to the benefit of the parties hereto,
the successors of U.S. Concrete and the Companies, and the heirs and legal
representatives of the Stockholders. Except as provided in ARTICLE VII or in
this Section 11.01, nothing in this Agreement is intended or will be construed
to confer upon or give any person or entity other than the parties hereto any
rights or remedies under or by reason of this Agreement or any transaction
contemplated hereby.
11.02 ENTIRE AGREEMENT. This Agreement (including the Schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders, the
Companies and U.S. Concrete and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement may be
modified or amended only by a written instrument executed by the Stockholders,
the Companies and U.S. Concrete, acting through their respective officers, duly
authorized by their respective Boards of Directors. Any right hereunder may be
waived only by a written instrument executed by the party waiving such right.
11.03 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. Facsimile
transmission of any signed original document and/or retransmission
35
of any signed facsimile transmission will be deemed the same as delivery of an
original. At the request of any party, the parties will confirm facsimile
transmission by signing a duplicate original document.
11.04 BROKERS AND AGENTS. Except for the Stockholders' engagement of W.Y.
Xxxxxxxx and Company, whose fees and expenses are liabilities and obligations of
the Stockholders, each party hereto represents and warrants that it employed no
broker or agent in connection with the transactions contemplated by this
Agreement. Each party agrees to indemnify each other party against all loss,
cost, damages or expense arising out of claims for fees or commissions of
brokers employed or alleged to have been employed by such indemnifying party.
11.05 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested (which will be deemed
given three business days after deposit), or by delivering the same in person to
an officer or agent of such party (which will be deemed given when actually
received), as follows:
If to U.S. Concrete, addressed to it at:
U.S. Concrete, Inc.
0000 Xxxx Xxx Xxxx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Corporate Secretary
If to the Stockholders, addressed as follows:
B. Xxxxxx Xxxxxx, as Trustee under the Trust Agreement
dated February 20, 1986 for B Xxxxxx Xxxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Xxxxx X. Xxxxxx, as Trustee under the Trust Agreement
dated February 27, 1990 for Xxxxx X. Xxxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
B. Xxxxxx Xxxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
B. Xxxxxx Xxxxxx, Custodian under the Michigan Uniform
Gifts to Minors Act for the benefit of Xxxxxxx X.
Xxxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Xxxxxxx X. Xxxxx
0000 Xxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
36
Xxxxxxx X. Xxxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Xxxxxxx X. Xxxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
with a copy (which shall not constitute notice) to:
Xxxxxxxxx Xxxxxx PLLC
Attn: Xxxxxxx X. Xxxxxx, Esq.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
or such other address as any party hereto shall specify pursuant to this Section
11.05 from time to time.
11.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in ARTICLE IV and ARTICLE V shall survive the Closing for a
period of two years from the Closing Date (the "Expiration Date"), except that
the representations and warranties set forth in Sections 4.03, 4.11, 4.16 and
4.18 hereof shall survive until such time as the applicable statute of
limitations period has run, which shall be deemed to be the Expiration Date for
Sections 4.03, 4.11, 4.16 and 4.18, as the case may be. The respective parties
shall remain liable after the Expiration Date for breaches of the
representations and warranties set forth in ARTICLE IV and ARTICLE V, provided
such breaches are asserted in good faith by notice in writing to the alleged
breaching party prior to the Expiration Date.
11.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE. Except as
otherwise provided herein, no delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of any similar breach or default occurring later; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default occurring before or after that waiver. No right, remedy or
election any term of this Agreement gives will be deemed exclusive, but each
will be cumulative with all other rights, remedies and elections available at
law or in equity.
11.08 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable, but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
11.09 Section Headings; Gender. The Section headings contained in this
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this
37
Agreement. Words of the masculine gender in this Agreement shall be deemed and
construed to include correlative words of the feminine and neuter genders and
words of the neuter gender shall be deemed and construed to include correlative
words of the masculine and feminine genders.
11.10 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Michigan (except for its principles governing conflicts
of laws).
11.11 DISPUTE RESOLUTION.
(a) Except with respect to injunctive relief as provided in Section 8.02
and Section 9.02 (which relief may be sought from any court or administrative
agency with jurisdiction with respect thereto), any unresolved dispute or
controversy arising out of or relating to this Agreement, or the breach thereof,
shall be settled exclusively by arbitration administered by the American
Arbitration Association under its Commercial Arbitration Rules then in effect.
(b) The arbitration proceedings shall be conducted before a single
arbitrator, unless any party's claim exceeds $500,000, exclusive of interest and
attorneys' fees, in which case the dispute shall be heard and determined by
three arbitrators. The arbitrator(s) shall be a practicing attorney or a
retired judge. The place of arbitration shall be Chicago, Illinois.
(c) The arbitrator(s) shall not have the authority to add to, detract from,
or modify any provision hereof nor to award punitive damages to any injured
party. A decision by the arbitrator shall be final and binding. Judgment may
be entered on the arbitrator's award in any court having jurisdiction thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
38
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
U.S. CONCRETE, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Xxxxxx Xxxxx, Vice President
39
STOCKHOLDERS:
B. XXXXXX XXXXXX, AS TRUSTEE UNDER THE TRUST
AGREEMENT DATED FEBRUARY 20, 1986 FOR B.
XXXXXX XXXXXX
By: /s/ B. Xxxxxx Xxxxxx
___________________________
B. Xxxxxx Xxxxxx
XXXXX X. XXXXXX, AS TRUSTEE UNDER THE TRUST
AGREEMENT DATED FEBRUARY 27, 1990 FOR XXXXX
X. XXXXXX
By: /s/ Xxxxx X. Xxxxxx
___________________________
Xxxxx X. Xxxxxx
/s/ B. Xxxxxx Xxxxxx
_______________________________
B. Xxxxxx Xxxxxx
B. XXXXXX XXXXXX, CUSTODIAN UNDER THE
MICHIGAN UNIFORM GIFTS TO MINORS ACT FOR THE
BENEFIT OF XXXXXXX X. XXXXXX
By: /s/ B. Xxxxxx Xxxxxx
___________________________
B. Xxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxx
_______________________________
Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxx
_______________________________
Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
_______________________________
Xxxxxxx X. Xxxxxx
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