-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D8WmGZuDsISqcuuh1hEj7idVi1sJy0HG2JrSTS37mqJc0UdwC/YzcOonU/yudAX3 ZKaigcsDw+FcH+6P8Sdl5Q== 0000899243-00-000708.txt : 20000331 0000899243-00-000708.hdr.sgml : 20000331 ACCESSION NUMBER: 0000899243-00-000708 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: US CONCRETE INC CENTRAL INDEX KEY: 0001073429 STANDARD INDUSTRIAL CLASSIFICATION: CONCRETE PRODUCTS, EXCEPT BLOCK & BRICK [3272] IRS NUMBER: 760688680 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-26025 FILM NUMBER: 588349 BUSINESS ADDRESS: STREET 1: 1360 POST OAK BLVD STREET 2: SUITE 800 CITY: HOUSTON STATE: TX ZIP: 77065 BUSINESS PHONE: 7133506000 MAIL ADDRESS: STREET 1: 1360 POST OAK BLVD STREET 2: SUITE 800 CITY: HOUSTON STATE: TX ZIP: 77065 FORMER COMPANY: FORMER CONFORMED NAME: RMX INDUSTRIES INC DATE OF NAME CHANGE: 19981113 10-K 1 FORM 10-K - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- FORM 10-K (Mark one) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-12977 U. S. CONCRETE, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 76-0586680 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) 1300 Post Oak Blvd., Suite 1220 77056 Houston, Texas (Zip Code) (Address of Principal Executive Offices)
Registrant's telephone number, including area code: (713) 499-6200 Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- None Not applicable
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.001 per share (Title of class) Rights to Purchase Series A Junior Participating Preferred Stock (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] As of March 24, 2000, there were 21,252,430 shares of common stock, par value $.001 per share, of the Registrant issued and outstanding, 12,004,771 of which, having an aggregate market value of $76.5 million, based on the closing price per share of the common stock of the Registrant reported on The Nasdaq Stock Market(R) on that date, were held by non-affiliates of the Registrant. For purposes of the above statement only, all directors and executive officers of the Registrant are assumed to be affiliates. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement related to the Registrant's 2000 Annual Stockholders Meeting are incorporated by reference into Part III of this report. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TABLE OF CONTENTS
Page ---- PART I Items 1 and 2. Business and Properties................................. 1 Cautionary Statement Concerning Forward-looking Statements.............................................. 11 Item 3. Legal Proceedings....................................... 12 Item 4. Submission of Matters to a Vote of Security Holders..... 12 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters..................................... 13 Item 6. Selected Financial Data................................. 13 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations..................... 14 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.................................................... 19 Item 8. Financial Statements and Supplementary Data............. 19 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................... 37 PART III Item 10. Directors and Executive Officers of the Registrant...... 37 Item 11. Executive Compensation.................................. 37 Item 12. Security Ownership of Certain Beneficial Owners and Management.............................................. 37 Item 13. Certain Relationships and Related Transactions.......... 37 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................................................ 37
Statements we make in this Annual Report on Form 10-K which express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to various risks, uncertainties and assumptions, including those to which we refer under the heading "Cautionary Statement Concerning Forward-Looking Statements" following Items 1 and 2 of Part I of this report. PART I Items 1 and 2. Business and Properties General U.S. Concrete provides ready-mixed concrete and related products and services to the construction industry in several major markets in the United States. As of March 24, 2000, we have 59 operating plants producing over 4.5 million cubic yards of concrete annually. Our operations consist principally of formulating, preparing, delivering and placing ready-mixed concrete at the job sites of our customers. We provide services intended to reduce our customers' overall construction costs by lowering the installed, or "in- place," cost of concrete. These services include the formulation of new mixtures for specific design uses, on-site and lab-based product quality control and delivery programs we configure to meet our customers' needs. We completed our initial public offering in May 1999. At the same time, we acquired six ready-mixed concrete and related businesses and began operating 26 concrete plants in three major markets in the United States. Since our IPO and through March 24, 2000, we have acquired an additional 11 ready-mixed concrete and related businesses, operating an additional 33 concrete plants, in five additional major markets in the United States. To increase our geographic diversification and expand the scope of our operations, we seek to acquire businesses operating under quality management teams in growing markets. Our acquisition strategy has two primary objectives. In a new market, we target one or more companies that can serve as platform businesses into which we can integrate other concrete operations. In markets where we have existing operations and seek to increase our market penetration, we pursue tuck-in acquisitions. Industry Overview Annual usage of ready-mixed concrete in the United States is currently at a record level. According to the National Ready-Mixed Concrete Association, total sales from production and delivery of ready-mixed concrete in the United States grew over the past three years as follows:
Year Sales ---- ------------ ($ millions) 1997......................................................... $21,183 1998......................................................... 23,672 1999......................................................... 25,812
Also according to this industry association, the four major segments of the construction industry accounted for the following approximate percentages of total sales of ready-mixed concrete in the United States in 1999: Commercial and industrial construction............................... 28% Residential construction............................................. 23% Street and highway construction and paving........................... 30% Other public works and infrastructure construction................... 19% --- Total............................................................ 100% ===
Ready-mixed concrete is a versatile, low-cost manufactured material the construction industry uses in substantially all its projects. It is a stone- like compound that results from combining fine and coarse aggregates, such as sand, gravel and crushed stone, with water, various admixtures and cement. Ready-mixed concrete can be manufactured in thousands of variations which in each instance may reflect a specific design use. Manufacturers of ready-mixed concrete generally maintain less than one day's requirements of raw materials and must coordinate their daily material purchases with the time-sensitive delivery requirements of their customers. - ------------------------------------------------------------------------------- 1 Ready-mixed concrete begins to harden when mixed and generally becomes difficult to place within 60 to 90 minutes after mixing. This characteristic generally limits the market for a permanently installed plant to an area within a 25-mile radius of its location. Concrete manufacturers produce ready-mixed concrete in batches at their plants and use mixer and other trucks to distribute and place it at the job sites of their customers. These manufacturers generally do not provide paving or other finishing services construction contractors or subcontractors typically perform. Manufacturers generally obtain contracts through local sales and marketing efforts they direct at general contractors, developers and home builders. As a result, local relationships are very important. On the basis of information the National Ready-Mixed Concrete Association has provided to us, we estimate that, in addition to vertically integrated manufacturers of cement and ready-mixed concrete, more than 3,500 independent producers currently operate a total of approximately 5,300 plants in the United States. Larger markets generally have numerous producers competing for business on the basis of price, timing of delivery and reputation for quality and service. We believe, on the basis of available market information, that the typical ready-mixed concrete company is family-owned and has limited access to capital, limited financial and technical expertise and limited exit strategies for its owners. Given these operating constraints, we believe many ready-mixed concrete companies are finding it difficult to both grow their businesses and compete effectively against larger, more cost-efficient and technically capable competitors. We believe these characteristics in our highly fragmented industry present growth opportunities for a company with a focused acquisition program and access to capital. Barriers to the start-up of a new ready-mixed concrete manufacturing operation historically have been low. In recent years, however, public concerns about the dust, noise and heavy mixer and other truck traffic associated with the operation of ready-mixed concrete plants and their general appearance have made obtaining the permits and licenses required for new plants more difficult. Delays in the regulatory process, coupled with the substantial capital investment start-up operations entail, have raised the barriers to entry for those operations. Significant Factors Impacting the Market for Ready-Mixed Concrete On the basis of available industry information, we believe that between 1996 and 1999 ready-mixed concrete sales as a percentage of total construction expenditures in the United States increased 8.3%. In addition to favorable trends in the overall economy of the United States, we believe three significant factors have been expanding the market for ready-mixed concrete in particular: . the increased level of industry-wide promotional and marketing activities; . the development of new and innovative uses for ready-mixed concrete; and . the enactment of the federal legislation commonly called TEA-21. Industry-wide Promotional and Marketing Activities. We believe industry participants have only in recent years focused on and benefited from promotional activities to increase the industry's share of street and highway and residential construction expenditures. Many of these promotional efforts resulted from an industry-wide initiative called RMC 2000, a program established in 1993 under the leadership of our chief executive officer, Eugene P. Martineau. The National Ready-Mixed Concrete Association, the industry's largest trade organization, has adopted this program. Its principal goals have been to (1) promote ready-mixed concrete as a building and paving material and (2) improve the overall image of the ready-mixed concrete industry. We believe RMC 2000 has been a catalyst for increased investment in the promotion of concrete. Development of New and Innovative Ready-mixed Concrete Products. Ready-mixed concrete has many attributes that make it a highly versatile construction material. In recent years, industry participants have developed various product innovations, including: . concrete housing; . pre-cast modular paving stones; - -------------------------------------------------------------------------------- 2 . pre-stressed concrete railroad ties to replace wood ties; . continuous-slab rail-support systems for rapid transit and heavy-traffic intricate rail lines; and . concrete bridges, tunnels and other structures for rapid transit systems. Other examples of successful innovations that have opened new markets for ready-mixed concrete include: . highway median barriers; . highway sound barriers; . paved shoulders to replace less permanent and increasingly costly asphalt shoulders; . parking lots providing a long-lasting and aesthetically pleasing urban environment; and . colored pavements to mark entrance and exit ramps and lanes of expressways. Impact of TEA-21. The Federal Transportation Equity Act for the 21st Century, commonly called TEA-21, is the largest public works funding bill in the history of the United States. It became effective in June 1998 and provides a $218 billion budget for federal highway, transit and safety spending for the six-year period from 1998 through 2003. This represents a 43% increase over the funding levels similar federal funding programs authorized for the 1992-1997 period. Although road and highway construction and paving accounted for only 17% of our pro forma 1999 sales, we believe we should benefit from the impact we expect TEA-21 will have on the overall demand for ready-mixed concrete in the United States. Our Business Strategy Our objective is to continue expanding the geographic scope of our operations and become the leading value-added provider of ready-mixed concrete and related products and services in each of our markets. We plan to achieve this objective by (1) continuing to make acquisitions and (2) continuing to implement our national operating strategy aimed at increasing revenue growth and market share, achieving cost efficiencies and enhancing profitability. Growth Through Acquisitions. The significant costs and regulatory requirements involved in building new plants make acquisitions an important element of our growth strategy. Our acquisition program targets opportunities for (1) expansion in our existing markets and (2) entering new geographic markets in the United States. . Expanding in Existing Markets. We seek to continue acquiring other well- established companies operating in our existing markets in order to expand our market penetration. We have acquired operating companies in Northern California, Michigan, North Texas, Memphis/Northern Mississippi and the Washington, D.C. area following our initial entry into these markets. By expanding in existing markets through acquisitions, we expect to continue realizing various operating synergies, including: . increased market coverage; . improved utilization and range of mixer trucks because of access to additional plants; . customer cross-selling opportunities; and . reduced operating and overhead costs. . Entering New Geographic Markets. We seek to continue entering new geographic markets that have a balanced mix of residential, commercial, industrial and public sector concrete consumption and have demonstrated adequate sustainable demand and prospects for growth. In each new market we enter, we target for acquisition one or more leading local or regional ready-mixed concrete companies that can serve as platform businesses into which we can consolidate other ready-mixed concrete operations. Important criteria for these acquisition candidates include historically successful operating results, established customer relationships and superior operational management personnel, whom we generally will seek to retain. Since our formation in May 1999, we have entered into new geographic markets in San Diego, North Texas/Southwest Oklahoma, Memphis/Northern Mississippi, Knoxville and Michigan. - ------------------------------------------------------------------------------- 3 Implementation of National Operating Strategy. We designed our national operating strategy (1) to increase revenues and market share through improved marketing and sales initiatives and enhanced operations and (2) to achieve cost efficiencies. . Improving Marketing and Sales Initiatives and Enhancing Operations. Our basic operating strategy emphasizes the sale of value-added product to customers who are more focused on reducing their installed, or in-place, concrete costs than on the price per cubic yard of the ready-mixed concrete they purchase. Key elements of our service-oriented strategy include: . providing corporate-level marketing and sales expertise; . establishing company-wide quality control improvements; . continuing to develop and implement training programs that emphasize successful marketing, sales and training techniques and the sale of high-margin concrete mix designs; and . investing in computer and communications technology at each of our locations to improve communications, purchasing, accounting, load dispatch, delivery efficiency, reliability, truck tracking and customer relations. . Achieving Cost Efficiencies. We expect to reduce the total operating expenses of the businesses we acquire by eliminating duplicative administrative functions and consolidating other functions each business performed separately prior to its acquisition. In addition, we believe that, as we continue to increase in size, we should continue experiencing reduced costs as a percentage of net sales compared to those of the individual businesses we acquire in such areas as: . materials procurement; . purchases of mixer trucks and other equipment, spare parts and tools; . vehicle and equipment maintenance; . employee benefit plans; and . insurance and other risk management programs. Products and Services Ready-Mixed Concrete. Our ready-mixed concrete products consist of proportioned mixes we prepare and deliver in unhardened plastic states for placement and shaping into their designed forms. Selecting the optimum mix for a job entails determining not only the ingredients that will produce the desired permeability, strength, appearance and other properties of the concrete after it has hardened and cured, but also the ingredients necessary to achieve a workable consistency under the weather and other conditions at the job site. We believe we can achieve product differentiation for the mixes we offer because of the variety of mixes we can produce, our volume production capacity and our scheduling, delivery and placement reliability. We also believe we distinguish ourselves with our value-added service approach that emphasizes reducing our customers' overall construction costs by lowering the installed, or in-place, cost of concrete. From a contractor's perspective, the in-place cost of concrete includes both the amount paid to the ready-mixed concrete manufacturer and the internal costs associated with the labor and equipment the contractor provides. A contractor's unit cost of concrete is often only a small component of the total in-place cost that takes into account all the labor and equipment costs required to place and finish the ready-mixed concrete, including the cost of additional labor and time lost as a result of substandard products or delivery delays. By carefully designing proper mixes and using advances in mixing technology, we can assist our customers in reducing the amount of reinforcing steel and labor they will require in various applications. - ------------------------------------------------------------------------------- 4 We provide a variety of services in connection with our sale of ready-mixed concrete which can help reduce our customers' in-place cost of concrete. These services include: . production of new formulations and alternative product recommendations that reduce labor and materials costs; . quality control, through automated production and laboratory testing, that ensures consistent results and minimizes the need to correct completed work; . automated scheduling and tracking systems that ensure timely delivery and reduce the downtime incurred by the customer's finishing crew; and . innovative pricing discounts that are designed to minimize the time the customer keeps our trucks on site, thereby resulting in a lower price to the customer as well as a more efficient use of the customer's crews and equipment. We produce ready-mixed concrete by combining the desired type of cement, sand, gravel and crushed stone with water and typically one or more admixtures. These admixtures, such as chemicals, minerals and fibers, determine the usefulness of the product for particular applications. We use a variety of chemical admixtures to achieve one or more of five basic purposes: . relieve internal pressure and increase resistance to cracking in subfreezing weather; . retard the hardening process to make concrete more workable in hot weather; . strengthen concrete by reducing its water content; . accelerate the hardening process and reduce the time required for curing; and . facilitate the placement of concrete having a low water content. We frequently use various mineral admixtures as supplementary cementing materials to alter the permeability, strength and other properties of concrete. These materials include fly ash, ground granulated blast-furnace slag and silica fume. We also use fibers, such as steel, glass and synthetic and carbon filaments, as an additive in various formulations of concrete. Fibers help to control shrinkage cracking, thus reducing permeability and improving abrasion resistance. In many applications, fibers replace welded steel wire and reinforcing bars. Relative to the other components of ready-mixed concrete, these additives generate comparatively high margins. Our ready-mixed concrete operations comprised 90% of our pro forma 1999 revenues. Pre-Cast Concrete. We produce pre-cast concrete products at our Pleasanton, Santa Rosa and San Diego, California plants. Our pre-cast concrete products consist of ready-mixed concrete we produce and then pour into molds at the plant site. These operations produce a wide variety of specialized finished products, including specialty engineered structures, custom signage and curb inlets. After the concrete sets, we strip the molds from the products and ship the finished product to our customers. Because these products are not perishable, pre-cast concrete plants can serve a much larger market than ready-mixed concrete plants. Our pre-cast operations comprised 6.5% of our pro forma 1999 revenues. Building Materials. Our building materials operations supply various materials, products and tools contractors use in the concrete construction industry. These materials include rebar, wire mesh, color additives, curing compounds, grouts, wooden forms, hard hats, rubber boots, gloves, trowels, lime slurry used to stabilize foundations and numerous other items. Our building materials operations are generally located near our ready-mixed concrete operations. Our building materials operations comprised 3.5% of our pro forma 1999 revenues. - ------------------------------------------------------------------------------- 5 Operations The businesses we have acquired have made substantial capital investments in equipment, systems and personnel at their respective plants to facilitate continuous multi-customer deliveries of highly perishable products. In any given market, we may maintain a number of plants whose production we centrally coordinate to meet customer production requirements. We must be able to adapt constantly to continually changing delivery schedules. Our ready-mixed concrete plants consist of permanent and mobile facilities that produce ready-mixed concrete in wet or dry batches. Our fixed-plant operations use our 59 permanent plant facilities to produce ready-mixed concrete that we transport to job sites by mixer trucks. Our on-site mobile plant operations deploy our eight mobile-plant facilities to produce ready- mixed concrete at the job site that we direct into place using a series of conveyor belts or a mixer truck. Several factors govern the choice of plant type, including: . capital availability; . production consistency requirements; . daily production capacity requirements; and . job-site location. A wet batch plant generally costs more, but yields greater consistency in the concrete produced and has greater daily production capacity, than a dry batch plant. We believe that a wet batch plant having an hourly capacity of 250 cubic yards currently would cost approximately $1.5 million, while a dry batch plant having the same capacity currently would cost approximately $0.7 million. At March 24, 2000, we operated 12 wet batch plants and 47 dry batch plants. The market primarily will drive our future plant decisions. The relevant market factors include: . the expected production demand for the plant; . the expected types of projects the plant will service; and . the desired location of the plant. Generally, plants intended primarily to serve high-volume, commercial or public works projects will be wet batch plants, while plants intended primarily to serve low-volume, residential construction projects will be dry batch plants. From time to time, we also may use portable plants, which include both wet batch and dry batch facilities, to service large, long-term jobs and jobs in remote locations. The batch operator in a dry batch plant simultaneously loads the dry components of stone, sand and cement with water and admixtures in a mixer truck that begins the mixing process during loading and completes that process while driving to the job site. In a wet batch plant, the batch operator blends the dry components and water in a plant mixer from which he loads the already mixed concrete into the mixer truck, which leaves for the job site promptly after loading. Mixer trucks slowly rotate their loads on route to job sites in order to maintain product consistency. A mixer truck typically has a load capacity of nine cubic yards, or approximately 18 tons, and a useful life of 12 years. Depending upon the type of batch plant from which the mixer trucks generally are loaded, some components of the mixer trucks will require refurbishment after three to nine years. A new truck of this size currently costs approximately $125,000. At March 24, 2000, we operated a fleet of approximately 720 mixer trucks. In our manufacture and delivery of ready-mixed concrete, we emphasize quality control, pre-job planning, customer service and coordination of supplies and delivery. We often obtain purchase orders for ready-mixed concrete months in advance of actual delivery to a job site. A typical order contains various specifications the contractor requires the concrete to meet. After receiving the specifications for a particular job, we use computer modeling, industry information and information from previous similar jobs to formulate a variety of mixtures of cement, aggregates, water and admixtures which meet or exceed the contractor's specifications. We perform testing to determine which mix design is most appropriate to meet the required specifications. The test results enable us to select the mixture that has the lowest cost and meets or exceeds the job specifications. The testing center creates and - ------------------------------------------------------------------------------- 6 maintains a project file that details the mixture we will use when we produce the concrete for the job. For quality control purposes, the testing center also is responsible for maintaining batch samples of concrete we have delivered to a job site. We use computer modeling to prepare bids for particular jobs based on the size of the job, location, desired margin, cost of raw materials and the design mixture identified in our testing process. If the job is large enough, we obtain quotes from our suppliers as to the cost of raw materials we use in preparing the bid. Once we obtain a quotation from our suppliers, the price of the raw materials for the specified job is informally established. Several months may elapse from the time a contractor has accepted our bid until actual delivery of the ready-mixed concrete begins. During this time, we maintain regular communication with the contractor concerning the status of the job and any changes in the job's specifications in order to coordinate the multi- sourced purchases of cement and other materials we will need to fill the job order and meet the contractor's delivery requirements. We confirm that our customers are ready to take delivery of manufactured product throughout the placement process. On any given day, a particular plant may have production orders for dozens of customers at various locations throughout its area of operation. To fill an order: . the dispatch office coordinates the timing and delivery of the concrete to the job site; . a load operator supervises and coordinates the receipt of the necessary raw materials and operates the hopper that dispenses those materials into the appropriate storage bins; . a batch operator prepares the specified mixture from the order and oversees the loading of the mixer truck with either dry ingredients and water in a dry batch plant or the already-mixed concrete in a wet batch plant; and . the driver of the mixer truck delivers the load to the job site, discharges the load and, after washing the truck, departs at the direction of the dispatch office. The central dispatch system tracks the status of each mixer truck as to whether a particular truck is: . loading concrete; . in route to a particular job site; . on the job site; . discharging concrete; . being washed; or . in route to a particular plant. The system is updated continuously via signals received from the individual truck operators as to their status. In this manner, the dispatcher can determine the optimal routing and timing of subsequent deliveries by each mixer truck and monitor the performance of each driver. A plant manager oversees the operation of each plant. Our employees also include: . maintenance personnel who perform routine maintenance work throughout our plants; . a full-time staff of mechanics who perform substantially all the maintenance and repair work on our vehicles; . testing center staff who prepare mixtures for particular job specifications and maintain quality control; . various clerical personnel who perform administrative tasks; and . sales personnel who are responsible for identifying potential customers and maintaining existing customer relationships. - ------------------------------------------------------------------------------- 7 We generally operate on a single shift with some overtime operation during the construction season. On occasion, however, we may have projects that require deliveries around the clock. Cement and Raw Materials We obtain most of the materials necessary to manufacture ready-mixed concrete at each of our facilities on a daily basis. These raw materials include cement, which is a manufactured product, stone, gravel and sand. Each plant typically maintains an inventory level of these materials sufficient to satisfy its operating needs for one day or less. Cement represents the highest cost material used in manufacturing a cubic yard of ready-mixed concrete, while the combined cost of the stone, gravel and sand used is slightly less than the cement cost. In each of our markets, we purchase each of these materials from any one of several suppliers. Sales and Marketing General contractors typically select their suppliers of ready-mixed concrete. In large, complex projects, an engineering firm or division within a state transportation or public works department may influence the purchasing decision, particularly if the concrete has complicated design specifications. In those projects and in government-funded projects generally, the general contractor or project engineer usually awards supply orders on the basis of either direct negotiation or competitive bidding. We believe the purchasing decision in many cases ultimately is relationship-based. Our marketing efforts target general contractors, design engineers and architects whose focus extends beyond the price of ready-mixed concrete to product quality and consistency and reducing their in-place cost of concrete. Customers Of our pro forma 1999 sales, we made approximately 43% to commercial and industrial construction contractors, approximately 35% to residential construction contractors, approximately 17% to street and highway construction contractors and approximately 5% to other public works and infrastructure contractors. In 1999, no single customer or project accounted for more than 8% of our total sales. We rely heavily on repeat customers. Our management and dedicated sales personnel are responsible for developing and maintaining successful long-term relationships with key customers. We believe that by expanding our operations into more geographic markets, we will be in a better position to market to and service large nationwide and regional contractors. Training and Safety Our future success will depend, in part, on the extent to which we can attract, retain and motivate qualified employees. We believe that our ability to do so will depend on the quality of our recruiting, training, compensation and benefits, the opportunities we afford for advancement and our safety record. Historically, we have supported and funded continuing education programs for our employees. We intend to continue and expand these programs. We require all field employees to attend periodic safety training meetings and all drivers to participate in training seminars followed by certification testing. The responsibilities of our national safety director include managing and executing a unified, company-wide safety program. Competition The ready-mixed concrete industry is highly competitive. Our competitive position in a market depends largely on the location and operating costs of our ready-mixed concrete plants and prevailing prices in that market. Price is the primary competitive factor among suppliers for small or simple jobs, principally in residential construction, while timeliness of delivery and consistency of quality and service as well as price are the principal competitive factors among suppliers for large or complex jobs. Our competitors range from small, owner-operated private companies to subsidiaries or operating units of large, vertically integrated cement manufacturing and concrete products companies. Competitors having lower operating costs than we do or having the financial resources to enable them to accept lower margins than we do have a competitive advantage over us for jobs that are particularly price-sensitive. Competitors having greater financial resources to build plants in new areas or pay for acquisitions also have competitive advantages over us. - ------------------------------------------------------------------------------- 8 Employees At March 24, 2000, we had approximately 239 salaried employees, including executive officers, management personnel, sales personnel, technical personnel, administrative staff and clerical personnel, and approximately 1,137 hourly personnel generally employed on an as-needed basis, including 801 truck drivers. The number of employees fluctuates depending on the number and size of projects ongoing at any particular time, which may be impacted by variations in weather conditions throughout the year. At March 24, 2000, approximately 635 of our employees were represented by labor unions having collective bargaining agreements with us. Generally, these agreements have multi-year terms and expire on a staggered basis. Under these agreements, we pay specified wages to covered employees, observe designated workplace rules and make payments to multi-employer pension plans and employee benefit trusts rather than administering the funds on behalf of these employees. None of the businesses we have acquired has experienced any strikes or significant work stoppages in the past five years. We believe our relationships with our employees and union representatives are satisfactory. Facilities and Equipment At March 24, 2000, we operated a fleet of approximately 720 owned and leased mixer trucks and 323 other vehicles. Our own mechanics service most of the fleet. We believe these vehicles are generally well maintained and adequate for our operations. The average age of the mixer trucks is approximately 7.3 years. We operated 67 fixed-plant facilities and eight onsite mobile-plant facilities at March 24, 2000. We believe that these facilities are sufficient for our immediate needs. The table below summarizes operations at our fixed- plant facilities at March 24, 2000. The ready-mixed volumes in the table represent the pro forma 1999 volumes produced by each location.
Ready-Mixed Volume Building (in thousands Location Ready-Mixed Pre-Cast Materials of cubic yards) - ------------------------ ----------- -------- --------- --------------- Northern California..... 20 2 3 2,102 North Texas/Southwest Oklahoma............... 14 -- 2 773 Washington, D.C. area... 4 -- -- 476 Michigan................ 7 -- -- 392 Memphis/Northern Mississippi............ 6 -- -- 357 Knoxville............... 3 -- -- 215 New Jersey.............. 5 -- -- 211 San Diego............... -- 1 -- -- --- --- --- ----- 59 3 5 4,526 === === === ===== The information above includes the following locations we purchased between January 1, 2000 and March 24, 2000: Ready-Mixed Volume Building (in thousands Location Ready-Mixed Pre-Cast Materials of cubic yards) - ------------------------ ----------- -------- --------- --------------- North Texas/Southwest Oklahoma............... 14 -- 2 773 Michigan................ 4 -- -- 147 --- --- --- ----- 18 -- 2 920 === === === =====
- ------------------------------------------------------------------------------- 9 Governmental Regulation and Environmental Matters A wide range of federal, state and local laws apply to our operations, including such matters as: . land usage; . street and highway usage; . noise levels; and . health, safety and environmental matters. In many instances, we must have certificates, permits or licenses to conduct our business. Failure to maintain required certificates, permits or licenses or to comply with applicable laws could result in substantial fines or possible revocation of our authority to conduct some of our operations. Delays in obtaining approvals for the transfer or grant of certificates, permits or licenses, or failures to obtain new certificates, permits or licenses, could impede the implementation of our acquisition program. Environmental laws that impact our operations include those relating to air quality, solid waste management and water quality. Environmental laws are complex and subject to frequent change. These laws impose strict liability in some cases without regard to negligence or fault. Sanctions for noncompliance may include revocation of permits, corrective action orders, administrative or civil penalties and criminal prosecution. Some environmental laws provide for joint and several strict liability for remediation of spills and releases of hazardous substances. In addition, businesses may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances, as well as damage to natural resources. These laws also may expose us to liability for the conduct of or conditions caused by others, or for acts which complied with all applicable laws when performed. We have conducted Phase I investigations to assess environmental conditions on substantially all the real properties we own or lease and have engaged independent environmental consulting firms in that connection. We have not identified any environmental concerns we believe are likely to have a material adverse effect on our business, financial condition or results of operations, but you have no assurance material liabilities will not occur. You also have no assurance our compliance with amended, new or more stringent laws, stricter interpretations of existing laws or the future discovery of environmental conditions will not require additional, material expenditures. OSHA regulations establish requirements our training programs must meet. We have all material permits and licenses we need to conduct our operations and are in substantial compliance with applicable regulatory requirements relating to our operations. Our capital expenditures relating to environmental matters were not material on a pro forma combined basis in 1999. We currently do not anticipate any material adverse effect on our business or financial position as a result of our future compliance with existing environmental laws controlling the discharge of materials into the environment. Insurance Our operations involve providing ready-mixed concrete formulations that must meet building code or other regulatory requirements and contractual specifications for durability, stress-level capacity, weight-bearing capacity and other characteristics. If we fail or are unable to provide product meeting these requirements and specifications, claims may arise against us or our reputation could be damaged. Although we have not experienced any material claims of this nature in recent periods, we may experience such claims in the future. In addition, our employees perform a significant portion of their work moving and storing large quantities of heavy raw materials, driving large mixer trucks in heavy traffic conditions or placing concrete at construction sites or in other areas that may be hazardous. These operating hazards can cause personal injury and loss of life, damage to or destruction of property and equipment and environmental damage. We maintain insurance coverage in amounts and against the risks we believe accord with industry practice, but this insurance may not be adequate to cover all losses or liabilities we may incur in our operations, and we may be unable to maintain insurance of the types or at levels we deem necessary or adequate or at rates we consider reasonable. - ------------------------------------------------------------------------------- 10 CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS We are including the following discussion to inform our existing and potential security holders generally of some of the risks and uncertainties that can affect our company and to take advantage of the "safe harbor" protection for forward-looking statements that applicable federal securities law affords. From time to time, our management or persons acting on our behalf make forward-looking statements to inform existing and potential security holders about our company. These statements may include projections and estimates concerning the timing of pending acquisitions and the success of our acquisition program, revenues, income and capital spending. Forward-looking statements generally use words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "plan," "goal" or other words that convey the uncertainty of future events or outcomes. In addition, sometimes we will specifically describe a statement as being a forward-looking statement and refer to this cautionary statement. In addition, various statements this report contains, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. Those forward- looking statements appear in Items 1 and 2--"Business and Properties" and Item 3--"Legal Proceedings" in Part I of this report and in Item 7--"Management's Discussion and Analysis of Financial Condition and Results of Operations" and in the notes to our consolidated financial statements in Item 8 of Part II of this report and elsewhere in this report. These forward-looking statements speak only as of the date of this report, we disclaim any obligation to update these statements and we caution you not to rely unduly on them. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: . our acquisition and national operating strategies; . our ability to integrate the businesses we acquire; . our ability to obtain the capital necessary to finance our growth strategies; . the availability of qualified personnel; . the trends we anticipate in the ready-mixed concrete industry; . the level of activity in the construction industry generally and in our local markets for ready-mixed concrete; . the highly competitive nature of our business; . changes in, or our ability to comply with, governmental regulations, including those relating to the environment; . our labor relations and those of our suppliers of cement and aggregates; . our ability to control costs and maintain quality; and . continuing uncertainties relating to the recent change over to the year 2000. We believe the items we have outlined above are important factors that could cause our actual results to differ materially from those expressed in a forward-looking statement made in this report or elsewhere by us or on our behalf. We have discussed most of these factors in more detail elsewhere in this report. These factors are not necessarily all the important factors that could affect us. Unpredictable or unknown factors we have not discussed in this report could also have material adverse effects on actual results of matters that are the subject of our forward-looking statements. We do not intend to update our description of important factors each time a potential important factor arises. We advise our stockholders and prospective investors that they should (1) be aware that important factors to which we do not refer above could affect the accuracy of our forward-looking statements and (2) use caution and common sense when considering our forward-looking statements. - ------------------------------------------------------------------------------- 11 Item 3. Legal Proceedings From time to time, and currently, we are subject to claims and litigation brought by employees, customers and third parties for, among other matters, personal injuries, property damages, product defects and delay damages, that have, or allegedly have, resulted from the conduct of our operations. Currently, we do not have pending any litigation that, separately or in the aggregate, if adversely determined, we believe would have a material adverse effect on our business, financial condition or results of operations. We expect that in the future we will from time to time be a party to litigation or administrative proceedings which arise in the normal course of our business. Item 4. Submission of Matters to a Vote of Security Holders No matter was submitted to a vote of the Company's security holders during the fourth quarter of 1999. - ------------------------------------------------------------------------------- 12 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Our common stock began trading on The Nasdaq Stock Market in May 1999 under the symbol "RMIX." As of March 24, 2000, 21.3 million shares of our common stock were outstanding, held by approximately 155 stockholders of record. The number of record holders does not necessarily bear any relationship to the number of beneficial owners of our common stock. The following table sets forth the range of high and low bid prices for our common stock on The Nasdaq Stock Market for the periods indicated:
Year Ended December 31, 1999 High Low ---------------------------- ---- --- Second Quarter (May 26 to June 30)....................... $10 1/32 $7 7/8 Third Quarter............................................ 11 1/8 6 1/2 Fourth Quarter........................................... 8 5/32 5 7/8
The last reported bid price for our common stock on The Nasdaq Stock Market on March 24, 2000 was $6.375 per share. During the quarter ended December 31, 1999, we issued 688,000 shares of our common stock as part of the consideration we paid to the former owners of four businesses we acquired during the quarter. We issued these shares without registration under the Securities Act in reliance on the exemption provided by Section 4(2) of the Securities Act as transactions not involving any public offering. Each acquisition involved a limited number of owners. We have not paid or declared any dividends since our formation and currently intend to retain earnings to fund our working capital. Any future dividends will be at the discretion of our board of directors after taking into account various factors it deems relevant, including our financial condition and performance, cash needs, income tax consequences and the restrictions Delaware and other applicable laws and our credit facilities then impose. Our credit facility prohibits the payment of cash dividends on our common stock. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources" in Item 7 of this Report and Note 6 of our Notes to Consolidated Financial Statements in Item 8 of this Report. Item 6. Selected Financial Data During 1999, we purchased 14 operating businesses for which we have accounted in accordance with the purchase method of accounting. Our financial statements present Central Concrete Supply Co., Inc., one of our initial six acquisitions, as the acquirer of the other 13 businesses and U.S. Concrete. The following historical financial information is of Central prior to June 1, 1999 and of U.S. Concrete and its consolidated subsidiaries after that date. The historical financial information for Central as of December 31, 1998 and 1997, and for the years ended December 31, 1998, 1997 and 1996, derives from the audited financial statements of Central. The remaining historical financial information for Central derives from Central's unaudited financial statements, which have been prepared on the same basis as the audited financial statements and reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of that information. See the historical financial statements and related notes this document contains. - ------------------------------------------------------------------------------- 13
Year Ended December 31 Year Ended ----------------------------------- April 30, 1999 1998 1997 1996 1996 -------- ------- ------- ------- ----------- (in thousands) (unaudited) Statement of Operations Information: Sales....................... $167,912 $66,499 $53,631 $39,204 $37,781 Cost of goods sold.......... 135,195 53,974 43,794 33,402 32,040 -------- ------- ------- ------- ------- Gross profit................ 32,717 12,525 9,837 5,802 5,741 Selling, general and administrative expenses.... 9,491 4,712 4,265 3,644 2,955 Stock compensation charge... 2,880 -- -- -- -- Depreciation and amortization............... 3,453 930 1,330 1,203 586 -------- ------- ------- ------- ------- Income from operations...... 16,893 6,883 4,242 955 2,200 Interest and other income (expense) net.............. (1,045) (129) (200) (188) (73) -------- ------- ------- ------- ------- Income before provision (benefit) for income taxes...................... 15,848 6,754 4,042 767 2,127 Provision (benefit) for income taxes............... 7,658 100 (457) 303 937 -------- ------- ------- ------- ------- Net income.................. $ 8,190 $ 6,654 $ 4,499 $ 464 $ 1,190 ======== ======= ======= ======= ======= December 31 ----------------------------------- April 30, 1999 1998 1997 1996 1996 -------- ------- ------- ------- ----------- (in thousands) (unaudited) Balance Sheet Information: Working capital............. $ 14,578 $ 7,431 $ 4,899 $ 1,363 $ 1,074 Total assets................ 212,734 26,640 19,837 13,603 9,683 Long-term debt, including current maturities......... 57,375 3,530 2,660 1,730 2,091 Total stockholders' equity.. 110,793 15,154 10,731 6,472 3,158
Item 7. Management's Discussion and Analysis of Financial Condition and Results Of Operations Statements we make in the following discussion which express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance or achievements, or industry results, could differ materially from those we express in the following discussion as a result of a variety of factors, including the risks and uncertainties we have referred to under the heading "Cautionary Statement Concerning Forward-looking Statements" following Items 1 and 2 of Part I of this report and under the heading "Factors That May Affect Our Future Operating Results" below. Overview We derive substantially all our revenues from the sale of ready-mixed concrete, other concrete products and related construction materials to the construction industry in the United States. We serve substantially all segments of the construction industry, and our customers include contractors for commercial, industrial, residential and public works and infrastructure construction. We typically sell ready-mixed concrete under daily purchase orders that require us to formulate, prepare and deliver ready-mixed concrete to the job sites of our customers. We generally recognize our sales from these orders when we deliver the ordered products. Our cost of goods sold consists principally of the costs we incur in obtaining the cement, aggregates and admixtures we combine to produce ready- mixed concrete and other concrete products in various formulations. We obtain all these materials from third parties and generally have only one day's supply at each of our concrete plants. Our cost of goods sold also includes labor costs and the operating, maintenance and rental expenses we incur in operating our concrete plants and mixer trucks and other vehicles. Our selling expenses include the salary and incentive compensation we pay our sales force, the salaries and incentive compensation of our sales managers and travel, entertainment and other promotional expenses. Our general and administrative expenses include the salaries and benefits we pay to our executive officers, the senior managers of - ------------------------------------------------------------------------------- 14 our local and regional operations, plant managers and administrative staff. These expenses also include office rent and utilities, communications expenses and professional fees. During 1999, we purchased 14 operating businesses for which we have accounted in accordance with the purchase method of accounting. Our financial statements present Central Concrete Supply Co., Inc., one of our initial six acquisitions, as the acquirer of the other 13 businesses and U.S. Concrete. These financial statements are those of Central prior to June 1, 1999 and of U.S. Concrete and its consolidated subsidiaries after that date. Factors That May Affect Our Future Operating Results Reflecting the levels of construction activity, the demand for ready-mixed concrete is highly seasonal. We believe that this demand may be as much as three times greater in a prime summer month than in a slow winter month and that the six-month period of May through October is the peak demand period. Consequently, we expect that our sales generally will be materially lower in the first and fourth calendar quarters. Because we incur fixed costs, such as wages, rent, depreciation and other selling, general and administrative expenses, throughout the year, we expect our gross profit margins will be disproportionately lower than our sales in these quarters. Even during traditional peak periods, sustained periods of inclement weather and other extreme weather conditions can slow or delay construction and thus slow or delay our sales. You should not rely on (1) quarterly comparisons of our revenues and operating results as indicators of our future performance or (2) the results of any quarterly period during a year as an indicator of results you may expect for that entire year. Demand for ready-mixed concrete and other concrete products depends on the level of activity in the construction industry. That industry is cyclical in nature, and the general condition of the economy and a variety of other factors beyond our control affect its level of activity. These factors include, among others: . the availability of funds for public or infrastructure construction; . commercial and residential vacancy levels; . changes in interest rates; . the availability of short- and long-term financing; . inflation; . consumer spending habits; and . employment levels. The construction industry can exhibit substantial variations in activity across the country as a result of these factors impacting regional and local economies differently. Markets for ready-mixed concrete generally are local. Our results of operations are susceptible to swings in the level of construction activity which may occur in our markets. Ready-mixed concrete is highly price-sensitive. Our prices are subject to changes in response to relatively minor fluctuations in supply and demand, general economic conditions and market conditions, all of which are beyond our control. Because of the fixed-cost nature of our business, our overall profitability is sensitive to minor variations in sales volumes and small shifts in the balance between supply and demand. Competitive conditions in our industry also may affect our future operating results. As we acquire additional businesses in the future for which we will account in accordance with the purchase method of accounting, we will include the operating results of those businesses in our consolidated operating results from their respective acquisition dates and begin writing off any purchased goodwill resulting from those acquisitions - ------------------------------------------------------------------------------- 15 on those same dates. Consequently, the magnitude and timing of our future acquisitions will affect our operating results. Results of Operations The following table sets forth for us selected historical statement of operations information and that information as a percentage of sales for the years indicated. These financial statements are those of Central prior to June 1, 1999 and of U.S. Concrete and its consolidated subsidiaries after that date. Except as we note below, the consolidation of operating results beginning on June 1, 1999 and our subsequent acquisitions in 1999 principally account for the changes in 1999 from 1998.
Year Ended December 31 ----------------------------------------------- 1999 1998 1997 --------------- -------------- -------------- (dollars in thousands) Sales......................... $167,912 100.0% $66,499 100.0% $53,631 100.0% Cost of goods sold............ 135,195 80.5 53,974 81.2 43,794 81.7 -------- ----- ------- ----- ------- ----- Gross profit................ 32,717 19.5 12,525 18.8 9,837 18.3 Selling, general and administrative expenses...... 9,491 5.7 4,712 7.1 4,265 7.9 Stock compensation charge..... 2,880 1.7 -- -- -- -- Depreciation and amortization................. 3,453 2.1 930 1.4 1,330 2.5 -------- ----- ------- ----- ------- ----- Income from operations...... 16,893 10.0 6,883 10.3 4,242 7.9 Interest expense, net......... 1,708 1.0 165 0.2 226 0.4 Other income (expense), net... (663) (0.4) (36) (0.1) (26) -- -------- ----- ------- ----- ------- ----- Income before income tax provision (benefit)........ 15,848 9.4 6,754 10.2 4,042 7.5 Income tax provision (benefit).................... 7,658 4.5 100 0.2 (457) (0.9) -------- ----- ------- ----- ------- ----- Net income.................. $ 8,190 4.9% $ 6,654 10.0% $ 4,499 8.4% ======== ===== ======= ===== ======= =====
1999 Compared to 1998 Sales. Sales increased $101.4 million, or 152.5%, from $66.5 million in 1998 to $167.9 million in 1999. Gross profit. Gross profit increased $20.2 million, or 161.2%, from $12.5 million in 1998 to $32.7 million in 1999. Gross margins increased from 18.8% in 1998 to 19.5% in 1999, primarily because increases in our product prices more than offset increases in labor rates, additional technical personnel and increases in our costs of raw materials. Selling, general and administrative expenses. Selling, general and administrative expenses increased $4.8 million, or 101.4%, from $4.7 million in 1998 to $9.5 million in 1999. The 1999 expenses include the salaries of our executive officers and expenses we incurred in building our corporate infrastructure. Stock compensation charge. The 1999 stock compensation charge represents a noncash charge for the 400,000 shares of our common stock we issued in December 1998 and March 1999 to management and nonemployee directors at a nominal cost. Depreciation and amortization. Depreciation and amortization expense increased $2.6 million, or 271.3%, from $0.9 million in 1998 to $3.5 million in 1999. This increase reflects our initial amortization of the goodwill attributable to our 1999 acquisition activity. We are amortizing this goodwill over 40 years for each acquisition. At December 31, 1999, the annualized amount of this noncash expense was $2.7 million. Interest expense, net. Interest expense, net, increased $1.5 million from $0.2 million in 1998 to $1.7 million in 1999. This increase was attributable principally to borrowings we made to finance our post-IPO acquisitions in 1999 and to refinance indebtedness of our acquired businesses. At December 31, 1999, we had borrowings totaling $57.1 million outstanding under our credit facility at a weighted average interest cost of 7.9% per annum. - ------------------------------------------------------------------------------- 16 Income tax provision. We provided for income taxes of $7.7 million in 1999, an increase of $7.6 million from our provision in 1998. This increase is attributable to the fact that Central was an S corporation during 1998 and the first five months of 1999 and thus made no provision for federal income taxes during those periods. 1998 Compared to 1997 Sales. Sales increased $12.9 million, or 24.1%, from $53.6 million in 1997 to $66.5 million in 1998, principally as a result of strong construction activity in the Silicon Valley region in California. Both increases in the size of Central's customer base and in repeat sales to its existing customers contributed to this increase. Gross profit. Gross profit increased $2.7 million, or 27.3%, from $9.8 million in 1997 to $12.5 million in 1998. Gross margins increased from 18.3% in 1997 to 18.8% in 1998 because increases in Central's product prices more than offset increases in labor rates and costs of raw materials. Selling, general and administrative expenses. Selling, general and administrative expenses increased $0.4 million, or 10.5%, from $4.3 million in 1997 to $4.7 million in 1998 as a result of the addition of administrative infrastructure necessary to support Central's growth. As a percentage of sales, these expenses decreased from 7.9% in 1997 to 7.1% in 1998. Liquidity and Capital Resources The consolidation of operating results on June 1, 1999 and our subsequent acquisitions in 1999 principally account for the changes in our working capital accounts and our property, plant and equipment account from December 31, 1998 to December 31, 1999. On May 28, 1999, we completed our initial public offering. In the IPO, we issued and sold 3.8 million shares of common stock at an initial offering price of $8 per share. On June 11, 1999, we issued and sold an additional 570,000 shares on the exercise in full of the over-allotment option we had granted to the underwriters for the IPO. Our net proceeds from these sales, after deducting the underwriting discount and other IPO expenses, totaled $27.7 million. We used $22.3 million of these proceeds to pay the cash portions of the purchase prices of our six initial businesses and the remaining $5.4 million to repay a portion of their indebtedness. On May 28, 1999, we entered into a $75 million secured revolving credit facility with a group of banks and borrowed approximately $22.7 million, principally to refinance outstanding indebtedness of our acquired businesses. In December 1999, we increased the size of the facility to $100 million. We had $57.1 million of outstanding borrowings under the facility at December 31, 1999. In February 2000, we increased the size of the facility to $200 million. We had $130.8 million of outstanding borrowings under the facility at March 24, 2000. The facility has a three-year term and a $5.0 million sublimit for letters of credit issued on our behalf. We may use the facility for the following purposes: . finance acquisitions; . internally expand operations; . working capital; and . general corporate purposes. Our subsidiaries have guaranteed the repayment of all amounts owing under the facility, and we secured the facility with the capital stock and assets of our subsidiaries. The facility: . requires the consent of the lenders for certain acquisitions; . prohibits the payment of cash dividends on our common stock; . limits our ability to incur additional indebtedness; and . requires us to comply with financial covenants. - ------------------------------------------------------------------------------- 17 The failure to comply with these covenants and restrictions would constitute an event of default under the facility. Our borrowing capacity under the facility will vary from time to time depending on our satisfaction of several financial tests. We anticipate that our consolidated cash flow from our operations will exceed our normal working capital needs, debt service requirements and the amount of our planned capital expenditures, excluding acquisitions, for at least the next 12 months. Our growth strategy will require substantial capital. We currently intend to finance future acquisitions through issuances of our common stock or debt securities, including convertible debt securities, and borrowings under our credit facility. Using debt to complete acquisitions could substantially limit our operational and financial flexibility. The extent to which we will be able or willing to use our common stock to make acquisitions will depend on its market value from time to time and the willingness of potential sellers to accept it as full or partial payment. Using our common stock for this purpose may result in dilution to our then existing stockholders. To the extent we are unable to use our common stock to make future acquisitions, our ability to grow will be limited by the extent to which we are able to raise capital for this purpose, as well as to expand existing operations, through debt or additional equity financings. If we are unable to obtain additional capital on acceptable terms, we may be required to reduce the scope of our presently anticipated expansion, which could materially adversely affect our business and the value of our common stock. We cannot accurately predict the timing, size and success of our acquisition efforts or our associated potential capital commitments. Year 2000 Compliance The "year 2000" problem resulted from the fact that many software applications, computer hardware and related equipment and systems that use embedded technology, such as microprocessors, rely on two digits rather than four to represent years in performing computations and decision-making functions. Absent modification, many of these programs, hardware items and systems would have failed on January 1, 2000 or earlier because they would have misinterpreted "00" as the year 1900 rather than 2000. By December 31, 1999, we completed all tasks that we scheduled for completion before that date to resolve the year 2000 problems that might have affected us, and the transition to the year 2000 did not have a material impact on any of our critical systems or facilities. To date, the year 2000 problems of third parties, including our customers and suppliers, have not had a significant impact on our operations. The costs associated with modifications to our systems and other activities related to achieving year 2000 readiness have not had a material impact on our consolidated financial condition, cash flows or results of operations. The total cost of our year 2000 project was under $0.1 million, which we funded through our cash flows from operations. Although it appears the transition to the year 2000 has not impacted us, some risk will continue until we encounter other critical dates in the current year and until we execute all our software and other systems through complete business and operating cycles. This disclosure is subject to protection under the Year 2000 Information and Readiness Disclosure Act of 1998 as a "Year 2000 Statement" and "Year 2000 Readiness Disclosure," as that Act defines those terms. Inflation As a result of the relatively low levels of inflation during the past three years, inflation did not significantly affect our results of operations in any of those years. - ------------------------------------------------------------------------------- 18 Item 7A. Quantitative and Qualitative Disclosures About Market Risk Borrowings under our revolving credit facility expose us to certain market risks. Outstanding borrowings under our credit facility were $57.1 million at December 31, 1999. A change of one percent in the interest rate would cause a change in interest expense of approximately $571,000, or $0.02 per share, on an annual basis. We did not enter into our credit facility for trading purposes and the facility carries interest at a pre-agreed percentage point spread from either the prime interest rate or 30-day Eurodollar interest rate. Item 8. Financial Statements and Supplementary Data U.S. CONCRETE, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page ---- U.S. Concrete, Inc. and Subsidiaries Report of Independent Public Accountants................................ 20 Consolidated Balance Sheets at December 31, 1999 and 1998............... 21 Consolidated Statements of Operations for the Years Ended December 31, 1999, 1998 and 1997.................................................... 22 Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1999, 1998 and 1997................................. 23 Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997.................................................... 24 Notes to Consolidated Financial Statements.............................. 25
- ------------------------------------------------------------------------------- 19 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To U.S. Concrete, Inc.: We have audited the accompanying consolidated balance sheets of U.S. Concrete, Inc., a Delaware corporation, and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1999. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of U.S. Concrete, Inc. and subsidiaries as of December 31, 1999 and 1998, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. /s/ ARTHUR ANDERSEN LLP - ------------------------------- ARTHUR ANDERSEN LLP Houston, Texas March 10, 2000 - -------------------------------------------------------------------------------- 20 U.S. CONCRETE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)
December 31 ---------------- ASSETS 1999 1998 ------ -------- ------- Current assets: Cash and cash equivalents........................................ $ 627 $ 4,213 Trade accounts receivable, net................................... 44,085 7,641 Receivables from related parties................................. 1,496 2,712 Inventories...................................................... 4,351 792 Prepaid expenses and other current assets........................ 1,758 989 -------- ------- Total current assets......................................... 52,317 16,347 -------- ------- Property, plant and equipment, net................................. 53,949 9,138 Goodwill, net...................................................... 105,492 -- Cash surrender value of life insurance............................. -- 1,155 Other assets....................................................... 976 -- -------- ------- Total assets................................................. $212,734 $26,640 ======== ======= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Current maturities of long-term debt............................. $ 140 $ 1,006 Accounts payable and accrued liabilities......................... 37,599 7,910 -------- ------- Total current liabilities.................................... 37,739 8,916 -------- ------- Long-term debt, net of current maturities.......................... 57,235 2,524 Deferred income taxes.............................................. 6,967 46 -------- ------- Total liabilities............................................ 101,941 11,486 -------- ------- Stockholders' equity Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding..................................... -- -- Common stock, $0.001 par value; 60,000,000 shares authorized; 18,639,228 and 3,120,130 shares issued and outstanding in 1999 and 1998, respectively.......................................... 19 3 Additional paid-in capital..................................... 104,271 621 Retained earnings.............................................. 6,503 14,530 -------- ------- Total stockholders' equity................................... 110,793 15,154 -------- ------- Total liabilities and stockholders' equity................... $212,734 $26,640 ======== =======
The accompanying notes are an integral part of these consolidated financial statements. - -------------------------------------------------------------------------------- 21 U.S. CONCRETE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
Year Ended December 31 -------------------------- 1999 1998 1997 -------- ------- ------- Sales............................................. $167,912 $66,499 $53,631 Cost of goods sold................................ 135,195 53,974 43,794 -------- ------- ------- Gross profit.................................... 32,717 12,525 9,837 Selling, general and administrative expenses...... 9,491 4,712 4,265 Stock compensation charge......................... 2,880 -- -- Depreciation and amortization..................... 3,453 930 1,330 -------- ------- ------- Income from operations.......................... 16,893 6,883 4,242 Interest expense, net............................. 1,708 165 226 Other, net........................................ (663) (36) (26) -------- ------- ------- Income before income tax provision (benefit).... 15,848 6,754 4,042 Income tax provision (benefit).................... 7,658 100 (457) -------- ------- ------- Net income...................................... $ 8,190 $ 6,654 $ 4,499 ======== ======= ======= Earnings per share: Basic........................................... $ 0.70 $ 2.13 $ 1.44 ======== ======= ======= Diluted......................................... $ 0.70 $ 2.13 $ 1.44 ======== ======= ======= Number of shares used in calculating earnings per share: Basic........................................... 11,770 3,120 3,120 ======== ======= ======= Diluted......................................... 11,783 3,120 3,120 ======== ======= =======
The accompanying notes are an integral part of these consolidated financial statements. - -------------------------------------------------------------------------------- 22 U.S. CONCRETE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (in thousands, except share amounts)
Common Stock Additional ------------- Paid-In Retained Stockholders' Shares Amount Capital Earnings Equity ------ ------ ---------- -------- ------------- BALANCE, December 31, 1996..... 3,120 $ 3 $ 621 $ 5,848 $ 6,472 Distributions to stockholders................ -- -- -- (240) (240) Net income................... -- -- -- 4,499 4,499 ------ --- -------- ------- -------- BALANCE, December 31, 1997..... 3,120 3 621 10,107 10,731 Distributions to stockholders................ -- -- -- (2,231) (2,231) Net income..................... -- -- -- 6,654 6,654 ------ --- -------- ------- -------- BALANCE, December 31, 1998..... 3,120 3 621 14,530 15,154 Initial public offering, net of offering costs........... 4,370 4 27,668 -- 27,672 Acquisitions of founding companies................... 8,719 10 60,784 (6,064) 54,730 Acquisitions of purchased companies................... 2,430 2 15,198 -- 15,200 Distributions to stockholders................ -- -- -- (10,153) (10,153) Net income................... -- -- -- 8,190 8,190 ------ --- -------- ------- -------- BALANCE, December 31, 1999..... 18,639 $19 $104,271 $ 6,503 $110,793 ====== === ======== ======= ========
The accompanying notes are an integral part of these consolidated financial statements. - -------------------------------------------------------------------------------- 23 U.S. CONCRETE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Year Ended December 31 -------------------------- 1999 1998 1997 -------- ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income....................................... $ 8,190 $ 6,654 $ 4,499 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization.................. 3,453 930 1,330 Net gain on sale of property, plant and equipment..................................... (218) (36) (27) Deferred income tax provision (benefit)........ 762 11 (483) Provision for doubtful accounts................ 118 17 -- Stock compensation charge...................... 2,880 -- -- Changes in assets and liabilities, excluding effects of acquisitions: Receivables.................................... (5,372) (1,697) (4,640) Prepaid expenses and other current assets...... 69 (519) (378) Accounts payable and accrued liabilities....... (959) 1,499 1,947 -------- ------- ------- Net cash provided by operating activities.... 8,923 6,859 2,248 -------- ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment....... (7,547) (3,300) (2,222) Payments for acquisitions accounted for as purchases, net of cash received of $10,070, $0 and $0.......................................... (78,793) -- -- Proceeds from disposals of property, plant and equipment....................................... 1,031 52 91 Increase in cash surrender value of life insurance....................................... -- (189) (177) -------- ------- ------- Net cash used in investing activities........ (85,309) (3,437) (2,308) -------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings......................... 57,266 2,006 1,570 Repayments of borrowings......................... (3,607) (1,136) (640) Proceeds from issuances of common stock.......... 32,512 -- -- Cash paid related to common stock issuance costs........................................... (4,373) -- -- Distributions to stockholders.................... (8,998) (2,024) (240) -------- ------- ------- Net cash provided by (used in) financing activities.................................. 72,800 (1,154) 690 -------- ------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....................................... (3,586) 2,268 630 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD... 4,213 1,945 1,315 -------- ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD......... $ 627 $ 4,213 $ 1,945 ======== ======= ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest........................... $ 1,412 $ 344 $ 285 Cash paid for income taxes....................... $ 4,973 $ 78 $ 749 NONCASH FINANCING ACTIVITY: Distribution of cash surrender value of life insurance to stockholder........................ $ 1,155 $ -- $ -- Distribution of note receivable to stockholder... $ -- $ 207 $ --
The accompanying notes are an integral part of these consolidated financial statements. - -------------------------------------------------------------------------------- 24 U.S. CONCRETE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND BASIS OF PRESENTATION U.S. Concrete, Inc., a Delaware corporation, was founded in July 1997 to create a leading provider of ready-mixed concrete and related products and services to the construction industry in major markets in the United States. It did not conduct any operations prior to May 1999. On May 28, 1999, it completed an initial public offering of its common stock and concurrently acquired six operating businesses. From the date of its IPO through December 31, 1999, U.S. Concrete acquired eight additional operating businesses. It intends to acquire additional companies to expand its operations. For financial statement presentation purposes, (1) Central Concrete Supply Co., Inc., one of the acquired businesses, is presented as the acquirer of the other acquired businesses and U.S. Concrete, (2) all the 1999 acquisitions are accounted for in accordance with the purchase method of accounting and (3) the effective date of the initial acquisitions is May 31, 1999. These consolidated financial statements are those of (1) Central for periods prior to June 1, 1999 and (2) U.S. Concrete and its consolidated subsidiaries on that date and thereafter. U.S. Concrete's future success depends on a number of factors which include integrating operations successfully, identifying and integrating satisfactory acquisition candidates, obtaining acquisition financing, managing growth, attracting and retaining qualified management and employees, complying with government regulations and other regulatory requirements or contract specifications, and addressing risks associated with competition, seasonality and quarterly fluctuations. 2. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements consist of the accounts of U.S. Concrete and its wholly owned subsidiaries. They eliminate all intercompany transactions and balances. Cash and Cash Equivalents U.S. Concrete records as cash equivalents all highly liquid investments having maturities of three months or less at the date of purchase. Inventories Inventories consist primarily of raw materials, pre-cast products, building materials and repair parts that U.S. Concrete holds for use or sale in the ordinary course of business. It uses the first-in, first-out method to value inventories at the lower of cost or market. For each of the three years ended December 31, 1999, management believes U.S. Concrete incurred no material impairments in the carrying value of its inventories. Prepaid Expenses Prepaid expenses primarily include amounts U.S. Concrete has paid for fuel, property taxes, licenses and insurance. It expenses or amortizes all prepaid amounts as used or over the period of benefit, as applicable. Property, Plant and Equipment, Net U.S. Concrete states property, plant and equipment at cost, unless impaired, and uses the straight-line method to compute depreciation of these assets over their estimated useful lives. It capitalizes leasehold improvements on properties it holds under operating leases and amortizes them over the lesser of their estimated useful lives or the lives of the applicable leases. It states equipment it holds under capital leases at the net present value of the future minimum lease payments at the inception of the applicable leases and amortizes that equipment over the lesser of the life of the lease or the estimated useful life of the asset. U.S. Concrete expenses maintenance and repair costs when incurred and capitalizes and depreciates expenditures for major renewals and betterments that extend the useful lives of its existing assets. When U.S. Concrete retires or disposes of property, plant or equipment, it removes the related cost and accumulated depreciation from its accounts and reflects any resulting gain or loss in its statements of operations. - ------------------------------------------------------------------------------- 25 U.S. CONCRETE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Goodwill Goodwill represents the amount by which the total purchase price U.S. Concrete has paid to acquire businesses accounted for as purchases exceeds its estimated fair market value of the net tangible assets acquired. It amortizes goodwill on a straight-line basis over 40 years. Management routinely evaluates whether events or circumstances have occurred that indicate that the remaining estimated useful life of goodwill may warrant revision or that the remaining balances may not be recoverable. During an evaluation the estimated future undiscounted cash flows associated with the asset are compared to the asset's carrying amount to determine if such an impairment exists. As of December 31, 1999 and 1998, accumulated amortization was $1.1 million and $0, respectively. Debt Issue Costs Other long-term assets include debt issue costs related to U.S. Concrete's credit facility. See Note 6. U.S. Concrete amortizes these costs as interest expense over the scheduled maturity period of the debt. As of December 31, 1999 and 1998, accumulated amortization of debt issue costs was $154,780 and $0, respectively. Allowance for Doubtful Accounts U.S. Concrete provides an allowance for accounts receivable it believes it may not collect in full. Sales and Expenses U.S. Concrete derives its sales primarily from the production and delivery of ready-mixed concrete. It recognizes sales when products are delivered. Cost of goods sold consists primarily of product costs and operating expenses. Operating expenses consist primarily of wages, benefits and other expenses attributable to plant operations, repairs and maintenance and trucks. Selling expenses consist primarily of sales commissions, salaries of sales managers, travel and entertainment expenses and trade show expenses. General and administrative expenses consist primarily of executive compensation and related benefits, administrative salaries and benefits, office rent and utilities, communication expenses and professional fees. Income Taxes U.S. Concrete uses the liability method of accounting for income taxes. Under this method, it records deferred income taxes based on temporary differences between the financial reporting and tax bases of assets and liabilities and uses enacted tax rates and laws that will be in effect when it recovers those assets or settles those liabilities, as the case may be, to measure those taxes. U.S. Concrete files a consolidated federal income tax return, which includes the operations of all acquired businesses for periods subsequent to their respective acquisition dates. The acquired businesses file "short period" federal income tax returns for the period from their last fiscal year through their respective acquisition dates. Fair Value of Financial Instruments The financial instruments of U.S. Concrete consist primarily of cash and cash equivalents, trade receivables, trade payables and long-term debt. Management considers the book values of these items to be representative of their respective fair values. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions by management in determining the reported amounts of liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. - ------------------------------------------------------------------------------- 26 U.S. CONCRETE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Valuation of Long-Lived Assets U.S. Concrete reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. If the expected future undiscounted cash flows of an asset it intends to hold for use is less than the carrying amount of the asset, it will recognize a loss equal to the difference between the fair value (calculated by discounting the estimated future operating cash flows) and the carrying amount of the asset. If it intends to dispose of an asset that is impaired, it will recognize a loss equal to the difference between the estimated fair value of the asset, less estimated costs to sell, and its carrying amount. Reclassifications Certain reclassifications have been made to amounts in prior period financial statements to conform with current period presentation. Earnings per Share Since Central is presented as the acquirer of the other acquired businesses and U.S. Concrete, U.S. Concrete uses the shares of its common stock beneficially owned by the former owners of Central in the calculation of its earnings per share for all periods prior to the IPO. The following table reconciles the numerators and denominators of the basic and diluted earnings per share for the periods shown (in thousands, except per share amounts). Basic earnings represent earnings per weighted average outstanding share, while diluted earnings represent those earnings as diluted by potentially dilutive securities such as outstanding options.
Year Ended December 31 -------------------- 1999 1998 1997 ------ ------ ------ Numerator: Net income............................................... $8,190 $6,654 $4,499 Denominator: Weighted average common shares outstanding-basic......... 11,770 3,120 3,120 Effect of dilutive stock options......................... 13 -- -- ------ ------ ------ Weighted average common shares outstanding-diluted....... 11,783 3,120 3,120 ====== ====== ====== Earnings per share: Basic.................................................... $ 0.70 $ 2.13 $ 1.44 Diluted.................................................. $ 0.70 $ 2.13 $ 1.44
For the year ended December 31, 1999, 1.3 million stock options were excluded from the computation of diluted earnings per share because their exercise prices were greater than the average market price of the common stock. Collective Bargaining Agreements U.S. Concrete's subsidiaries are parties to various collective bargaining agreements with labor unions. These agreements require them to pay specified wages and provide certain benefits to their union employees. These agreements will expire at various times through April 2002. New Accounting Pronouncements In the first quarter of 1999, U.S. Concrete adopted Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income," which requires the display of comprehensive income and its - ------------------------------------------------------------------------------- 27 U.S. CONCRETE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) components in the financial statements. Comprehensive income represents all changes in equity of an entity during the reporting period, except those resulting from investments by and distributions to stockholders. For each of the three years ended December 31, 1999, no material differences exist between the historical net income and comprehensive income of U.S. Concrete. U.S. Concrete has adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information," which establishes standards for the way public enterprises are to report information about operating segments in annual financial statements and requires the reporting of selected information about operating segments in interim financial reports issued to stockholders. Beginning January 1, 2001, U.S. Concrete will apply SFAS No. 133, "Accounting for Derivative Securities and Hedging Activities." SFAS No. 133 will require it to recognize all derivative instruments (including some derivative instruments embedded in other contracts) as assets or liabilities on its balance sheet and measure them at fair value. The statement requires that changes in the fair value of derivatives be recognized currently in earnings unless specific hedge accounting criteria are met. U.S. Concrete is evaluating SFAS No. 133 and its impact on existing accounting policies and financial reporting disclosure. U.S. Concrete has not, to date, engaged in activities or entered into arrangements associated with derivative instruments. 3. BUSINESS COMBINATIONS During 1999, U.S. Concrete acquired 14 businesses. The aggregate consideration it paid in these transactions, all of which are accounted for as purchases, consisted of $40.0 million in cash and 2.4 million shares of common stock. The accompanying balance sheet as of December 31, 1999 includes preliminary allocations of the purchase prices and is subject to final adjustment. The following summarized unaudited pro forma financial information adjusts the historical financial information by assuming U.S. Concrete acquired all these businesses on January 1, 1998:
Year Ended December 31 ----------------- 1999 1998 -------- -------- (unaudited) Revenues.................................................. $282,598 $270,611 Net income................................................ $ 12,308 $ 9,115 Basic earnings per share.................................. $ 0.66 $ 0.49 Diluted earnings per share................................ $ 0.66 $ 0.49
Pro forma adjustments these amounts include primarily relate to: . contractual reductions in salaries, bonuses and benefits to former owners of the businesses; . elimination of legal, accounting and other professional fees incurred in connection with the acquisitions; . amortization of goodwill resulting from the acquisitions; . reduction in interest expense, net of interest expense on borrowings to fund acquisitions; and . adjustments to the federal and state income tax provision based on pro forma operating results. The pro forma financial information does not purport to represent what the combined financial results of operations of U.S. Concrete actually would have been if these transactions and events had in fact occurred when assumed and are not necessarily representative of its financial results of operations for any future period. - ------------------------------------------------------------------------------- 28 U.S. CONCRETE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) In connection with the acquisitions, U.S. Concrete has determined a preliminary calculation of the resulting goodwill as follows (in thousands):
December 31, 1999 ------------ Fair value of assets acquired, net of cash acquired............. $ 75,067 Less: liabilities assumed....................................... (37,808) -------- Net assets acquired, net of cash................................ 37,259 -------- Cash paid, net of cash acquired................................. 69,026 Issuance of common stock........................................ 74,816 -------- Total consideration paid........................................ 143,842 -------- Goodwill........................................................ $106,583 ========
These amounts are preliminary and are subject to final adjustment. 4. PROPERTY, PLANT AND EQUIPMENT A summary of property, plant and equipment is as follows (dollars in thousands):
Useful December 31 Lives in ---------------- Years 1999 1998 -------- ------- ------- Land.............................................. -- $12,381 $ 584 Buildings and improvements........................ 10-40 7,225 1,019 Machinery and equipment........................... 10-30 14,191 5,827 Mixers, trucks and other vehicles................. 6-12 29,211 11,313 Furniture and fixtures............................ 3-10 527 512 Construction in progress.......................... -- 2,322 -- ------- ------- 65,857 19,255 Less: accumulated depreciation.................... (11,908) (10,117) ------- ------- $53,949 $ 9,138 ======= =======
5. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS Activity in U.S. Concrete's allowance for doubtful accounts receivable consists of the following (in thousands):
December 31 --------------- 1999 1998 1997 ---- ---- ---- Balance, beginning of period................................ $ 97 $80 $80 Additions from acquisitions................................. 686 -- -- Provision for uncollectible accounts........................ 118 17 -- Uncollectible receivables written off, net of recoveries.... (171) -- -- ---- --- --- Balance, end of period...................................... $730 $97 $80 ==== === ===
- ------------------------------------------------------------------------------- 29 U.S. CONCRETE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Inventory consists of the following (in thousands):
December 31 ----------- 1999 1998 ------ ---- Raw materials................................................... $1,905 $259 Building materials for resale................................... 844 533 Precast products................................................ 993 -- Repair parts.................................................... 609 -- ------ ---- $4,351 $792 ====== ====
Accounts payable and accrued liabilities consist of the following (in thousands):
December 31 -------------- 1999 1998 ------- ------ Accounts payable............................................. $27,473 $7,042 Accrued compensation and benefits............................ 2,764 868 Accrued interest............................................. 172 -- Accrued income taxes......................................... 3,827 -- Other........................................................ 3,363 -- ------- ------ $37,599 $7,910 ======= ======
6. LONG-TERM DEBT A summary of long-term debt is as follows (in thousands):
December 31 ---------------- 1999 1998 ------- ------- Secured revolving credit facility............................ $57,100 $ -- Notes payable to various financial institutions, secured by mixer trucks, maturing in varying amounts through May 2003, with interest ranging from 7.0% to 9.7%..................... -- 2,860 Notes payable to various financial institutions, secured by various equipment and guaranteed by stockholders, maturing in varying amounts through September 2003, with interest ranging from 4.7% to 8.8%................................... -- 670 Other........................................................ 275 -- ------- ------- 57,375 3,530 Less: current maturities................................... (140) (1,006) ------- ------- Long-term debt, net of current maturities.................... $57,235 $ 2,524 ======= =======
On May 28, 1999, U.S. Concrete entered into a three-year $75 million revolving credit facility with a group of banks. It may use this facility for working capital, to finance acquisitions and for other general corporate purposes. Availability under the facility is tied to consolidated cash flow and liquidity. Advances bear interest, at U.S. Concrete's option, at a prime rate or LIBOR, in each case plus a margin keyed to the ratio of consolidated indebtedness to cash flow. At December 31, 1999, U.S. Concrete had borrowings totaling $57.1 million outstanding under its credit facility at a weighted average interest cost of 7.9%. Commitment fees are due on any unused borrowing capacity. The facility requires U.S. Concrete to maintain financial covenants regarding net worth, coverage ratios and additional indebtedness and prohibits dividends on its common stock. Subsidiary guarantees and pledges of substantially all U.S. Concrete's fixed assets secure the payment of all obligations owing under the facility. The size of the facility increased to $100 million in December 1999 and $200 million in February 2000. - ------------------------------------------------------------------------------- 30 U.S. CONCRETE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Aggregate maturities are as follows (in thousands):
Year Ending December 31 ----------------------- 2000................................................................ $ 140 2001................................................................ 114 2002................................................................ 57,121 ------- $57,375 =======
7. STOCKHOLDERS' EQUITY Initial Public Offering In May 1999, U.S. Concrete completed its IPO, issuing 3.8 million shares of its common stock to the public at a price of $8.00 per share, resulting in net proceeds to U.S. Concrete of $23.5 million, after deducting offering costs. In June 1999, it sold an additional 570,000 shares of common stock on the exercise of the underwriters' over-allotment option. It realized net proceeds from this sale of $4.2 million. Warrants In connection with the IPO, U.S. Concrete issued warrants to the underwriters to purchase 200,000 shares of common stock at an exercise price of $8.00 per share. At December 31, 1999, all these warrants remained outstanding. They expire in May 2002. Stock Options U.S. Concrete's 1999 incentive plan enables U.S. Concrete to grant non- qualified options, restricted stock, deferred stock, incentive stock options, stock appreciation rights and other long-term incentive awards. The number of shares available for issuance under the plan is limited to the greater of 2.0 million shares of common stock or 15% of the number of shares of common stock outstanding on the last day of the preceding calendar quarter, although the board of directors of U.S. Concrete may, in its discretion, grant additional awards or establish other compensation plans. The number of shares available for issue under the plan was 1.3 million as of December 31, 1999. The following table summarizes stock option activity during 1999 (in thousands, except prices):
Weighted Average Exercise Options Price ----------- -------- Options outstanding at January 1....................... -- -- Granted.............................................. 1,425 7.93 Exercised............................................ -- -- Forfeited............................................ (32) 8.13 ----------- ---- Options outstanding at December 31..................... 1,393 7.93 =========== ==== Options exercisable at December 31..................... 28 6.60 =========== ==== Option exercise price range at December 31............. $6.25-$8.75
As allowed by SFAS No. 123, "Accounting for Stock-Based Compensation," U.S. Concrete accounts for stock option awards in accordance with Accounting Principles Board (APB) Opinion No. 25. The exercise prices of all options U.S. Concrete awarded during 1999 equaled the fair market values of the common stock on the dates of - ------------------------------------------------------------------------------- 31 U.S. CONCRETE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) grant. As a result, under APB No. 25, it did not recognize any compensation expense attributable to these options. Had it determined compensation expense under the SFAS No. 123 method, its net income and earnings per share during 1999 would have been the following pro forma amounts (in thousands, except per share amounts): Net income As reported........................................................ $8,190 ====== Pro forma.......................................................... $7,699 ====== Diluted earnings per share As reported........................................................ $ 0.70 ====== Pro forma.......................................................... $ 0.65 ======
The effects of applying SFAS No. 123 in the pro forma disclosure may not be indicative of future amounts because U.S. Concrete expects to make additional awards. For purposes of this disclosure, U.S. Concrete estimated the fair value of each option grant on the date of grant using the Black-Scholes option pricing model with the following assumptions: Expected dividend yield............................................. 0.0% Expected stock price volatility..................................... 54.7% Risk-free interest rate............................................. 6.0% Expected life of options............................................ 10 years
8. INCOME TAXES U.S. Concrete's consolidated federal and state tax returns include the results of operations of acquired businesses from their dates of acquisition. The amounts of consolidated federal and state income tax provision (benefit) are as follows (in thousands):
Year Ended December 31 ----------------- 1999 1998 1997 ------ ---- ----- Current: Federal.................................................... $6,398 $ -- $ (32) State...................................................... 498 89 58 ------ ---- ----- 6,896 89 26 ------ ---- ----- Deferred: Federal.................................................... 700 -- (393) State...................................................... 62 11 (90) ------ ---- ----- 762 11 (483) ------ ---- ----- $7,658 $100 $(457) ====== ==== =====
- -------------------------------------------------------------------------------- 32 U.S. CONCRETE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) A reconciliation of U.S. Concrete's effective income tax rate to the amounts calculated by applying the federal statutory corporate tax rate of 35% is as follows (in thousands):
Year Ended December 31 ------------------- 1999 1998 1997 ------ ---- ----- Tax at statutory rate..................................... $5,547 $ -- $ -- Add (deduct): State income taxes...................................... 364 100 (32) Nondeductible expenses.................................. 405 -- 4 Nondeductible compensation charge....................... 1,008 -- -- Income taxed to Central shareholders.................... (590) -- (429) Deferred tax charge for S corporation taxes............. 924 -- -- ------ ---- ----- Income tax provision (benefit)............................ $7,658 $100 $(457) ====== ==== ===== Effective income tax rate................................. 48.3% 1.5% (11.3%) ====== ==== =====
Deferred income tax provisions (benefits) result from temporary differences in the recognition of expenses for financial reporting purposes and for tax reporting purposes. U.S. Concrete presents the effects of those differences as deferred income tax liabilities and assets, as follows (in thousands):
December 31 ----------- 1999 1998 ------ ---- Deferred income tax liabilities: Property and equipment, net....................................... $7,838 $47 Other............................................................. 476 10 ------ --- Total deferred income tax liabilities........................... 8,314 57 ------ --- Deferred income tax assets: Allowance for doubtful accounts................................... 197 1 Inventory......................................................... 42 -- Accrued expenses.................................................. 1,062 9 Other............................................................. 46 1 ------ --- Total deferred income tax assets................................ 1,347 11 ------ --- Net deferred income tax liabilities........................... $6,967 $46 ====== ===
Prior to their respective acquisitions, Central and other acquired businesses were S corporations and were not subject to federal income taxes. Effective with their acquisition they became subject to those taxes, and U.S. Concrete has recorded an estimated deferred tax liability to provide for its estimated future income tax liability as a result of the difference between the book and tax bases of the net assets of these corporations as of the dates of their acquisitions. These consolidated financial statements reflect the federal and state income taxes of these corporations since their dates of acquisition. - ------------------------------------------------------------------------------- 33 U.S. CONCRETE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 9. RELATED-PARTY TRANSACTIONS U.S. Concrete has transactions in the normal course of business with related parties. These transactions consist principally of operating leases under which U.S. Concrete leases facilities from former owners of its acquired businesses or their affiliates. These leases are for periods generally ranging from three to five years and are on terms management believes are comparable to non-related party leases. Lease payments under these leases were approximately $597,000 in 1999, $144,000 in 1998 and $144,000 in 1997. The schedule of minimum lease payments in Note 11 includes U.S. Concrete's future commitments under these leases. U.S. Concrete's venture capital partner advanced funds to U.S. Concrete from August 1998 until May 1999 totaling $1.7 million to enable it to pay its expenses in connection with the completion of its IPO and concurrent acquisitions of six operating businesses. U.S. Concrete repaid these advances, including interest accrued at the rate of 6% per year, from the gross proceeds of its IPO. U.S. Concrete paid its venture capital partner an additional $180,000 during the remainder of 1999 for services related to U.S. Concrete's acquisition program. 10. RISK CONCENTRATION U.S. Concrete grants credit, generally without collateral, to its customers, which include general contractors, municipalities and commercial companies located solely in the United States. Consequently, it is subject to potential credit risk related to changes in business and economic factors throughout the United States. U.S. Concrete generally has lien rights in the work it performs, and concentrations of credit risk are limited because of the diversity of its customer base. Further, management believes that its contract acceptance, billing and collection policies are adequate to minimize any potential credit risk. U.S. Concrete maintains cash balances at financial institutions, which may at times be in excess of federally insured levels. It has not incurred losses related to these balances during the three-year period ended December 31, 1999. 11. COMMITMENTS AND CONTINGENCIES Litigation In the normal course of business, U.S. Concrete is subject to proceedings, lawsuits and other claims. In the opinion of management, pending or threatened litigation involving U.S. Concrete will not have a material adverse effect on its financial condition or results of operations. Lease Payments U.S. Concrete leases tracts of land, facilities and equipment it uses in its operations. Rental expense under operating leases was $2.0 million, $322,000 and $320,000 in 1999, 1998 and 1997, respectively. Minimum future annual lease payments under these leases are as follows (in thousands):
Year Ending December 31 ----------- 2000............................................................. $ 3,503 2001............................................................. 2,926 2002............................................................. 2,349 2003............................................................. 1,861 2004............................................................. 1,621 Thereafter....................................................... 2,086 ------- $14,346 =======
- ------------------------------------------------------------------------------- 34 U.S. CONCRETE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 12. SIGNIFICANT CUSTOMERS Significant customers represented sales (as a percentage of total sales) as follows:
Year Ended December 31 ---------------- 1999 1998 1997 ---- ---- ---- Customer A................................................. 8% 16% 14% Customer B (related party)................................. 8 22 20
13. SIGNIFICANT SUPPLIERS Significant suppliers represented purchases (as a percentage of total purchases) as follows:
Year Ended December 31 ---------------- 1999 1998 1997 ---- ---- ---- Supplier A................................................. 23% 41% 39% Supplier B................................................. 17 18 22 Supplier C................................................. 4 9 10
14. SEGMENT REPORTING SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information," requires that companies report separately information about each significant operating segment reviewed by the chief operating decision maker. All segments that meet a threshold of 10% of revenues, reported profit or loss, or combined assets are defined as significant segments. U.S. Concrete currently operates as one segment, and all operations and long-lived assets are in the United States. 15. EMPLOYEE BENEFIT PLANS U.S. Concrete maintains defined contribution profit-sharing and money purchase pension plans for its non union employees. Contributions to these plans were approximately $816,000 in 1999, $404,000 in 1998 and $404,000 in 1997. In connection with its collective bargaining agreements with various unions, U.S. Concrete participates with other companies in the unions' multi-employer pension plans. These plans cover all of U.S. Concrete's employees who are members of such unions. The Employee Retirement Income Security Act of 1974, as amended by the Multi-Employer Pension Plan Amendments Act of 1980, imposes certain liabilities upon employers who are contributors to a multi-employer plan in the event of the employer's withdrawal from, or upon termination of such plan. U.S. Concrete has no plans to withdraw from these plans. These plans do not maintain information on net assets and actuarial present value of the accumulated share of the plans' unfunded vested benefits allocable to U.S. Concrete, and amounts, if any, for which U.S. Concrete may be contingently liable are not ascertainable at this time. U.S. Concrete made contributions to these plans of $4.2 million in 1999, $2.3 million in 1998 and $2.0 million in 1997. - ------------------------------------------------------------------------------- 35 U.S. CONCRETE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 16. SELECTED QUARTERLY FINANCIAL INFORMATION (unaudited; in thousands, except per share data)
First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- 1999 Revenues.................................... $12,956 $27,648 $59,803 $67,505 Operating income (loss)..................... 716 (182) 8,296 8,063 Net income (loss)........................... 926 (1,979) 4,913 4,330 Basic earnings (loss) per share............. 0.30 (0.23) 0.30 0.24 Diluted earnings (loss) per share........... 0.30 (0.23) 0.30 0.24 1998 Revenues.................................... 9,918 15,775 21,482 19,324 Operating income............................ 593 1,654 2,390 2,246 Net income.................................. 683 1,584 2,340 2,047 Basic earnings per share.................... 0.22 0.51 0.75 0.66 Diluted earnings per share.................. 0.22 0.51 0.75 0.66
In the second quarter of 1999, in connection with the IPO, U.S. Concrete recorded a noncash compensation charge for 400,000 shares of common stock issued to management at a nominal cost. The compensation charge was calculated using a fair value of $7.20 per share, which reflects a 10% discount from the IPO price of $8.00 per share because of restrictions on the sale and transferability of the shares issued. Also in the second quarter, an additional tax provision of $924,000 was recorded with the conversion of Central from C-corp status to S-corp status. Central had made no provision for federal income taxes for the first five months of 1999. 17. SUBSEQUENT EVENTS Profit Sharing Plan In February 2000, U.S. Concrete established a defined contribution 401(k) profit sharing plan for employees meeting various employment requirements. Eligible employees may contribute amounts up to the lesser of 15% of their annual compensation or the maximum amount permitted under IRS regulations. U.S. Concrete matches 100% of employee contributions up to a maximum of 5% of their compensation. Acquisitions From January 1 through March 10, 2000, U.S. Concrete acquired three businesses. The aggregate consideration it paid in these transactions, all of which it accounted for as purchases, consisted of $67.4 million in cash and 2.6 million shares of common stock. - ------------------------------------------------------------------------------- 36 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. PART III Item 10. Directors and Executive Officers of the Registrant Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management Item 13. Certain Relationships and Related Transactions Please see the definitive proxy statement for our 2000 Annual Meeting of Stockholders for the information required by Items 10, 11, 12 and 13. We will file the definitive proxy statement with the SEC by May 1, 2000. We are incorporating our definitive proxy statement into this report by reference except for the information appearing under the captions "Report from the Compensation Committee Regarding Executive Compensation" and "Performance Graph". PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a)(1) Financial Statements. See Index to Consolidated Financial Statements on page 19. (2) Financial Statement Schedules. All financial statement schedules are omitted because they are not required or the required information is shown in our consolidated financial statements or the notes thereto. (3) Exhibits.
Exhibit Number Description ------- ----------- 2.1* --Agreement and Plan of Reorganization dated as of March 22, 1999 by and among U.S. Concrete, OCC Acquisition Inc., Opportunity Concrete Corporation and the stockholders named therein (Form S-1 (Reg. No. 333-74855), Exhibit 2.1). 2.2* --Agreement and Plan of Reorganization dated as of March 22, 1999 by and among U.S. Concrete, Walker's Acquisition Inc., Walker's Concrete, Inc. and the stockholders named therein (Form S-1 (Reg. No. 333-74855), Exhibit 2.2). 2.3* --Agreement and Plan of Reorganization dated as of March 22, 1999 by and among U.S. Concrete, Central Concrete Acquisitions Inc., Central Concrete Supply Co., Inc. and the stockholders named therein (Form S-1 (Reg. No. 333-74855), Exhibit 2.3). 2.4* --Agreement and Plan of Reorganization dated as of March 22, 1999 by and among U.S. Concrete, Bay Cities Acquisition Inc., Bay Cities Building Materials Co., Inc. and the stockholders named therein (Form S-1 (Reg. No. 333-74855), Exhibit 2.4). 2.5* --Agreement and Plan of Reorganization dated as of March 22, 1999 by and among U.S. Concrete, Baer Acquisition Inc., Baer Concrete, Incorporated and the stockholders named therein (Form S-1 (Reg. No. 333-74855), Exhibit 2.5).
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Exhibit Number Description ------- ----------- 2.6* --Agreement and Plan of Reorganization dated as of March 22, 1999 by and among U.S. Concrete, Santa Rosa Acquisition, Inc., R.G. Evans/Associates d/b/a Santa Rosa Cast Products Co.) and the stockholders named therein (Form S-1 (Reg. No. 333-74855), Exhibit 2.6). 2.7* --Uniform Provisions for the Acquisitions (incorporated into the agreements filed as Exhibits 2.1 through 2.6 hereto) (Form S-1 (Reg. No. 333-74855), Exhibit 2.7). 2.8 --Acquisition Agreement and Plan of Reorganization dated as of September 14, 1999 by and among U.S. Concrete, Inc., Concrete XI Acquisition, Inc., Carrier Excavation and Foundation Company, John F. Carrier, William Henry Carrier, Michael K. Carrier, Mary G. Carrier, Trustee for Anne Carrier (TN UGMA), William Henry Carrier, Trustee for William Henry Carrier, Jr. (TN UGMA), and Mary G. Carrier. 2.9 --Stock Purchase Agreement dated as of November 5, 1999 by and among U. S. Concrete, Inc., B. Thomas Stover, as Trustee under Trust Agreement dated February 20, 1986 for B. Thomas Stover, Sarah M. Stover, as Trustee under Trust Agreement dated February 27, 1990 for Sarah M. Stover, B. Andrew Stover, B. Thomas Stover, Custodian under Michigan Uniform Gifts to Minors Act for the benefit of Carolyn A. Stover, Jeffery D. Spahr, Jeffrey T. Stover, and Bradley C. Stover. 2.10* --Stock Purchase Agreement dated as of January 20, 2000 by and among Robert S. Beall, Chase Bank of Texas, National Association, in its capacity as Trustee for Allison Beall 1999 Trust, Logan Beall 1999 Trust, Allison Beall Descendants' Trust and Logan Beall Descendants' Trust and U.S. Concrete, Inc. (Form 8-K dated February 23, 2000, Exhibit 2.1). 2.11* --Amendment No. 1 to Stock Purchase Agreement dated January 28, 2000 by and among Robert S. Beall, Chase Bank of Texas, National Association, in its capacity as Trustee for Allison Beall 1999 Trust, Logan Beall 1999 Trust, Allison Beall Descendants' Trust and Logan Beall Descendants' Trust and U.S. Concrete, Inc. (Form 8-K dated February 23, 2000, Exhibit 2.2). 2.12* --Stock Purchase Agreement dated as of January 24, 2000 by and among Fallis Arch Beall, Nola Sue Beall, Robert S. Beall, Leigh Ann Gathright, Doris W. Stokes and Fallis Arch Beall, in his capacity as Trustee for the R. E. Stokes Trust and U. S. Concrete, Inc. (Form 8-K dated February 23, 2000, Exhibit 2.3). 2.13 --Acquisition Agreement and Plan of Reorganization dated as of February 8, 2000 by and among U. S. Concrete, Inc., Concrete XIX Acquisition, Inc., Cornillie Fuel & Supply, Inc., Richard A. Deneweth and Joseph C. Cornillie, Trustee URTA of Joseph C. Cornillie. 2.14 --Stock Purchase Agreement dated as of February 8, 2000 by and among U. S. Concrete, Inc., Cornillie Fuel & Supply, Inc., Dencor, Inc. Richard A. Deneweth and Joseph C. Cornillie, Trustee URTA of Joseph C. Cornillie. 2.15 --Acquisition Agreement and Plan of Reorganization dated as of February 8, 2000 by and among U. S. Concrete, Inc., Concrete XVIII Acquisition, Inc., Cornillie Leasing, Inc., Richard A. Deneweth, and Joseph C. Cornillie, Trustee URTA of Joseph C. Cornillie. 2.16 --Acquisition Agreement and Plan of Reorganization dated as of March 2, 2000 by and among U. S. Concrete, Inc., Concrete XXIV Acquisition, Inc., Stancon Inc. and Donald S. Butler and John Grace. 3.1* --Restated Certificate of Incorporation of U.S. Concrete (Form S-1 (Reg. No. 333-74855), Exhibit 3.1). 3.2* --Bylaws of U.S. Concrete (Form S-1 (Reg. No. 333-74855), Exhibit 3.2). 4.1* --Form of Certificate representing common stock (Form S-1 (Reg. No. 333-74855), Exhibit 4.1). 4.2* --Form of Registration Rights Agreement by and among U.S. Concrete and the stockholders listed on the signature pages thereto (Form S-1 (Reg. No. 333-74855), Exhibit 4.2). 4.3* --Funding Agreement dated as of September 10, 1999 by and between U.S. Concrete and Main Street Merchant Partners II, L.P. (Form S-1 (Reg. No. 333-74855), Exhibit 4.3). 4.4* --Rights Agreement by and between U.S. Concrete and American Stock Transfer & Trust Company, including form of Rights Certificate attached as Exhibit B thereto (Form S-1 (Reg. No. 333-74855), Exhibit 4.4). 4.5* --Form of Warrant Agreement among U.S. Concrete, Scott & Stringfellow, Inc. and Sanders Morris Mundy, Inc. (Form S-1 (Reg. No. 333-74855), Exhibit 1.2).
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Exhibit Number Description ------- ----------- 4.6 --Amended and Restated Credit Agreement dated as of February 9, 2000, among U.S. Concrete, the Guarantors named therein, the Lenders named therein, Bankers Trust Company, as syndication agent, First Union National Bank, as documentation agent, Bank One, Texas, NA, Branch Banking & Trust Company, Credit Lyonnais New York Branch and The Bank of Nova Scotia, as co-managing agents and Chase Bank of Texas, N.A., as the Administrative Agent, and Chase Securities, Inc., as sole book manager and lead arranger. U.S. Concrete and some of its subsidiaries are parties to debt instruments under which the total amount of securities authorized does not exceed 10% of the total assets of U.S. Concrete and its subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii) (A) of Item 601(b) of Regulation S-K, U.S. Concrete agrees to furnish a copy of those instruments to the SEC on request. 10.1* --1999 Incentive Plan of U.S. Concrete (Form S-1 (Reg. No. 333-74855), Exhibit 10.1). 10.2* --Employment Agreement between U.S. Concrete and William T. Albanese (Form S-1 (Reg. No. 333-74855), Exhibit 10.2). 10.3* --Form of Employment Agreement between U.S. Concrete and Michael W. Harlan (Form S-1 (Reg. No. 333-74855), Exhibit 10.3). 10.4* --Form of Employment Agreement between U.S. Concrete and Eugene P. Martineau (Form S-1 (Reg. No. 333-74855), Exhibit 10.4). 10.5* --Employment Agreement between U.S. Concrete and Michael D. Mitschele (Form S-1 (Reg. No. 333-74855), Exhibit 10.5). 10.6* --Employment Agreement between U.S. Concrete and Charles W. Sommer (Form S-1 (Reg. No. 333-74855), Exhibit 10.6). 10.7* --Employment Agreement between U.S. Concrete and Neil J. Vannucci (Form S-1 (Reg. No. 333-74855), Exhibit 10.7). 10.8* --Employment Agreement between U.S. Concrete and Robert S. Walker (Form S-1 (Reg. No. 333-74855), Exhibit 10.8). 10.9* --Form of Indemnification Agreement between U.S. Concrete and each of its directors and officers (Form S-1 (Reg. No. 333-74855), Exhibit 10.9). 10.10* --Form of Employment Agreement between U.S. Concrete and Terry Green (Form S-1 (Reg. No. 333-74855), Exhibit 10.10). 10.11 --Employment Agreement between U.S. Concrete and Donald C. Wayne. 21 --Subsidiaries 23 --Consent of independent public accountants. 27 --Financial Data Schedule.
- -------- * Incorporated by reference to the filing indicated. (b) Reports on Form 8-K. None - -------------------------------------------------------------------------------- 39 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. U.S. CONCRETE, INC. Date: March 24, 2000 /s/ Eugene P. Martineau By:__________________________________ Eugene P. Martineau President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 24, 2000.
Signature Title --------- ----- /s/ Eugene P. Martineau President and Chief Executive ___________________________________________ Officer and Director (Principal Eugene P. Martineau Executive Officer) /s/ Michael W. Harlan Chief Financial Officer and Director ___________________________________________ (Principal Financial and Accounting Michael W. Harlan Officer /s/ Vincent D. Foster Director ___________________________________________ Vincent D. Foster /s/ John R. Colson Director ___________________________________________ John R. Colson /s/ Peter T. Dameris Director ___________________________________________ Peter T. Dameris /s/ William T. Albanese Director ___________________________________________ William T. Albanese /s/ Michael D. Mitschele Director ___________________________________________ Michael D. Mitschele /s/ Murray S. Simpson Director ___________________________________________ Murray S. Simpson /s/ Neil J. Vannucci Director ___________________________________________ Neil J. Vannucci /s/ Robert S. Walker Director ___________________________________________ Robert S. Walker
- ------------------------------------------------------------------------------- 40 EX-2.8 2 ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION EXHIBIT 2.8 ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION BY AND AMONG U.S. CONCRETE, INC., CONCRETE XI ACQUISITION, INC., CARRIER EXCAVATION AND FOUNDATION COMPANY, JOHN F. CARRIER, WILLIAM HENRY CARRIER, MICHAEL K. CARRIER, MARY G. CARRIER, TRUSTEE FOR ANNE CARRIER (TN UGMA), WILLIAM HENRY CARRIER, TRUSTEE FOR WILLIAM HENRY CARRIER, JR. (TN UGMA), AND MARY G. CARRIER Dated as of September 14, 1999 TABLE OF CONTENTS ARTICLE I DEFINITIONS........................................................................ 1 1.01 DEFINITIONS............................................................................. 1 1.02 INTERPRETATION.......................................................................... 6 ARTICLE II THE MERGER AND THE SURVIVING CORPORATION................................................ 6 2.01 THE MERGER.............................................................................. 6 2.02 EFFECTIVE TIME OF THE MERGER............................................................ 6 2.03 CERTIFICATE OF INCORPORATION, BYLAWS AND BOARD OF DIRECTORS OF SURVIVING CORPORATION.... 6 ARTICLE III CONVERSION OF SHARES.................................................................... 7 3.01 CONVERSION OF SHARES.................................................................... 7 3.02 NEWCO SHARES............................................................................ 7 3.03 DELIVERY OF MERGER CONSIDERATION........................................................ 7 ARTICLE IV CLOSING................................................................................. 7 4.01 CLOSING................................................................................. 7 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS...................................... 8 5.01 DUE ORGANIZATION AND QUALIFICATION...................................................... 8 5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS............................................. 8 5.03 CAPITALIZATION AND OWNERSHIP............................................................ 9 5.04 SUBSIDIARIES............................................................................ 9 5.05 FINANCIAL STATEMENTS.................................................................... 9 5.06 LIABILITIES AND OBLIGATIONS............................................................. 10 5.07 ACCOUNTS AND NOTES RECEIVABLE........................................................... 10 5.08 PROPERTIES AND ASSETS................................................................... 11 5.09 MATERIAL CUSTOMERS AND CONTRACTS........................................................ 13 5.10 PERMITS................................................................................. 14 5.11 ENVIRONMENTAL MATTERS................................................................... 14 5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS........................................ 15 5.13 INSURANCE............................................................................... 16 5.14 COMPENSATION; EMPLOYMENT AGREEMENTS..................................................... 16 5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS; EMPLOYEE POLICIES....... 16 5.16 EMPLOYEE BENEFIT PLANS.................................................................. 16 5.17 LITIGATION AND COMPLIANCE WITH LAW...................................................... 18 5.18 TAXES................................................................................... 19 5.19 ABSENCE OF CHANGES...................................................................... 19 5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY.................................. 20 5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES................................................... 21 5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS................................. 21 5.23 INTANGIBLE PROPERTY..................................................................... 21 5.24 CAPITAL EXPENDITURES.................................................................... 21 5.25 INVENTORIES............................................................................. 21 5.26 TAX REORGANIZATION REPRESENTATION....................................................... 21 5.27 NO IMPLIED REPRESENTATIONS.............................................................. 21 5.28 DISCLOSURE.............................................................................. 22 5.29 YEAR 2000 COMPLIANCE.................................................................... 22
i ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO.............................. 22 6.01 ORGANIZATION............................................................................. 22 6.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.............................................. 22 6.03 U.S. CONCRETE COMMON STOCK............................................................... 23 6.04 TAX REORGANIZATION REPRESENTATIONS....................................................... 23 6.05 SEC FILINGS; DISCLOSURE.................................................................. 24 6.06 NO IMPLIED REPRESENTATIONS............................................................... 24 6.07 DISCLOSURE............................................................................... 24 ARTICLE VII CERTAIN COVENANTS................................................................... 25 7.01 RELEASE FROM GUARANTEES.................................................................. 25 7.02 FUTURE COOPERATION; TAX MATTERS.......................................................... 25 7.03 EXPENSES................................................................................. 25 7.04 LEGAL OPINION............................................................................ 25 7.05 EMPLOYMENT AGREEMENTS.................................................................... 26 7.06 REPAYMENT OF RELATED PARTY INDEBTEDNESS.................................................. 26 7.07 STOCK OPTIONS............................................................................ 26 7.08 PRE-CLOSING DISTRIBUTIONS................................................................ 27 7.09 WORKING CAPITAL ADJUSTMENT............................................................... 27 ARTICLE VIII IDEMNIFICATION..................................................................... 27 8.01 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS.............................................. 27 8.02 INDEMNIFICATION BY U.S. CONCRETE......................................................... 28 8.03 THIRD PERSON CLAIMS...................................................................... 28 8.04 NON-THIRD PERSON CLAIMS.................................................................. 29 8.05 INDEMNIFICATION DEDUCTIBLE............................................................... 29 8.06 INDEMNIFICATION LIMITATION............................................................... 29 8.07 INDEMNIFICATION FOR NEGLIGENCE OF INDEMNIFIED PARTY...................................... 29 ARTICLE IX NONCOMPETITION COVENANTS............................................................ 30 9.01 PROHIBITED ACTIVITIES................................................................... 30 9.02 EQUITABLE RELIEF........................................................................ 31 9.03 REASONABLE RESTRAINT.................................................................... 31 9.04 SEVERABILITY; REFORMATION............................................................... 31 9.05 MATERIAL AND INDEPENDENT COVENANT....................................................... 31 ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................................. 31 10.01 GENERAL................................................................................. 31 10.02 EQUITABLE RELIEF........................................................................ 31 ARTICLE XI INTENDED TAX TREATMENT.................................................................. 32 11.01 TAX-FREE REORGANIZATION................................................................. 32 ARTICLE XII FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON STOCK... 32 12.01 COMPLIANCE WITH LAW..................................................................... 32 12.02 ECONOMIC RISK; SOPHISTICATION; ACCREDITED INVESTORS..................................... 33 12.03 RULE 144 REPORTING...................................................................... 34 12.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES.............................. 34
ii ARTICLE XIII MISCELLANEOUS............................................................... 34 13.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES............................................... 34 13.02 ENTIRE AGREEMENT....................................................................... 35 13.03 COUNTERPARTS........................................................................... 35 13.04 BROKERS AND AGENTS..................................................................... 35 13.05 NOTICES................................................................................ 35 13.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES............................................. 36 13.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE................................... 36 13.08 REFORMATION AND SEVERABILITY........................................................... 36 13.09 SECTION HEADINGS; GENDER............................................................... 37 13.10 GOVERNING LAW.......................................................................... 37 13.11 DISPUTE RESOLUTION..................................................................... 37
iii ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of September 14, 1999, by and among U.S. Concrete, Inc., a Delaware corporation ("U.S. Concrete"), Concrete XI Acquisition, Inc., a Delaware corporation that is a subsidiary of U.S. Concrete ("Newco"), Carrier Excavation and Foundation Company, a Tennessee corporation (the "Company") and John F. Carrier, William Henry Carrier, Michael K. Carrier, Mary G. Carrier, Trustee for Anne Carrier (TN UGMA), William Henry Carrier, Trustee for William Henry Carrier, Jr. (TN UGMA), and Mary G. Carrier (such individuals and trustees are collectively referred to hereinafter as the "Stockholders"), with the Stockholders being all of the Company's Stockholders. WHEREAS, the respective Boards of Directors of Newco and the Company (collectively referred to as "Constituent Corporations") deem it advisable and in the best interests of the Constituent Corporations and the stockholders of the Constituent Corporations that the Company merge with and into Newco (the "Merger"); and WHEREAS, the Boards of Directors of the Constituent Corporations have approved and adopted this Agreement as a plan of reorganization within the provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"); and WHEREAS, the stockholders of the Constituent Corporations have approved the Merger in accordance with the GCL and the TBCA. NOW, THEREFORE, in consideration of the premises and of the mutual agreements, representations, warranties, provisions and covenants contained herein, the parties hereto, intending to be legally bound, agree as follows: ARTICLE I DEFINITIONS 1.01 DEFINITIONS. Capitalized terms used in this Agreement shall have the following meanings: "Affiliate" of, or "Affiliated" with, a specified person or entity means a person or entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the specified person or entity. "Agreement" has the meaning set forth in the first paragraph of this Agreement. "Balance Sheet Date" has the meaning set forth in Section 5.05. "Broker" has the meaning set forth in Section 13.04. 1 "Closing" has the meaning set forth in ARTICLE IV. "Closing Date" has the meaning set forth in ARTICLE IV. "Code" has the meaning set forth in the third paragraph of this Agreement. "Company" has the meaning set forth in the first paragraph of this Agreement. "Company Common Stock" means the Company's common stock, $24.00 par value per share. "Competitive Business" means any business that competes with the Company or the Surviving Corporation, including, without limitation, any business that involves the production and sale of ready-mixed concrete (including truck-mixed concrete) and other cement mixtures and pre-cast concrete products and any logical extension of or business activity reasonably related to any of the foregoing. "Constituent Corporations" has the meaning set forth in the second paragraph of this Agreement. "Effective Time" has the meaning set forth in Section 2.02. "Employee benefit plan" has the meaning set forth in Section 5.16. "Employee pension benefit plan" has the meaning set forth in Section 5.16. "Employment Agreements" has the meaning set forth in Section 7.05. "Encumbrances" means all liens, encumbrances, mortgages, pledges, security interests, conditional sales agreements, charges, options, preemptive rights, rights of first refusal, reservations, restrictions or other encumbrances or defects in title. "Environmental Laws" means any and all Laws or agreements with any Governmental Authority relating to (a) the protection, preservation or restoration of the environment (including, without limitation, ambient air, surface water (including water management and runoff), groundwater, drinking water supply, surface land, subsurface strata, plant and animal life or any other natural resource) or human health or safety, (b) emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes (including, without limitation, Hazardous Substances) or noxious noise or odor into the environment or (c) the exposure to, or the use, storage, recycling, treatment, manufacture, generation, transport, processing, handling, labeling, production, removal or disposal of any pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes (including, without limitation, Hazardous Substances), in each case as amended from time to time and as now or hereafter in effect. The term "Environmental Laws" includes, without limitation, (i) the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), the Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, 2 the Federal Insecticide Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, the Safe Drinking Water Act, the Atomic Energy Act and the Hazardous Materials Transportation Act, in each case as amended from time to time, and any other Laws now or hereafter relating to any of the foregoing, and (ii) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of, effects of or exposure to any Hazardous Substance. "ERISA" has the meaning set forth in Section 5.16. "ERISA Affiliate" has the meaning set forth in Section 5.16. "Expiration Date" has the meaning set forth in Section 13.06. "Financial Statements" has the meaning set forth in Section 5.05. "GAAP" means generally accepted accounting principles as currently applied by the respective party on a basis consistent with preceding years and throughout the periods involved. "GCL" means the General Corporation Law of the State of Delaware, as amended. "Governmental Authority" means any federal, state, local or foreign government, political subdivision or governmental or regulatory authority, agency, board, bureau, commission, instrumentality or court or quasi- governmental authority. "Hazardous Substances" means any and all substances presently listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any Environmental Law. The term "Hazardous Substances" includes, without limitation, any substance to which exposure is regulated by any Governmental Authority or any Environmental Law including, without limitation, any toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste, industrial substance or petroleum or any derivative or by-product thereof, radon, radioactive material, asbestos or asbestos containing material, urea formaldehyde foam insulation, lead or polychlorinated biphenyls. "Incentive Plan" has the meaning set forth in Section 7.07. "Indemnified Party" has the meaning set forth in Section 8.03. "Indemnifying Party" has the meaning set forth in Section 8.03. "Initial Lockup Period" has the meaning set forth in Section 12.04. "Interim Balance Sheet" has the meaning set forth in Section 5.05. "Interim Financial Statements" has the meaning set forth in Section 5.05. 3 "IRCA" has the meaning set forth in Section 5.12. "JAMS" has the meaning set forth in Section 13.10. "Judge List" has the meaning set forth in Section 13.10. "Laws" means any and all federal, state, local or foreign statutes, laws, ordinances, proclamations, codes, regulations, licenses, permits, authorizations, rulings, approvals, consents, legal doctrines, published requirements, orders, decrees, judgments, injunctions and rules of any Governmental Authority, including, without limitation, those covering environmental, Tax, energy, safety, health, transportation, bribery, recordkeeping, zoning, discrimination, antitrust and wage and hour matters, in each case as amended and in effect from time to time. "Letter of Intent" means that certain letter of intent dated August 4, 1999 by and among U.S. Concrete, the Company and the Stockholders, and the other parties named therein, as amended or supplemented. "Listed Agreements" has the meaning set forth in Section 5.09. "Lockup Periods" has the meaning set forth in Section 12.04. "Losses" means any and all liabilities, losses, claims, damages, actions, suits, proceedings, demands, assessments, adjustments, fees, costs and expenses (including specifically, but without limitation, reasonable attorneys' fees and costs and expenses of investigation), net of (i) income Tax effects with respect thereto (including, without limitation, income Tax benefits recognized in connection therewith and income Taxes upon any indemnification recovery thereof) and (ii) insurance recoveries. "Material Customers" has the meaning set forth in Section 5.09. "Merger" has the meaning set forth in the second paragraph of this Agreement. "Merger Consideration" has the meaning set forth in Section 3.01. "Merger Filings" has the meaning set forth in Section 2.02. "Newco" has the meaning set forth in the first paragraph of this Agreement. "Noncompete Term" has the meaning set forth in Section 9.01(a). "1933 Act" means the Securities Act of 1933, as amended. "1934 Act" means the Securities Exchange Act of 1934, as amended. "Permits" has the meaning set forth in Section 5.10. 4 "Permitted Encumbrances" means any and all (a) Encumbrances reserved against in the Interim Balance Sheet, (b) Encumbrances for property or ad valorem Taxes not yet due and payable or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the Company's books in accordance with GAAP, and (c) obligations under operating and capital leases described in Schedule 5.08. "Plan" has the meaning set forth in Section 5.16. "Prospectus" means the prospectus of U.S. Concrete, dated May 25, 1999, relating to the initial public offering of U.S. Concrete Common Stock. "Qualified Plan" has the meaning set forth in Section 5.16. "Restricted Shares" has the meaning set forth in Section 12.01. "Rule 144" means Rule 144 as promulgated under the 1933 Act. "SEC" means the Securities and Exchange Commission. "Secondary Lockup Period" has the meaning set forth in Section 12.04. "Stockholder" means any of the Stockholders. "Stockholders" has the meaning set forth in the first paragraph of this Agreement. "Structures" has the meaning set forth in Section 5.08. "Surviving Corporation" has the meaning set forth in Section 2.01. "Taxes" has the meaning set forth in Section 5.18. "TBCA" means the Tennessee Business Corporation Act, as amended. "10-Q" means the Quarterly Report on Form 10-Q of U.S. Concrete for the period ended June 30, 1999. "Territory" has the meaning set forth in Section 9.01. "Third Person" has the meaning set forth in Section 8.03. "U.S. Concrete" has the meaning set forth in the first paragraph of this Agreement. "U.S. Concrete Common Stock" means U.S. Concrete's Common Stock, par value $.001 per share. 5 "Year-End Financial Statements has the meaning set forth in Section 5.05. "Year 2000 Compliant" has the meaning set forth in Section 5.27. 1.02 INTERPRETATION. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in Section 1.01 and elsewhere in this Agreement include the plural as well as the singular and vice versa; (b) all accounting terms not otherwise defined herein have the meanings ascribed to them in accordance with GAAP; and (c) the words "herein," "hereof," and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. ARTICLE II THE MERGER AND THE SURVIVING CORPORATION 2.01 THE MERGER. Upon the terms and subject to the conditions of this Agreement, at the Effective Time in accordance with the TBCA and the GCL, the Company shall be merged with and into Newco and the separate existence of the Company shall thereupon cease. Newco shall be the surviving corporation in the Merger (hereinafter sometimes referred to as the "Surviving Corporation"). 2.02 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective at such time (the "Effective Time") as (a) holders of all of the Company Common Stock approve the Merger, and (b) a certificate of merger, in form mutually acceptable to U.S. Concrete and the Company, is filed with the Secretaries of State of the States of Delaware and Tennessee, respectively (the "Merger Filings"). The Merger Filings shall be made simultaneously with or as soon as practicable after the Closing. 2.03 CERTIFICATE OF INCORPORATION, BYLAWS AND BOARD OF DIRECTORS OF SURVIVING CORPORATION. As a result of the Merger and at the Effective Time: (a) The Certificate of Incorporation of Newco in effect immediately prior to the Effective Time shall become the Certificate of Incorporation of the Surviving Corporation, except that such Certificate of Incorporation shall be amended as of the Effective Time to change the name of the Surviving Corporation to "Carrier Excavation and Foundation Company" After the Effective Time, the Certificate of Incorporation of the Surviving Corporation may be amended in accordance with its terms and as provided in the GCL. (b) The Bylaws of Newco in effect immediately prior to the Effective Time shall become the Bylaws of the Surviving Corporation, and thereafter may be amended in accordance 6 with their terms and as provided by the Certificate of Incorporation of the Surviving Corporation and the GCL. (c) The Board of Directors of Newco as constituted immediately prior to the Effective Time shall be the Board of Directors of the Surviving Corporation. ARTICLE III CONVERSION OF SHARES 3.01 CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger, and without any action on the part of any holder of any capital stock of the Company, the issued and outstanding shares of Company Common Stock as of the Effective Time shall be converted into the right to receive, and become exchangeable for $3,603,186.76 in cash and 568,224 shares of U.S. Concrete Common Stock at Closing (the cash and U.S. Concrete Common Stock paid in exchange for the Company Common Stock being herein collectively referred to as the "Merger Consideration"). 3.02 NEWCO SHARES. The outstanding shares of common stock, par value $1.00 per share, of Newco shall remain outstanding following the Merger. 3.03 DELIVERY OF MERGER CONSIDERATION. At the Closing, (a) each Stockholder shall furnish to U.S. Concrete the certificates representing his or her Company Common Stock, duly endorsed in blank by such Stockholder or accompanied by duly executed blank stock powers, and (b) U.S. Concrete shall deliver to each Stockholder cash (by wire transfer of immediately available funds in accordance with the wiring instructions for such Stockholder set forth on Schedule 3.01) and a copy of an irrevocable instruction letter to U.S. Concrete's transfer agent directing that certificates representing the shares of U.S. Concrete Common Stock be delivered to such Stockholder pursuant to Section 3.01. Each Stockholder agrees promptly to cure any deficiencies with respect to the endorsement of the certificates or other documents of conveyance with respect to the Company Common Stock or with respect to the stock powers accompanying such stock. ARTICLE IV CLOSING 4.01 CLOSING. The consummation of the Merger and delivery of the Merger Consideration and the other transactions contemplated by this Agreement (the "Closing") shall take place at the offices of U.S. Concrete, 1300 Post Oak Blvd., Suite 1220, Houston, Texas 77056, concurrently with the execution of this Agreement or at such other time and date as U.S. Concrete, the Company and the Stockholders may mutually agree, which date is herein referred to as the "Closing Date." 7 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS The Stockholders, jointly and severally, represent and warrant to U.S. Concrete as follows: 5.01 DUE ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Tennessee and is duly authorized and qualified to do business under all applicable Laws to carry on its business in the places and in the manner as now conducted. The Company has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as such business is currently being conducted. Schedule 5.01 includes (a) certificate(s) of existence and good standing for the Company issued by the appropriate Governmental Authorities of the State of Tennessee, (b) a list of all jurisdictions in which the Company is authorized or qualified to do business and (c) certificate(s) of qualification or authority to do business (or similar certificates) for the Company issued by the appropriate Governmental Authorities of each of the jurisdictions in which the Company is authorized or qualified to do business. The Company does not own, lease or operate any assets or properties or carry on any business in any jurisdiction that Schedule 5.01 does not list. Schedule 5.01 also contains a list of each county in Tennessee in which the Company conducts business or has conducted business within the past three years. True, complete and correct copies of the Articles of Incorporation and Bylaws, each as amended, of the Company are attached hereto as Schedule 5.01, and no breach of such Articles of Incorporation or Bylaws has occurred and is continuing. True, complete and correct copies of all stock records and minute books of the Company have been provided to U.S. Concrete. 5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. (a) The Company has the requisite corporate power and authority to enter into this Agreement and the ancillary documents and agreements described herein and to effect the Merger. Each Stockholder has the full legal right, power and authority to enter into this Agreement. The execution, delivery and performance of this Agreement and the transactions contemplated hereby have been approved by the board of directors of the Company and by the Stockholders. No additional corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement and the consummation by the Company of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and the Stockholders, and, assuming the due authorization, execution and delivery hereof by U.S. Concrete and Newco, constitutes a valid and binding agreement of the Company and the Stockholders, enforceable against each of them in accordance with its terms. (b) The execution and delivery of this Agreement by the Company and the Stockholders do not, and the consummation by the Company and the Stockholders of the transactions contemplated hereby will not, violate or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation of any Encumbrance upon any of the properties or assets of the Company under any of the terms, conditions or provisions of, (i) the Articles of Incorporation or Bylaws of the Company, (ii) any Law applicable to the Stockholders or the Company or any of the properties or assets of the 8 Stockholders or the Company, or (iii) except as set forth in Schedule 5.02, any agreement, note, bond, mortgage, indenture, deed of trust, license, franchise, Permit, concession, lease or other instrument, obligation or agreement of any kind to which any Stockholder or the Company is now a party or by which the Company or any of its properties or assets may be bound or affected. (c) Except for the Merger Filings and as set forth in Schedule 5.02, no declaration, filing or registration with, or notice to, or authorization, consent or approval of, any Governmental Authority or other person or entity is necessary for the execution and delivery of this Agreement by the Company and the Stockholders or the consummation by the Company and the Stockholders of the transactions contemplated hereby. Except as set forth in Schedule 5.02, none of the contracts or agreements with Material Customers or contracts providing for purchases or services individually in excess of $10,000, or in the aggregate in excess of $25,000, or other agreements, licenses or Permits to which the Company is a party requires notice to, or the consent or approval of, any Governmental Authority or other person or entity to the execution and delivery of this Agreement by the Company and the Stockholders or to any of the transactions contemplated hereby to remain in full force and effect following such transaction. 5.03 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of the Company consists solely of 2,000 shares of Company Common Stock, of which 1048.1 shares are issued and outstanding. All of the issued and outstanding shares of the Company Common Stock are owned beneficially and of record by the Stockholders as set forth in Schedule 5.03. All of the issued and outstanding shares of the Company Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, and were offered, issued, sold and delivered by the Company in compliance with all applicable Laws, including, without limitation, those Laws concerning the issuance of securities. None of such shares were issued in violation of the preemptive rights of any past or present stockholder of the Company. The exchange of Company Common Stock for U.S. Concrete Common Stock pursuant to the Merger will transfer to U.S. Concrete good, valid and marketable title in the shares of the Company Common Stock owned by the Stockholders, free and clear of all Encumbrances except for those created by U.S. Concrete. At the Effective Time, by virtue of the Merger Filing in Tennessee the Merger will become effective in Tennessee. Except as set forth in Schedule 5.03, (a) no shares of Company Common Stock are held by the Company as treasury shares, and (b) no subscription, option, warrant, call, convertible or exchangeable security, other conversion right or commitment of any kind exists which obligates the Company to issue any of its capital stock or the Stockholders to transfer any of the capital stock of the Company. 5.04 SUBSIDIARIES. Except as set forth in Schedule 5.04, the Company owns, of record or beneficially, or controls, directly or indirectly, no capital stock, securities convertible into or exchangeable for capital stock or any other equity interest in any corporation, association or other business entity. Except as set forth in Schedule 5.04, the Company is not, directly or indirectly, a participant in any joint venture, limited liability company, partnership or other noncorporate entity. 5.05 FINANCIAL STATEMENTS. (a) The Company has delivered to U.S. Concrete true, complete and correct copies of the following financial statements: 9 (i) the reviewed balance sheets of the Company as of December 31, 1996, 1997 and 1998 and the related reviewed statements of operations, stockholders' equity and cash flows for the three-year period ended December 31, 1998, together with the related notes, schedules and report of the Company's independent accountants (such balance sheets, the related statements of operations, stockholders' equity and cash flows and the related notes and schedules are referred to herein as the "Year-End Financial Statements"); and (ii) the unaudited balance sheet (the "Interim Balance Sheet") of the Company as of June 30, 1999 (the "Balance Sheet Date") and the related unaudited statements of operations, stockholders' equity and cash flows for the six-month period ended on the Balance Sheet Date, together with the related notes and schedules (such balance sheets, the related statements of operations, stockholders' equity and cash flows and the related notes and schedules are referred to herein as the "Interim Financial Statements"). The Year-End Financial Statements and the Interim Financial Statements (collectively, the "Financial Statements") are attached as Schedule 5.05 to this Agreement; (b) Except as set forth in Schedule 5.05, the Financial Statements have been prepared from the books and records of the Company in conformity with GAAP and present fairly the financial position and results of operations of the Company as of the dates of such statements and for the periods covered thereby. The books of account of the Company have been kept accurately in all material respects in the ordinary course of business, the transactions entered therein represent bona fide transactions, and the revenues, expenses, assets and liabilities of the Company have been properly recorded therein in all material respects. Within the past five fiscal years of the Company, the Company has not received any correspondence with its accountants, including without limitation, management letters, which have indicated or disclosed that there is a "material weakness" in or "reportable condition" with respect to (as those terms are defined under GAAP) the Company's financial condition. 5.06 LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule 5.06, as of the Balance Sheet Date the Company does not have, nor has it incurred since that date, any liabilities or obligations (whether absolute, accrued, contingent or otherwise) of any nature, except liabilities, obligations or contingencies (a) that are reflected or accrued or reserved against in the Financial Statements or reflected in the notes thereto, (b) that are of a nature not required to be reflected in the Financial Statements and that do not exceed or reasonably could be expected to exceed $5,000 individually or $10,000 in the aggregate and (c) that were incurred after the Balance Sheet Date and were incurred in the ordinary course of business, consistent with past practices. Schedule 5.06 contains a reasonable estimate by the Company and the Stockholders of the maximum amount that may be payable with respect to liabilities which are not fixed. For each such liability for which the amount is not fixed or is contested, the Company has provided a summary description of the liability together with copies of all relevant documentation relating thereto. Schedule 5.06 sets forth the Company's outstanding principal amount of indebtedness for borrowed money (including overdrafts) as of the date hereof. Except as set forth in Schedule 5.06, there are no prepayment penalties, termination fees or other payments triggered by the prepayment or termination of any loan or indebtedness of the Company. 5.07 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.07 sets forth an accurate list of the accounts and notes receivable of the Company as of the Balance Sheet Date and of those generated 10 between the Balance Sheet Date and the second business day preceding the Closing Date, including any such amounts which are not reflected in the Interim Balance Sheet. Receivables from and advances to employees, the Stockholders and any entities or persons related to or Affiliates of the Stockholders are separately identified in Schedule 5.07. Schedule 5.07 also sets forth an accurate aging of all accounts and notes receivable as of the Balance Sheet Date, showing amounts due in 30-day aging categories. The trade and other accounts receivable of the Company, including without limitation those classified as current assets on the Interim Balance Sheet, are bona fide receivables, were acquired in the ordinary course of business, are stated in accordance with GAAP and are collectible in the amounts shown on Schedule 5.07, net of reserves reflected in the Interim Financial Statements with respect to the accounts receivable as of the Balance Sheet Date, and net of reserves reflected in the books and records of the Company (consistent with the methods used in the Interim Financial Statements) with respect to receivables of the Company after the Balance Sheet Date. 5.08 PROPERTIES AND ASSETS. (a) Schedule 5.08 sets forth an accurate list of all real and personal property included in "property and equipment" on the Interim Balance Sheet and all other tangible assets of the Company with a book value in excess of $5,000 (i) owned by the Company as of the Balance Sheet Date and (ii) acquired since the Balance Sheet Date. Schedule 5.08 also sets forth an accurate list of all real and personal property currently leased by the Company, and includes complete and correct copies of leases for significant equipment and for all real property leased by the Company and descriptions of all real property (as currently owned or leased by the Company) on which plants, buildings, warehouses, workshops, garages and other structures (collectively, the "Structures") and vehicles used in the operation of the business of the Company are situated and, for each of those properties, the address thereof, the type and approximate square footage of each Structure located thereon and the use thereof in the business of the Company. Schedule 5.08 indicates which properties and assets used in the operation of the businesses of the Company are currently owned by the Stockholders or Affiliates of either of the Company or the Stockholders. Except as specifically identified in Schedule 5.08, all of the tangible assets, plants, Structures, vehicles and other significant machinery and equipment owned or leased by the Company listed in Schedule 5.08 are in good working order and condition, ordinary wear and tear excepted, have been maintained in accordance with standard industry practice and are adequate for the purpose for which they presently are being used or held for use. Except as specifically described in Schedule 5.08, all properties and fixed assets used by the Company in its business are either owned by the Company or leased under agreements identified in Schedule 5.08 and are affixed only to one or more of the real properties Schedule 5.08 lists. All leases set forth in Schedule 5.08 are in full force and effect and constitute valid and binding agreements of the Company and the other parties thereto in accordance with their respective terms, and all amounts currently payable thereunder have been paid. Neither the Company nor any other party to the leases set forth in Schedule 5.08 is or has been asserted to be in default, violation or breach of any such lease, and no event has occurred and is continuing that constitutes or, with notice or the passage of time or both, would constitute a default, violation or breach under any such lease. The Company has good, valid and marketable title to the tangible and intangible assets, personal property and real property owned and used in its business, including, without limitation, the properties identified in Schedule 5.08 as owned real property (each of which the Company owns in fee), free and clear of all Encumbrances other than Permitted Encumbrances and those set forth in Schedule 5.08. Schedule 5.08 contains true, complete and correct copies of all title reports and title 11 insurance policies received or owned by the Company with respect to the real property owned or leased by the Company. Schedule 5.08 includes a summary description of all commitments of the Company involving the opening of new operations, expansion of existing operations or the acquisition of any real property or existing business, to which management of the Company has devoted any significant effort or expenditure in the two-year period prior to the date of the Agreement. (b) Except as specifically described in Schedule 5.08, all uses of the real property owned and leased by the Company conform in all material respects to all applicable Laws and do not violate any instrument of record or agreement affecting any such property. Neither the Company nor the Stockholders have received any notice or communication from any Governmental Authority or other person or entity indicating that any condition exists with respect to any of the real property owned or leased by the Company or with respect to the improvements thereon that violates any Law, including without limitation, any Environmental Law. Neither the Company nor the Stockholders have received from any insurance carrier insuring or proposing to insure any of the real property owned or leased by the Company or any other person or entity any notice or other communication noting any dangerous or illegal condition at any such property or any other condition at any of such properties otherwise requiring corrective action. Except as otherwise described on Schedule 5.08, all of the real property owned and leased by the Company is in satisfactory, usable and operating condition without the necessity of any major repairs, and all such real properties can be used for the operations currently being conducted on such real properties. Neither the Company nor the Stockholders have received any notice nor have any knowledge that any of the real property owned or leased by the Company is or will be affected by any special assessments, condemnation, eminent domain, off- site improvements to be constructed, change in grade of public streets or similar proceedings. There is no writ, injunction, decree, order or judgment outstanding, nor any action, claim, suit or proceeding, pending or threatened, relating to the ownership, lease, use, occupancy or operation of any real property owned or leased by the Company. (c) There is ingress and egress to and from each of the real properties owned and leased by the Company of record adequate for the use of such properties as currently operated by the Company. Except as disclosed in Schedule 5.08, the Company has made no off-record agreements affecting the ownership, use or occupation of any such properties. All public utilities, including, without limitation, sewers, water, electric, gas and telephone, required for the operation of each of the real properties owned and leased by the Company as presently operated are installed and operating, and all installation and connection charges therefor have been paid in full. Neither the Company nor the Stockholders have received any notice stating that the Company will not be able to obtain adequate supplies of water to operate its business on any such properties as presently conducted, or that the provision of utilities violates any public or private easement. Except as disclosed in Schedule 5.08, neither the Company nor the Stockholders have received notice that any part of any improvements on the real property owned or leased by the Company (including any of the structures thereon) encroaches upon any property adjacent thereto or upon any easement, nor is there any encroachment or overlap upon the real property owned or leased by the Company. Each of the real property leases listed in Schedule 5.08 grants the Company the exclusive right to use and occupy the demised premises thereunder, and the Company enjoys peaceful and undisturbed possession under its respective real property leases listed on Schedule 5.08 for the real property leased by the Company. No person or entity other than the Company is in possession of any of the real property owned or leased by the Company. Except as set forth on Schedule 5.08, to the best knowledge of the Company there are no contracts outstanding for the sale, exchange, lease or transfer of 12 any of the real property owned or leased by the Company, or any other right of a third party to acquire any interest therein. To the best knowledge of the Stockholders, the heating, cooling, ventilation, electrical and plumbing systems at all of the real property owned and leased by the Company is in good working condition. 5.09 MATERIAL CUSTOMERS AND CONTRACTS. (a) Schedule 5.09 (i) sets forth an accurate list of all customers representing 5% or more of the Company's revenues for each of the fiscal year ended in 1998 and the interim period ended on the Balance Sheet Date (the "Material Customers"), and (ii) sets forth an accurate list and briefly describes all material contracts, warranties, commitments, understandings, instruments and similar agreements and arrangements to which the Company is currently a party or by which it or any of its properties is bound (the "Listed Agreements"), including, but not limited to, (A) all customer contracts in excess of $10,000, individually, or $25,000 in the aggregate, (B) contracts with any labor organizations, (C) leases providing for annual rental payments in excess of $5,000, individually, or $10,000 in the aggregate, (D) loan agreements, (E) pledge and security agreements, (F) financing agreements, (G) indemnity or guaranty agreements or obligations, (H) bonds, debentures and indentures, (I) notes, (J) mortgages, (K) joint venture, partnership or cost- sharing agreements, (L) options to purchase real or personal property, (M) agreements relating to the purchase or sale by the Company of assets or securities for more than $5,000, individually, or $10,000 in the aggregate or which contain, or commit or will commit the Company for a fixed term, (N) agreements, which, by their terms, require the consent of any party thereto to the consummation of the transactions contemplated hereby, (O) voting trust agreements or similar stockholders' agreements, (P) agreements providing for the purchase from a supplier of all or substantially all the requirements of the Company of a particular product, material or service and (Q) any other contracts, warranties, commitments, understandings, instruments and similar agreements and arrangements which involve aggregate payments in excess of $10,000 that cannot be canceled in 30 days' or less notice without penalty or premium or any continuing obligation or liability. Prior to the date hereof, the Company has made available to U.S. Concrete true, complete and correct copies and complete written descriptions of all the Listed Agreements. (b) Except as set forth in Schedule 5.09, since December 31, 1998 (i) no Material Customer has canceled or substantially reduced or, to the knowledge of the Company and the Stockholders, is threatening to cancel or substantially reduce its purchases of the Company's products or services, and (ii) neither the Company nor any other party to the Listed Agreements is or has been asserted to be in default, violation or breach of any such Listed Agreement, and no event has occurred and is continuing that constitutes or with notice or the passage of time or both, would constitute a default, violation or breach under any such Listed Agreement. The Listed Agreements are in full force and effect and constitute valid and binding agreements of the Company and the other parties thereto in accordance with their respective terms. (c) Except as set forth in Schedule 5.09, the Company is not a party to any contracts subject to price redetermination or renegotiation. Except to the extent set forth in Schedule 5.09, the Company is not required to provide any bonding or other financial security arrangements in any material amount in connection with any transactions with any of its customers or suppliers. 13 (d) Except as set forth in Schedule 5.09, neither the Company, the Stockholders nor any officer, employee, stockholder, director, representative or agent thereof is a party to any contract, arrangement, commitment or understanding among themselves or with any of the Company's customers for the repurchase of products, sharing of fees, rebating of charges, bribes, kickbacks or other similar arrangements. (e) Schedule 5.09 sets forth a summary of each outstanding bid or proposal by the Company that, if awarded to the Company, contemplates payments to the Company in excess of $25,000. (f) Except as set forth in Schedule 5.09, neither the Company nor the Stockholders have any knowledge of any plan or intention of any other party to any Listed Agreement to exercise any right to cancel or terminate that Listed Agreement, and neither the Company nor the Stockholders have any knowledge of any condition or state of facts which would justify the exercise of such a right. 5.10 PERMITS. Schedule 5.10 contains an accurate list, summary description and copies of all licenses, franchises, permits, approvals, certificates, transportation authorities and other governmental authorizations and intangible assets held by the Company that are material to the conduct of its business, including, without limitation, permits, licenses and operating authorizations, titles (including motor vehicle titles and current registrations), fuel permits, franchises, certificates, trademarks, trade names, patents, patent applications and copyrights owned or held by the Company (collectively, the "Permits"). The Permits are valid, and the Company has not received any written notice that any Governmental Authority intends to cancel, terminate or not renew any such Permit. The Permits are all the permits, licenses, operating authorizations, franchises, approvals, certificates, transportation authorities and other governmental authorizations and intangible assets that are required by Law for the operation of the businesses of the Company as conducted at the Balance Sheet Date and the ownership of the assets and properties of the Company. The Company has conducted and is conducting its business in substantial compliance with the requirements, standards, criteria and conditions set forth in the Permits, as well as the applicable orders, approvals and variances related thereto, and is not in violation of any of the foregoing. Except as specifically provided in Schedule 5.10, the transactions contemplated by this Agreement will not result in a default under, a breach or violation of, a termination of, or adversely affect the rights and benefits afforded to the Company by, any Permits. 5.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5.11, (a) the Company has complied with and is in compliance with all Environmental Laws, (b) the Company has obtained and complied with all necessary permits, licenses, authorizations and other approvals necessary to treat, transport, store, dispose of and otherwise handle Hazardous Substances and has reported, to the extent required by all Environmental Laws, all past and present sites owned or operated by the Company where Hazardous Substances have been treated, stored, disposed of or otherwise handled, (c) there have been no "releases" or threats of "releases" (as defined in any Environmental Laws) at, from, in, to, under or on any property currently or previously owned or operated by the Company, (d) there is no on-site or off-site location to which the Company has transported or disposed of Hazardous Substances or arranged for the transportation or disposal of Hazardous Substances which is or could be the subject of any federal, state, local or foreign enforcement action or any other investigation which could lead to any claim against the Surviving Corporation, U.S. Concrete or Newco for any clean-up cost, remedial work, damage to natural resources or personal injury, including, but not limited to, any claim under any 14 Environmental Law and (e) the Company has no contingent liability in connection with any release or disposal of any Hazardous Substance into the environment. None of the past or present sites owned or operated by the Company is currently or has ever been designated as a treatment, storage and/or disposal facility, nor has any such facility ever applied for a permit, license, authorization or other approval designating it as a treatment, storage and/or disposal facility, under any Environmental Law. The Company has provided U.S. Concrete with copies (or, if not available, accurate written summaries) of all environmental investigations, studies, audits, reviews and other analyses conducted by or on behalf, or which otherwise are in the possession, of the Company respecting any facility site or other property previously or presently owned or operated by the Company. 5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS. (a) Except as set forth in Schedule 5.12, the Company is not bound by or subject to any arrangement with any labor union. Except as set forth in Schedule 5.12, no employees of the Company are represented by any labor union or covered by any collective bargaining agreement nor, to the Company's or the Stockholders' knowledge, is any campaign to establish such representation in progress nor has there been any campaign to establish such representation within the last three years. There is no pending or, to the Company's or the Stockholders' knowledge, threatened labor dispute involving the Company and any group of its employees nor has the Company experienced any significant labor interruptions over the past five years. Neither the Company nor the Stockholders have any knowledge of any significant issues or problems in connection with the relationship of the Company with its employees. The Company considers its relationship with its employees to be good. (b) Except as set forth in Schedule 5.12, (i) there is no unfair labor practice charge or complaint pending or, to the knowledge of the Stockholders, threatened against or otherwise affecting the Company, (ii) no action, suit, complaint, charge, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority brought by or on behalf of any employee, prospective employee, former employee, retiree, labor organization or other representative of the Company's employees is pending or threatened against the Company, (iii) no grievance is pending or threatened against the Company, (iv) the Company is not a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Authority relating to employees or employment practices, (v) the Company has paid in full to, or accrued in its financial books and records, all employees of the Company all wages, salaries, commissions, bonuses, benefits and other compensation due to such employees or otherwise arising under any policy, practice, agreement, plan, program, statute or other law and (vi) the Company is in substantial compliance with its obligations pursuant to the Worker Adjustment and Retraining Notification Act of 1988, and all other notification and bargaining obligations arising under any collective bargaining agreement, statute or otherwise. (c) Except as set forth in Schedule 5.12, all employees of the company are (i) citizens of the United States or (ii) not citizens of the United States, but, in accordance with the Immigration Reform and Control Act of 1986 ("IRCA") and other applicable Laws are either (A) immigrants authorized to work in the United States or (B) nonimmigrants authorized to work in the United States for the Company in their specific jobs. 15 5.13 INSURANCE. Schedule 5.13 sets forth an accurate list as of the Balance Sheet Date of (a) all insurance policies carried by the Company, copies of which are attached as Schedule 5.13, (b) all insurance loss runs or workmen's compensation claims received for the past five policy years, and (c) the following information with respect to all insurance policies currently carried by the Company and previously carried by the Company within the last five years: (i) insurer, (ii) type of policy, (iii) coverage period, and (iv) policy limits and amount of deductible or loss retention. Except as set forth in Schedule 5.13, none of such policies are "claims made" policies. The policies described in Schedule 5.13 for the current policy year provide adequate coverage against the risks involved in the Company's business and are currently in full force and effect. Any open claims as of the Closing Date are recoverable under such policies, except to the extent of any applicable deductible or loss retention as set forth on Schedule 5.13. 5.14 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 5.14 sets forth an accurate schedule of all officers, directors and Stockholder employees of the Company with annual salaries of $50,000 or more, listing the rate of compensation (and the portions thereof attributable to salary, bonus, benefits and other compensation, respectively) of each of such persons as of (a) the Balance Sheet Date and (b) the date hereof. Neither the Company nor the Stockholders have any knowledge that any of such individuals has any present intention of terminating his or her employment or association with the Company. Attached to Schedule 5.14 are true, complete and correct copies of each employment or consulting agreement with any employee of the Company or the Stockholders. Except as set forth in Schedule 5.14, the Company is not a party to any agreement, nor has it established any plan, policy, practice or program, requiring it to make a payment or provide any other form of compensation or benefit or vesting rights to any officer, director, stockholder, member or employee of the Company or other person performing services for the Company which would not be payable or provided in the absence of this Agreement or the consummation of the transactions contemplated hereby, including any parachute payment under Section 280G of the Code. 5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS; EMPLOYEE POLICIES. Schedule 5.15 sets forth all agreements containing covenants not to compete or solicit employees or to maintain the confidentiality of information to which the Company or any of the Stockholders is bound or under which the Company or any of the Stockholders has any rights or obligations. Schedule 5.15 lists all employee manuals and all material policies, procedures and work-related rules that apply to any employee, director or officer of, or any other individual performing consulting or other independent contractor services for, the Company. The Company has provided U.S. Concrete with a copy of all such written policies and procedures and a written description of all such unwritten policies and procedures. 5.16 EMPLOYEE BENEFIT PLANS. (a) Schedule 5.16 sets forth an accurate schedule of each "employee benefit plan," as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and all deferred compensation or retirement funding arrangements, whether formal or informal and whether legally binding or not, that are currently in force or under which the Company or an ERISA Affiliate has any current or future obligation or liability or under which any present or former employee of the Company or an ERISA Affiliate, or such present or former employee's dependents or beneficiaries, has any current or future right to benefits (each such plan and arrangement referred to hereinafter as a 16 "Plan"), together with true and complete copies of such Plans, arrangements and any trusts related thereto, and classifications of employees covered thereby as of the Balance Sheet Date. Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate sponsors, maintains or contributes currently, or sponsored, maintained or contributed at any time during the preceding five years, to any plan, program, fund or arrangement that constitutes an employee pension benefit plan. Each Plan may be terminated by the Company, or if applicable, by an ERISA Affiliate at any time without any liability, cost or expense, other than costs and expenses that are customary in connection with the termination of a Plan. For purposes of this Agreement, the term "employee pension benefit plan" shall have the meaning given that term in Section 3(2) of ERISA, and the term "ERISA Affiliate" means any corporation or trade or business under common control with the Company as determined under Section 414(b), (c), (m) or (o) of the Code. (b) Each Plan listed in Schedule 5.16 is in compliance in all material respects with the applicable provisions of ERISA, the Code and any other applicable Law. Except as set forth in Schedule 5.16, with respect to each Plan of the Company and each ERISA Affiliate (other than a "multiemployer plan," as defined in Section 4001(a)(3) of ERISA), all reports and other documents required under ERISA or other applicable Law to be filed with any Governmental Authority, including without limitation all Forms 5500, or required to be distributed to participants or beneficiaries, have been duly and timely filed or distributed. True and complete copies of all such reports and other documents with respect to the past five years for each Plan have been provided to U.S. Concrete. No "accumulated funding deficiency" (as defined in Section 412(a) of the Code) with respect to any Plan has been incurred (without regard to any waiver granted under Section 412 of the Code), nor has any funding waiver from the Internal Revenue Service been received or requested. Except as set forth in Schedule 5.16, each Plan that is intended to be "qualified" within the meaning of Section 401(a) of the Code (a "Qualified Plan") is, and has been during the period from its adoption to the date hereof, so qualified, both as to form and operation and all necessary approvals of Governmental Authorities, including a favorable determination as to the qualification under the Code of each of such Qualified Plans and each amendment thereto, have been timely obtained. Except as set forth in Schedule 5.16, all accrued contribution obligations of the Company with respect to any Plan have either been fulfilled in their entirety or are fully reflected in the Financial Statements. (c) No Plan has incurred or will incur, and neither the Company nor any ERISA Affiliate has incurred or will incur, with respect to any Plan, any liability for excise tax or penalty due to the Internal Revenue Service. There have been no terminations, partial terminations or discontinuances of contributions to any Qualified Plan during the preceding five years without notice to and approval by the Internal Revenue Service and payment of all obligations and liabilities attributable to such Qualified Plan. (d) Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate has made any promises of retirement or other benefits to employees, except as set forth in the Plans, and neither the Company nor any ERISA Affiliate maintains or has established any Plan that is a "welfare benefit plan" within the meaning of Section 3(1) of ERISA that provides for continuing benefits or coverage for any participant or any beneficiary of a participant after such participant's termination of employment, except as may be required by Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code and similar state Law provisions, and at the expense of the participant or the beneficiary of the 17 participant, or retiree medical liabilities. Neither the Company nor any ERISA Affiliate maintains, has established or has ever participated in a multiple employer welfare benefit arrangement as described in Section 3(40)(A) of ERISA. Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate has any current or future obligation or liability with respect to a Plan pursuant to the provisions of a collective bargaining agreement. (e) Neither the Company nor any ERISA Affiliate has incurred, nor will it incur as a result of past activities, any material liability to the Pension Benefit Guaranty Corporation in connection with any Plan. The assets of each Plan that are subject to Title IV of ERISA are sufficient to provide the benefits under such Plan, the payment of which the Pension Benefit Guaranty Corporation would guarantee if such Plan were terminated, and such assets are also sufficient to provide all other "benefits liabilities" (as defined in ERISA Section 4001(a)(16)) due under such Plan upon termination. (f) No "reportable event" (as defined in Section 4043 of ERISA) has occurred and is continuing with respect to any Plan. There are no pending, or to the Company's and the Stockholders' knowledge, threatened claims, lawsuits or actions (other than routine claims for benefits in the ordinary course) asserted or instituted against, and neither the Company nor any ERISA Affiliate has knowledge of any threatened litigation or claims against, the assets of any Plan or its related trust or against any fiduciary of a Plan with respect to the operation of such Plan. To the Company's and the Stockholders' knowledge, there are no investigations or audits of any Plan by any Governmental Authority currently pending and there have been no such investigations or audits that have been concluded that resulted in any liability to the Company or any ERISA Affiliate that has not been fully discharged. Neither the Company nor any ERISA Affiliate has participated in any voluntary compliance or closing agreement programs established with respect to the form or operation of a Plan. (g) Neither the Company nor any ERISA Affiliate has engaged in any prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, in connection with any Plan for which exemption was not available. Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate is, or ever has been, a participant in or is obligated to make any payment to a multiemployer plan. No person or entity that was engaged by the Company or an ERISA Affiliate as an independent contractor within the last five years reasonably can or will be characterized or deemed to be an employee of the Company or an ERISA Affiliate under applicable Laws for any purpose whatsoever, including, without limitation, for purposes of federal, state and local income taxation, workers' compensation and unemployment insurance and Plan eligibility. 5.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in Schedule 5.17, there are no claims, actions, suits or proceedings, pending or, to the knowledge of the Company and the Stockholders, threatened against or affecting the Company, at law or in equity, or before or by any Governmental Authority having jurisdiction over the Company. No written notice of any claim, action, suit or proceeding, whether pending or threatened, has been received by the Company and, to the Stockholders' and the Company's knowledge, there is no basis therefor. Except to the extent set forth in Schedule 5.17, the Company has conducted and is conducting its business in compliance with all Laws applicable to the Company, its assets or the operation of its business. 18 5.18 TAXES. For purposes of this Agreement, the term "Taxes" shall mean all taxes, charges, fees, levies or other assessments including, without limitation, income, gross receipts, excise, property, sales, withholding, social security, unemployment, occupation, use, service, service use, license, payroll, franchise, transfer and recording taxes, fees and charges, imposed by the United States or any state, local or foreign government or subdivision or agency thereof, whether computed on a separate, consolidated, unitary, combined or any other basis; and such term shall include any interest, fines, penalties or additional amounts attributable to or imposed with respect to any such taxes, charges, fees, levies or other assessments. The Company has timely filed all requisite federal, state, local and other tax returns for all fiscal periods ended on or before the Closing, and has duly paid in full or made adequate provision in the Financial Statements for the payment of all Taxes for all periods ending at or prior to the Closing Date. The Company has duly withheld and paid or remitted all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other person or entity that required withholding under any applicable Law, including, without limitation, any amounts required to be withheld or collected with respect to social security, unemployment compensation, sales or use taxes or workers' compensation. There have not been during the past three years nor are there currently any examinations, audits, proceedings, notices, waivers, asserted deficiencies or disputed valuations in progress or claims against the Company relating to Taxes for any period or periods prior to and including the Balance Sheet Date and no notice of any claim for Taxes, whether pending or threatened, has been received. The Company has not granted or been requested to grant any extension of the limitation period applicable to any claim for Taxes or assessments with respect to Taxes. The Company is not a party to any Tax allocation or sharing agreement and is not otherwise liable or obligated to indemnify any person or entity with respect to any Taxes. The amounts shown as accruals for Taxes on the Interim Financial Statements as of the Balance Sheet Date are sufficient for the payment of all Taxes for all fiscal periods ended on or before that date. True and complete copies of (a) any tax examinations or audits, (b) extensions of statutory limitations and (c) the federal, state and local Tax returns of the Company for the last three fiscal years have been previously provided to U.S. Concrete. There are no requests for ruling in respect of any Tax pending between the Company and any Taxing authority. The Company has been taxed under the provisions of Subchapter S of the Code since March 3, 1993. The Company currently utilizes the accrual method of accounting for income tax purposes. Such method of accounting has not changed in the past five years. 5.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth in Schedule 5.19, the Company has conducted its operations in the ordinary course and there has not been: (a) any material adverse change in the business, operations, properties, condition (financial or other), assets, liabilities (contingent or otherwise), results of operations or prospects of the Company; (b) any damage, destruction or loss (whether or not covered by insurance) materially adversely affecting the assets, properties or business of the Company; (c) any change in the authorized capital stock of the Company or in its outstanding securities or any change in the Stockholders' ownership interests in the Company or any grant of any options, warrants, calls, conversion rights or commitments; 19 (d) except as set forth on Schedule 7.08, any declaration or payment of any dividend or distribution in respect of the capital stock or any direct or indirect redemption, purchase or other acquisition of any of the capital stock of the Company; (e) any increase in the compensation payable or to become payable by the Company to the Stockholders or any of its officers, directors, employees, consultants or agents, except for ordinary and customary bonuses and salary increases for employees in accordance with past practice, which bonuses and salary increases are set forth in Schedule 5.19; (f) any work interruptions, labor grievances or claims filed; (g) any proposed law, regulation or event or condition of any character materially adversely affecting the assets, properties or business of the Company; (h) except for the Merger, any sale or transfer, or any agreement to sell or transfer, any material assets, properties or rights of the Company to any person or entity, including, without limitation, the Stockholders and their Affiliates; (i) any cancellation, or agreement to cancel, any indebtedness or other obligation owing to the Company; (j) any increase in the indebtedness of the Company, other than accounts payable incurred in the ordinary course of business, consistent with past practices, or incurred in connection with the transactions contemplated by this Agreement; (k) any plan, agreement or arrangement granting any preferential rights to purchase or acquire any interest in any of the assets, properties or rights of the Company or requiring consent of any party to the transfer and assignment of any such assets, properties or rights; (l) any purchase or acquisition of, or agreement, plan or arrangement to purchase or acquire, any assets, properties or rights outside of the ordinary course of the Company's business; (m) any waiver of any material rights or claims of the Company; (n) any material breach, amendment or termination of any Listed Agreement, Permit or other right to which the Company is a party or any of its property is subject; or (o) any other material transaction by the Company outside the ordinary course of business. 5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY. Schedule 5.20 sets forth an accurate schedule, as of the date of this Agreement, of (a) the name of each financial institution or brokerage firm in which the Company has accounts or safe deposit boxes; (b) the names in which the accounts or boxes are held; (c) the type of account and the cash, cash equivalents and securities held in such account as of the second business day prior to the Closing, none of which assets have been withdrawn from such accounts since such date except for bona fide business purposes in the ordinary 20 course of the business of the Company; and (d) the name of each person authorized to draw thereon or have access thereto. Schedule 5.20 also sets forth the name of each person, corporation, firm or other entity holding a general or special power of attorney from the Company and a description of the terms thereof. 5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor the Stockholders nor any of their respective Affiliates has given or offered to give anything of value to any governmental official, political party or candidate for government office that was illegal to give or offer to give nor has it otherwise taken any action which would constitute a violation of the Foreign Corrupt Practices Act of 1977, as amended, or any similar Law. 5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as set forth in Schedule 5.22, neither the Stockholders nor any other Affiliate of the Company owns, directly or indirectly, any interest in, or is an officer, director, employee or consultant of or otherwise receives remuneration from, any Competitive Business, lessor, lessee, customer or supplier of the Company. Except as set forth in Schedule 5.22, no officer or director of the Company nor the Stockholders have, nor had any interest in any tangible or intangible assets or property, real or personal, used in or pertaining to the business of the Company. 5.23 INTANGIBLE PROPERTY. Schedule 5.23 sets forth an accurate list of all patents, patent applications, trademarks, service marks, technology, licenses, trade names, copyrights and other intellectual property or proprietary property rights owned or used by the Company. The Company owns or possesses, and the assets of the Company include, sufficient legal rights to use all of such items without conflict with or infringement of the rights of others. 5.24 CAPITAL EXPENDITURES. Schedule 5.24 sets forth the total amount of capital expenditures currently budgeted to be incurred by the company in excess of $25,000 in the aggregate during the balance of the Company's current fiscal year. 5.25 INVENTORIES. Except as Schedule 5.25 sets forth: (i) all inventories, net of reserves determined in accordance with GAAP, of the Company which are classified as such on the Interim Balance Sheet are merchantable and salable or usable in the ordinary course of business of the Company; and (ii) the Company does not depend on any single vendor for its inventories the loss of which could have a material adverse effect on the business or financial condition of the Company or during the past five years has sustained a difficulty material to the Company in obtaining its inventories. 5.26 TAX REORGANIZATION REPRESENTATION. The Surviving Corporation will acquire substantially all of the properties of the Company within the meaning of Section 368(a)(2)(D) of the Code. 5.27 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary contained in this Agreement, it is the express understanding of the Stockholders and the Company that U.S. Concrete and Newco are not making any representation or warranty whatsoever, express or implied, other than those representations and warranties of U.S. Concrete and Newco expressly set forth in this Agreement. 21 5.28 DISCLOSURE. The Stockholders and the Company have fully provided U.S. Concrete or its representatives with all the information that U.S. Concrete has requested in analyzing whether to consummate the Merger and the other transactions contemplated by this Agreement. None of the information so provided nor any representation or warranty of the Stockholders to U.S. Concrete or Newco in this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein, in light of the circumstances under which they were made, not misleading. There is no fact known to the Stockholders which has specific application to the Company (other than general economic or industry conditions) and which materially adversely affects or, so far as the Stockholders can reasonably foresee, materially threatens, the business or financial condition of the Company which has not been described in the Agreement or the Schedules hereto or disclosed in writing to U.S. Concrete. 5.29 YEAR 2000 COMPLIANCE. To the best knowledge of the Stockholders after reasonable investigation, all devices, systems, machinery, information technology, computer software and hardware, and other date sensitive technology (jointly and severally its "systems") necessary for the Company's business as presently conducted will be Year 2000 Compliant within a period of time calculated to result in no material disruption of any of their business operations. For purposes hereof, "Year 2000 Compliant" means that such systems are designed to be used prior to, during and after the Gregorian calendar year 2000 A.D. and will operate during each such time period without error relating to date data, specifically including any error relating to, or the product of, date data which represents or references different centuries or more than one century. ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO U.S. Concrete and Newco jointly and severally represent and warrant to the Stockholders as follows: 6.01 ORGANIZATION. Each of U.S. Concrete and Newco is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, and is duly authorized and qualified under all applicable Laws to carry on its business in the places and in the manner now conducted. Each of U.S. Concrete and Newco has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as such business is currently being conducted. 6.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. (a) Each of U.S. Concrete and Newco has the full legal right, power and authority to enter into this Agreement and the ancillary documents and agreements described herein and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement has been approved by the boards of directors of U.S. Concrete and Newco and by U.S. Concrete, as the sole stockholder of Newco. No additional corporate proceedings on the part of U.S. Concrete or Newco are necessary to authorize the execution and delivery of this Agreement and the consummation by U.S. Concrete and Newco of the transactions contemplated hereby. This Agreement has been duly and 22 validly executed and delivered by U.S. Concrete and Newco, and, assuming the due authorization, execution and delivery by the Company and the Stockholders, constitutes valid and binding agreements of U.S. Concrete and Newco, enforceable against U.S. Concrete and Newco in accordance with its terms. (b) The execution and delivery of this Agreement by U.S. Concrete and Newco do not, and the consummation by U.S. Concrete and Newco of the transactions contemplated hereby will not, violate or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under any of the terms, conditions or provisions of (i) the Certificate of Incorporation or By-Laws of U.S. Concrete or Newco, (ii) any Law applicable to either U.S. Concrete or Newco or any of its properties or assets or (iii) any material note, bond, mortgage, indenture, deed of trust, license, franchise, permit, concession, contract, lease or other instrument, obligation or agreement of any kind to which U.S. Concrete or Newco is now a party or by which either U.S. Concrete or Newco or any of its properties or assets may be bound or affected. (c) Except for the Merger Filings and such filings as may be required under federal or state securities Laws, no declaration, filing or registration with, or notice to, or authorization, consent or approval of, any Governmental Authority is necessary for the execution and delivery of this Agreement by U.S. Concrete and Newco or the consummation by U.S. Concrete and Newco of the transactions contemplated hereby. 6.03 U.S. CONCRETE COMMON STOCK. The shares of U.S. Concrete Common Stock to be issued to the Stockholders pursuant to the Merger are duly authorized and, when issued in accordance with the terms of this Agreement, will be validly issued, fully paid and nonassessable. The issuance of U.S. Concrete Common Stock pursuant to the Merger will transfer to the Stockholders valid title to such shares of U.S. Concrete Common Stock, free and clear of all Encumbrances, except for any Encumbrances created by the Stockholders. 6.04 TAX REORGANIZATION REPRESENTATIONS. (a) Prior to the Merger, U.S. Concrete will be in control of Newco within the meaning of Section 368(c) of the Code. (b) U.S. Concrete has no plan or intention to cause the Surviving Corporation to issue additional shares of its stock that would result in U.S. Concrete losing control of the Surviving Corporation within the meaning of Section 368(c) of the Code. (c) U.S. Concrete has no plan or intention to reacquire any of its stock issued in the Merger. (d) U.S. Concrete has no plan or intention to liquidate the Surviving Corporation; to merge the Surviving Corporation with or into another corporation; to sell or otherwise dispose of the stock of the Surviving Corporation except for transfers of stock to another corporation controlled by U.S. Concrete; or to cause the Surviving Corporation to sell or otherwise dispose of any of its assets, 23 except for dispositions made in the ordinary course of business or transfers of assets to a corporation controlled by U.S. Concrete. (e) Following the Closing, U.S. Concrete's intention is that the Surviving Corporation will continue the historic business of the Company or use a significant portion of the historic business assets of the Company in a business, all as required to satisfy the "continuity of business enterprise" requirement under Section 368 of the Code. (f) U.S. Concrete does not own, nor has it owned during the past five years, any shares of the stock of the Company. (g) Each of U.S. Concrete and Newco is undertaking the Merger for a bona fide business purpose and not merely for the avoidance of federal income tax. (h) Neither U.S. Concrete nor Newco is an investment company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code. (i) As of the Closing Date, the fair market value of the assets of Newco will exceed the sum of Newco's liabilities plus the amount of other liabilities, if any, to which Newco's assets are subject. 6.05 SEC FILINGS; DISCLOSURE. U.S. Concrete has filed with the SEC all material forms, statements, reports and documents required to be filed by it prior to the date hereof under each of the 1933 Act and the 1934 Act and the respective rules and regulations thereunder, (a) all of which, as amended, if applicable, complied when filed in all material respects with all applicable requirements of the appropriate Act and the rules and regulations thereunder, and (b) none of which, as amended, if applicable, contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made and at the time they were made, not misleading. 6.06 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary contained in this Agreement, it is the express understanding of U.S. Concrete and Newco that the Stockholders are not making any representation or warranty whatsoever, express or implied, other than those representations and warranties of the Stockholders expressly set forth in this Agreement. 6.07 DISCLOSURE. U.S. Concrete has fully provided the Stockholders or their representatives with all the information that the Stockholders have requested in analyzing whether to consummate the Merger. None of the information so provided nor any representation or warranty of U.S. Concrete contained in this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. 24 ARTICLE VII CERTAIN COVENANTS 7.01 Release From Guarantees. U.S. Concrete shall use its commercially reasonable efforts to have the Stockholders released from the personal guarantees of the Company's indebtedness identified in Schedule 7.01 within 90 days after the Closing Date. U.S. Concrete hereby agrees to indemnify and defend the Stockholders and hold each Stockholder harmless for any amounts that such Stockholder is required to pay in connection with the enforcement of any obligations under such personal guarantees after the Closing, including without limitation any reasonable attorneys' fees and expenses incurred in connection therewith. 7.02 FUTURE COOPERATION; TAX MATTERS. The Stockholders and U.S. Concrete shall each deliver or cause to be delivered to the other following the Closing such additional instruments as the other may reasonably request for the purpose of fully carrying out this Agreement. The Stockholders will cooperate and use their commercially reasonable best efforts to have the present officers, directors and employees of the Company cooperate with U.S. Concrete and the Surviving Corporation at and after the Closing in furnishing information, evidence, testimony and other assistance in connection with any actions, proceedings, arrangements or disputes of any nature with respect to matters pertaining to all periods prior to the Closing. The Stockholders will cooperate with the Surviving Corporation in the preparation of all Tax returns covering the period from the beginning of the Company's current Tax year through the Closing. In addition, U.S. Concrete will provide the Stockholders with access to such of its books and records as may be reasonably requested by the Stockholders in connection with federal, state and local tax matters relating to periods prior to the Closing. The party requesting cooperation, information or actions under this Section 7.02 shall reimburse the other party for all reasonable out-of-pocket costs and expenses paid or incurred in connection therewith, which costs and expenses shall not, however, include per diem charges for employees or allocations of overhead charges. 7.03 EXPENSES. U.S. Concrete will pay the fees, expenses and disbursements of U.S. Concrete and its agents, representatives, accountants and counsel incurred in connection with the execution, delivery and performance of this Agreement and any amendments hereto. The Company will be responsible for the fees and expenses of Arthur Andersen LLP's audit or audit related procedures in connection with the transactions contemplated hereby. The Stockholders will pay their fees, expenses and disbursements and those of their and the Company's agents, representatives, financial advisors, accountants and counsel incurred in connection with the execution, delivery and performance of this Agreement and any amendments hereto and the consummation of the transactions contemplated hereby, including, without limitation, accounting fees and related expenses attributable to the final Tax returns of the Company and the Stockholders for periods through the Closing. The Stockholders will also pay any costs associated with business brokers or other advisors engaged by the Stockholders or the Company. 7.04 LEGAL OPINION. At the Closing, the Company and the Stockholders shall cause their legal counsel, Evans & Petree, a Professional Association, to deliver to U.S. Concrete a legal opinion in form and substance acceptable to U.S. Concrete. 25 7.05 EMPLOYMENT AGREEMENTS. Concurrently with the execution of this Agreement, the Surviving Corporation shall enter into a mutually acceptable Employment Agreement with each of the individuals identified on Schedule 7.05 (collectively, the "Employment Agreements"). 7.06 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the execution of this Agreement, (a) the Stockholders shall repay to the Company all amounts outstanding as advances to or receivables from the Stockholders, each of which advances or receivables is specifically reflected in Schedule 5.07, and (b) the Company shall repay all amounts outstanding under loans to the Company from the Stockholders, each of which loans to the Company is specifically reflected in Schedule 5.06. 7.07 STOCK OPTIONS. U.S. Concrete shall grant nonqualified options to purchase an aggregate of 40,000 shares of U.S. Concrete Common Stock as of the Closing Date under U.S. Concrete's 1999 Incentive Plan (the "Incentive Plan") to certain key employees of the Company (other than the Stockholders), as set forth on Schedule 7.07 in the amounts listed thereon. Schedule 7.07 shall also include the social security number and home address of each individual listed thereon. Such options shall vest in equal annual increments for four years, commencing on the first anniversary of the Closing Date. 7.08 PRE-CLOSING DISTRIBUTIONS. Prior to the Closing, the Company may have distributed to the Stockholders the cash and other assets set forth on Schedule 7.08. Any such distributions shall have been authorized by the Board of Directors of the Company prior to the Closing, and the Company and the Stockholders shall have used their respective best efforts to complete such distributions prior to the Closing. Notwithstanding the foregoing, if any such authorized distributions have not been completed prior to the Closing, the Surviving Corporation shall use reasonable efforts to complete such authorized distributions after the Closing. The Stockholders' sole recourse against the Company with respect to this Section 7.08 shall be to receive the assets to be distributed. 7.09 WORKING CAPITAL ADJUSTMENT. As soon as practicable, and in any event within 75 days after the Closing Date, U.S. Concrete shall cause to be prepared and delivered to the Stockholders a balance sheet of the Company as of August 31, 1999 (the "August 31, 1999 Balance Sheet") and a working capital adjustment schedule (the "Adjustment Schedule"). The Adjustment Schedule will set forth (a) the amount of cash on the August 31, 1999 Balance Sheet less the amount of cash and cash equivalents of the Company distributed between August 31, 1999 and the Closing Date (excluding the distribution of $116,000 from the proceeds of the sale of real property located in Olive Branch, Mississippi), as set forth on Schedule 7.08 (the "Adjusted Cash Amount") and (b) the amount of net working capital of the Company at August 31, 1999 (computed by subtracting current liabilities from current assets (excluding (i) cash and (ii) any current assets of the Company distributed between August 31, 1999 and the Closing Date as set forth on Schedule 7.08) listed on the August 31, 1999 Balance Sheet) (the "Adjusted Working Capital Amount"). If the aggregate of the Adjusted Cash Amount and the Adjusted Working Capital Amount (the "Adjusted Amount") is less than $1,220,000, then the Stockholders shall, no later than 15 days after delivery of the Adjustment Schedule by U.S. Concrete, pay to the Surviving Corporation the amount by which $1,220,000 exceeds the Adjusted Amount (the "Shortfall"). If the Adjusted Amount is greater than $1,220,000, then the Surviving Corporation shall, no later than 15 days after delivery of the Adjustment Schedule, pay to the Stockholders, on a pro rata basis in proportion to their percentage ownership of the Company Common Stock outstanding 26 immediately prior to the Closing, the amount by which the Adjusted Amount exceeds $1,220,000 (the "Excess"). The August 31, 1999 Balance Sheet and Adjustment Schedule will be final and binding on the parties hereto unless, within 15 days following the delivery of the Adjustment Schedule by U.S. Concrete, the Stockholders notify U.S. Concrete in writing that the Stockholders disagree with all or any portion of the August 31, 1999 Balance Sheet and/or the Adjustment Schedule. If the Stockholders and U.S. Concrete cannot mutually resolve any such disagreement within 15 days after the expiration of the Stockholders' notice of disagreement, then the Stockholders and U.S. Concrete shall submit the dispute to a mutually agreeable "Big Five" independent certified public accountant (the "Accounting Firm") within 10 days after the end of such 15-day period. If the Stockholders and U.S. Concrete are unable to agree upon such an accountant within such 10-day period, then the Stockholders and U.S. Concrete shall each select a "Big Five" accountant and within five days after their selection, those two accountants shall select a third "Big Five" accountant, which third accountant shall act as the Accounting Firm. The Stockholders and U.S. Concrete shall request that the Accounting Firm audit the August 31, 1999 Balance Sheet and provide a computation of the Adjusted Cash Amount and/or the Adjusted Working Capital Amount within 30 days thereafter, and this computation will be final and binding upon the parties hereto and used to compute the Shortfall or the Excess, as the case may be, the payment of which shall be made within five days of delivery by U.S. Concrete of the audited August 31, 1999 Balance Sheet. ARTICLE VIII INDEMNIFICATION The Stockholders, U.S. Concrete and Newco each make the following covenants: 8.01 General Indemnification by the Stockholders. Subject to Section 8.05 and Section 8.06, the Stockholders covenant and agree that they will jointly and severally (without any right of indemnification or contribution from the Company) indemnify, defend, protect and hold harmless U.S. Concrete, Newco and the Surviving Corporation, and their respective officers, directors, employees, stockholders, agents, representatives and Affiliates, at all times from and after the date of this Agreement from and against all Losses incurred by any of such indemnified persons and entities as a result of or arising from (a) until the Expiration Date any breach of the representations and warranties of the Stockholders set forth herein or in the Schedules attached hereto or certificates delivered in connection herewith, (b) any breach or nonfulfillment of any covenant or agreement on the part of the Stockholders or the Company under this Agreement, (c) all income Taxes payable by the Company for all periods prior to and including the Closing Date, (d) all transfer and other Taxes arising from the transactions contemplated by this Agreement, (e) any violation of any Environmental Law by the Company or with respect to any property currently or previously owned by the Company (f) any encroachment of the improvements on the real property owned or leased by the Company upon any property adjacent thereto or upon any easement or (g) all claims naming the Company as a "potentially responsible party" in connection with the site known as the South 8th Street Superfund Site in West Memphis, Arkansas and/or the site known as the Gurley Pit Site in Edmiston, Arkansas, including without limitation those brought in the case of USA and the State of Arkansas v. Aircraft Service International, et al, No. J-C-98-362 in the United States District Court, Eastern District of Arkansas, Jonesboro Division; provided, however, that in the event any amount previously paid by the Company to cover clean-up costs of these 27 sites is returned to the Company, then Newco shall pay such amount to the Stockholders, on a pro rata basis in proportion to their percentage ownership of the Company Common Stock outstanding immediately prior to the Closing, within 30 days of receipt of such returned funds. 8.02 INDEMNIFICATION BY U.S. CONCRETE. Subject to Section 8.05 and Section 8.06, U.S. Concrete covenants and agrees that it will indemnify, defend, protect and hold harmless the Stockholders and their respective agents, representatives, Affiliates, beneficiaries and heirs and employees at all times from and after the date of this Agreement from and against all Losses incurred by any of such indemnified persons as a result of or arising from (a) until the Expiration Date, any breach of the representations and warranties of U.S. Concrete or Newco set forth herein or in the Schedules attached hereto or certificates delivered in connection herewith or (b) any breach or nonfulfillment of any covenant or agreement on the part of U.S. Concrete or Newco under this Agreement. 8.03 THIRD PERSON CLAIMS. Promptly after any party entitled to indemnification under Sections 8.01 and 8.02 hereof (hereinafter the "Indemnified Party") has received notice of or has knowledge of any claim by a person or entity not a party to this Agreement ("Third Person"), of the commencement of any action or proceeding by a Third Person, which the Indemnified Party believes in good faith is an indemnifiable claim under this Agreement, the Indemnified Party shall give to the party obligated to provide indemnification pursuant to Sections 8.01 or 8.02 hereof (hereinafter the "Indemnifying Party") written notice of such claim or the commencement of such action or proceeding. Such notice shall state the nature and the basis of such claim and a reasonable estimate of the amount thereof. The Indemnifying Party shall have the right to defend and settle, at its own expense and by its own counsel reasonably acceptable to the Indemnified Party, any such matter so long as the Indemnifying Party pursues the same diligently and in good faith. If the Indemnifying Party undertakes to defend or settle, it shall promptly notify the Indemnified Party of its intention to do so, and the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in all commercially reasonable respects in the defense thereof and in any settlement thereof. Such cooperation shall include, but shall not be limited to, furnishing the Indemnifying Party with any books, records and other information reasonably requested by the Indemnifying Party and in the Indemnified Party's possession or control. After the Indemnifying Party has notified the Indemnified Party of its intention to undertake to defend or settle any such asserted liability, and for so long as the Indemnifying Party diligently pursues such defense, the Indemnifying Party shall not be liable for any additional legal expenses incurred by the Indemnified Party in connection with any defense or settlement of such asserted liability; provided, however, that the Indemnified Party shall be entitled, at its expense, to participate in the defense of such asserted liability and the negotiations of the settlement thereof. The Indemnifying Party shall not settle any such Third Person claim without the consent of the Indemnified Party, unless the settlement thereof imposes no liability or obligation on, and includes a complete release from liability of, the Indemnified Party. If the Indemnifying Party desires to accept a final and complete settlement of any such Third Person claim and the Indemnified Party refuses to consent to such settlement, then the Indemnifying Party's liability under this Section with respect to such Third Person claim shall be limited to the amount so offered in settlement by said Third Person; provided, however, that notwithstanding the foregoing, the Indemnified Party shall be entitled to refuse to consent to any such proposed settlement and the Indemnifying Party's liability hereunder shall not be limited by the amount of the proposed settlement if such settlement imposes any liability or obligation on, or does not provide for the complete release of, the Indemnified Party. If, upon receiving notice, the Indemnifying Party does not timely undertake to 28 defend such matter to which the Indemnified Party is entitled to indemnification hereunder, or fails diligently to pursue such defense, the Indemnified Party may undertake such defense through counsel of its choice, at the cost and expense of the Indemnifying Party, and the Indemnified Party may settle such matter, in its discretion, and the Indemnifying Party shall reimburse the Indemnified Party for the amount paid in such settlement and any other liabilities or expenses incurred by the Indemnified Party in connection therewith. 8.04 Non-Third Person Claims. In the event that any Indemnified Party asserts the existence of a claim giving rise to Losses (but excluding claims resulting from the assertion of liability by Third Persons), such party shall give written notice to the Indemnifying Party. Such written notice shall state that it is being given pursuant to this Section 8.04, specify the nature and amount of the claim asserted, and indicate the date on which such assertion shall be deemed accepted and the amount of the claim deemed a valid claim (such date to be established in accordance with the next sentence). If such Indemnifying Party, within 60 days after the mailing of notice by such Indemnified Party, shall not give written notice to such Indemnified Party announcing such Indemnifying Party's intent to contest such assertion of such Indemnified Party, such assertion shall be deemed accepted and the amount of such claim shall be deemed a valid claim. In the event, however, that such Indemnifying Party contests such assertion of a claim by giving such written notice to the Indemnified Party within said period, then the parties shall act in good faith to reach agreement regarding such claim. In the event that litigation shall arise with respect to any such claim, the prevailing party shall be entitled to reimbursement of costs and expenses incurred in connection with such litigation including reasonable attorneys' fees, if the parties hereto, acting in good faith, cannot reach agreement with respect to such claim within 60 days after the notice provided by the Indemnified Party. 8.05 Indemnification Deductible. Neither the Stockholders, on the one hand, nor U.S. Concrete, Newco and the Surviving Corporation, on the other hand, shall be entitled to indemnification from the other under the provisions of Section 8.01(a) or Section 8.02(a), as the case may be, until such time as, and only to the extent that, the claims subject to indemnification by such other party exceed, in the aggregate, $77,974. Notwithstanding the foregoing, the limitations set forth in this Section 8.05 shall not apply to fraudulent misrepresentations. 8.06 INDEMNIFICATION LIMITATION. Subject to Section 8.05, the aggregate indemnification obligation of the Stockholders under Section 8.01(a) and of U.S. Concrete and Newco under Section 8.02(a) shall be limited to $7,797,390. Notwithstanding the foregoing, the limitations set forth in this Section 8.06 shall not apply to fraudulent misrepresentations. 8.07 Indemnification for Negligence of Indemnified Party. THE RIGHTS TO INDEMNIFICATION UNDER THIS ARTICLE VIII INCLUDE RIGHTS TO INDEMNIFICATION FOR THE RESULTS OF AN INDEMNIFIED PARTY'S ACTUAL OR ALLEGED NEGLIGENCE, IF SUCH INDEMNIFIED PARTY WOULD OTHERWISE BE ENTITLED TO INDEMNIFICATION HEREUNDER. 29 ARTICLE IX NONCOMPETITION COVENANTS 9.01 PROHIBITED ACTIVITIES. (a) For no additional consideration, each Stockholder will not for five years following the Closing Date and, if any Stockholder is party to an Employment Agreement, if longer, one year following such Stockholder's termination of employment with the Surviving Corporation or its Affiliates (with the applicable period being herein referred to as the "Noncompete Term"), directly or indirectly, for himself or on behalf of or in conjunction with any other person, company, partnership, corporation or business or other entity of whatever nature: (i) engage, as an officer, director, shareholder, owner, investor, partner, joint venturer, or in a managerial or advisory capacity, whether as an employee, independent contractor, consultant or advisor, or as a sales representative, dealer or distributor, in any Competitive Business within any Territory surrounding any plant or other operating facility in which the Company was engaged in business on the date immediately prior to the Closing Date (for purposes of this ARTICLE IX, the "Territory" surrounding any plant or other operating facility will be: (A) the city, town or village in which that plant or facility is located, (B) the county or parish in which that plant or facility is located, (C) the counties or parishes contiguous to the county or parish in which that plant or facility is located, (D) the area located within 50 miles of that plant or facility, (E) the area located within 100 miles of that plant or facility and (F) the area in which that plant or facility regularly provides products or services at the locations of its customers). (ii) call upon or otherwise solicit any person, who is, at that time, an employee or consultant of U.S. Concrete, the Surviving Corporation or any of their respective subsidiaries, for the purpose or with the intent or effect of enticing such employee or consultant away from or out of the employ or contract with U.S. Concrete, the Surviving Corporation or any of their respective subsidiaries; (iii) call upon or otherwise solicit any person or entity which is, at that time, or which has been, within two years prior to that time, a customer of the Company, U.S. Concrete or the Surviving Corporation or any of the subsidiaries of such parties within the Territory for the purpose of soliciting or selling services or products in a Competitive Business within the Territory; or (iv) call upon or otherwise solicit any entity which the Company or U.S. Concrete has called on in connection with the possible acquisition by either of them of such entity or of which either of them has made an acquisition analysis, with the knowledge of that entity's status as an acquisition candidate of U.S. Concrete, for the purpose of acquiring that entity or arranging the acquisition of that entity by any person or entity other than U.S. Concrete. (b) Notwithstanding the above, Section 9.01(a) shall not be deemed to prohibit any Stockholder from acquiring, as a passive investor with no involvement in the operations of the business, 30 not more than one percent of the capital stock of a Competitive Business whose stock is publicly traded on a national securities exchange, the Nasdaq National Market or over-the-counter. 9.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic losses to U.S. Concrete and the Surviving Corporation as a result of a breach of the foregoing covenant, because a breach of such covenant would diminish the value of the assets, properties and business of the Company being sold pursuant to this Agreement, and because of the immediate and irreparable damage that could be caused to U.S. Concrete and the Surviving Corporation for which it would have no other adequate remedy, each Stockholder agrees that the foregoing covenant may be enforced against such individual by injunctions, restraining orders and other equitable actions. 9.03 REASONABLE RESTRAINT. It is agreed by the parties hereto that the foregoing covenants in this ARTICLE IX are necessary in terms of time, activity and territory to protect U.S. Concrete's and the Surviving Corporation's interest in the assets, properties and business being acquired pursuant to the terms of this Agreement and impose a reasonable restraint on the Stockholders in light of the activities and businesses of U.S. Concrete on the date of the execution of this Agreement and the current plans of U.S. Concrete. 9.04 SEVERABILITY; REFORMATION. The covenants in this ARTICLE IX are severable and separate, and the unenforceability of any specific covenant shall not affect the continuing validity and enforceability of any other covenant. In the event any court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth in this ARTICLE IX are unreasonable and therefore unenforceable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which the court deems reasonable and this Agreement shall thereby be reformed. 9.05 MATERIAL AND INDEPENDENT COVENANT. The Stockholders acknowledge that their agreements and the covenants set forth in this ARTICLE IX are material conditions to U.S. Concrete's and Newco's agreements to execute and deliver this Agreement and to consummate the transactions contemplated hereby and that U.S. Concrete and Newco would not have entered into this Agreement without such covenants. All of the covenants in this ARTICLE IX shall be construed as an agreement independent of any other provision in this Agreement. The existence of any claim or cause of action by any Stockholder against U.S. Concrete, whether predicated on this Agreement or otherwise, will not constitute a defense to the enforcement by U.S. Concrete of any of the covenants of this ARTICLE IX. It is specifically agreed that the time period Section 9.01 specifies will be computed in the case of each Stockholder by excluding from that computation any time during which that Stockholder is in violation of any provision of Section 9.01. The covenants this ARTICLE IX contains will not be affected by any breach of any other provision hereof by any party hereto. ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION 10.01 General. The Stockholders recognize and acknowledge that they had in the past, currently have, and in the future will have, access to certain confidential information relating to the businesses of the Company, the Surviving Corporation and/or U.S. Concrete, including, without limitation, lists of customers, operational policies, and pricing and cost policies that are, and 31 following the Closing will be, valuable, special and unique assets of the Surviving Corporation and U.S. Concrete. Each Stockholder agrees that he or she will not use or disclose such confidential information to any person, firm, corporation, association or other entity for any purpose whatsoever, except as is required in the course of performing his or her duties, if any, to the Surviving Corporation and/or U.S. Concrete, unless (a) such information becomes known to the public generally through no fault of the Stockholder or (b) disclosure is required by Law, provided that prior to disclosing any information pursuant to this clause (b) the disclosing Stockholder(s) shall give prior written notice thereof to U.S. Concrete and the Surviving Corporation and provide U.S. Concrete with the opportunity to contest such disclosure. In the event of a breach or threatened breach by any Stockholder of the provisions of this Section, U.S. Concrete shall be entitled to an injunction restraining such Stockholder from disclosing, in whole or in part, such confidential information. Nothing herein shall be construed as prohibiting U.S. Concrete from pursuing any other available remedy for such breach or threatened breach, including, without limitation, the recovery of damages. 10.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic losses to U.S. Concrete and the Surviving Corporation as a result of the breach of the foregoing covenant, because a breach of such covenant would diminish the value of the assets, properties and business of the Company being sold pursuant to this Agreement, and because of the immediate and irreparable damage that would be caused for which the Surviving Corporation and/or U.S. Concrete would have no other adequate remedy, each Stockholder agrees that the foregoing covenants may be enforced against such individual by injunctions, restraining orders and other equitable actions. ARTICLE XI INTENDED TAX TREATMENT 11.01 TAX-FREE REORGANIZATION. U.S. Concrete and the Stockholders are entering into this Agreement with the intention that the Merger qualify as a tax-free reorganization for federal income tax purposes, except to the extent of any "boot" received, and neither U.S. Concrete nor the Stockholders will take any actions that disqualify the Merger for such treatment. ARTICLE XII FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON STOCK 12.01 Compliance with Law. The Stockholders acknowledge the shares of U.S. Concrete Common Stock issued in accordance with the terms of this Agreement (the "Restricted Shares") will not be registered under the 1933 Act and therefore may not be resold without compliance with the 1933 Act. The Restricted Shares are being or will be acquired by the Stockholders solely for their own account, for investment purposes only, and with no present intention of distributing, selling or otherwise disposing of them in connection with a distribution. Each Stockholder covenants, warrants and represents that none of the Restricted Shares held by such Stockholder will be, directly or indirectly, offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of except after full compliance with all of the 32 applicable provisions of the 1933 Act and the rules and regulations of the SEC. Certificates representing the Restricted Shares shall bear the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE WERE NOT ISSUED IN A TRANSACTION REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. THE SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE OPINION OF COUNSEL TO THE ISSUER, IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. 12.02 Economic Risk; Sophistication; Accredited Investors. Schedule 12.02 correctly states (i) whether each Stockholder is, or is not, an "accredited investor" as defined in the Securities Act Rule 501(a) and, if he or she is not such an investor, (ii) the name and address of his or her "purchaser representative(s)" (as defined in Securities Act Rule 501(h)). Each Stockholder is able to bear the economic risk of an investment in the Restricted Shares and can afford to sustain a total loss of such investment. Each Stockholder has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the proposed investment and therefore has the capacity to protect his or her own interests in connection with the acquisition of the Restricted Shares pursuant hereto. The purchaser representative(s) of each Stockholder that is not an accredited investor has received and reviewed a copy of each of the Prospectus and 10-Q. Each Stockholder and his or her purchaser representative(s), if such Stockholder is not an accredited investor, has had an adequate opportunity to ask questions of, and receive answers from the appropriate officers and representatives of U.S. Concrete and Newco concerning, among other matters, U.S. Concrete, its management, business, operations and financial condition, its plans for the operation of its business and potential additional acquisitions, and to obtain any additional information requested by such Stockholder or his or her purchaser representative(s), if such Stockholder is not an accredited investor, concerning such matters, and all those questions have been answered to the satisfaction of such Stockholder or purchaser representative(s). 12.03 RULE 144 REPORTING. With a view to making available the benefits of certain rules and regulations of the SEC that may permit the resale of U.S. Concrete Common Stock to the public without registration, for a period of two years after the Closing, U.S. Concrete agrees to use its commercially reasonable efforts to: (a) make and keep public information (as such terms are defined in Rule 144) regarding U.S. Concrete available; (b) file with the SEC in a timely manner all reports and other documents required of U.S. Concrete under the 1933 Act and the 1934 Act; and (c) furnish to a Stockholder upon written request a written statement by U.S. Concrete as to its compliance with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, a copy of the most recent annual or quarterly report of U.S. Concrete, and such other reports and documents so filed as such Stockholder may reasonably request in availing 33 himself or herself of any rule or regulation of the SEC allowing such Stockholder to sell any such shares without registration. 12.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES. The Stockholders covenant, warrant and represent that (i) none of the Restricted Shares will be offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of, directly or indirectly, during the one-year period commencing on the Closing Date (the "Initial Lockup Period") and (ii) 50% of the Restricted Shares will not be offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of, directly or indirectly, during the two- year period commencing on the Closing Date (the "Secondary Lockup Period" and together with the Initial Lockup Period, the "Lockup Periods") and, after the applicable Lockup Period, the Restricted Shares may be offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of directly or indirectly, only after full compliance with all of the applicable provisions of the 1933 Act and the rules and regulations of the SEC; and, during the applicable Lockup Period, the Stockholders shall not engage in put, call, short- sale, hedge, straddle, collar or similar transactions intended to reduce the Stockholders' risk of owning the Restricted Shares subject to the applicable Lockup Period. Certificates representing 50% of the Restricted Shares shall bear the following legend, which shall reflect the Initial Lockup Period, in addition to the legend under Section 12.01: THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL RESTRICTION ON TRANSFER THAT EXPIRES ON SEPTEMBER 14, 2000 AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC. Certificates representing the remaining 50% of the Restricted Shares shall bear the following legend, which shall reflect the Secondary Lockup Period, in addition to the legend under Section 12.01: THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL RESTRICTION ON TRANSFER THAT EXPIRES ON SEPTEMBER 14, 2001 AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC. ARTICLE XIII MISCELLANEOUS 13.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES. This Agreement and the rights of the parties hereunder may not be assigned (except by operation of Law) and shall be binding upon and shall inure to the benefit of the parties hereto, the successors of U.S. Concrete, Newco, the Surviving Corporation and the Company, and the heirs and legal representatives of the Stockholders. Except as provided in ARTICLE VIII or in this Section 13.01, nothing in this Agreement is intended or will be construed to confer upon or give any person or entity other than the parties hereto any rights or remedies under or by reason of this Agreement or any transaction contemplated hereby. 34 13.02 ENTIRE AGREEMENT. This Agreement (including the Schedules, exhibits and annexes attached hereto) and the documents delivered pursuant hereto constitute the entire agreement and understanding among the Stockholders, the Company, Newco and U.S. Concrete and supersede any prior agreement and understanding relating to the subject matter of this Agreement, including, without limitation, the Letter of Intent. This Agreement may be modified or amended only by a written instrument executed by the Stockholders, the Company, Newco and U.S. Concrete, acting through their respective officers, duly authorized by their respective Boards of Directors. Any right hereunder may be waived only by a written instrument executed by the party waiving such right. 13.03 COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument. Facsimile transmission of any signed original document and/or retransmission of any signed facsimile transmission will be deemed the same as delivery of an original. At the request of any party, the parties will confirm facsimile transmission by signing a duplicate original document. 13.04 BROKERS AND AGENTS. Each party hereto represents and warrants that it employed no broker or agent in connection with the transactions contemplated by this Agreement. Each party agrees to indemnify each other party against all loss, cost, damages or expense arising out of claims for fees or commissions of brokers employed or alleged to have been employed by such indemnifying party. 13.05 NOTICES. All notices and communications required or permitted hereunder shall be in writing and may be given by depositing the same in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested (which will be deemed given three business days after deposit), or by delivering the same in person to an officer or agent of such party (which will be deemed given when actually received), as follows: If to U.S. Concrete, Newco or the Surviving Corporation, addressed to them at: U.S. Concrete, Inc. 1300 Post Oak Blvd., Suite 1200 Houston, Texas 77056 Attn: Corporate Secretary If to the Stockholders, addressed as follows: John F. Carrier 10310 Latting Road Cordova, Tennessee 38018 William Henry Carrier 77 Waring Memphis, Tennessee 38117 Michael King Carrier 2490 Birnam Wood 35 Germantown, Tennessee 38138 Mary G. Carrier, Trustee for Anne Carrier (TN UGMA) 77 Waring Memphis, Tennessee 38117 William Henry Carrier, Trustee for William Henry Carrier, Jr. (TN UGMA) 77 Waring Memphis, Tennessee 38117 Mary G. Carrier 77 Waring Memphis, Tennessee 38117 with a copy (which shall not constitute notice) to: Evans & Petree 81 Monroe Avenue Memphis, Tennessee 38103 Attn: W. Lytle Nichol IV, Esq. or such other address as any party hereto shall specify pursuant to this Section 13.05 from time to time. 13.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties set forth in ARTICLE V and ARTICLE VI shall survive the Closing for a period of two years from the Closing Date (the "Expiration Date"), except that the representations and warranties set forth in Sections 5.03, 5.11, 5.16 and 5.18 hereof shall survive until such time as the applicable statute of limitations period has run, which shall be deemed to be the Expiration Date for Sections 5.03, 5.11, 5.16 and 5.18, as the case may be. The respective parties shall remain liable after the Expiration Date for breaches of the representations and warranties set forth in ARTICLE V and ARTICLE VI, provided such breaches are asserted in good faith by notice in writing to the alleged breaching party prior to the Expiration Date. 13.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE. Except as otherwise provided herein, no delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver. No right, remedy or election any term of this Agreement gives will be deemed exclusive, but each will be cumulative with all other rights, remedies and elections available at law or in equity. 13.08 REFORMATION AND SEVERABILITY. In case any provision of this Agreement shall be invalid, illegal or unenforceable, it shall, to the extent possible, be modified in such manner as to be valid, legal 36 and enforceable, but so as to most nearly retain the intent of the parties, and if such modification is not possible, such provision shall be severed from this Agreement, and in either case, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby. 13.09 Section Headings; Gender. The Section headings contained in this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement. Words of the masculine gender in this Agreement shall be deemed and construed to include correlative words of the feminine and neuter genders and words of the neuter gender shall be deemed and construed to include correlative words of the masculine and feminine genders. 13.10 GOVERNING LAW. This Agreement shall be construed in accordance with the laws of the State of Tennessee (except for its principles governing conflicts of laws). 13.11 DISPUTE RESOLUTION. (a) Except with respect to injunctive relief as provided in Section 9.02 and Section 10.02 (which relief may be sought from any court or administrative agency with jurisdiction with respect thereto), any unresolved dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in accordance with the rules of the American Arbitration Association then in effect. The arbitration shall be conducted by a retired judge employed by the Atlanta, Georgia Regional Office of J.A.M.S./Endispute, Inc. ("JAMS"). The arbitration shall be held in JAMS' Atlanta, Georgia office. (b) The parties shall obtain from JAMS a list of the retired judges available to conduct the arbitration. The parties shall use their reasonable efforts to agree upon a judge to conduct the arbitration. If the parties cannot agree upon a judge to conduct the arbitration within 10 days after receipt of the list of available judges, the parties shall ask JAMS to provide the parties a list of three available judges (the "Judge List"). Within five days after receipt of the Judge List, each party shall strike one of the names of the available judges from the Judge List and return a copy of such list to JAMS and the other party. If two different judges are stricken from the Judge List, the remaining judge shall conduct the arbitration. If only one judge is stricken from the Judge List, JAMS shall select a judge from the remaining two judges on the Judge List to conduct the arbitration. (c) The arbitrator shall not have the authority to add to, detract from, or modify any provision hereof nor to award punitive damages to any injured party. The arbitrator shall have the authority to order payment of damages, reimbursement of costs, including those incurred to enforce this Agreement, and interest thereon in the event the arbitrator determines that a material breach of this Agreement has occurred. A decision by the arbitrator shall be final and binding. Judgment may be entered on the arbitrator's award in any court having jurisdiction. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 37 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. U.S. CONCRETE, INC. By: /s/ Donald Wayne _____________________________ Donald Wayne, Vice President CONCRETE XI ACQUISITION, INC. By: /s/ Donald Wayne _____________________________ Donald Wayne, President CARRIER EXCAVATION AND FOUNDATION COMPANY By: /s/ John F. Carrier ________________________ Name: John F. Carrier Title: President /s/ John F. Carrier __________________________________ John F. Carrier, Individually /s/ William Henry Carrier ___________________________________ William Henry Carrier, Individually /s/ Michael K. Carrier ___________________________________ Michael K. Carrier, Individually 38 MARY G. CARRIER, TRUSTEE FOR ANN CARRIER (TN UGMA) /s/ Mary G. Carrier ______________________________ Mary G. Carrier, Trustee WILLIAM HENRY CARRIER, TRUSTEE FOR WILLIAM HENRY CARRIER, JR. (TN UGMA) /s/ William Henry Carrier ______________________________ William Henry Carrier, Trustee /s/ Mary G. Carrier ______________________________ Mary G. Carrier, Individually 39 EX-2.9 3 STOCK PURCHASE AGREEMENT Exhibit 2.9 STOCK PURCHASE AGREEMENT BY AND AMONG U.S. CONCRETE, INC., B. THOMAS STOVER, AS TRUSTEE UNDER TRUST AGREEMENT DATED FEBRUARY 20, 1986 FOR B. THOMAS STOVER, SARAH M. STOVER, AS TRUSTEE UNDER TRUST AGREEMENT DATED FEBRUARY 27, 1990 FOR SARAH M. STOVER, B. ANDREW STOVER, B. THOMAS STOVER, CUSTODIAN UNDER MICHIGAN UNIFORM GIFTS TO MINORS ACT FOR THE BENEFIT OF CAROLYN A. STOVER, JEFFERY D. SPAHR, JEFFREY T. STOVER, AND BRADLEY C. STOVER 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
i 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
ii 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
iii 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. Thomas Stover, as Trustee under the Trust Agreement dated February 20, 1986 for B. Thomas Stover, Sarah M. Stover, as Trustee under the Trust Agreement dated February 27, 1990 for Sarah M. Stover, B. Andrew Stover, B. Thomas Stover, Custodian under the Michigan Uniform Gifts to Minors Act for the benefit of Carolyn A. Stover, Jeffery D. Spahr, Jeffrey T. Stover and Bradley C. Stover (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 2 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. 3 "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. 4 "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, 1300 Post Oak Blvd., Suite 1220, Houston, Texas 77056, 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: 7 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 10 "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. 11 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 19 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; 20 (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 21 (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 22 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. 23 (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. 24 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 Arthur Andersen 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. Campbell & Company. 6.04 LEGAL OPINION. At the Closing, the Companies and the Stockholders shall cause their legal counsel, Dickinson Wright PLLC, to deliver to U.S. Concrete a legal opinion substantially in the form of Exhibit A to this Agreement. 25 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 Jeffery Spahr 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 43443 Flint Road, Novi, Michigan 48376, 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. Campbell 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. 1300 Post Oak Blvd., Suite 1200 Houston, Texas 77056 Attn: Corporate Secretary If to the Stockholders, addressed as follows: B. Thomas Stover, as Trustee under the Trust Agreement dated February 20, 1986 for B Thomas Stover 5499 Mystic Lake Drive Brighton, Michigan 48116 Sarah M. Stover, as Trustee under the Trust Agreement dated February 27, 1990 for Sarah M. Stover 5499 Mystic Lake Drive Brighton, Michigan 48116 B. Andrew Stover 5499 Mystic Lake Drive Brighton, Michigan 48116 B. Thomas Stover, Custodian under the Michigan Uniform Gifts to Minors Act for the benefit of Carolyn A. Stover 5499 Mystic Lake Drive Brighton, Michigan 48116 Jeffery D. Spahr 7851 Lee Road Brighton, Michigan 48116 36 Jeffery T. Stover 5499 Mystic Lake Drive Brighton, Michigan 48116 Bradley C. Stover 5499 Mystic Lake Drive Brighton, Michigan 48116 with a copy (which shall not constitute notice) to: Dickinson Wright PLLC Attn: Richard M. Bolton, Esq. 500 Woodward Avenue, Suite 4000 Detroit, Michigan 48226 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/ Donald Wayne --------------------------------- Donald Wayne, Vice President 39 STOCKHOLDERS: B. THOMAS STOVER, AS TRUSTEE UNDER THE TRUST AGREEMENT DATED FEBRUARY 20, 1986 FOR B. THOMAS STOVER By: /s/ B. Thomas Stover ___________________________ B. Thomas Stover SARAH M. STOVER, AS TRUSTEE UNDER THE TRUST AGREEMENT DATED FEBRUARY 27, 1990 FOR SARAH M. STOVER By: /s/ Sarah M. Stover ___________________________ Sarah M. Stover /s/ B. Andrew Stover _______________________________ B. Andrew Stover B. THOMAS STOVER, CUSTODIAN UNDER THE MICHIGAN UNIFORM GIFTS TO MINORS ACT FOR THE BENEFIT OF CAROLYN A. STOVER By: /s/ B. Thomas Stover ___________________________ B. Thomas Stover /s/ Jeffery D. Spahr _______________________________ Jeffery D. Spahr /s/ Jeffrey T. Stover _______________________________ Jeffrey T. Stover /s/ Bradley C. Stover _______________________________ Bradley C. Stover 40 EX-2.13 4 ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION EXHIBIT 2.13 ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION BY AND AMONG U.S. CONCRETE, INC., CONCRETE XIX ACQUISITION, INC., CORNILLIE FUEL & SUPPLY, INC., RICHARD A. DENEWETH AND JOSEPH C. CORNILLIE, TRUSTEE URTA OF JOSEPH C. CORNILLIE, DATED OCTOBER 4, 1995 Dated as of February 8, 2000 TABLE OF CONTENTS ARTICLE I DEFINITIONS............................................................................ 1 1.01 Definitions............................................................................ 1 1.02 Interpretation......................................................................... 5 ARTICLE II THE MERGER AND THE SURVIVING CORPORATION............................................... 6 2.01 The Merger............................................................................. 6 2.02 Effective Time of the Merger........................................................... 6 2.03 Certificate of Incorporation, Bylaws and Board of Directors of Surviving Corporation... 6 ARTICLE III CONVERSION OF SHARES................................................................... 6 3.01 Conversion of Shares................................................................... 6 3.02 Newco Shares........................................................................... 7 3.03 Delivery of Merger Consideration....................................................... 7 ARTICLE IV CLOSING................................................................................ 7 4.01 Closing................................................................................ 7 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS..................................... 7 5.01 Due Organization and Qualification..................................................... 7 5.02 Authorization; Non-Contravention; Approvals............................................ 8 5.03 Capitalization and Ownership........................................................... 9 5.04 Subsidiaries........................................................................... 9 5.05 Financial Statements................................................................... 9 5.06 Liabilities and Obligations............................................................ 10 5.07 Accounts and Notes Receivable.......................................................... 10 5.08 Properties and Assets.................................................................. 11 5.09 Material Customers and Contracts....................................................... 13 5.10 Permits................................................................................ 14 5.11 Environmental Matters.................................................................. 14 5.12 Labor and Employee Relations; Employment Matters....................................... 15 5.13 Insurance.............................................................................. 16 5.14 Compensation; Employment Agreements.................................................... 16 5.15 Noncompetition, Confidentiality and Nonsolicitation Agreements; Employee Policies...... 16 5.16 Employee Benefit Plans................................................................. 17 5.17 Litigation and Compliance with Law..................................................... 19 5.18 Taxes.................................................................................. 19 5.19 Absence of Changes..................................................................... 20 5.20 Accounts with Banks and Brokerages; Powers of Attorney................................. 21 5.21 Absence of Certain Business Practices.................................................. 21 5.22 Competing Lines of Business; Related-Party Transactions................................ 21 5.23 Intangible Property.................................................................... 21 5.24 Capital Expenditures................................................................... 22 5.25 Inventories............................................................................ 22 5.26 Tax Reorganization Representation...................................................... 22 5.27 Absence of Interest-Bearing Debt....................................................... 22 5.28 No Implied Representations............................................................. 22
i 5.29 Disclosure............................................................................. 22 ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO.................................................................................. 22 6.01 Organization........................................................................... 22 6.02 Authorization; Non-Contravention; Approvals............................................ 23 6.03 U.S. Concrete Common Stock............................................................. 23 6.04 Tax Reorganization Representations..................................................... 24 6.05 SEC Filings; Disclosure................................................................ 24 6.06 No Implied Representations............................................................. 25 6.07 Disclosure............................................................................. 25 ARTICLE VII CERTAIN COVENANTS...................................................................... 25 7.01 Release From Guarantees................................................................ 25 7.02 Future Cooperation; Tax Matters........................................................ 25 7.03 Expenses............................................................................... 26 7.04 Legal Opinion.......................................................................... 26 7.05 Employment Agreements.................................................................. 26 7.06 Repayment of Related Party Indebtedness................................................ 26 7.07 Stock Options.......................................................................... 26 7.08 Pre-Closing Distributions.............................................................. 26 7.09 Working Capital Adjustment............................................................. 27 7.10 Wastewater Discharge Permit............................................................ 28 7.11 Other Documents........................................................................ 28 7.12 Benefit Plans.......................................................................... 29 ARTICLE VIII INDEMNIFICATION........................................................................ 29 8.01 General Indemnification by the Stockholders............................................ 29 8.02 Indemnification by U.S. Concrete....................................................... 30 8.03 Third Person Claims.................................................................... 30 8.04 Non-Third Person Claims................................................................ 31 8.05 Indemnification Deductible............................................................. 31 8.06 Liability Limitation................................................................... 31 8.07 Form of Indemnity Payment.............................................................. 31 ARTICLE IX NONCOMPETITION COVENANTS............................................................... 32 9.01 Prohibited Activities.................................................................. 32 9.02 Equitable Relief....................................................................... 32 9.03 Reasonable Restraint................................................................... 33 9.04 Severability; Reformation.............................................................. 33 9.05 Material and Independent Covenant...................................................... 33 ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................................. 33 10.01 General................................................................................ 33 10.02 Equitable Relief....................................................................... 34 ARTICLE XI INTENDED TAX TREATMENT................................................................. 34 11.01 Tax-Free Reorganization................................................................ 34 ARTICLE XII FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON STOCK...... 34 12.01 Compliance with Law.................................................................... 34 12.02 Economic Risk; Sophistication; Accredited Investors.................................... 35
ii 12.03 Rule 144 Reporting..................................................................... 35 12.04 Restriction on Sale or Other Transfer of Restricted Shares............................. 35 12.05 Prospectus Delivery.................................................................... 36 12.06 Removal of Legends..................................................................... 36 ARTICLE XIII MISCELLANEOUS.......................................................................... 36 13.01 Successors and Assigns; Rights of Parties.............................................. 36 13.02 Entire Agreement....................................................................... 36 13.03 Counterparts........................................................................... 36 13.04 Brokers and Agents..................................................................... 37 13.05 Notices................................................................................ 37 13.06 Survival of Representations and Warranties............................................. 37 13.07 Exercise of Rights and Remedies; Remedies Cumulative................................... 38 13.08 Reformation and Severability........................................................... 38 13.09 Section Headings; Gender............................................................... 38 13.10 Governing Law.......................................................................... 38 13.11 Dispute Resolution..................................................................... 38 iii
ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of February 8, 2000, by and among U.S. Concrete, Inc., a Delaware corporation ("U.S. Concrete"), Concrete XIX Acquisition, Inc., a Delaware corporation that is a subsidiary of U.S. Concrete ("Newco"), Cornillie Fuel & Supply, Inc., a Michigan corporation (the "Company") and Richard A. Deneweth ("Deneweth") and Joseph C. Cornillie, individually and as Trustee URTA of Joseph C. Cornillie, Dated October 4, 1995 ("Cornillie") (Deneweth and Cornillie are each referred to hereinafter as a "Stockholder" and collectively, the "Stockholders"), with the Stockholders being all of the Company's Stockholders. WHEREAS, the respective Boards of Directors of Newco and the Company (collectively referred to as "Constituent Corporations") deem it advisable and in the best interests of the Constituent Corporations and the stockholders of the Constituent Corporations that Newco merge with and into the Company (the "Merger"); WHEREAS, the Boards of Directors of the Constituent Corporations have approved and adopted this Agreement as a plan of reorganization within the provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"); WHEREAS, the stockholders of the Constituent Corporations have approved the Merger in accordance with the GCL and the MBCA; and WHEREAS, U.S. Concrete is also, pursuant to separate written agreements, acquiring the equity interests of Cornillie Leasing, Inc. (the "Leasing Merger Agreement") and Dencor, Inc. (the "Dencor Stock Purchase Agreement"); NOW, THEREFORE, in consideration of the premises and of the mutual agreements, representations, warranties, provisions and covenants contained herein, the parties hereto, intending to be legally bound, agree as follows: ARTICLE I DEFINITIONS 1.01 DEFINITIONS. Capitalized terms used in this Agreement shall have the following meanings: "Affiliate" of, or "Affiliated" with, a specified person or entity means a person or entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the specified person or entity. "Agreement" has the meaning set forth in the first paragraph of this Agreement. "Balance Sheet Date" has the meaning set forth in Section 5.05. "Broker" has the meaning set forth in Section 13.04. "Closing" has the meaning set forth in ARTICLE IV. "Closing Date" has the meaning set forth in ARTICLE IV. "Code" has the meaning set forth in the third paragraph of this Agreement. "Company" has the meaning set forth in the first paragraph of this Agreement. "Company Common Stock" means the Company's common stock, $10.00 par value per share. "Competitive Business" means any business that competes with any business of U.S. Concrete existing on the date hereof, including, without limitation, any business that involves the production and sale of ready-mixed concrete (including truck-mixed concrete) and other cement mixtures; pre-cast concrete products and slag products. "Constituent Corporations" has the meaning set forth in the second paragraph of this Agreement. "Effective Time" has the meaning set forth in Section 2.02. "Employee benefit plan" has the meaning set forth in Section 5.16. "Employee pension benefit plan" has the meaning set forth in Section 5.16. "Employment Agreements" has the meaning set forth in Section 7.05. "Encumbrances" means all liens, encumbrances, mortgages, pledges, security interests, conditional sales agreements, charges, options, preemptive rights, rights of first refusal, reservations, restrictions or other encumbrances or defects in title. "Environmental Laws" means any and all Laws or agreements between Company and any Governmental Authority relating to (a) the protection, preservation or restoration of the environment (including, without limitation, ambient air, surface water (including water management and runoff), groundwater, drinking water supply, surface land, subsurface strata, plant and animal life or any other natural resource) or human health or safety, (b) emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes (including, without limitation, Hazardous Substances) or noxious noise or odor into the environment or (c) the exposure to, or the use, storage, recycling, treatment, manufacture, generation, transport, processing, handling, labeling, production, removal or disposal of any pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes (including, without limitation, Hazardous Substances), in each case as amended from time to time and as now or hereafter in effect. The term "Environmental Laws" includes, without limitation, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), the Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste 2 Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, the Safe Drinking Water Act, the Atomic Energy Act and the Hazardous Materials Transportation Act, and any comparable or similar Michigan Law, in each case as amended from time to time, and any other Laws now or hereafter relating to any of the foregoing. "ERISA" has the meaning set forth in Section 5.16. "ERISA Affiliate" has the meaning set forth in Section 5.16. "Expiration Date" has the meaning set forth in Section 13.06. "Financial Statements" has the meaning set forth in Section 5.05. "GAAP" means generally accepted accounting principles as currently applied by the respective party on a basis consistent with preceding years and throughout the periods involved. "GCL" means the General Corporation Law of the State of Delaware, as amended. "Governmental Authority" means any federal, state, local or foreign government, political subdivision or governmental or regulatory authority, agency, board, bureau, commission, instrumentality or court or quasi- governmental authority. "Hazardous Substances" means any and all substances presently listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any Environmental Law. The term "Hazardous Substances" includes, without limitation, any substance to which exposure is regulated by any Environmental Law including, without limitation, any toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste, industrial substance or petroleum or any derivative or by- product thereof, radon, radioactive material, asbestos or asbestos containing material, urea formaldehyde foam insulation, lead or polychlorinated biphenyls. "Incentive Plan" has the meaning set forth in Section 7.07. "Indemnified Party" has the meaning set forth in Section 8.03. "Indemnifying Party" has the meaning set forth in Section 8.03. "Interest-Bearing Debt" means the total amount of outstanding indebtedness of the Company for borrowed money (including, without limitation, bank debt, equipment debt, capital lease obligations with non-affiliates of Company, bank overdrafts and any other indebtedness for borrowed money). "Interim Balance Sheet" has the meaning set forth in Section 5.05. "Interim Financial Statements" has the meaning set forth in Section 5.05. "IRCA" has the meaning set forth in Section 5.12. 3 "JAMS" has the meaning set forth in Section 13.10. "Judge List" has the meaning set forth in Section 13.10. "Laws" means any and all federal, state, local or foreign statutes, laws, ordinances, codes, rules, regulations, orders, decrees, judgments and injunctions of any Governmental Authority, including, without limitation, those covering, Tax, energy, safety, health, transportation, bribery, record keeping, zoning, discrimination, antitrust and wage and hour matters, in each case as amended and in effect from time to time. "Letter of Intent" means that certain letter of intent dated December 15, 1999 by and among U.S. Concrete, the Company and the Stockholders, and the other parties named therein, as amended or supplemented. "Listed Agreements" has the meaning set forth in Section 5.09. "Lockup Period" has the meaning set forth in Section 12.04. "Losses" means any and all liabilities, losses, claims, damages, actions, suits, proceedings, demands, assessments, adjustments, fees, costs and expenses (including specifically, but without limitation, reasonable attorneys' fees and costs and expenses of investigation), net of (i) income Tax effects with respect thereto (including, without limitation, income Tax benefits recognized in connection therewith and income Taxes upon any indemnification recovery thereof), and (ii) insurance proceeds related to such Losses actually received by the Indemnified Party; provided, however, that no Indemnified Party shall be under any obligation either to insure any particular risk or to make a claim under an existing policy (except that the Surviving Corporation agrees to continue to pursue the insurance claim made by Company in connection with the litigation disclosed on Schedule 5.17). "MBCA" means the Michigan Business Corporation Act, as amended. "Material Customers" has the meaning set forth in Section 5.09. "Merger" has the meaning set forth in the second paragraph of this Agreement. "Merger Consideration" has the meaning set forth in Section 3.01. "Merger Filings" has the meaning set forth in Section 2.02. "Newco" has the meaning set forth in the first paragraph of this Agreement. "Noncompete Term" has the meaning set forth in Section 9.01(a). "1933 Act" means the Securities Act of 1933, as amended. "1934 Act" means the Securities Exchange Act of 1934, as amended. 4 "Permits" has the meaning set forth in Section 5.10. "Permitted Encumbrances" means any and all (a) Encumbrances reserved against in the Interim Balance Sheet, (b) Encumbrances for property or ad valorem Taxes not yet due and payable or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the Company's books in accordance with GAAP, and (c) obligations described in Schedule 5.08. "Plan" has the meaning set forth in Section 5.16. "Qualified Plan" has the meaning set forth in Section 5.16. "Restricted Shares" has the meaning set forth in Section 12.01. "Rule 144" means Rule 144 as promulgated under the 1933 Act. "SEC" means the Securities and Exchange Commission. "Stockholders" has the meaning set forth in the first paragraph of this Agreement. "Structures" has the meaning set forth in Section 5.08. "Surviving Corporation" has the meaning set forth in Section 2.01. "Taxes" has the meaning set forth in Section 5.18. "Territory" has the meaning set forth in Section 9.01. "Third Person" has the meaning set forth in Section 8.03. "U.S. Concrete" has the meaning set forth in the first paragraph of this Agreement. "U.S. Concrete Common Stock" means U.S. Concrete's Common Stock, par value $.001 per share. "Year-End Financial Statements has the meaning set forth in Section 5.05. 1.02 INTERPRETATION. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in Section 1.01 and elsewhere in this Agreement include the plural as well as the singular and vice versa; (b) all accounting terms not otherwise defined herein have the meanings ascribed to them in accordance with GAAP; and 5 (c) the words "herein," "hereof," and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. ARTICLE II THE MERGER AND THE SURVIVING CORPORATION 2.01 THE MERGER. Upon the terms and subject to the conditions of this Agreement, at the Effective Time in accordance with the MBCA and the GCL, Newco shall be merged with and into the Company and the separate existence of Newco shall thereupon cease. The Company shall be the surviving corporation in the Merger (hereinafter sometimes referred to as the "Surviving Corporation"). 2.02 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective at such time (the "Effective Time") as (a) holders of all of the Company Common Stock approve the Merger, and (b) a certificate of merger, in form mutually acceptable to U.S. Concrete and the Company, is filed with the Secretary of State of the State of Delaware and the Michigan Department of Consumer & Industry Services, respectively (the "Merger Filings"). The Merger Filings shall be made simultaneously with or as soon as practicable after the Closing. 2.03 CERTIFICATE OF INCORPORATION, BYLAWS AND BOARD OF DIRECTORS OF SURVIVING CORPORATION. As a result of the Merger and at the Effective Time: (a) The Certificate of Incorporation of the Company in effect immediately prior to the Effective Time shall become the Certificate of Incorporation of the Surviving Corporation. After the Effective Time, the Certificate of Incorporation of the Surviving Corporation may be amended in accordance with its terms and as provided in the MBCA. (b) The Bylaws of the Company in effect immediately prior to the Effective Time shall become the Bylaws of the Surviving Corporation, and thereafter may be amended in accordance with their terms and as provided by the Certificate of Incorporation of the Surviving Corporation and the MBCA. (c) The Board of Directors of Newco as constituted immediately prior to the Effective Time shall be the Board of Directors of the Surviving Corporation. ARTICLE III CONVERSION OF SHARES 3.01 CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger, and without any action on the part of any holder of any capital stock of the Company, the issued and outstanding shares of Company Common Stock as of the Effective Time shall be cancelled and retired and converted into the right to receive, and become exchangeable for an aggregate of $561,566 in cash and 329,546 shares of U.S. Concrete Common Stock (having an aggregate value of $2,389,208 at $7.25 per share) at Closing (the cash and U.S. Concrete Common Stock paid in exchange for the Company Common Stock being herein collectively referred to as the 6 "Merger Consideration"). The Merger Consideration shall be allocated between Stockholders as set forth on Exhibit A, attached hereto and made a part hereof. 3.02 NEWCO SHARES. The outstanding shares of common stock, par value $.01 per share, of Newco shall be converted into the right to receive, and become exchangeable for, 1,000 shares of Common Stock of the Surviving Corporation. 3.03 DELIVERY OF MERGER CONSIDERATION. At the Closing, (a) each Stockholder shall furnish to U.S. Concrete the certificates representing his or her Company Common Stock, duly endorsed in blank by such Stockholder or accompanied by duly executed blank stock powers, and (b) U.S. Concrete shall deliver to each Stockholder cash (by wire transfer in accordance with the wiring instructions for such Stockholder set forth on Schedule 3.01) and a copy of an irrevocable instruction letter to U.S. Concrete's transfer agent directing that certificates representing the shares of U.S. Concrete Common Stock be delivered to such Stockholder pursuant to Section 3.01. Each Stockholder agrees promptly to cure any deficiencies with respect to the endorsement of the certificates or other documents of conveyance with respect to the Company Common Stock or with respect to the stock powers accompanying such stock. U.S. Concrete will take all steps necessary to ensure that the stock certificates are promptly issued by the transfer agent in accordance with the terms of this Agreement and the irrevocable instruction letter. ARTICLE IV CLOSING 4.01 CLOSING. The consummation of the Merger and delivery of the Merger Consideration and the other transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Baker & Hostetler LLP, 3200 National City Center, 1900 E. 9th Street, Cleveland, Ohio 44114, concurrently with the execution of this Agreement or at such other time and date as U.S. Concrete, the Company and the Stockholders may mutually agree, which date is herein referred to as the "Closing Date." ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS The Stockholders, jointly and severally, represent and warrant to U.S. Concrete as follows: 5.01 DUE ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Michigan and is duly authorized and qualified to do business under all applicable Laws and to carry on its business in the places and in the manner as now conducted. The Company has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as such business is currently being conducted. Schedule 5.01 includes (a) certificate(s) of existence and good standing for the Company issued by the appropriate Governmental Authorities of the State of Michigan, (b) a list of all jurisdictions in which the Company is authorized or qualified to do business and (c) certificate(s) of qualification or authority to do business (or similar 7 certificates) for the Company issued by the appropriate Governmental Authorities of each of the jurisdictions in which the Company is authorized or qualified to do business. The Company does not own, lease or operate any assets or properties or carry on any business in any jurisdiction that Schedule 5.01 does not list. True, complete and correct copies of the Articles of Incorporation and Bylaws, each as amended, of the Company are attached hereto as Schedule 5.01, and no breach of such Articles of Incorporation or Bylaws has occurred and is continuing. True, complete and correct copies of all stock records and minute books of the Company have been provided to U.S. Concrete. 5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. (a) The Company has the requisite corporate power and authority to enter into this Agreement and the ancillary documents and agreements described herein and to effect the Merger. Each Stockholder has the full legal right, power and authority to enter into this Agreement. The execution, delivery and performance of this Agreement and the transactions contemplated hereby have been approved by the board of directors of the Company and by the Stockholders. No additional corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement and the consummation by the Company of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and the Stockholders, and, assuming the due authorization, execution and delivery hereof by U.S. Concrete and Newco, constitutes a valid and binding agreement of the Company and the Stockholders, enforceable against each of them in accordance with its terms, subject to general principles of equity and bankruptcy, insolvency and other similar laws relating to the enforcement of creditor's rights. (b) The execution and delivery of this Agreement by the Company and the Stockholders do not, and the consummation by the Company and the Stockholders of the transactions contemplated hereby will not, violate or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation of any Encumbrance upon any of the properties or assets of the Company under any of the terms, conditions or provisions of, (i) the Articles of Incorporation or Bylaws of the Company, (ii) any Law applicable to the Stockholders or the Company or any of the properties or assets of the Stockholders or the Company, or (iii) except as set forth in Schedule 5.02, any agreement, note, bond, mortgage, indenture, deed of trust, license, franchise, Permit, concession, lease or other instrument, obligation or agreement of any kind to which any Stockholder or the Company is now a party or by which the Company or any of its properties or assets may be bound or affected, except for any of the foregoing which would not have a material adverse effect on the financial condition or results of operations of Company or the Surviving Corporation. (c) Except for the Merger Filings and as set forth in Schedule 5.02, no declaration, filing or registration with, or notice to, or authorization, consent or approval of, any Governmental Authority or other person or entity is necessary for the execution and delivery of this Agreement by the Company and the Stockholders or the consummation by the Company and the Stockholders of the transactions contemplated 8 hereby. Except as set forth in Schedule 5.02, none of the contracts or agreements with Material Customers or contracts providing for purchases or services individually in excess of $10,000, or in the aggregate in excess of $25,000, or leases or Permits to which the Company is a party requires notice to, or the consent or approval of, any Governmental Authority or other person or entity to the execution and delivery of this Agreement by the Company and the Stockholders or to any of the transactions contemplated hereby to remain in full force and effect following such transaction. 5.03 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of the Company consists solely of 5,000 shares of Company Common Stock, of which 138 shares are issued and outstanding. All of the issued and outstanding shares of the Company Common Stock are owned beneficially and of record by the Stockholders as set forth in Schedule 5.03. All of the issued and outstanding shares of the Company Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, and were offered, issued, sold and delivered by the Company in compliance with all applicable Laws, including, without limitation, those Laws concerning the issuance of securities. None of such shares were issued in violation of the preemptive rights of any past or present stockholder of the Company. At the Effective Time, by virtue of the Merger Filing in Michigan the Merger will become effective in Michigan. Except as set forth in Schedule 5.03, (a) no shares of Company Common Stock are held by the Company as treasury shares, and (b) no subscription, option, warrant, call, convertible or exchangeable security, other conversion right or commitment of any kind exists which obligates the Company to issue any of its capital stock or the Stockholders to transfer any of the capital stock of the Company. 5.04 SUBSIDIARIES. Except as set forth in Schedule 5.04, the Company owns, of record or beneficially, or controls, directly or indirectly, no capital stock, securities convertible into or exchangeable for capital stock or any other equity interest in any corporation, association or other business entity. Except as set forth in Schedule 5.04, the Company is not, directly or indirectly, a participant in any joint venture, limited liability company, partnership or other noncorporate entity. 5.05 FINANCIAL STATEMENTS. (a) The Company has delivered to U.S. Concrete true, complete and correct copies of the following financial statements: (i) the reviewed balance sheets of the Company as of March 31, 1997, 1998 and 1999 and the related reviewed statements of operations, stockholders' equity and cash flows for the three-year period ended March 31, 1999, together with the related notes, schedules and report of the Company's independent accountants (such balance sheets, the related statements of operations, stockholders' equity and cash flows and the related notes and schedules are referred to herein as the "Year-End Financial Statements"); and (ii) the unaudited balance sheet (the "Interim Balance Sheet") of the Company as of December 31, 1999 (the "Balance Sheet Date") and the related unaudited statements of operations, for the nine-month period ended on the Balance Sheet Date (such balance sheets, the related statements of operations, and 9 any related notes and schedules are referred to herein as the "Interim Financial Statements"). The Year-End Financial Statements and the Interim Financial Statements (collectively, the "Financial Statements") are attached as Schedule 5.05 to this Agreement; (b) Except as set forth in Schedule 5.05, the Financial Statements have been prepared from the books and records of the Company in conformity with GAAP and present fairly the financial position and results of operations of the Company in all material respects as of the dates of such statements and for the periods covered thereby; provided, however, that the Interim Financial Statements are subject to normal year-end adjustments and lack footnotes and other presentation items. The books of account of the Company have been kept accurately in all material respects in the ordinary course of business, the transactions entered therein represent bona fide transactions, and the revenues, expenses, assets and liabilities of the Company have been properly recorded therein in all material respects. Within the past five fiscal years of the Company, the Company has not received any correspondence with its accountants, including without limitation, management letters, which have indicated or disclosed that there is a "material weakness" in or "reportable condition" with respect to (as those terms are defined under GAAP) the Company's financial condition. 5.06 LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule 5.06, as of the Balance Sheet Date the Company did not have, nor has it incurred since that date, any liabilities or obligations (whether absolute, accrued, contingent or otherwise) of any nature, except liabilities, obligations or contingencies (a) that are reflected or accrued or reserved against in the Financial Statements or reflected in the notes thereto, (b) that are of a nature not required to be reflected in the Financial Statements in accordance with GAAP, or (c) that were incurred after the Balance Sheet Date and were incurred in the ordinary course of business, consistent with past practices. For each such liability for which the amount is not fixed or is contested, the Company has provided a summary description of the liability together with copies of all relevant documentation relating thereto. Except as set forth in Schedule 5.06, there are no prepayment penalties, termination fees or other payments triggered by the prepayment or termination of any loan or indebtedness of the Company. 5.07 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.07 sets forth an accurate list of the accounts and notes receivable of the Company as of the Balance Sheet Date and of those generated between the Balance Sheet Date and the second business day preceding the Closing Date, including any such amounts which are not reflected in the Interim Balance Sheet. Receivables from and advances to employees, the Stockholders and any entities or persons related to or Affiliates of the Stockholders are separately identified in Schedule 5.07. Schedule 5.07 also sets forth an accurate aging of all accounts and notes receivable as of the Balance Sheet Date, showing amounts due in 30-day aging categories. The trade and other accounts receivable of the Company, including without limitation those classified as current assets on the Interim Balance Sheet, are bona fide receivables, were acquired in the ordinary course of business, are stated in accordance with GAAP and are collectible in the amounts shown on Schedule 5.07, net of reserves reflected in the Interim Financial Statements with respect to the accounts receivable as of the Balance Sheet Date, and net of reserves reflected in the books and records of the Company (consistent with the methods used in the Interim Financial Statements) with respect to receivables of the Company after the Balance Sheet Date. 10 5.08 PROPERTIES AND ASSETS. (a) Schedule 5.08 sets forth an accurate list of all real and personal property included in "property and equipment" on the Interim Balance Sheet and all other tangible assets of the Company with a book value in excess of $5,000 (i) owned by the Company as of the Balance Sheet Date and (ii) acquired since the Balance Sheet Date. Schedule 5.08 also sets forth an accurate list of all real and personal property currently leased by the Company, and includes complete and correct copies of leases for significant equipment and for all real property leased by the Company and descriptions of all real property (as currently owned or leased by the Company) on which plants, buildings, warehouses, workshops, garages and other structures (collectively, the "Structures") and vehicles used in the operation of the business of the Company are situated and, for each of those properties, the address thereof, the type and approximate square footage of each Structure located thereon and the use thereof in the business of the Company. Schedule 5.08 indicates which properties and assets used in the operation of the businesses of the Company are currently owned by the Stockholders or Affiliates of either of the Company or the Stockholders. Except as specifically identified in Schedule 5.08, all of the tangible assets, plants, Structures, vehicles and other significant machinery and equipment owned or leased by the Company listed in Schedule 5.08 have been maintained by the Company in the ordinary course of business consistent with past practice and are in such condition and repair as is suitable for the purpose for which they presently are being used or held for use, ordinary wear and tear excepted. Except as specifically described in Schedule 5.08, all properties and fixed assets used by the Company in its business are either owned by the Company or leased under agreements identified in Schedule 5.08 and are affixed only to one or more of the real properties Schedule 5.08 lists. All leases set forth in Schedule 5.08 are in full force and effect and constitute valid and binding agreements of the Company and the other parties thereto in accordance with their respective terms, and all amounts currently due and payable thereunder have been paid. Neither the Company nor any other party to the leases set forth in Schedule 5.08 is or has been asserted to be in default, violation or breach of any such lease in any material respects, and no event has occurred and is continuing that constitutes or, with notice or the passage of time or both, would constitute such a default, violation or breach under any such lease. The Company has good, valid and marketable title to the tangible and intangible assets, personal property and real property owned and used in its business, including, without limitation, the properties identified in Schedule 5.08 as owned real property (each of which the Company owns in fee), free and clear of all Encumbrances other than Permitted Encumbrances and those set forth in Schedule 5.08. Schedule 5.08 contains true, complete and correct copies of all title reports and title insurance policies in the possession or control of the Company with respect to the real property owned or leased by the Company. Schedule 5.08 includes a summary description of all commitments of the Company involving the opening of new operations, expansion of existing operations or the acquisition of any real property or existing business, to which management of the Company has devoted any significant effort or expenditure in the two-year period prior to the date of the Agreement and which the Surviving Corporation would be obligated to continue after the Merger. 11 (b) Except as specifically described in Schedule 5.08, all uses of the real property owned and leased by the Company conform in all material respects to all applicable Laws and do not violate any instrument of record or agreement affecting any such property. Neither the Company nor the Stockholders have received from any insurance carrier insuring or proposing to insure any of the real property owned or leased by the Company or any other person or entity any written notice or communication noting any dangerous or illegal condition at any such property or any other condition at any of such properties otherwise requiring corrective action as of the Closing Date. Except as otherwise described on Schedule 5.08, all of the real property owned and leased by the Company can be used by the Surviving Corporation for their intended purposes without violating any conditional use permit, variance or private restriction. Neither the Company nor the Stockholders have received any written notice nor have any knowledge that any of the real property owned or leased by the Company is or will be affected by any special assessments, condemnation, eminent domain, off-site improvements to be constructed, change in grade of public streets or similar proceedings. There is no writ, injunction, decree, order or judgment outstanding, nor any action, claim, suit or proceeding, pending or, to the Stockholders' knowledge, threatened, relating to the ownership, lease, use, occupancy or operation of any real property owned or leased by the Company. (c) There is ingress and egress to and from each of the real properties owned and leased by the Company of record adequate for the use of such properties as currently operated by the Company. Except as disclosed in Schedule 5.08, the Company has made no off-record agreements affecting the ownership, use or occupation of any such properties. All public utilities, including if applicable, without limitation, sewers, water, electric, gas and telephone, required for the operation of each of the real properties owned and leased by the Company as presently operated are installed and operating, and all installation and connection charges therefor have been paid in full. Neither the Company nor the Stockholders have received any written notice stating that the Company will not be able to obtain adequate supplies of water to operate its business on any such properties as presently conducted, or that the provision of utilities violates any public or private easement as of the Closing Date. Neither the Company nor the Stockholders have received written notice that any part of any improvements on the real property owned or leased by the Company (including any of the structures thereon) encroaches upon any property adjacent thereto or upon any easement, nor is there any encroachment or overlap upon the real property owned or leased by the Company as of the Closing Date. Each of the real property leases listed in Schedule 5.08 grants the Company the exclusive right to use and occupy the demised premises thereunder, and the Company enjoys peaceful and undisturbed possession under its respective real property leases listed on Schedule 5.08 for the real property leased by the Company. None of the real property leases requires the consent of the applicable landlord to the Merger or the transactions contemplated by this Agreement. Except as set forth on Schedule 5.08, no person or entity other than the Company is in possession of any of the real property owned or leased by the Company. Except as set forth on Schedule 5.08, to the knowledge of the Company there are no contracts outstanding for the sale, exchange, lease or transfer of any of the real property owned or leased by the Company, or any other right of a third party to acquire any interest therein. The heating, cooling, ventilation, electrical and plumbing systems at all 12 of the real property owned and leased by the Company is in good working condition, in all material respects, ordinary wear and tear excepted. 5.09 MATERIAL CUSTOMERS AND CONTRACTS. (a) Schedule 5.09 (i) sets forth an accurate list of all customers representing 5% or more of the Company's revenues for each of the fiscal year ended in 1999 and the interim period ended on the Balance Sheet Date (the "Material Customers"), and (ii) sets forth an accurate list and briefly describes all material contracts, warranties, commitments, understandings, instruments and similar agreements and arrangements to which the Company is currently a party or by which it or any of its properties is bound (the "Listed Agreements"), including, but not limited to, (A) all customer contracts in excess of $10,000, individually, or $25,000 in the aggregate, (B) contracts with any labor organizations, (C) leases providing for annual rental payments in excess of $5,000, individually, or $10,000 in the aggregate, (D) loan agreements, (E) pledge and security agreements, (F) financing agreements, (G) indemnity or guaranty agreements or obligations, (H) bonds, debentures and indentures, (I) notes, (J) mortgages, (K) joint venture, partnership or cost-sharing agreements, (L) options to purchase real or personal property, (M) agreements relating to the purchase or sale by the Company of assets or securities for more than $5,000, individually, or $10,000 in the aggregate, (N) agreements, which, by their terms, require the consent of any party thereto to the consummation of the transactions contemplated hereby, (O) voting trust agreements or similar stockholders' agreements, (P) agreements providing for the purchase from a supplier of all or substantially all the requirements of the Company of a particular product, material or service and (Q) any other contracts, warranties, commitments, understandings, instruments and similar agreements and arrangements which involve aggregate payments in excess of $10,000 that cannot be canceled in 30 days' or less notice without penalty or premium or any continuing obligation or liability. Prior to the date hereof, the Company has made available to U.S. Concrete true, complete and correct copies of all the Listed Agreements. (b) Except as set forth in Schedule 5.09, since December 31, 1999 (i) no Material Customer has canceled or substantially reduced or, to the knowledge of the Company and the Stockholders, is threatening to cancel or substantially reduce its purchases of the Company's products or services, and (ii) neither the Company nor any other party to the Listed Agreements is or has been asserted to be in default, violation or breach in any material respect of any such Listed Agreement, and no event has occurred and is continuing that constitutes or with notice or the passage of time or both, would constitute such a default, violation or breach under any such Listed Agreement. The Listed Agreements are in full force and effect and constitute valid and binding agreements of the Company and the other parties thereto in accordance with their respective terms. (c) Except as set forth in Schedule 5.09, the Company is not a party to any contracts subject to price redetermination or renegotiation. Except to the extent set forth in Schedule 5.09, the Company is not required to provide any bonding or other financial security arrangements in any material amount in connection with any transactions with any of its customers or suppliers. 13 (d) Except as set forth in Schedule 5.09, neither the Company, the Stockholders nor, to the Stockholders' knowledge, any officer, employee, stockholder, director, representative or agent thereof is a party to any contract, arrangement, commitment or understanding among themselves or with any of the Company's customers for the repurchase of products, sharing of fees, rebating of charges, bribes, kickbacks or other similar arrangements. (e) Schedule 5.09 sets forth a summary of each outstanding bid or proposal by the Company that, if awarded to the Company, contemplates payments to the Company in excess of $50,000. (f) Except as set forth in Schedule 5.09, neither the Company nor the Stockholders have any knowledge of any plan or intention of any other party to any Listed Agreement to exercise any right to cancel or terminate that Listed Agreement, and neither the Company nor the Stockholders have any knowledge of any condition or state of facts which would justify the exercise of such a right. 5.10 PERMITS. Schedule 5.10 contains an accurate list, and copies of all licenses, franchises, permits, approvals, certificates, transportation authorities and other governmental authorizations and intangible assets held by the Company that are material to the conduct of its business, including, without limitation, permits, licenses and operating authorizations, fuel permits, franchises and certificates owned or held by the Company (collectively, the "Permits"). The Permits are valid, and the Company has not received any written notice that any Governmental Authority intends to cancel, terminate or not renew any such Permit. The Permits are all the permits, licenses, operating authorizations, franchises, approvals, certificates, transportation authorities and other governmental authorizations and intangible assets that are required by Law for the operation of the businesses of the Company as conducted at the Balance Sheet Date and the ownership of the assets and properties of the Company. The Company has conducted and is conducting its business in substantial compliance with the requirements, standards, criteria and conditions set forth in the Permits, as well as the applicable orders, approvals and variances related thereto, and is not in substantial violation of any of the foregoing. Except as specifically provided in Schedule 5.10, the transactions contemplated by this Agreement will not result in a default under, a breach or violation of, a termination of, or adversely affect the rights and benefits afforded to the Company by, any Permits. 5.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5.11, (a) the Company has complied with and is in compliance with all Environmental Laws, (b) the Company has obtained and complied with all necessary permits, licenses, authorizations and other approvals necessary to treat, transport, store, dispose of and otherwise handle Hazardous Substances and has reported, to the extent required by all Environmental Laws, all past and present sites owned or operated by the Company where Hazardous Substances have been treated, stored, disposed of or otherwise handled, (c) there have been no "releases" or threats of "releases" (as defined in any Environmental Laws) by the Company, its agents, employees or representatives at, from, in, to, under or on any property currently or previously owned or operated by the Company, (d) there is no on-site or off-site location to which the Company has transported or disposed of Hazardous Substances or arranged for the transportation or disposal of Hazardous Substances which, to the Stockholders' knowledge, is the subject of any federal, state, local or foreign enforcement action 14 or any other investigation which could lead to any claim against the Surviving Corporation, U.S. Concrete or Newco for any clean-up cost, remedial work, damage to natural resources or personal injury, including, but not limited to, any claim under any Environmental Law and (e) the Company has no contingent liability in connection with any release or disposal of any Hazardous Substance by the Company, its agents, employees or representatives into the environment. None of the past or present sites owned or operated by the Company is currently or has during Stockholders' ownership of Company been designated as a treatment, storage and/or disposal facility, nor, to the Stockholders' knowledge, has any such facility ever applied for a permit, license, authorization or other approval designating it as a treatment, storage and/or disposal facility, under any Environmental Law. The Company has provided U.S. Concrete with copies (or, if not available, accurate written summaries) of all environmental investigations, studies, audits, reviews and other analyses conducted by or on behalf, or which otherwise are in the possession, of the Company respecting any facility site or other property previously or presently owned or operated by the Company. 5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS. (a) Except as set forth in Schedule 5.12, the Company is not bound by or subject to any arrangement with any labor union. Except as set forth in Schedule 5.12, no employees of the Company are represented by any labor union or covered by any collective bargaining agreement nor, to the Company's or the Stockholders' knowledge, is any campaign to establish such representation in progress nor has there been any campaign to establish such representation within the last three years. There is no pending or, to the Company's or the Stockholders' knowledge, threatened labor dispute involving the Company and any group of its employees nor has the Company experienced any significant labor interruptions over the past five years. Neither the Company nor the Stockholders have any knowledge of any significant issues or problems in connection with the relationship of the Company with its employees. The Company considers its relationship with its employees to be good. (b) Except as set forth in Schedule 5.12, (i) there is no unfair labor practice charge or complaint pending or, to the knowledge of the Stockholders, threatened against or otherwise affecting the Company, (ii) no action, suit, complaint, charge, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority brought by or on behalf of any employee, prospective employee, former employee, retiree, labor organization or other representative of the Company's employees is pending or, to the Stockholders' knowledge, threatened against the Company, (iii) no grievance is pending or threatened against the Company, (iv) the Company is not a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Authority relating to employees or employment practices, (v) the Company is in substantial compliance with all applicable Laws, agreements, contracts and policies relating to employment, employment practices, wages, hours and terms and conditions of employment, (vi) the Company has paid in full to, or accrued in its financial books and records, all employees of the Company all wages, salaries, commissions, bonuses, benefits and other compensation due to such employees or otherwise arising under any policy, practice, agreement, plan, program, statute or other law and (vii) the Company is in substantial compliance with its obligations pursuant to the Worker Adjustment and Retraining 15 Notification Act of 1988, and all other notification and bargaining obligations arising under any collective bargaining agreement, statute or otherwise. (c) Except as set forth in Schedule 5.12, to the Stockholders' knowledge, all employees of the company are (i) citizens of the United States or (ii) not citizens of the United States, but, in accordance with the Immigration Reform and Control Act of 1986 ("IRCA") and other applicable Laws are either (A) immigrants authorized to work in the United States or (B) non- immigrants authorized to work in the United States for the Company in their specific jobs. 5.13 INSURANCE. Schedule 5.13 sets forth an accurate list as of the Balance Sheet Date of (a) all insurance policies carried by the Company, copies of which are attached as Schedule 5.13, (b) all insurance loss runs or workmen's compensation claims received for the past five policy years, and (c) the following information with respect to all insurance policies currently carried by the Company and previously carried by the Company within the last five years: (i) insurer, (ii) type of policy, (iii) coverage period, and (iv) policy limits and amount of deductible or loss retention. Except as set forth in Schedule 5.13, none of such policies are "claims made" policies. The policies described in Schedule 5.13 for the current policy year provide adequate coverage against the risks customarily involved in the Company's business based on historical experiences and are currently in full force and effect. Any open claims as of the Closing Date are recoverable under such policies, except to the extent of any applicable deductible or loss retention as set forth on Schedule 5.13. 5.14 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 5.14 sets forth an accurate schedule of all officers, directors and Stockholder employees of the Company with annual salaries of $50,000 or more, listing the rate of compensation (and the portions thereof attributable to salary, bonus, benefits and other compensation, respectively) of each of such persons as of (a) the Balance Sheet Date and (b) the date hereof. Neither the Company nor the Stockholders have any knowledge that any of such individuals has any present intention of terminating his or her employment or association with the Company. Attached to Schedule 5.14 are true, complete and correct copies of each employment or consulting agreement with any employee of the Company or the Stockholders. Except as set forth in Schedule 5.14, the Company is not a party to any agreement, nor has it established any plan, policy, practice or program, requiring it to make a payment or provide any other form of compensation or benefit or vesting rights to any officer, director, stockholder, member or employee of the Company or other person performing services for the Company which would not be payable or provided in the absence of this Agreement or the consummation of the transactions contemplated hereby, including any parachute payment under Section 280G of the Code. 5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS; EMPLOYEE POLICIES. Schedule 5.15 sets forth all agreements containing covenants not to compete or solicit employees or to maintain the confidentiality of information to which the Company or any of the Stockholders is bound or under which the Company or any of the Stockholders has any rights or obligations. Schedule 5.15 lists all employee manuals and all material policies, procedures and work-related rules that apply to any employee, director or officer of, or any other individual performing consulting or other independent contractor services for, the Company. The Company has provided U.S. Concrete with a copy of all such written policies and procedures and a written description of all such unwritten policies and procedures. 16 5.16 EMPLOYEE BENEFIT PLANS. (a) Schedule 5.16 sets forth an accurate schedule of each "employee benefit plan," as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") (other than a "multiemployer plan", as defined in Section 3(37) of ERISA), and all deferred compensation or retirement funding arrangements, whether formal or informal and whether legally binding or not, under which the Company or an ERISA Affiliate has any current or future obligation or liability or under which any present or former employee of the Company or an ERISA Affiliate, or such present or former employee's dependents or beneficiaries, has any current or future right to benefits (each such plan and arrangement referred to hereinafter as a "Plan"). Company has provided to U.S. Concrete true and complete copies of such Plans, arrangements and any trusts related thereto, and classifications of employees covered thereby as of the Balance Sheet Date. Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate sponsors, maintains or contributes currently, or sponsored, maintained or contributed at any time during the preceding five years, to any plan, program, fund or arrangement that constitutes an employee pension benefit plan. Except as set forth in Schedule 5.16, each Plan may be terminated by the Company, or if applicable, by an ERISA Affiliate at any time without any liability, cost or expense, other than costs and expenses that are customary in connection with the termination of a Plan. For purposes of this Agreement, the term "employee pension benefit plan" shall have the meaning given that term in Section 3(2) of ERISA (other than a multiemployer plan), and the term "ERISA Affiliate" means any corporation or trade or business under common control with the Company as determined under Section 414(b), (c), (m) or (o) of the Code. (b) Each Plan listed in Schedule 5.16 is in compliance in all material respects with the applicable provisions of ERISA, the Code and any other applicable Law. Except as set forth in Schedule 5.16, with respect to each Plan of the Company and each ERISA Affiliate, all reports and other documents required under ERISA or other applicable Law to be filed with any Governmental Authority, including without limitation all Forms 5500, or required to be distributed to participants or beneficiaries, have been duly and timely filed or distributed. True and complete copies of all such reports and other documents with respect to the past three years for each Plan have been provided to U.S. Concrete. No "accumulated funding deficiency" (as defined in Section 412(a) of the Code) with respect to any Plan has been incurred (without regard to any waiver granted under Section 412 of the Code), nor has any funding waiver from the Internal Revenue Service been received or requested. Except as set forth in Schedule 5.16, each Plan that is intended to be "qualified" within the meaning of Section 401(a) of the Code (a "Qualified Plan") is, and has been during the period from its adoption to the date hereof, so qualified, both as to form and operation and all necessary approvals of Governmental Authorities, including a favorable determination as to the qualification under the Code of each of such Qualified Plans and each amendment thereto, have been timely obtained. Except as set forth in Schedule 5.16, all accrued contribution obligations of the Company with respect to any Plan have either been fulfilled in their entirety or are fully reflected in the Financial Statements. 17 (c) No Plan has incurred or will incur, and neither the Company nor any ERISA Affiliate has incurred or will incur, with respect to any Plan, any liability for excise tax or penalty due to the Internal Revenue Service. There have been no terminations, partial terminations or discontinuances of contributions to any Qualified Plan during the preceding five years without notice to and approval by the Internal Revenue Service and payment of all obligations and liabilities attributable to such Qualified Plan. (d) Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate has made any promises of retirement or other benefits to employees, except as set forth in the Plans, and neither the Company nor any ERISA Affiliate maintains or has established any Plan that is a "welfare benefit plan" within the meaning of Section 3(1) of ERISA that provides for continuing benefits or coverage for any participant or any beneficiary of a participant after such participant's termination of employment, except as may be required by Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code and similar state Law provisions, and at the expense of the participant or the beneficiary of the participant, or retiree medical liabilities. Neither the Company nor any ERISA Affiliate maintains, has established or has ever participated in a multiple employer welfare benefit arrangement as described in Section 3(40)(A) of ERISA. Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate has any current or future obligation or liability with respect to a Plan pursuant to the provisions of a collective bargaining agreement. (e) Neither the Company nor any ERISA Affiliate has incurred, nor will it incur as a result of past activities, any material liability to the Pension Benefit Guaranty Corporation in connection with any Plan. Except as set forth on Schedule 5.16, the assets of each Plan that are subject to Title IV of ERISA are sufficient to provide the benefits under such Plan, the payment of which the Pension Benefit Guaranty Corporation would guarantee if such Plan were terminated, and such assets are also sufficient to provide all other "benefits liabilities" (as defined in ERISA Section 4001(a)(16)) due under such Plan upon termination. (f) No "reportable event" (as defined in Section 4043 of ERISA) has occurred and is continuing with respect to any Plan. There are no pending, or to the Company's and the Stockholders' knowledge, threatened claims, lawsuits or actions (other than routine claims for benefits in the ordinary course) asserted or instituted against, and neither the Company nor any ERISA Affiliate has knowledge of any threatened litigation or claims against, the assets of any Plan or its related trust or against any fiduciary of a Plan with respect to the operation of such Plan. To the Company's and the Stockholders' knowledge, there are no investigations or audits of any Plan by any Governmental Authority currently pending and there have been no such investigations or audits that have been concluded that resulted in any liability to the Company or any ERISA Affiliate that has not been fully discharged. Neither the Company nor any ERISA Affiliate has participated in any voluntary compliance or closing agreement programs established with respect to the form or operation of a Plan. 18 (g) Neither the Company nor any ERISA Affiliate has engaged in any prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, in connection with any Plan for which exemption was not available. No person or entity that was engaged by the Company or an ERISA Affiliate as an independent contractor within the last five years reasonably can or will be characterized or deemed to be an employee of the Company or an ERISA Affiliate under applicable Laws for any purpose whatsoever, including, without limitation, for purposes of federal, state and local income taxation, workers' compensation and unemployment insurance and Plan eligibility. (h) Schedule 5.16 also sets forth an accurate schedule of each multiemployer plan to which the Company or any ERISA Affiliate is, or ever has been, a participant in or obligated to make any payment. With respect to each such multiemployer plan: (i) none of the foregoing representations and warranties of this Section 5.16 shall apply; and (ii) except as set forth on Schedule 5.16, all contributions required to be made by the Company or any ERISA Affiliate to such multiemployer plan have been made or are accrued and fully reflected in the Financial Statements. 5.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in Schedule 5.17, there are no claims, actions, suits or proceedings, pending or, to the knowledge of the Company and the Stockholders, threatened against or affecting the Company, at law or in equity, or before or by any Governmental Authority having jurisdiction over the Company. No written notice of any claim, action, suit or proceeding, whether pending or threatened, has been received by the Company and, to the Stockholders' and the Company's knowledge, there are no facts or circumstances existing which, with delivery of notice or passage of time or both would constitute such a claim, action, suit or proceeding. Except to the extent set forth in Schedule 5.17, the Company has conducted and is conducting its business in substantial compliance with all Laws applicable to the Company, its assets or the operation of its business. Also listed on Schedule 5.17 are all other instances where the Company is a plaintiff or complaining or moving party, under any of the above types of proceedings. 5.18 TAXES. For purposes of this Agreement, the term "Taxes" shall mean all taxes, charges, fees, levies or other assessments including, without limitation, income, gross receipts, excise, property, sales, withholding, social security, unemployment, occupation, use, service, service use, license, payroll, franchise, transfer and recording taxes, fees and charges, imposed by the United States or any state, local or foreign government or subdivision or agency thereof, whether computed on a separate, consolidated, unitary, combined or any other basis; and such term shall include any interest, fines, penalties or additional amounts attributable to or imposed with respect to any such taxes, charges, fees, levies or other assessments. The Company has timely filed all requisite federal, state, local and other tax returns for all fiscal periods ended on or before the Closing, and has duly paid in full or made adequate provision in the year-end Financial Statements for the payment of all Taxes for all periods ending at or prior to the Closing Date. The Company has duly withheld and paid or remitted all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other person or entity that required withholding under any applicable Law, including, without limitation, any amounts required to be withheld or collected with respect to social security, unemployment compensation, sales or use taxes or workers' compensation. There have not been during the past three years nor are there currently in 19 progress any examinations, audits, proceedings, notices, waivers, asserted deficiencies or disputed valuations or other claims against the Company relating to Taxes for any period or periods prior to and including the Balance Sheet Date and no notice of any claim for Taxes has been received. The Company has not granted or been requested to grant any extension of the limitation period applicable to any claim for Taxes or assessments with respect to Taxes. The Company is not a party to any Tax allocation or sharing agreement and is not otherwise liable or obligated to indemnify any person or entity with respect to any Taxes. True and complete copies of (a) any tax examinations or audits, (b) extensions of statutory limitations and (c) the federal, state and local Tax returns of the Company for the last three fiscal years have been previously provided to U.S. Concrete. There are no requests for ruling in respect of any Tax pending between the Company and any Taxing authority. The Company has been taxed under the provisions of Subchapter S of the Code since April 1, 1999. The Company currently utilizes the accrual method of accounting for income tax purposes. Such method of accounting has not changed in the past five years. 5.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth in Schedule 5.19, the Company has conducted its operations in the ordinary course and there has not been: (a) any material adverse change in the business, operations, properties, condition (financial or other), assets, liabilities (contingent or otherwise), or results of operations of the Company; (b) any damage, destruction or loss (whether or not coVered by insurance) materially adversely affecting the assets, properties or business of the Company; (c) any change in the authorized capital stock of the Company or in its outstanding securities or any change in the Stockholders' ownership interests in the Company or any grant of any options, warrants, calls, conversion rights or commitments; (d) any declaration or payment of any dividend or distribution in respect of the capital stock or any direct or indirect redemption, purchase or other acquisition of any of the capital stock of the Company; (e) any increase in the compensation payable or to become payable by the Company to the Stockholders or any of its officers, directors, employees, consultants or agents, except for ordinary and customary bonuses and salary increases for employees in accordance with past practice, which bonuses and salary increases are set forth in Schedule 5.19; (f) any work interruptions, labor grievances or claims filed; (g) except for the Merger, any sale or transfer, or any agreement to sell or transfer, any material assets, properties or rights of the Company to any person or entity, including, without limitation, the Stockholders and their Affiliates; (h) any cancellation, or agreement to cancel, any indebtedness or other obligation owing to the Company; 20 (i) any increase in the indebtedness of the Company, other than accounts payable incurred in the ordinary course of business, consistent with past practices, or incurred in connection with the transactions contemplated by this Agreement; (j) any plan, agreement or arrangement granting any preferential rights to purchase or acquire any interest in any of the assets, properties or rights of the Company or requiring consent of any party to the transfer and assignment of any such assets, properties or rights; (k) any purchase or acquisition of, or agreement, plan or arrangement to purchase or acquire, any assets, properties or rights outside of the ordinary course of the Company's business; (l) any waiver of any material rights or claims of the Company; or (m) any other material transaction by the Company outside the ordinary course of business. 5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY. Schedule 5.20 sets forth an accurate schedule, as of the date of this Agreement, of (a) the name of each financial institution or brokerage firm in which the Company has accounts or safe deposit boxes; (b) the names in which the accounts or boxes are held; (c) the type of account and the cash, cash equivalents and securities held in such account as of the second business day prior to the Closing, none of which assets have been withdrawn from such accounts since such date except for bona fide business purposes in the ordinary course of the business of the Company; and (d) the name of each person authorized to draw thereon or have access thereto. Schedule 5.20 also sets forth the name of each person, corporation, firm or other entity holding a general or special power of attorney from the Company and a description of the terms thereof. 5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor the Stockholders nor any of their respective Affiliates has given or offered to give anything of value to any governmental official, political party or candidate for government office that was illegal to give or offer to give nor has it otherwise taken any action which would constitute a violation of the Foreign Corrupt Practices Act of 1977, as amended, or any similar Law. 5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as set forth in Schedule 5.22, neither the Stockholders nor any other Affiliate of the Company owns, directly or indirectly, any interest in, or is an officer, director, employee or consultant of or otherwise receives remuneration from, any Competitive Business, lessor, lessee, customer or supplier of the Company. Except as set forth in Schedule 5.22, no officer or director of the Company nor the Stockholders have, nor had any interest in any tangible or intangible assets or real or personal property used in or pertaining to the business of the Company. 5.23 INTANGIBLE PROPERTY. Schedule 5.23 sets forth an accurate list of all patents, patent applications, trademarks, service marks, technology, licenses, trade names, copyrights and other intellectual property or proprietary property rights owned or used by the Company. 21 The Company owns or possesses, and the assets of the Company include, sufficient legal rights to use all of such items without conflict with or infringement of the rights of others. 5.24 CAPITAL EXPENDITURES. Schedule 5.24 sets forth the total amount of capital expenditures currently budgeted to be incurred by the company in excess of $25,000 in the aggregate during the balance of the Company's current fiscal year. 5.25 INVENTORIES. Except as Schedule 5.25 sets forth: (i) all inventories, net of reserves determined in accordance with GAAP, of the Company which are classified as such on the Interim Balance Sheet are merchantable and salable or usable in the ordinary course of business of the Company; and (ii) the Company does not depend on any single vendor for its inventories the loss of which could have a material adverse effect on the business or financial condition of the Company or during the past five years has sustained a difficulty material to the Company in obtaining its inventories. 5.26 TAX REORGANIZATION REPRESENTATION. The Surviving Corporation will acquire substantially all of the properties of the Company within the meaning of Section 368(a)(2)(D) of the Code. 5.27 ABSENCE OF INTEREST-BEARING DEBT. As of the Closing Date, Company shall have no Interest-Bearing Debt and no Interest-Bearing Debt shall be assumed by the Surviving Corporation. 5.28 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary contained in this Agreement, it is the express understanding of the Stockholders and the Company that U.S. Concrete and Newco are not making any representation or warranty whatsoever, express or implied, other than those representations and warranties of U.S. Concrete and Newco expressly set forth in this Agreement. 5.29 DISCLOSURE. The Stockholders and the Company have fully provided U.S. Concrete or its representatives with all the information that U.S. Concrete has requested in analyzing whether to consummate the Merger and the other transactions contemplated by this Agreement. None of the information so provided nor any representation or warranty of the Stockholders to U.S. Concrete or Newco in this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein, in light of the circumstances under which they were made, not misleading. ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO U.S. Concrete and Newco jointly and severally represent and warrant to the Stockholders as follows: 6.01 ORGANIZATION. Each of U.S. Concrete and Newco is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, and is duly authorized and qualified under all applicable Laws to carry on its business in the places and in the manner now conducted. Each of U.S. Concrete and Newco has the requisite power and 22 authority to own, lease and operate its assets and properties and to carry on its business as such business is currently being conducted. 6.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. (a) Each of U.S. Concrete and Newco has the full legal right, power and authority to enter into this Agreement and the ancillary documents and agreements described herein and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement has been approved by the boards of directors of U.S. Concrete and Newco and by U.S. Concrete, as the sole stockholder of Newco. No additional corporate or shareholder proceedings on the part of U.S. Concrete or Newco are necessary to authorize the execution and delivery of this Agreement and the consummation by U.S. Concrete and Newco of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by U.S. Concrete and Newco, and, assuming the due authorization, execution and delivery by the Company and the Stockholders, constitutes valid and binding agreements of U.S. Concrete and Newco, enforceable against U.S. Concrete and Newco in accordance with its terms. (b) The execution and delivery of this Agreement by U.S. Concrete and Newco do not, and the consummation by U.S. Concrete and Newco of the transactions contemplated hereby will not, violate or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under any of the terms, conditions or provisions of (i) the Certificate of Incorporation or By-Laws of U.S. Concrete or Newco, (ii) any Law applicable to either U.S. Concrete or Newco or any of its properties or assets or (iii) any material agreement, note, bond, mortgage, indenture, deed of trust, license, franchise, permit, concession, contract, lease or other instrument, obligation or agreement of any kind to which U.S. Concrete or Newco is now a party or by which either U.S. Concrete or Newco or any of its properties or assets may be bound or affected. (c) Except for the Merger Filings and such filings as may be required under federal or state securities Laws, no declaration, filing or registration with, or notice to, or authorization, consent or approval of, any Governmental Authority or other person or entity is necessary for the execution and delivery of this Agreement by U.S. Concrete and Newco or the consummation by U.S. Concrete and Newco of the transactions contemplated hereby. 6.03 U.S. CONCRETE COMMON STOCK. The shares of U.S. Concrete Common Stock to be issued and delivered to the Stockholders pursuant to the Merger are duly authorized and, when issued in accordance with the terms of the irrevocable instruction letter contemplated by Section 3.03, will be validly issued, fully paid and nonassessable. The issuance of U.S. Concrete Common Stock pursuant to the Merger will transfer to the Stockholders valid title to such shares of U.S. Concrete Common Stock, free and clear of all Encumbrances, except for any Encumbrances created by the Stockholders. 23 6.04 TAX REORGANIZATION REPRESENTATIONS. (a) Prior to the Merger, U.S. Concrete will be in control of Newco within the meaning of Section 368(c) of the Code. (b) U.S. Concrete has no plan or intention to cause the Surviving Corporation to issue additional shares of its stock that would result in U.S. Concrete losing control of the Surviving Corporation within the meaning of Section 368(c) of the Code. (c) U.S. Concrete has no plan or intention to reacquire any of its stock issued in the Merger. (d) U.S. Concrete has no plan or intention to liquidate the Surviving Corporation; to merge the Surviving Corporation with or into another corporation; to sell or otherwise dispose of the stock of the Surviving Corporation except for transfers of stock to another corporation controlled by U.S. Concrete; or to cause the Surviving Corporation to sell or otherwise dispose of any of its assets, except for dispositions made in the ordinary course of business or transfers of assets to a corporation controlled by U.S. Concrete. (e) Following the Closing, U.S. Concrete's intention is that the Surviving Corporation will continue the historic business of the Company or use a significant portion of the historic business assets of the Company in a business, all as required to satisfy the "continuity of business enterprise" requirement under Section 368 of the Code. (f) U.S. Concrete does not own, nor has it owned during the past five years, any shares of the stock of the Company. (g) Each of U.S. Concrete and Newco is undertaking the Merger for a bona fide business purpose and not merely for the avoidance of federal income tax. (h) Neither U.S. Concrete nor Newco is an investment company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code. (i) As of the Closing Date, the fair market value of the assets of Newco will exceed the sum of Newco's liabilities plus the amount of other liabilities, if any, to which Newco's assets are subject. 6.05 SEC FILINGS; DISCLOSURE. U.S. Concrete has filed with the SEC all material forms, statements, reports and documents required to be filed by it prior to the date hereof under each of the 1933 Act and the 1934 Act and the respective rules and regulations thereunder, (a) all of which, as amended, if applicable, complied when filed in all material respects with all applicable requirements of the appropriate Act and the rules and regulations thereunder, and (b) none of which, as amended, if applicable, contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made and at the time they were made, not misleading. Since the date of the information provided in the most recent filing, 24 there has been no material adverse change in the financial condition or results of operations of U.S. Concrete, taken as a whole. 6.06 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary contained in this Agreement, it is the express understanding of U.S. Concrete and Newco that the Stockholders are not making any representation or warranty whatsoever, express or implied, other than those representations and warranties of the Stockholders expressly set forth in this Agreement. 6.07 DISCLOSURE. U.S. Concrete has fully provided the Stockholders or their representatives with all the information that the Stockholders have requested in analyzing whether to consummate the Merger. None of the information so provided nor any representation or warranty of U.S. Concrete contained in this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. ARTICLE VII CERTAIN COVENANTS 7.01 Release From Guarantees. U.S. Concrete shall use its commercially reasonable efforts to have the Stockholders released from the personal guarantees of the Company's indebtedness identified in Schedule 7.01 on the Closing Date and will continue such efforts after the Closing Date if not released prior thereto. U.S. Concrete hereby agrees to indemnify and defend the Stockholders and hold each Stockholder harmless for any amounts that such Stockholder is required to pay in connection with the enforcement of any obligations under such personal guarantees after the Closing, including without limitation any reasonable attorneys' fees and expenses incurred in connection therewith. 7.02 FUTURE COOPERATION; TAX MATTERS. The Stockholders and U.S. Concrete shall each deliver or cause to be delivered to the other following the Closing such additional instruments as the other may reasonably request for the purpose of fully carrying out this Agreement. The Stockholders shall be responsible for the payment of all Taxes attributable to all periods prior to and including the Closing Date, including without limitation the period from the beginning of the Company's current Tax year through the Closing Date. The Stockholders shall be responsible for the preparation of all Tax returns covering the period from the beginning of the Company's current Tax year through the Closing Date, and shall be responsible for all costs and expenses incurred in connection with the preparation of such Tax returns. The Surviving Corporation will cooperate with the Stockholders in their preparation of all Tax returns covering the period from the beginning of the Company's current Tax year through the Closing. In addition, U.S. Concrete will provide the Stockholders with access to such of its books and records as may be reasonably requested by the Stockholders in connection with federal, state and local tax matters relating to periods prior to the Closing. The Stockholders will cooperate and use their commercially reasonable efforts to encourage the present officers, directors and employees of the Company to cooperate with U.S. Concrete and the Surviving Corporation at and after the Closing in furnishing information, evidence, testimony and other assistance in connection with any actions, proceedings, arrangements or disputes of any nature with respect to matters pertaining to all periods prior to the Closing. The party requesting cooperation, 25 information or actions under this Section 7.02 shall reimburse the other party for all reasonable out-of-pocket costs and expenses paid or incurred in connection therewith, which costs and expenses shall not, however, include per diem charges for employees or allocations of overhead charges. 7.03 EXPENSES. U.S. Concrete will pay the fees, expenses and disbursements of U.S. Concrete and its agents, representatives, accountants and counsel incurred in connection with the execution, delivery and performance of this Agreement and any amendments hereto. The Company (as owned by U.S. Concrete after Closing) will be responsible for the fees and expenses of Arthur Andersen LLP's audit or audit related procedures in connection with the transactions contemplated hereby. The Stockholders will pay their fees, expenses and disbursements and those of their and the Company's agents, representatives, financial advisors, accountants and counsel incurred in connection with the execution, delivery and performance of this Agreement and any amendments hereto and the consummation of the transactions contemplated hereby, including, without limitation, accounting fees and related expenses attributable to the final Tax returns of the Company and the Stockholders for periods through the Closing. The Stockholders will also pay any costs associated with business brokers or other advisors engaged by the Stockholders or the Company. 7.04 LEGAL OPINION. At the Closing, the Company and the Stockholders shall cause their legal counsel, Dykema Gossett PLLC, to deliver to U.S. Concrete a legal opinion in form and substance acceptable to U.S. Concrete. 7.05 EMPLOYMENT AGREEMENTS. Concurrently with the execution of this Agreement, the Surviving Corporation shall enter into a mutually acceptable Employment Agreements with each of Cornillie and Deneweth (collectively, the "Employment Agreements"). 7.06 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the execution of this Agreement, (a) the Stockholders shall repay to the Company all amounts outstanding as advances to or receivables from the Stockholders, each of which advances or receivables is specifically reflected in Schedule 5.07, and (b) the Company shall repay all amounts outstanding under loans to the Company from the Stockholders, each of which loans to the Company is specifically reflected in Schedule 5.06. 7.07 STOCK OPTIONS. U.S. Concrete shall grant nonqualified options to purchase an aggregate of 12,500 shares of U.S. Concrete Common Stock as of the Closing Date under U.S. Concrete's 1999 Incentive Plan (the "Incentive Plan") to certain key employees of the Company (other than the Stockholders), as set forth on Schedule 7.07 in the amounts listed thereon. Schedule 7.07 shall also include the social security number and home address of each individual listed thereon. Such options shall vest in equal annual increments for four years, commencing on the first anniversary of the Closing Date. 7.08 PRE-CLOSING DISTRIBUTIONS. Prior to the Closing, the Company may have distributed to the Stockholders the cash and other assets set forth on Schedule 7.08. Any such distributions shall have been authorized by the Board of Directors of the Company prior to the Closing, and the Company and the Stockholders shall have used the respective best efforts to complete such distributions prior to the Closing. Notwithstanding the foregoing, if any such authorized distributions have not been completed prior to the Closing the Surviving Corporation 26 shall use reasonable efforts to complete such authorized distributions after the Closing. The Stockholders' sole recourse against the Surviving Corporation and U.S. Concrete with respect to this Section 7.08 shall be to the assets to be distributed. 7.09 WORKING CAPITAL ADJUSTMENT. (a) As soon as practicable after the Closing Date, U.S. Concrete shall cause to be prepared and delivered to the Stockholders a consolidated balance sheet of Cornillie Leasing, Inc., Dencor, Inc. and the Company (collectively, the "Consolidated Companies") as of the Closing Date (the "Closing Date Balance Sheet Date"), which has been prepared from the books and records of the Consolidated Companies in conformity with GAAP (the "Final Balance Sheet"), and a working capital adjustment schedule (the "Adjustment Schedule"). The Adjustment Schedule will set forth the computation of the Adjusted Working Capital Amount. As used in this Section 7.09, capitalized terms not otherwise defined in this Agreement shall have the following meanings: "Adjusted Current Assets" means the amount of current assets of the Consolidated Companies as set forth on the Closing Date Balance Sheet; "Adjusted Current Liabilities" means the amount of current liabilities of the Consolidated Companies as set forth on the Closing Date Balance Sheet less the current portion of Interest-Bearing Debt (if any) as set forth on the Closing Date Balance Sheet; and "Adjusted Working Capital Amount" means the amount computed by subtracting Adjusted Current Liabilities from Adjusted Current Assets as finally determined in accordance with Section 7.09(c). Adjusted Working Capital will exclude amounts relating to the 1999 Ross Portable Plant and the upgrade of the aggregate section of the Detroit batch plant (bins). (b) If the Adjusted Working Capital Amount is less than $250,000, then the Stockholders shall, no later than 15 days after delivery of the Adjustment Schedule as finally determined in accordance with Section 7.09(c) by U.S. Concrete, pay to the Surviving Corporation the amount by which $250,000 exceeds the Adjusted Working Capital Amount (the "Adjusted Working Capital Shortfall"). If the Adjusted Working Capital Amount is greater than $250,000, then the Surviving Corporation shall, no later than 15 days after delivery of the Adjustment Schedule as finally determined in accordance with Section 7.09(c), pay to the Stockholders, on a pro rata basis in proportion to their percentage ownership of the Company Common Stock outstanding immediately prior to the Closing, the amount by which the Adjusted Working Capital Amount exceeds $250,000 (the "Adjusted Working Capital Excess"). (c) The Closing Date Balance Sheet and Adjustment Schedule will be final and binding on the parties hereto unless, within 30 days following the delivery of the Adjustment Schedule by U.S. Concrete, the Stockholders notify U.S. Concrete in writing that the Stockholders disagree with all or any portion of the Closing Date Balance Sheet and/or the Adjustment Schedule. If the Stockholders and U.S. Concrete cannot mutually resolve any such disagreement within 30 days after the receipt by U.S. Concrete of the 27 Stockholders' notice of disagreement, then the Stockholders and U.S. Concrete shall submit the dispute to a mutually agreeable certified public accounting firm (the "Accountant") within 20 days after the end of such 30- day period. If the Stockholders and U.S. Concrete are unable to agree upon such an accounting firm within such 20-day period, then the Stockholders and U.S. Concrete shall select a "Big Five" accounting firm by lot (after excluding any of their respective regular Big Five accounting firms), which accounting firm shall act as the Accountant. The Stockholders and U.S. Concrete shall request that the Accountant audit the Closing Date Balance Sheet and provide a computation of the Adjusted Working Capital Amount within 30 days thereafter, and this computation will be final and binding upon the parties hereto and used to compute the Adjusted Working Capital Shortfall or Adjusted Working Capital Excess, as the case may be, the payment of any of which shall be made within five days of delivery by U.S. Concrete of the audited Closing Date Balance Sheet. In the event the Stockholders and U.S. Concrete submit any unresolved objections to an Accountant for resolution as provided in this Section 7.09, the Stockholders and U.S. Concrete will each pay one-half of the fees and expenses of the Accountant. 7.10 WASTEWATER DISCHARGE PERMIT. As soon as practicable following the Closing, the Stockholders shall obtain for the benefit of the Surviving Corporation, its successors and permitted assigns, at Stockholders' sole risk, cost and expense, the City of Detroit Wastewater Discharge Permit (the "Wastewater Permit") if finally determined by the City of Detroit to be necessary for the legal operation of the Detroit facility. U.S. Concrete and the Surviving Corporation agree to reasonably cooperate with Stockholders in connection therewith; provided, however, U.S. Concrete shall not be required to incur any expense and shall have no responsibility or liability in connection with the absence or lack of the Wastewater Permit. 7.11 OTHER DOCUMENTS. At the Closing, U.S. Concrete shall receive the following additional certificates, instruments and documents: (a) Stock certificates representing all Company Common Stock duly endorsed in blank by the Stockholders, or accompanied by stock powers duly executed in blank by the Stockholders, and otherwise in a form acceptable to U.S. Concrete. (b) Written resignations of all directors and all officers of the Company, such resignations to be effective concurrently with the Closing on the Closing Date. (c) Releases in form and substance satisfactory to U.S. Concrete executed by the Stockholders releasing the Company from any liability or obligation to the Stockholders. (d) All of the Company's books and records, including, without limitation, minute books, corporate charters, by-laws, stock records, bank account records, computer records and all contracts with third parties; provided, however, that all of the foregoing, other than the minute books, corporate charters, by-laws and stock records, shall remain at the business location of Company where they are currently maintained. 28 7.12 BENEFIT PLANS. (a) U.S. Concrete shall not , and shall cause the Surviving Corporation not to at any time prior to 60 days after the Closing Date, effectuate a "plant closing" or "mass layoff" as those terms are defined in the Worker Adjustment and Restraining Notification Act of 1988 ("WARN") affecting in whole or in part any facility, site of employment, operating unit or employee of Company or any Company Subsidiary without complying fully with the requirements of WARN. (b) All health and welfare benefit plans of U.S. Concrete or the Surviving Corporation in which the employees of Company or any Company Subsidiary participate after the Effective Time shall (i) recognize expenses and claims that were incurred by such employees in the year in which the Effective Time occurs for purposes of computing deductible amounts and co-payments under such health and welfare plans as of the Effective Time, (ii) provide coverage for pre-existing health conditions to the extent covered under the applicable plans or programs as of the Effective Time, and (iii) credit any deductibles paid or co-payments made by employees of Company or any Company Subsidiary prior to the Effective Time for purposes of paying deductibles or making co-payments pursuant to the health and welfare benefit plans of U.S. Concrete or the Surviving Corporation. In addition, employees of the Surviving Corporation and its subsidiaries shall receive credit for their prior service with Company for eligibility and vesting purposes and for vacation accrual purposes under all health and welfare, pension, 401(k) and other benefit programs. ARTICLE VIII INDEMNIFICATION The Stockholders, U.S. Concrete and Newco each make the following covenants: 8.01 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. Subject to Section 8.05 and Section 8.06, the Stockholders covenant and agree that they will jointly and severally (without any right of indemnification or contribution from the Company) indemnify, defend, protect and hold harmless U.S. Concrete, Newco and the Surviving Corporation, and their respective officers, directors, employees, stockholders, agents, representatives and Affiliates, at all times from and after the date of this Agreement from and against all Losses incurred by any of such indemnified persons and entities as a result of or arising from (a) until the Expiration Date any breach of the representations and warranties of the Stockholders set forth herein or in the Schedules attached hereto, (b) any breach or nonfulfillment of any covenant or agreement on the part of the Stockholders under this Agreement, (c) all income Taxes payable by the Company for all periods prior to and including the Closing Date, (d) all transfer Taxes arising from the transactions contemplated by Section 7.08 of this Agreement, (e) any litigation listed on Schedule 5.17, or (f) any failure of Company to have obtained the Wastewater Permit prior to Closing or any inability of Stockholders to obtain the Wastewater Permit after the Closing if finally determined by the City of Detroit to be required for the legal operation of the Detroit facility. 29 8.02 INDEMNIFICATION BY U.S. CONCRETE. Subject to Section 8.06, U.S. Concrete covenants and agrees that it will indemnify, defend, protect and hold harmless the Stockholders and their respective agents, representatives, Affiliates, beneficiaries and heirs and employees at all times from and after the date of this Agreement from and against all Losses incurred by any of such indemnified persons as a result of or arising from (a) until the Expiration Date, any breach of the representations and warranties of U.S. Concrete or Newco set forth herein or in the Schedules attached hereto or certificates delivered in connection herewith or (b) any breach or nonfulfillment of any covenant or agreement on the part of U.S. Concrete or Newco under this Agreement. 8.03 THIRD PERSON CLAIMS. Promptly after any party entitled to indemnification under Sections 8.01 and 8.02 hereof (hereinafter the "Indemnified Party") has received notice of or has knowledge of any claim by a person or entity not a party to this Agreement ("Third Person"), or the commencement of any action or proceeding by a Third Person, which the Indemnified Party believes in good faith is an indemnifiable claim under this Agreement, the Indemnified Party shall give to the party obligated to provide indemnification pursuant to Sections 8.01 or 8.02 hereof (hereinafter the "Indemnifying Party") written notice of such claim or the commencement of such action or proceeding. Such notice shall state the nature and the basis of such claim and a reasonable estimate of the amount thereof. The Indemnifying Party shall have the right to defend and settle, at its own expense and by its own counsel reasonably acceptable to the Indemnified Party, any such matter so long as the Indemnifying Party pursues the same diligently and in good faith. If the Indemnifying Party undertakes to defend or settle, it shall promptly notify the Indemnified Party of its intention to do so, and the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in all commercially reasonable respects in the defense thereof and in any settlement thereof. Such cooperation shall include, but shall not be limited to, furnishing the Indemnifying Party with any books, records and other information reasonably requested by the Indemnifying Party and in the Indemnified Party's possession or control. After the Indemnifying Party has notified the Indemnified Party of its intention to undertake to defend or settle any such asserted liability, and for so long as the Indemnifying Party diligently pursues such defense, the Indemnifying Party shall not be liable for any additional legal expenses incurred by the Indemnified Party in connection with any defense or settlement of such asserted liability; provided, however, that the Indemnified Party shall be entitled, at its expense, to participate in the defense of such asserted liability and the negotiations of the settlement thereof. The Indemnifying Party shall not settle any such Third Person claim without the consent of the Indemnified Party (which consent shall not be unreasonably withheld), unless the settlement thereof imposes no liability or obligation on, and includes a complete release from liability of, the Indemnified Party. If the Indemnifying Party desires to accept a final and complete settlement of any such Third Person claim and the Indemnified Party refuses to consent to such settlement, then the Indemnifying Party's liability under this Section with respect to such Third Person claim shall be limited to the amount so offered in settlement by said Third Person; provided, however, that notwithstanding the foregoing, the Indemnified Party shall be entitled to refuse to consent to any such proposed settlement and the Indemnifying Party's liability hereunder shall not be limited by the amount of the proposed settlement if such settlement imposes any liability or obligation on, or does not provide for the complete release of, the Indemnified Party. If, upon receiving notice, the Indemnifying Party does not timely undertake to defend such matter to which the Indemnified Party is entitled to indemnification hereunder, or fails diligently to pursue such defense, the Indemnified Party may undertake such defense through counsel of its choice, at the cost and expense of the Indemnifying Party, and the 30 Indemnified Party may settle such matter, in its discretion, and the Indemnifying Party shall reimburse the Indemnified Party for the amount paid in such settlement and any other liabilities or expenses incurred by the Indemnified Party in connection therewith. 8.04 NON-THIRD PERSON CLAIMS. In the event that any Indemnified Party asserts the existence of a claim giving rise to Losses (but excluding claims resulting from the assertion of liability by Third Persons), such party shall give written notice to the Indemnifying Party. Such written notice shall state that it is being given pursuant to this Section 8.04, specify the nature and amount of the claim asserted, and indicate the date on which such assertion shall be deemed accepted and the amount of the claim deemed a valid claim (such date to be established in accordance with the next sentence). If such Indemnifying Party, within 60 days after the mailing of notice by such Indemnified Party, shall not give written notice to such Indemnified Party announcing such Indemnifying Party's intent to contest such assertion of such Indemnified Party, such assertion shall be deemed accepted and the amount of such claim shall be deemed a valid claim. In the event, however, that such Indemnifying Party contests such assertion of a claim by giving such written notice to the Indemnified Party within said period, then the parties shall act in good faith to reach agreement regarding such claim. If the parties cannot resolve such dispute after good faith negotiations with respect thereto within 60 days after the notice provided by the Indemnifying Party, such dispute shall be submitted to arbitration in accordance with the provisions of Section 13.11. In the event that arbitration shall arise with respect to any such claim, the prevailing party shall be entitled to reimbursement of costs and expenses incurred in connection with such arbitration including reasonable attorneys' fees. 8.05 INDEMNIFICATION DEDUCTIBLE. Neither U.S. Concrete, Newco nor the Surviving Corporation shall be entitled to indemnification or other relief from the Stockholders under the provisions of Section 8.01(a) until such time as, and only to the extent that, the claims subject to indemnification by such other party exceed, in the aggregate, $100,760 when combined with the Leasing Merger Agreement and Dencor Stock Purchase Agreement. Notwithstanding the foregoing, the limitations set forth in this Section 8.05 shall not apply to fraudulent misrepresentations, the representation contained in Section 5.27 or the covenant contained in Section 7.10. 8.06 LIABILITY LIMITATION. Subject to Section 8.05, the aggregate obligation of the Stockholders, on the one hand, and of U.S. Concrete and the Surviving Corporation (exclusive of the Merger Consideration), on the other hand, for any and all claims arising under this Agreement, the Leasing Merger Agreement, Dencor Stock Purchase Agreement, or under Sections 3 or 7 of the Employment Agreements shall be limited to $10,076,029. Notwithstanding the foregoing, the limitations set forth in this Section 8.06 shall not apply to fraudulent misrepresentations, the representation contained in Section 5.27 or the covenant contained in Section 7.10. 8.07 FORM OF INDEMNITY PAYMENT. Any payment required to be made by the Stockholders pursuant to this Agreement shall first be made from the cash portion of the Merger Consideration. In the event of a payment obligation which exceeds such cash portion, then Stockholders may make payment by delivering to U.S. Concrete such required number of shares of U.S. Concrete Common Stock valued at the Average Closing Price. 31 ARTICLE IX NONCOMPETITION COVENANTS 9.01 PROHIBITED ACTIVITIES. (a) For no additional consideration, each Stockholder will not for five years following the Closing Date (the "Noncompete Term"), directly or indirectly, for himself or on behalf of or in conjunction with any other person, company, partnership, corporation or business or other entity of whatever nature: (i) engage, as an officer, director, shareholder, owner, investor, lender, guarantor, partner, joint venturer, or in a managerial or advisory capacity, whether as an employee, independent contractor, consultant or advisor, or as a sales representative, dealer or distributor, in any Competitive Business within a radius of 100 air miles of any plant or other operating facility in which the Company was engaged in business on the date immediately prior to the Closing Date; (ii) call upon or otherwise solicit any person, who is, at that time, within the Territory, an employee or consultant of the Cornillie Companies, U.S. Concrete, the Surviving Corporation or any of their respective subsidiaries, for the purpose or with the intent of enticing such employee or consultant out of the employ or contract with the Cornillie Companies, the Surviving Corporation or any of their respective subsidiaries; (iii) call upon or otherwise solicit any person or entity which is, at that time, or which has been, within one year prior to that time, a customer of the Cornillie Companies, U.S. Concrete or the Surviving Corporation or any of the subsidiaries of such parties within the Territory for the purpose of soliciting or selling services or products in a Competitive Business within the Territory; or (iv) call upon or otherwise solicit any entity which the Company or U.S. Concrete has called on in connection with the possible acquisition by either of them of such entity or of which either of them has made an acquisition analysis, with the knowledge of that entity's status as an acquisition candidate of U.S. Concrete, for the purpose of (A) acquiring that entity or arranging the acquisition of that entity by any person or entity other than U.S. Concrete; and (B) engaging in a Competitive Business within the Territory. (b) Notwithstanding the above, Section 9.01(a) shall not be deemed to prohibit any Stockholder from acquiring, as a passive investor with no involvement in the operations of the business, not more than three percent of the capital stock of a Competitive Business whose stock is publicly traded on a national securities exchange, the NASDAQ National Market or over-the-counter. 9.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic losses to U.S. Concrete and the Surviving Corporation as a result of a breach of the foregoing covenant, because a breach of such covenant would diminish the value of the assets, properties and 32 business of the Company being sold pursuant to this Agreement, and because of the immediate and irreparable damage that could be caused to U.S. Concrete and the Surviving Corporation for which it would have no other adequate remedy, since monetary damages alone may not be an adequate remedy, each Stockholder agrees that the foregoing covenant may be enforced against such individual by, without limitation, injunctions, restraining orders and other equitable actions. 9.03 REASONABLE RESTRAINT. It is agreed by the parties hereto that the foregoing covenants in this ARTICLE IX are necessary in terms of time, activity and territory to protect U.S. Concrete's and the Surviving Corporation's interest in the assets, properties and business being acquired pursuant to the terms of this Agreement and impose a reasonable restraint on the Stockholders in light of the activities and businesses of U.S. Concrete on the date of the execution of this Agreement and the current plans of U.S. Concrete. 9.04 SEVERABILITY; REFORMATION. The covenants in this ARTICLE IX are severable and separate, and the unenforceability of any specific covenant shall not affect the continuing validity and enforceability of any other covenant. In the event any court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth in this ARTICLE IX are unreasonable and therefore unenforceable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which the court deems reasonable and this Agreement shall thereby be reformed. 9.05 MATERIAL AND INDEPENDENT COVENANT. The Stockholders acknowledge that their agreements and the covenants set forth in this ARTICLE IX are material conditions to U.S. Concrete's and Newco's agreements to execute and deliver this Agreement and to consummate the transactions contemplated hereby and that U.S. Concrete and Newco would not have entered into this Agreement without such covenants. All of the covenants in this ARTICLE IX shall be construed as an agreement independent of any other provision in this Agreement. The existence of any claim or cause of action by any Stockholder against U.S. Concrete, whether predicated on this Agreement or otherwise, will not constitute a defense to the enforcement by U.S. Concrete of any of the covenants of this ARTICLE IX. ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION 10.01 GENERAL. The Stockholders recognize and acknowledge that they had in the past, currently have, and in the future will have, access to certain confidential information relating to the businesses of the Company, the Surviving Corporation and/or U.S. Concrete, including, without limitation, lists of customers, operational policies, and pricing and cost policies that are, and following the Closing will be, valuable, special and unique assets of the Surviving Corporation and U.S. Concrete. Each Stockholder agrees that he or she will not use or disclose such confidential information to any person, firm, corporation, association or other entity for any purpose whatsoever, except as is required in the course of performing his or her duties, if any, to the Surviving Corporation and/or U.S. Concrete, unless (a) such information becomes known to the public generally through no fault of the Stockholder or (b) disclosure is required by Law, provided that prior to disclosing any information pursuant to this clause (b) the disclosing Stockholder(s) shall give prior written notice thereof to U.S. Concrete and the Surviving Corporation and provide U.S. Concrete with the opportunity to contest such disclosure. In the 33 event of a breach or threatened breach by any Stockholder of the provisions of this Section, U.S. Concrete shall be entitled to an injunction restraining such Stockholder from disclosing, in whole or in part, such confidential information. Nothing herein shall be construed as prohibiting U.S. Concrete from pursuing any other available remedy for such breach or threatened breach, including, without limitation, the recovery of damages. 10.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic losses to U.S. Concrete and the Surviving Corporation as a result of the breach of the foregoing covenant, because a breach of such covenant would diminish the value of the assets, properties and business of the Company being sold pursuant to this Agreement, and because of the immediate and irreparable damage that would be caused for which the Surviving Corporation and/or U.S. Concrete would have no other adequate remedy, since monetary damages alone may not be an adequate remedy, each Stockholder agrees that the foregoing covenants may be enforced against such individual by, without limitation, injunctions, restraining orders and other equitable actions. ARTICLE XI INTENDED TAX TREATMENT 11.01 TAX-FREE REORGANIZATION. U.S. Concrete and the Stockholders are entering into this Agreement with the intention that the Merger qualify as a tax-free reorganization for federal income tax purposes, except to the extent of any "boot" received, and neither U.S. Concrete nor the Stockholders will take any actions that disqualify the Merger for such treatment. ARTICLE XII FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON STOCK 12.01 Compliance with Law. The Stockholders acknowledge the shares of U.S. Concrete Common Stock issued in accordance with the terms of this Agreement (the "Restricted Shares") will not be registered under the 1933 Act and therefore may not be resold without compliance with the 1933 Act. The Restricted Shares are being or will be acquired by the Stockholders solely for their own account, for investment purposes only, and with no present intention of distributing, selling or otherwise disposing of them in connection with a distribution. Each Stockholder covenants, warrants and represents that none of the Restricted Shares held by such Stockholder will be, directly or indirectly, offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of except after full compliance with all of the applicable provisions of the 1933 Act and the rules and regulations of the SEC. Certificates representing the Restricted Shares shall bear the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE WERE NOT ISSUED IN A TRANSACTION REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. THE SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE OPINION OF 34 COUNSEL TO THE ISSUER, IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. 12.02 ECONOMIC RISK; SOPHISTICATION; ACCREDITED INVESTORS. Each Stockholder is able to bear the economic risk of an investment in the Restricted Shares and can afford to sustain a total loss of such investment. Each Stockholder has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the proposed investment and therefore has the capacity to protect his or her own interests in connection with the acquisition of the Restricted Shares pursuant hereto. Each Stockholder represents to U.S. Concrete and Newco that he or she is an "accredited investor," as that term is defined in Regulation D under the 1933 Act. Each Stockholder or his or her representatives have had an adequate opportunity to ask questions of, and receive answers from the appropriate officers and representatives of U.S. Concrete and Newco concerning, among other matters, U.S. Concrete, its management, business, operations and financial condition, its plans for the operation of its business and potential additional acquisitions, and to obtain any additional information requested by such Stockholder or his or her representatives concerning such matters. 12.03 RULE 144 REPORTING. With a view to making available the benefits of certain rules and regulations of the SEC that may permit the resale of U.S. Concrete Common Stock to the public without registration, for a period of two years after the Closing, U.S. Concrete agrees to use its commercially reasonable efforts to: (a) make and keep public information (as such terms are defined in Rule 144) regarding U.S. Concrete available; (b) file with the SEC in a timely manner all reports and other documents required of U.S. Concrete under the 1933 Act and the 1934 Act; and (c) furnish to a Stockholder upon written request a written statement by U.S. Concrete as to its compliance with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, a copy of the most recent annual or quarterly report of U.S. Concrete, and such other reports and documents so filed as such Stockholder may reasonably request in availing himself or herself of any rule or regulation of the SEC allowing such Stockholder to sell any such shares without registration. 12.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES. The Stockholders covenant, warrant and represent that (i) none of the Restricted Shares will be offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of, directly or indirectly, during the two-year period commencing on the Closing Date (the "Lockup Period"); (ii) after the Lockup Period, the Restricted Shares may be offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of directly or indirectly, only after full compliance with all of the applicable provisions of the 1933 Act and the rules and regulations of the SEC; (iii) during the one-year period commencing on the Closing Date, the Stockholders shall not engage in put, call, short-sale, hedge, straddle, collar or similar transactions with respect to any of the Restricted Shares intended to reduce the Stockholders' risk of owning such Restricted Shares; and (iv) following the one-year period described in clause (iii) and for the remainder of the Lockup Period, the Stockholders shall not engage in put, call, short-sale, hedge, straddle, collar or similar transactions with respect to 50% or more of the Restricted Shares intended to reduce 35 the Stockholders' risk of owning such Restricted Shares. Certificates representing the Restricted Shares shall bear the following legend, which shall reflect the Lockup Period, in addition to the legend under Section 12.01: THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL RESTRICTION ON TRANSFER THAT EXPIRES ON FEBRUARY 7, 2002, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC. 12.05 PROSPECTUS DELIVERY. Each Stockholder represents and acknowledges that he or she has been provided with the most current prospectus of U.S. Concrete, dated May 25, 1999, at least 20 days prior to the date hereof. 12.06 REMOVAL OF LEGENDS. Upon expiration of the Lockup Period, U.S. Concrete will cause its transfer agent to issue one or more certificates without such legend as to any Restricted Shares that are no longer subject to the legends set forth in Section 12.01 and 12.04, respectively; provided, however, that U.S. Concrete shall not be deemed to be in breach of this Section unless it fails to cause its transfer agent to issue such certificates after receipt of written request from a Stockholder. ARTICLE XIII MISCELLANEOUS 13.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES. This Agreement and the rights of the parties hereunder may not be assigned (except by operation of Law) and shall be binding upon and shall inure to the benefit of the parties hereto, the successors of U.S. Concrete, Newco, the Surviving Corporation and the Company, and the heirs and legal representatives of the Stockholders. Except as provided in ARTICLE VIII or in this Section 13.01, nothing in this Agreement is intended or will be construed to confer upon or give any person or entity other than the parties hereto any rights or remedies under or by reason of this Agreement or any transaction contemplated hereby. 13.02 ENTIRE AGREEMENT. This Agreement (including the Schedules, exhibits and annexes attached hereto) and the documents delivered pursuant hereto constitute the entire agreement and understanding among the Stockholders, the Company, Newco and U.S. Concrete and supersede any prior agreement and understanding relating to the subject matter of this Agreement, including, without limitation, the Letter of Intent. This Agreement may be modified or amended only by a written instrument executed by the Stockholders, the Company, Newco and U.S. Concrete. Any right hereunder may be waived only by a written instrument executed by the party waiving such right. 13.03 COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument. Facsimile transmission of any signed original document and/or retransmission of any signed facsimile transmission will be deemed the same as delivery of an 36 original. At the request of any party, the parties will confirm facsimile transmission by signing a duplicate original document. 13.04 BROKERS AND AGENTS. Except for a fee payable to Stockholders' agent, W.Y. Campbell, which Stockholders will pay, each party hereto represents and warrants that it employed no broker or agent in connection with the transactions contemplated by this Agreement. Each party agrees to indemnify each other party against all loss, cost, damages or expense arising out of claims for fees or commissions of brokers employed or alleged to have been employed by such indemnifying party. 13.05 NOTICES. All notices and communications required or permitted hereunder shall be in writing and may be given by depositing the same in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested (which will be deemed given three business days after deposit), or by delivering the same in person to an officer or agent of such party (which will be deemed given when actually received), as follows: If to U.S. Concrete, Newco or the Surviving Corporation, addressed to them at: U.S. Concrete, Inc. 1300 Post Oak Blvd., Suite 1200 Houston, Texas 77056 Attn: Corporate Secretary If to the Stockholders, addressed as follows: Richard A. Deneweth 9940 Edgewood Traverse City, Michigan 49648 Joseph C. Cornillie, Trustee URTA of Joseph C. Cornillie, Dated October 4, 1995 3279 Wendover Troy, Michigan 48084 with a copy (which shall not constitute notice) to: D. Richard McDonald, Esq. Dykema Gossett PLLC 1577 N. Woodward Ave., Suite 300 Bloomfield Hills, Michigan 48304 or such other address as any party hereto shall specify pursuant to this Section 13.05 from time to time. 13.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties set forth in ARTICLE V and ARTICLE VI shall survive the Closing for a period of two years from the Closing Date (the "Expiration Date"), except that the representations and 37 warranties set forth in Sections 5.03, 5.11, 5.16 and 5.18 hereof shall survive until such time as the applicable statute of limitations period has run, which shall be deemed to be the Expiration Date for Sections 5.03, 5.11, 5.16 and 5.18, as the case may be. The respective parties shall remain liable after the Expiration Date for breaches of the representations and warranties set forth in ARTICLE V and ARTICLE VI, provided such breaches are asserted in good faith by notice in writing to the alleged breaching party prior to the Expiration Date. 13.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE. Except as otherwise provided herein, no delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver. No right, remedy or election any term of this Agreement gives will be deemed exclusive, but each will be cumulative with all other rights, remedies and elections available at law or in equity, subject to the limitations set forth in Sections 8.05 and 8.06. 13.08 REFORMATION AND SEVERABILITY. In case any provision of this Agreement shall be invalid, illegal or unenforceable, it shall, to the extent possible, be modified in such manner as to be valid, legal and enforceable, but so as to most nearly retain the intent of the parties, and if such modification is not possible, such provision shall be severed from this Agreement, and in either case, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby. 13.09 SECTION HEADINGS; GENDER. The Section headings contained in this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement. Words of the masculine gender in this Agreement shall be deemed and construed to include correlative words of the feminine and neuter genders and words of the neuter gender shall be deemed and construed to include correlative words of the masculine and feminine genders. 13.10 GOVERNING LAW. This Agreement shall be construed in accordance with the laws of the State of Delaware (except for its principles governing conflicts of laws). 13.11 DISPUTE RESOLUTION. (a) Except with respect to injunctive relief as provided in Section 9.02 and Section 10.02 (which relief may be sought from any court or administrative agency with jurisdiction with respect thereto), any unresolved dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in accordance with the rules of the American Arbitration Association then in effect. The arbitration shall be conducted by a retired judge employed by the Chicago, Illinois office of J.A.M.S./Endispute, Inc. ("JAMS"). The arbitration shall be held in JAMS' Chicago, Illinois office. 38 (b) The parties shall obtain from JAMS a list of the retired judges available to conduct the arbitration. The parties shall use their reasonable efforts to agree upon a judge to conduct the arbitration. If the parties cannot agree upon a judge to conduct the arbitration within 10 days after receipt of the list of available judges, the parties shall ask JAMS to provide the parties a list of three available judges (the "Judge List"). Within five days after receipt of the Judge List, each party shall strike one of the names of the available judges from the Judge List and return a copy of such list to JAMS and the other party. If two different judges are stricken from the Judge List, the remaining judge shall conduct the arbitration. If only one judge is stricken from the Judge List, JAMS shall select a judge from the remaining two judges on the Judge List to conduct the arbitration. (c) The arbitrator shall not have the authority to add to, detract from, or modify any provision hereof nor to award punitive damages to any injured party. The arbitrator shall have the authority to order payment of damages, reimbursement of costs, including those incurred to enforce this Agreement, and interest thereon in the event the arbitrator determines that a material breach of this Agreement has occurred. A decision by the arbitrator shall be final and binding. Judgment may be entered on the arbitrator's award in any court having jurisdiction. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. U.S. CONCRETE, INC. By: /s/ Donald Wayne ________________________________ Donald Wayne, Vice President CONCRETE XIX ACQUISITION, INC. By: /s/ Donald Wayne ________________________________ Donald Wayne, President CORNILLIE FUEL & SUPPLY, INC. By: /s/ Joseph C. Cornillie ________________________________ Joseph C. Cornillie, President 39 STOCKHOLDERS: /s/ Richard A. Deneweth _____________________________________ Richard A. Deneweth, Individually /s/ Joseph C. Cornillie _____________________________________ Joseph C. Cornillie, Individually and As Trustee URTA of Joseph C. Cornillie Dated October 4, 1995 40 EXHIBIT A ALLOCATION OF CONSIDERATION Stock Cash ----- ---- Joseph C. Cornillie $1,194,604* $280,783 Richard A. Deneweth $1,194,604* $280,783 * 164,773 shares 41 EX-2.14 5 STOCK PURCHASE AGREEMENT EXHIBIT 2.14 STOCK PURCHASE AGREEMENT BY AND AMONG U.S. CONCRETE, INC., CORNILLIE FUEL & SUPPLY, INC., DENCOR, INC. RICHARD A. DENEWETH AND JOSEPH C. CORNILLIE, TRUSTEE URTA OF JOSEPH C. CORNILLIE, DATED OCTOBER 4, 1995 Dated as of February 8, 2000 TABLE OF CONTENTS ARTICLE I DEFINITIONS......................................................................... 1 1.01 Definitions......................................................................... 1 1.02 Interpretation...................................................................... 5 DELIVERY OF SHARES; ENDORSEMENT OF COMPANY STOCK 5 2.01 Delivery of Shares.................................................................. 5 2.02 Endorsement of Company Stock........................................................ 5 ARTICLE III CONVERSION OF SHARES................................................................ 5 3.01 Consideration....................................................................... 5 ARTICLE IV CLOSING............................................................................. 6 4.01 Closing............................................................................. 6 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.................................. 6 5.01 Due Organization and Qualification.................................................. 6 5.02 Authorization; Non-Contravention; Approvals......................................... 6 5.03 Capitalization and Ownership........................................................ 7 5.04 Subsidiaries........................................................................ 8 5.05 Financial Statements................................................................ 8 5.06 Liabilities and Obligations......................................................... 9 5.07 Accounts and Notes Receivable....................................................... 9 5.08 Properties and Assets............................................................... 9 5.09 Material Customers and Contracts.................................................... 11 5.10 Permits............................................................................. 13 5.11 Environmental Matters............................................................... 13 5.12 Labor and Employee Relations; Employment Matters.................................... 14 5.13 Insurance........................................................................... 14 5.14 Compensation; Employment Agreements................................................. 15 5.15 Noncompetition, Confidentiality and Nonsolicitation Agreements; Employee Policies... 15 5.16 Employee Benefit Plans.............................................................. 15 5.17 Litigation and Compliance with Law.................................................. 18 5.18 Taxes............................................................................... 18 5.19 Absence of Changes.................................................................. 18 5.20 Accounts with Banks and Brokerages; Powers of Attorney.............................. 20 5.21 Absence of Certain Business Practices............................................... 20 5.22 Competing Lines of Business; Related-Party Transactions............................. 20 5.23 Intangible Property................................................................. 20 5.24 Capital Expenditures................................................................ 20 5.25 Inventories......................................................................... 20 5.26 No Implied Representations.......................................................... 21 5.27 Absence of Interest-Bearing Debt.................................................... 21 5.28 Disclosure.......................................................................... 21 ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE..................................... 21 6.01 Organization........................................................................ 21 6.02 Authorization; Non-Contravention; Approvals......................................... 21 6.03 No Implied Representations.......................................................... 22 6.04 Disclosure.......................................................................... 22
i ARTICLE VII CERTAIN COVENANTS................................................................... 22 7.01 Release From Guarantees............................................................. 22 7.02 Future Cooperation; Tax Matters..................................................... 22 7.03 Expenses............................................................................ 23 7.04 Internal Revenue Code Election...................................................... 23 7.05 Legal Opinion....................................................................... 24 7.06 Employment Agreements............................................................... 24 7.07 Repayment of Related Party Indebtedness............................................. 24 7.08 Stock Options....................................................................... 24 7.09 Pre-Closing Distributions........................................................... 24 7.10 Working Capital Adjustment.......................................................... 24 7.11 Other Documents..................................................................... 26 7.12 Benefit Plans....................................................................... 26 ARTICLE VIII INDEMNIFICATION 27 8.01 General Indemnification by the Stockholders......................................... 27 8.02 Indemnification by U.S. Concrete.................................................... 27 8.03 Third Person Claims................................................................. 27 8.04 Non-Third Person Claims............................................................. 28 8.05 Indemnification Deductible.......................................................... 28 8.06 Indemnification Limitation.......................................................... 29 ARTICLE IX NONCOMPETITION COVENANTS............................................................ 29 9.01 Prohibited Activities............................................................... 29 9.02 Equitable Relief.................................................................... 30 9.03 Reasonable Restraint................................................................ 30 9.04 Severability; Reformation........................................................... 30 9.05 Material and Independent Covenant................................................... 30 ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION........................................... 31 10.01 General............................................................................. 31 10.02 Equitable Relief.................................................................... 31 ARTICLE XII MISCELLANEOUS....................................................................... 31 12.01 Successors and Assigns; Rights of Parties........................................... 31 12.02 Entire Agreement.................................................................... 31 12.03 Counterparts........................................................................ 32 12.04 Brokers and Agents.................................................................. 32 12.05 Notices............................................................................. 32 12.06 Survival of Representations and Warranties.......................................... 33 12.07 Exercise of Rights and Remedies; Remedies Cumulative................................ 33 12.08 Reformation and Severability........................................................ 33 12.09 Section Headings; Gender............................................................ 33 12.10 Governing Law....................................................................... 33 12.11 Dispute Resolution.................................................................. 33
ii STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of February 8, 2000, by and among U.S. Concrete, Inc., a Delaware corporation ("U.S. Concrete"), Cornillie Fuel & Supply, Inc., a Michigan corporation and wholly owned subsidiary of U.S. Concrete ("Buyer"), Dencor, Inc., a Michigan corporation (the "Company"), and Richard A. Deneweth ("Deneweth") and Joseph C. Cornillie, individually and as Trustee URTA of Joseph C. Cornillie, Dated October 4, 1995 ("Cornillie") (Deneweth and Cornillie are each referred to hereinafter as a "Stockholder" and collectively, the "Stockholders"), with the Stockholders being all of the Company's Stockholders. WHEREAS, Stockholders own all of the issued and outstanding shares of the capital stock of Company; WHEREAS, Buyer desires to acquire all of the issued and outstanding shares of the capital stock of Company from Stockholders and Stockholders desire to sell such Company Stock to Buyer as set forth herein; and WHEREAS, U.S. Concrete is also, pursuant to separate written agreements, acquiring the equity interests of Cornillie Leasing, Inc. (the "Leasing Merger Agreement") and Cornillie Fuel & Supply, Inc. (the "Fuel Merger Agreement"); NOW, THEREFORE, in consideration of the premises and of the mutual agreements, representations, warranties, provisions and covenants contained herein, the parties hereto, intending to be legally bound, agree as follows: ARTICLE I DEFINITIONS 1.01 DEFINITIONS. Capitalized terms used in this Agreement shall have the following meanings: "Affiliate" of, or "Affiliated" with, a specified person or entity means a person or entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the specified person or entity. "Agreement" has the meaning set forth in the first paragraph of this Agreement. "Balance Sheet Date" has the meaning set forth in Section 5.05. "Broker" has the meaning set forth in Section 11.04. "Closing" has the meaning set forth in ARTICLE IV. "Closing Date" has the meaning set forth in ARTICLE IV. "Company" has the meaning set forth in the first paragraph of this Agreement. "Company Common Stock" means the Company's common stock, $1.00 par value per share. "Competitive Business" means any business that competes with any business of U.S. Concrete existing on the date hereof, including, without limitation, any business that involves the production and sale of ready-mixed concrete (including truck-mixed concrete) and other cement mixtures; pre-cast concrete products and slag products. "Employee benefit plan" has the meaning set forth in Section 5.16. "Employee pension benefit plan" has the meaning set forth in Section 5.16. "Employment Agreements" has the meaning set forth in Section 7.05. "Encumbrances" means all liens, encumbrances, mortgages, pledges, security interests, conditional sales agreements, charges, options, preemptive rights, rights of first refusal, reservations, restrictions or other encumbrances or defects in title. "Environmental Laws" means any and all Laws or agreements between Company and any Governmental Authority relating to (a) the protection, preservation or restoration of the environment (including, without limitation, ambient air, surface water (including water management and runoff), groundwater, drinking water supply, surface land, subsurface strata, plant and animal life or any other natural resource) or human health or safety, (b) emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes (including, without limitation, Hazardous Substances) or noxious noise or odor into the environment or (c) the exposure to, or the use, storage, recycling, treatment, manufacture, generation, transport, processing, handling, labeling, production, removal or disposal of any pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes (including, without limitation, Hazardous Substances), in each case as amended from time to time and as now or hereafter in effect. The term "Environmental Laws" includes, without limitation, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), the Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, the Safe Drinking Water Act, the Atomic Energy Act and the Hazardous Materials Transportation Act, and any comparable or similar Michigan Law, in each case as amended from time to time, and any other Laws now or hereafter relating to any of the foregoing. "ERISA" has the meaning set forth in Section 5.16. "ERISA Affiliate" has the meaning set forth in Section 5.16. "Expiration Date" has the meaning set forth in Section 11.06. 2 "Financial Statements" has the meaning set forth in Section 5.05. "GAAP" means generally accepted accounting principles as currently applied by the respective party on a basis consistent with preceding years and throughout the periods involved. "GCL" means the General Corporation Law of the State of Delaware, as amended. "Governmental Authority" means any federal, state, local or foreign government, political subdivision or governmental or regulatory authority, agency, board, bureau, commission, instrumentality or court or quasi- governmental authority. "Hazardous Substances" means any and all substances presently listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any Environmental Law. The term "Hazardous Substances" includes, without limitation, any substance to which exposure is regulated by any Environmental Law including, without limitation, any toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste, industrial substance or petroleum or any derivative or by- product thereof, radon, radioactive material, asbestos or asbestos containing material, urea formaldehyde foam insulation, lead or polychlorinated biphenyls. "Incentive Plan" has the meaning set forth in Section 7.07. "Indemnified Party" has the meaning set forth in Section 8.03. "Indemnifying Party" has the meaning set forth in Section 8.03. "Interest-Bearing Debt" means the total amount of outstanding indebtedness of the Company for borrowed money (including, without limitation, bank debt, equipment debt, capital lease obligations with non-affiliates of Company, bank overdrafts and any other indebtedness for borrowed money). "Interim Balance Sheet" has the meaning set forth in Section 5.05. "Interim Financial Statements" has the meaning set forth in Section 5.05. "IRCA" has the meaning set forth in Section 5.11. "JAMS" has the meaning set forth in Section 11.10. "Judge List" has the meaning set forth in Section 11.10. "Laws" means any and all federal, state, local or foreign statutes, laws, ordinances, codes, rules, regulations, orders, decrees, judgments and injunctions of any Governmental Authority, including, without limitation, those covering Tax, energy, safety, health, transportation, bribery, record keeping, zoning, discrimination, antitrust and wage and hour matters, in each case as amended and in effect from time to time. 3 "Letter of Intent" means that certain letter of intent dated December 15, 1999 by and among U.S. Concrete, the Company and the Stockholders, and the other parties named therein, as amended or supplemented. "Listed Agreements" has the meaning set forth in Section 5.09. "Losses" means any and all liabilities, losses, claims, damages, actions, suits, proceedings, demands, assessments, adjustments, fees, costs and expenses (including specifically, but without limitation, reasonable attorneys' fees and costs and expenses of investigation), net of (i) income Tax effects with respect thereto (including, without limitation, income Tax benefits recognized in connection therewith and income Taxes upon any indemnification recovery thereof), and (ii) insurance proceeds related to such Losses actually received by the Indemnified Party; provided, however, that no Indemnified Party shall be under any obligation either to insure any particular risk or to make a claim under an existing policy. "MBCA" means the Michigan Business Corporation Act, as amended. "Material Customers" has the meaning set forth in Section 5.09. "Noncompete Term" has the meaning set forth in Section 9.01(a). "1933 Act" means the Securities Act of 1933, as amended. "1934 Act" means the Securities Exchange Act of 1934, as amended. "Permits" has the meaning set forth in Section 5.10. "Permitted Encumbrances" means any and all (a) Encumbrances reserved against in the Interim Balance Sheet, (b) Encumbrances for property or ad valorem Taxes not yet due and payable or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the Company's books in accordance with GAAP, and (c) obligations described in Schedule 5.08. "Plan" has the meaning set forth in Section 5.16. "Qualified Plan" has the meaning set forth in Section 5.16. "Rule 144" means Rule 144 as promulgated under the 1933 Act. "SEC" means the Securities and Exchange Commission. "Stockholders" has the meaning set forth in the first paragraph of this Agreement. "Structures" has the meaning set forth in Section 5.08. "Taxes" has the meaning set forth in Section 5.18. "Territory" has the meaning set forth in Section 9.01. 4 "Third Person" has the meaning set forth in Section 8.03. "U.S. Concrete" has the meaning set forth in the first paragraph of this Agreement. "U.S. Concrete Common Stock" means U.S. Concrete's Common Stock, par value $.001 per share. "Year-End Financial Statements has the meaning set forth in Section 5.05. 1.02 INTERPRETATION. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in Section 1.01 and elsewhere in this Agreement include the plural as well as the singular and vice versa; (b) all accounting terms not otherwise defined herein have the meanings ascribed to them in accordance with GAAP; and (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 DELIVERY OF SHARES; ENDORSEMENT OF COMPANY STOCK 2.01 DELIVERY OF SHARES. Upon the terms and subject to the conditions set forth in this Agreement, Stockholders shall, at the Closing, deliver to Buyer certificate(s) representing the number of shares set forth opposite each Stockholder's name on Exhibit A attached hereto and made a part hereof, which certificates represent all of the issued and outstanding capital stock of Company (the "Company Stock"). Stockholders shall deliver the Company Stock to Buyer free and clear of all Encumbrances. 2.02 ENDORSEMENT OF COMPANY STOCK. Stockholders shall deliver at Closing the certificates representing the Company Stock, duly endorsed in blank by Stockholders or accompanied by stock powers duly endorsed in blank and with all necessary transfer tax and other revenue stamps, acquired at Stockholders' expense, affixed and cancelled. Stockholders, at their sole expense, agree to cure (both before and after Closing) any deficiencies with respect to the endorsement of the certificates or other documents of conveyance with respect to the Company Stock or with respect to the stock powers accompanying the Company Stock. ARTICLE III CONVERSION OF SHARES 3.01 CONSIDERATION. In consideration of the sale to Buyer in accordance with this Agreement of the certificates representing the Company Stock, Buyer shall pay to Stockholders 5 on the Closing Date an aggregate of: $6,493,255 in cash (the "Consideration"). The Consideration shall be allocated between Stockholders as set forth on Exhibit A, attached hereto and made a part hereof. ARTICLE IV CLOSING 4.01 CLOSING. The delivery of the Company Common Stock and the Consideration and the other transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Baker & Hostetler LLP, 3200 National City Center, 1900 E. 9th Street, Cleveland, Ohio 44114, concurrently with the execution of this Agreement or at such other time and date as U.S. Concrete, the Company and the Stockholders may mutually agree, which date is herein referred to as the "Closing Date." ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS The Stockholders, jointly and severally, represent and warrant to U.S. Concrete as follows (For purposes of these representations and warranties, the term "Company" shall include Company and each of Company's subsidiaries): 5.01 DUE ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Michigan and is duly authorized and qualified to do business under all applicable Laws and to carry on its business in the places and in the manner as now conducted. The Company has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as such business is currently being conducted. Schedule 5.01 includes (a) certificate(s) of existence and good standing for the Company issued by the appropriate Governmental Authorities of the State of Michigan, (b) a list of all jurisdictions in which the Company is authorized or qualified to do business and (c) certificate(s) of qualification or authority to do business (or similar certificates) for the Company issued by the appropriate Governmental Authorities of each of the jurisdictions in which the Company is authorized or qualified to do business. The Company does not own, lease or operate any assets or properties or carry on any business in any jurisdiction that Schedule 5.01 does not list. True, complete and correct copies of the Articles of Incorporation and Bylaws, each as amended, of the Company are attached hereto as Schedule 5.01, and no breach of such Articles of Incorporation or Bylaws has occurred and is continuing. True, complete and correct copies of all stock records and minute books of the Company have been provided to U.S. Concrete. 5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. (a) The Company has the requisite corporate power and authority to enter into this Agreement and the ancillary documents and agreements described herein and to effect the transactions contemplated by this Agreement. 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 6 approved by the board of directors of the Company and by the Stockholders. No additional corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement and the consummation by the Company of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and the Stockholders, and, assuming the due authorization, execution and delivery hereof by U.S. Concrete and Buyer, constitutes a valid and binding agreement of the Company and the Stockholders, enforceable against each of them in accordance with its terms, subject to general principles of equity and bankruptcy, insolvency and other similar laws relating to the enforcement of creditor's rights. (b) The execution and delivery of this Agreement by the Company and the Stockholders do not, and the consummation by the Company and the Stockholders of the transactions contemplated hereby will not, violate or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation of any Encumbrance upon any of the properties or assets of the Company under any of the terms, conditions or provisions of, (i) the Articles of Incorporation or Bylaws of the Company, (ii) any Law applicable to the Stockholders or the Company or any of the properties or assets of the Stockholders or the Company, or (iii) except as set forth in Schedule 5.02, any agreement, note, bond, mortgage, indenture, deed of trust, license, franchise, Permit, concession, lease or other instrument, obligation or agreement of any kind to which any Stockholder or the Company is now a party or by which the Company or any of its properties or assets may be bound or affected, except for any of the foregoing which would not have a material adverse effect on the financial condition or results of operations of Company or Buyer. (c) Except as set forth in Schedule 5.02, no declaration, filing or registration with, or notice to, or authorization, consent or approval of, any Governmental Authority or other person or entity is necessary for the execution and delivery of this Agreement by the Company and the Stockholders or the consummation by the Company and the Stockholders of the transactions contemplated hereby. Except as set forth in Schedule 5.02, none of the contracts or agreements with Material Customers or contracts providing for purchases or services individually in excess of $10,000, or in the aggregate in excess of $25,000, or leases or Permits to which the Company is a party requires notice to, or the consent or approval of, any Governmental Authority or other person or entity to the execution and delivery of this Agreement by the Company and the Stockholders or to any of the transactions contemplated hereby to remain in full force and effect following such transaction. 5.03 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of the Company consists solely of 50,000 shares of Company Common Stock, of which 20,000 shares are issued and outstanding. All of the issued and outstanding shares of the Company Common Stock are owned beneficially and of record by the Stockholders as set forth in Schedule 5.03. All of the issued and outstanding shares of the Company Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, and were offered, issued, sold and delivered by the Company in compliance with all applicable Laws, including, without limitation, those Laws 7 concerning the issuance of securities. None of such shares were issued in violation of the preemptive rights of any past or present stockholder of the Company. Except as set forth in Schedule 5.03, (a) no shares of Company Common Stock are held by the Company as treasury shares, and (b) no subscription, option, warrant, call, convertible or exchangeable security, other conversion right or commitment of any kind exists which obligates the Company to issue any of its capital stock or the Stockholders to transfer any of the capital stock of the Company. 5.04 SUBSIDIARIES. Except as set forth in Schedule 5.04, the Company owns, of record or beneficially, or controls, directly or indirectly, no capital stock, securities convertible into or exchangeable for capital stock or any other equity interest in any corporation, association or other business entity. Except as set forth in Schedule 5.04, the Company is not, directly or indirectly, a participant in any joint venture, limited liability company, partnership or other noncorporate entity. 5.05 FINANCIAL STATEMENTS. (a) The Company has delivered to U.S. Concrete true, complete and correct copies of the following financial statements: (i) the reviewed balance sheets of the Company as of December 31, 1996, 1997 and 1998, and the related reviewed statements of operations, stockholders' equity and cash flows for the three-year period ended December 31, 1998, together with the related notes, schedules and report of the Company's independent accountants (such balance sheets, the related statements of operations, stockholders' equity and cash flows and the related notes and schedules are referred to herein as the "Year-End Financial Statements"); and (ii) the unaudited balance sheet (the "Interim Balance Sheet") of the Company as of December 31, 1999 (the "Balance Sheet Date") and the related unaudited statements of operations, for the year ended on the Balance Sheet Date (such balance sheets, the related statements of operations, and any related notes and schedules are referred to herein as the "Interim Financial Statements"). The Year-End Financial Statements and the Interim Financial Statements (collectively, the "Financial Statements") are attached as Schedule 5.05 to this Agreement; (b) Except as set forth in Schedule 5.05, the Financial Statements have been prepared from the books and records of the Company in conformity with GAAP and present fairly the financial position and results of operations of the Company in all material respects as of the dates of such statements and for the periods covered thereby; provided, however, that the Interim Financial Statements are subject to normal year-end adjustments and lack footnotes and other presentation items. The books of account of the Company have been kept accurately in all material respects in the ordinary course of business, the transactions entered therein represent bona fide transactions, and the revenues, expenses, assets and liabilities of the Company have been properly recorded therein in all material respects. Within the past five fiscal years of the Company, the Company has not received any correspondence with its accountants, including without limitation, management letters, which have indicated or disclosed that there is a "material 8 weakness" in or "reportable condition" with respect to (as those terms are defined under GAAP) the Company's financial condition. 5.06 LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule 5.06, as of the Balance Sheet Date the Company did not have, nor has it incurred since that date, any liabilities or obligations (whether absolute, accrued, contingent or otherwise) of any nature, except liabilities, obligations or contingencies (a) that are reflected or accrued or reserved against in the Financial Statements or reflected in the notes thereto, (b) that are of a nature not required to be reflected in the Financial Statements in accordance with GAAP, or (c) that were incurred after the Balance Sheet Date and were incurred in the ordinary course of business, consistent with past practices. For each such liability for which the amount is not fixed or is contested, the Company has provided a summary description of the liability together with copies of all relevant documentation relating thereto. Except as set forth in Schedule 5.06, there are no prepayment penalties, termination fees or other payments triggered by the prepayment or termination of any loan or indebtedness of the Company. 5.07 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.07 sets forth an accurate list of the accounts and notes receivable of the Company as of the Balance Sheet Date and of those generated between the Balance Sheet Date and the second business day preceding the Closing Date, including any such amounts which are not reflected in the Interim Balance Sheet. Receivables from and advances to employees, the Stockholders and any entities or persons related to or Affiliates of the Stockholders are separately identified in Schedule 5.07. Schedule 5.07 also sets forth an accurate aging of all accounts and notes receivable as of the Balance Sheet Date, showing amounts due in 30-day aging categories. The trade and other accounts receivable of the Company, including without limitation those classified as current assets on the Interim Balance Sheet, are bona fide receivables, were acquired in the ordinary course of business, are stated in accordance with GAAP and are collectible in the amounts shown on Schedule 5.07, net of reserves reflected in the Interim Financial Statements with respect to the accounts receivable as of the Balance Sheet Date, and net of reserves reflected in the books and records of the Company (consistent with the methods used in the Interim Financial Statements) with respect to receivables of the Company after the Balance Sheet Date. 5.08 PROPERTIES AND ASSETS. (a) Schedule 5.08 sets forth an accurate list of all real and personal property included in "property and equipment" on the Interim Balance Sheet and all other tangible assets of the Company with a book value in excess of $5,000 (i) owned by the Company as of the Balance Sheet Date and (ii) acquired since the Balance Sheet Date. Schedule 5.08 also sets forth an accurate list of all real and personal property currently leased by the Company, and includes complete and correct copies of leases for significant equipment and for all real property leased by the Company and descriptions of all real property (as currently owned or leased by the Company) on which plants, buildings, warehouses, workshops, garages and other structures (collectively, the "Structures") and vehicles used in the operation of the business of the Company are situated and, for each of those properties, the address thereof, the type and approximate square footage of each Structure located thereon and the use thereof in the business of the Company. Schedule 5.08 indicates which properties and assets used in the operation of the businesses of the Company are currently owned by the Stockholders or Affiliates of either of the Company 9 or the Stockholders. Except as specifically identified in Schedule 5.08, all of the tangible assets, plants, Structures, vehicles and other significant machinery and equipment owned or leased by the Company listed in Schedule 5.08 have been maintained by the Company in the ordinary course of business consistent with past practice and are in such condition and repair as is suitable for the purpose for which they presently are being used or held for use, ordinary wear and tear excepted. Except as specifically described in Schedule 5.08, all properties and fixed assets used by the Company in its business are either owned by the Company or leased under agreements identified in Schedule 5.08 and are affixed only to one or more of the real properties Schedule 5.08 lists. All leases set forth in Schedule 5.08 are in full force and effect and constitute valid and binding agreements of the Company and the other parties thereto in accordance with their respective terms, and all amounts currently due and payable thereunder have been paid. Neither the Company nor any other party to the leases set forth in Schedule 5.08 is or has been asserted to be in default, violation or breach of any such lease in any material respects, and no event has occurred and is continuing that constitutes or, with notice or the passage of time or both, would constitute such a default, violation or breach under any such lease. The Company has good, valid and marketable title to the tangible and intangible assets, personal property and real property owned and used in its business, including, without limitation, the properties identified in Schedule 5.08 as owned real property (each of which the Company owns in fee), free and clear of all Encumbrances other than Permitted Encumbrances and those set forth in Schedule 5.08. Schedule 5.08 contains true, complete and correct copies of all title reports and title insurance policies in the possession or control of the Company with respect to the real property owned or leased by the Company. Schedule 5.08 includes a summary description of all commitments of the Company involving the opening of new operations, expansion of existing operations or the acquisition of any real property or existing business, to which management of the Company has devoted any significant effort or expenditure in the two-year period prior to the date of the Agreement and which Buyer would be obligated to continue after the Closing. (b) Except as specifically described in Schedule 5.08, all uses of the real property owned and leased by the Company conform in all material respects to all applicable Laws and do not violate any instrument of record or agreement affecting any such property. Neither the Company nor the Stockholders have received from any insurance carrier insuring or proposing to insure any of the real property owned or leased by the Company or any other person or entity any written notice or communication noting any dangerous or illegal condition at any such property or any other condition at any of such properties otherwise requiring corrective action as of the Closing Date. Except as otherwise described on Schedule 5.08, all of the real property owned and leased by the Company can be used by Buyer for their intended purposes without violating any conditional use permit, variance or private restriction. Neither the Company nor the Stockholders have received any written notice nor have any knowledge that any of the real property owned or leased by the Company is or will be affected by any special assessments, condemnation, eminent domain, off-site improvements to be constructed, change in grade of public streets or similar proceedings. There is no writ, injunction, decree, order or judgment outstanding, nor any action, claim, suit or proceeding, pending or, to the Stockholders' knowledge, threatened, relating to the 10 ownership, lease, use, occupancy or operation of any real property owned or leased by the Company. (c) There is ingress and egress to and from each of the real properties owned and leased by the Company of record adequate for the use of such properties as currently operated by the Company. Except as disclosed in Schedule 5.08, the Company has made no off-record agreements affecting the ownership, use or occupation of any such properties. All public utilities, including if applicable, without limitation, sewers, water, electric, gas and telephone, required for the operation of each of the real properties owned and leased by the Company as presently operated are installed and operating, and all installation and connection charges therefor have been paid in full. Neither the Company nor the Stockholders have received any written notice stating that the Company will not be able to obtain adequate supplies of water to operate its business on any such properties as presently conducted, or that the provision of utilities violates any public or private easement as of the Closing Date. Neither the Company nor the Stockholders have received written notice that any part of any improvements on the real property owned or leased by the Company (including any of the structures thereon) encroaches upon any property adjacent thereto or upon any easement, nor is there any encroachment or overlap upon the real property owned or leased by the Company as of the Closing Date. Each of the real property leases listed in Schedule 5.08 grants the Company the exclusive right to use and occupy the demised premises thereunder, and the Company enjoys peaceful and undisturbed possession under its respective real property leases listed on Schedule 5.08 for the real property leased by the Company. None of the real property leases requires the consent of the applicable landlord to the transactions contemplated by this Agreement. Except as set forth on Schedule 5.08, no person or entity other than the Company is in possession of any of the real property owned or leased by the Company. Except as set forth on Schedule 5.08, to the knowledge of the Company there are no contracts outstanding for the sale, exchange, lease or transfer of any of the real property owned or leased by the Company, or any other right of a third party to acquire any interest therein. The heating, cooling, ventilation, electrical and plumbing systems at all of the real property owned and leased by the Company is in good working condition, in all material respects, ordinary wear and tear excepted. 5.09 MATERIAL CUSTOMERS AND CONTRACTS. (a) Schedule 5.09 (i) sets forth an accurate list of all customers representing 5% or more of the Company's revenues for each of the fiscal year ended in 1999 and the interim period ended on the Balance Sheet Date (the "Material Customers"), and (ii) sets forth an accurate list and briefly describes all material contracts, warranties, commitments, understandings, instruments and similar agreements and arrangements to which the Company is currently a party or by which it or any of its properties is bound (the "Listed Agreements"), including, but not limited to, (A) all customer contracts in excess of $10,000, individually, or $25,000 in the aggregate, (B) contracts with any labor organizations, (C) leases providing for annual rental payments in excess of $5,000, individually, or $10,000 in the aggregate, (D) loan agreements, (E) pledge and security agreements, (F) financing agreements, (G) indemnity or guaranty agreements or obligations, (H) bonds, debentures and indentures, (I) notes, (J) mortgages, (K) joint venture, partnership or cost-sharing agreements, (L) options to purchase real or personal 11 property, (M) agreements relating to the purchase or sale by the Company of assets or securities for more than $5,000, individually, or $10,000 in the aggregate, (N) agreements, which, by their terms, require the consent of any party thereto to the consummation of the transactions contemplated hereby, (O) voting trust agreements or similar stockholders' agreements, (P) agreements providing for the purchase from a supplier of all or substantially all the requirements of the Company of a particular product, material or service and (Q) any other contracts, warranties, commitments, understandings, instruments and similar agreements and arrangements which involve aggregate payments in excess of $10,000 that cannot be canceled in 30 days' or less notice without penalty or premium or any continuing obligation or liability. Prior to the date hereof, the Company has made available to U.S. Concrete true, complete and correct copies of all the Listed Agreements. (b) Except as set forth in Schedule 5.09, since December 31, 1999 (i) no Material Customer has canceled or substantially reduced or, to the knowledge of the Company and the Stockholders, is threatening to cancel or substantially reduce its purchases of the Company's products or services, and (ii) neither the Company nor any other party to the Listed Agreements is or has been asserted to be in default, violation or breach in any material respect of any such Listed Agreement, and no event has occurred and is continuing that constitutes or with notice or the passage of time or both, would constitute such a default, violation or breach under any such Listed Agreement. The Listed Agreements are in full force and effect and constitute valid and binding agreements of the Company and the other parties thereto in accordance with their respective terms. (c) Except as set forth in Schedule 5.09, the Company is not a party to any contracts subject to price redetermination or renegotiation. Except to the extent set forth in Schedule 5.09, the Company is not required to provide any bonding or other financial security arrangements in any material amount in connection with any transactions with any of its customers or suppliers. (d) Except as set forth in Schedule 5.09, neither the Company, the Stockholders nor, to the Stockholders' knowledge, any officer, employee, stockholder, director, representative or agent thereof is a party to any contract, arrangement, commitment or understanding among themselves or with any of the Company's customers for the repurchase of products, sharing of fees, rebating of charges, bribes, kickbacks or other similar arrangements. (e) Schedule 5.09 sets forth a summary of each outstanding bid or proposal by the Company that, if awarded to the Company, contemplates payments to the Company in excess of $50,000. (f) Except as set forth in Schedule 5.09, neither the Company nor the Stockholders have any knowledge of any plan or intention of any other party to any Listed Agreement to exercise any right to cancel or terminate that Listed Agreement, and neither the Company nor the Stockholders have any knowledge of any condition or state of facts which would justify the exercise of such a right. 12 5.10 PERMITS. Schedule 5.10 contains an accurate list, and copies of all licenses, franchises, permits, approvals, certificates, transportation authorities and other governmental authorizations and intangible assets held by the Company that are material to the conduct of its business, including, without limitation, permits, licenses and operating authorizations, fuel permits, franchises and certificates owned or held by the Company (collectively, the "Permits"). The Permits are valid, and the Company has not received any written notice that any Governmental Authority intends to cancel, terminate or not renew any such Permit. The Permits are all the permits, licenses, operating authorizations, franchises, approvals, certificates, transportation authorities and other governmental authorizations and intangible assets that are required by Law for the operation of the businesses of the Company as conducted at the Balance Sheet Date and the ownership of the assets and properties of the Company. The Company has conducted and is conducting its business in substantial compliance with the requirements, standards, criteria and conditions set forth in the Permits, as well as the applicable orders, approvals and variances related thereto, and is not in substantial violation of any of the foregoing. Except as specifically provided in Schedule 5.10, the transactions contemplated by this Agreement will not result in a default under, a breach or violation of, a termination of, or adversely affect the rights and benefits afforded to the Company by, any Permits. 5.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5.11, (a) the Company has complied with and is in compliance with all Environmental Laws, (b) the Company has obtained and complied with all necessary permits, licenses, authorizations and other approvals necessary to treat, transport, store, dispose of and otherwise handle Hazardous Substances and has reported, to the extent required by all Environmental Laws, all past and present sites owned or operated by the Company where Hazardous Substances have been treated, stored, disposed of or otherwise handled, (c) there have been no "releases" or threats of "releases" (as defined in any Environmental Laws) by the Company, its agents, employees or representatives at, from, in, to, under or on any property currently or previously owned or operated by the Company, (d) there is no on-site or off-site location to which the Company has transported or disposed of Hazardous Substances or arranged for the transportation or disposal of Hazardous Substances which, to the Stockholders' knowledge, is the subject of any federal, state, local or foreign enforcement action or any other investigation which could lead to any claim against Buyer, U.S. Concrete or Buyer for any clean-up cost, remedial work, damage to natural resources or personal injury, including, but not limited to, any claim under any Environmental Law and (e) the Company has no contingent liability in connection with any release or disposal of any Hazardous Substance by the Company, its agents, employees or representatives into the environment. None of the past or present sites owned or operated by the Company is currently or has during Stockholders' ownership of Company been designated as a treatment, storage and/or disposal facility, nor, to the Stockholders' knowledge, has any such facility ever applied for a permit, license, authorization or other approval designating it as a treatment, storage and/or disposal facility, under any Environmental Law. The Company has provided U.S. Concrete with copies (or, if not available, accurate written summaries) of all environmental investigations, studies, audits, reviews and other analyses conducted by or on behalf, or which otherwise are in the possession, of the Company respecting any facility site or other property previously or presently owned or operated by the Company. 13 5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS. (a) Except as set forth in Schedule 5.12, the Company is not bound by or subject to any arrangement with any labor union. Except as set forth in Schedule 5.12, no employees of the Company are represented by any labor union or covered by any collective bargaining agreement nor, to the Company's or the Stockholders' knowledge, is any campaign to establish such representation in progress nor has there been any campaign to establish such representation within the last three years. There is no pending or, to the Company's or the Stockholders' knowledge, threatened labor dispute involving the Company and any group of its employees nor has the Company experienced any significant labor interruptions over the past five years. Neither the Company nor the Stockholders have any knowledge of any significant issues or problems in connection with the relationship of the Company with its employees. The Company considers its relationship with its employees to be good. (b) Except as set forth in Schedule 5.12, (i) there is no unfair labor practice charge or complaint pending or, to the knowledge of the Stockholders, threatened against or otherwise affecting the Company, (ii) no action, suit, complaint, charge, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority brought by or on behalf of any employee, prospective employee, former employee, retiree, labor organization or other representative of the Company's employees is pending or, to the Stockholders' knowledge, threatened against the Company, (iii) no grievance is pending or threatened against the Company, (iv) the Company is not a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Authority relating to employees or employment practices, (v) the Company is in substantial compliance with all applicable Laws, agreements, contracts and policies relating to employment, employment practices, wages, hours and terms and conditions of employment, (vi) the Company has paid in full to, or accrued in its financial books and records, all employees of the Company all wages, salaries, commissions, bonuses, benefits and other compensation due to such employees or otherwise arising under any policy, practice, agreement, plan, program, statute or other law and (vii) the Company is in substantial compliance with its obligations pursuant to the Worker Adjustment and Retraining Notification Act of 1988, and all other notification and bargaining obligations arising under any collective bargaining agreement, statute or otherwise. (c) Except as set forth in Schedule 5.12, to the Stockholders' knowledge, all employees of the company are (i) citizens of the United States or (ii) not citizens of the United States, but, in accordance with the Immigration Reform and Control Act of 1986 ("IRCA") and other applicable Laws are either (A) immigrants authorized to work in the United States or (B) non- immigrants authorized to work in the United States for the Company in their specific jobs. 5.13 INSURANCE. Schedule 5.13 sets forth an accurate list as of the Balance Sheet Date of (a) all insurance policies carried by the Company, copies of which are attached as Schedule 5.13, (b) all insurance loss runs or workmen's compensation claims received for the past five policy years, and (c) the following information with respect to all insurance policies currently carried by the Company and previously carried by the Company within the last five years: (i) insurer, (ii) type of policy, (iii) coverage period, and (iv) policy limits and amount of deductible 14 or loss retention. Except as set forth in Schedule 5.13, none of such policies are "claims made" policies. The policies described in Schedule 5.13 for the current policy year provide adequate coverage against the risks customarily involved in the Company's business based on historical experience and are currently in full force and effect. Any open claims as of the Closing Date are recoverable under such policies, except to the extent of any applicable deductible or loss retention as set forth on Schedule 5.11. 5.14 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 5.14 sets forth an accurate schedule of all officers, directors and Stockholder employees of the Company with annual salaries of $50,000 or more, listing the rate of compensation (and the portions thereof attributable to salary, bonus, benefits and other compensation, respectively) of each of such persons as of (a) the Balance Sheet Date and (b) the date hereof. Neither the Company nor the Stockholders have any knowledge that any of such individuals has any present intention of terminating his or her employment or association with the Company. Attached to Schedule 5.14 are true, complete and correct copies of each employment or consulting agreement with any employee of the Company or the Stockholders. Except as set forth in Schedule 5.14, the Company is not a party to any agreement, nor has it established any plan, policy, practice or program, requiring it to make a payment or provide any other form of compensation or benefit or vesting rights to any officer, director, stockholder, member or employee of the Company or other person performing services for the Company which would not be payable or provided in the absence of this Agreement or the consummation of the transactions contemplated hereby, including any parachute payment under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"). 5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS; EMPLOYEE POLICIES. Schedule 5.15 sets forth all agreements containing covenants not to compete or solicit employees or to maintain the confidentiality of information to which the Company or any of the Stockholders is bound or under which the Company or any of the Stockholders has any rights or obligations. Schedule 5.15 lists all employee manuals and all material policies, procedures and work-related rules that apply to any employee, director or officer of, or any other individual performing consulting or other independent contractor services for, the Company. The Company has provided U.S. Concrete with a copy of all such written policies and procedures and a written description of all such unwritten policies and procedures. 5.16 EMPLOYEE BENEFIT PLANS. (a) Schedule 5.16 sets forth an accurate schedule of each "employee benefit plan," as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") (other than a "multiemployer plan", as defined in Section 3(37) of ERISA), and all deferred compensation or retirement funding arrangements, whether formal or informal and whether legally binding or not, under which the Company or an ERISA Affiliate has any current or future obligation or liability or under which any present or former employee of the Company or an ERISA Affiliate, or such present or former employee's dependents or beneficiaries, has any current or future right to benefits (each such plan and arrangement referred to hereinafter as a "Plan"). Company has provided to U.S. Concrete true and complete copies of such Plans, arrangements and any trusts related thereto, and classifications of employees covered thereby as of the Balance Sheet Date. Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate sponsors, maintains or contributes currently, or 15 sponsored, maintained or contributed at any time during the preceding five years, to any plan, program, fund or arrangement that constitutes an employee pension benefit plan. Except as set forth in Schedule 5.16, each Plan may be terminated by the Company, or if applicable, by an ERISA Affiliate at any time without any liability, cost or expense, other than costs and expenses that are customary in connection with the termination of a Plan. For purposes of this Agreement, the term "employee pension benefit plan" shall have the meaning given that term in Section 3(2) of ERISA (other than a multiemployer plan), and the term "ERISA Affiliate" means any corporation or trade or business under common control with the Company as determined under Section 414(b), (c), (m) or (o) of the Code. (b) Each Plan listed in Schedule 5.16 is in compliance in all material respects with the applicable provisions of ERISA, the Code and any other applicable Law. Except as set forth in Schedule 5.16, with respect to each Plan of the Company and each ERISA Affiliate, all reports and other documents required under ERISA or other applicable Law to be filed with any Governmental Authority, including without limitation all Forms 5500, or required to be distributed to participants or beneficiaries, have been duly and timely filed or distributed. True and complete copies of all such reports and other documents with respect to the past three years for each Plan have been provided to U.S. Concrete. No "accumulated funding deficiency" (as defined in Section 412(a) of the Code) with respect to any Plan has been incurred (without regard to any waiver granted under Section 412 of the Code), nor has any funding waiver from the Internal Revenue Service been received or requested. Except as set forth in Schedule 5.16, each Plan that is intended to be "qualified" within the meaning of Section 401(a) of the Code (a "Qualified Plan") is, and has been during the period from its adoption to the date hereof, so qualified, both as to form and operation and all necessary approvals of Governmental Authorities, including a favorable determination as to the qualification under the Code of each of such Qualified Plans and each amendment thereto, have been timely obtained. Except as set forth in Schedule 5.16, all accrued contribution obligations of the Company with respect to any Plan have either been fulfilled in their entirety or are fully reflected in the Financial Statements. (c) No Plan has incurred or will incur, and neither the Company nor any ERISA Affiliate has incurred or will incur, with respect to any Plan, any liability for excise tax or penalty due to the Internal Revenue Service. There have been no terminations, partial terminations or discontinuances of contributions to any Qualified Plan during the preceding five years without notice to and approval by the Internal Revenue Service and payment of all obligations and liabilities attributable to such Qualified Plan. (d) Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate has made any promises of retirement or other benefits to employees, except as set forth in the Plans, and neither the Company nor any ERISA Affiliate maintains or has established any Plan that is a "welfare benefit plan" within the meaning of Section 3(1) of ERISA that provides for continuing benefits or coverage for any participant or any beneficiary of a participant after such participant's termination of employment, except as may be required by Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code and similar state Law provisions, and at the expense of the participant or the 16 beneficiary of the participant, or retiree medical liabilities. Neither the Company nor any ERISA Affiliate maintains, has established or has ever participated in a multiple employer welfare benefit arrangement as described in Section 3(40)(A) of ERISA. Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate has any current or future obligation or liability with respect to a Plan pursuant to the provisions of a collective bargaining agreement. (e) Neither the Company nor any ERISA Affiliate has incurred, nor will it incur as a result of past activities, any material liability to the Pension Benefit Guaranty Corporation in connection with any Plan. Except as set forth on Schedule 5.16, the assets of each Plan that are subject to Title IV of ERISA are sufficient to provide the benefits under such Plan, the payment of which the Pension Benefit Guaranty Corporation would guarantee if such Plan were terminated, and such assets are also sufficient to provide all other "benefits liabilities" (as defined in ERISA Section 4001(a)(16)) due under such Plan upon termination. (f) No "reportable event" (as defined in Section 4043 of ERISA) has occurred and is continuing with respect to any Plan. There are no pending, or to the Company's and the Stockholders' knowledge, threatened claims, lawsuits or actions (other than routine claims for benefits in the ordinary course) asserted or instituted against, and neither the Company nor any ERISA Affiliate has knowledge of any threatened litigation or claims against, the assets of any Plan or its related trust or against any fiduciary of a Plan with respect to the operation of such Plan. To the Company's and the Stockholders' knowledge, there are no investigations or audits of any Plan by any Governmental Authority currently pending and there have been no such investigations or audits that have been concluded that resulted in any liability to the Company or any ERISA Affiliate that has not been fully discharged. Neither the Company nor any ERISA Affiliate has participated in any voluntary compliance or closing agreement programs established with respect to the form or operation of a Plan. (g) Neither the Company nor any ERISA Affiliate has engaged in any prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, in connection with any Plan for which exemption was not available. No person or entity that was engaged by the Company or an ERISA Affiliate as an independent contractor within the last five years reasonably can or will be characterized or deemed to be an employee of the Company or an ERISA Affiliate under applicable Laws for any purpose whatsoever, including, without limitation, for purposes of federal, state and local income taxation, workers' compensation and unemployment insurance and Plan eligibility. (h) Schedule 5.16 also sets forth an accurate schedule of each multiemployer plan to which the Company or any ERISA Affiliate is, or ever has been, a participant in or obligated to make any payment. With respect to each such multiemployer plan: (i) none of the foregoing representations and warranties of this Section 5.16 shall apply; and (ii) except as set forth on Schedule 5.16, all contributions required to be made by the Company or any ERISA Affiliate to such multiemployer plan have been made or are accrued and fully reflected in the Financial Statements. 17 5.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in Schedule 5.17, there are no claims, actions, suits or proceedings, pending or, to the knowledge of the Company and the Stockholders, threatened against or affecting the Company, at law or in equity, or before or by any Governmental Authority having jurisdiction over the Company. No written notice of any claim, action, suit or proceeding, whether pending or threatened, has been received by the Company and, to the Stockholders' and the Company's knowledge, there are no facts or circumstances existing which, with delivery of notice or passage of time or both would constitute such a claim, action, suit or proceeding. Except to the extent set forth in Schedule 5.17, the Company has conducted and is conducting its business in substantial compliance with all Laws applicable to the Company, its assets or the operation of its business. Also listed on Schedule 5.17 are all other instances where the Company is a plaintiff or complaining or moving party, under any of the above types of proceedings. 5.18 TAXES. For purposes of this Agreement, the term "Taxes" shall mean all taxes, charges, fees, levies or other assessments including, without limitation, income, gross receipts, excise, property, sales, withholding, social security, unemployment, occupation, use, service, service use, license, payroll, franchise, transfer and recording taxes, fees and charges, imposed by the United States or any state, local or foreign government or subdivision or agency thereof, whether computed on a separate, consolidated, unitary, combined or any other basis; and such term shall include any interest, fines, penalties or additional amounts attributable to or imposed with respect to any such taxes, charges, fees, levies or other assessments. The Company has timely filed all requisite federal, state, local and other tax returns for all fiscal periods ended on or before the Closing, and has duly paid in full or made adequate provision in the year-end Financial Statements for the payment of all Taxes for all periods ending at or prior to the Closing Date. The Company has duly withheld and paid or remitted all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other person or entity that required withholding under any applicable Law, including, without limitation, any amounts required to be withheld or collected with respect to social security, unemployment compensation, sales or use taxes or workers' compensation. There have not been during the past three years nor are there currently in progress any examinations, audits, proceedings, notices, waivers, asserted deficiencies or disputed valuations or other claims against the Company relating to Taxes for any period or periods prior to and including the Balance Sheet Date and no notice of any claim for Taxes has been received. The Company has not granted or been requested to grant any extension of the limitation period applicable to any claim for Taxes or assessments with respect to Taxes. The Company is not a party to any Tax allocation or sharing agreement and is not otherwise liable or obligated to indemnify any person or entity with respect to any Taxes. True and complete copies of (a) any tax examinations or audits, (b) extensions of statutory limitations and (c) the federal, state and local Tax returns of the Company for the last three fiscal years have been previously provided to U.S. Concrete. There are no requests for ruling in respect of any Tax pending between the Company and any Taxing authority. The Company has been taxed under the provisions of Subchapter S of the Code since March 28, 1990. The Company currently utilizes the accrual method of accounting for income tax purposes. Such method of accounting has not changed in the past five years. 5.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth in Schedule 5.19, the Company has conducted its operations in the ordinary course and there has not been: 18 (a) any material adverse change in the business, operations, properties, condition (financial or other), assets, liabilities (contingent or otherwise), or results of operations of the Company; (b) any damage, destruction or loss (whether or not covered by insurance) materially adversely affecting the assets, properties or business of the Company; (c) any change in the authorized capital stock of the Company or in its outstanding securities or any change in the Stockholders' ownership interests in the Company or any grant of any options, warrants, calls, conversion rights or commitments; (d) any declaration or payment of any dividend or distribution in respect of the capital stock or any direct or indirect redemption, purchase or other acquisition of any of the capital stock of the Company; (e) any increase in the compensation payable or to become payable by the Company to the Stockholders or any of its officers, directors, employees, consultants or agents, except for ordinary and customary bonuses and salary increases for employees in accordance with past practice, which bonuses and salary increases are set forth in Schedule 5.19; (f) any work interruptions, labor grievances or claims filed; (g) except for the transactions contemplated by this Agreement, any sale or transfer, or any agreement to sell or transfer, any material assets, properties or rights of the Company to any person or entity, including, without limitation, the Stockholders and their Affiliates; (h) any cancellation, or agreement to cancel, any indebtedness or other obligation owing to the Company; (i) any increase in the indebtedness of the Company, other than accounts payable incurred in the ordinary course of business, consistent with past practices, or incurred in connection with the transactions contemplated by this Agreement; (j) any plan, agreement or arrangement granting any preferential rights to purchase or acquire any interest in any of the assets, properties or rights of the Company or requiring consent of any party to the transfer and assignment of any such assets, properties or rights; (k) any purchase or acquisition of, or agreement, plan or arrangement to purchase or acquire, any assets, properties or rights outside of the ordinary course of the Company's business; (l) any waiver of any material rights or claims of the Company; or 19 (m) any other material transaction by the Company outside the ordinary course of business. 5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY. Schedule 5.20 sets forth an accurate schedule, as of the date of this Agreement, of (a) the name of each financial institution or brokerage firm in which the Company has accounts or safe deposit boxes; (b) the names in which the accounts or boxes are held; (c) the type of account and the cash, cash equivalents and securities held in such account as of the second business day prior to the Closing, none of which assets have been withdrawn from such accounts since such date except for bona fide business purposes in the ordinary course of the business of the Company; and (d) the name of each person authorized to draw thereon or have access thereto. Schedule 5.20 also sets forth the name of each person, corporation, firm or other entity holding a general or special power of attorney from the Company and a description of the terms thereof. 5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor the Stockholders nor any of their respective Affiliates has given or offered to give anything of value to any governmental official, political party or candidate for government office that was illegal to give or offer to give nor has it otherwise taken any action which would constitute a violation of the Foreign Corrupt Practices Act of 1977, as amended, or any similar Law. 5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as set forth in Schedule 5.22, neither the Stockholders nor any other Affiliate of the Company owns, directly or indirectly, any interest in, or is an officer, director, employee or consultant of or otherwise receives remuneration from, any Competitive Business, lessor, lessee, customer or supplier of the Company. Except as set forth in Schedule 5.22, no officer or director of the Company nor the Stockholders have, nor had any interest in any tangible or intangible assets or real or personal property used in or pertaining to the business of the Company. 5.23 INTANGIBLE PROPERTY. Schedule 5.23 sets forth an accurate list of all patents, patent applications, trademarks, service marks, technology, licenses, trade names, copyrights and other intellectual property or proprietary property rights owned or used by the Company. The Company owns or possesses, and the assets of the Company include, sufficient legal rights to use all of such items without conflict with or infringement of the rights of others. 5.24 CAPITAL EXPENDITURES. Schedule 5.24 sets forth the total amount of capital expenditures currently budgeted to be incurred by the company in excess of $25,000 in the aggregate during the balance of the Company's current fiscal year. 5.25 INVENTORIES. Except as Schedule 5.25 sets forth: (i) all inventories, net of reserves determined in accordance with GAAP, of the Company which are classified as such on the Interim Balance Sheet are merchantable and salable or usable in the ordinary course of business of the Company; and (ii) the Company does not depend on any single vendor for its inventories the loss of which could have a material adverse effect on the business or financial condition of the Company or during the past five years has sustained a difficulty material to the Company in obtaining its inventories. 20 5.26 No Implied Representations. Notwithstanding anything to the contrary contained in this Agreement, it is the express understanding of the Stockholders and the Company that U.S. Concrete and Buyer are not making any representation or warranty whatsoever, express or implied, other than those representations and warranties of U.S. Concrete and Buyer expressly set forth in this Agreement. 5.27 ABSENCE OF INTEREST-BEARING DEBT. As of the Closing Date, Company shall have no Interest-Bearing Debt and no Interest-Bearing Debt shall be assumed by the Surviving Corporation. 5.28 DISCLOSURE. The Stockholders and the Company have fully provided U.S. Concrete or its representatives with all the information that U.S. Concrete has requested in analyzing whether to consummate the transactions contemplated by this Agreement. None of the information so provided nor any representation or warranty of the Stockholders to U.S. Concrete or Buyer in this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein, in light of the circumstances under which they were made, not misleading. ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE U.S. Concrete represents and warrants to the Stockholders as follows: 6.01 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. 6.02 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 boards of directors of U.S. Concrete and by U.S. Concrete, as the sole stockholder of Buyer. No additional corporate or shareholder proceedings on the part of U.S. Concrete or Buyer are necessary to authorize the execution and delivery of this Agreement and the consummation by U.S. Concrete and Buyer of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by U.S. Concrete and Buyer, and, assuming the due authorization, execution and delivery by the Company and the Stockholders, constitutes valid and binding agreements of U.S. Concrete and Buyer, enforceable against U.S. Concrete and Buyer in accordance with its terms. (b) The execution and delivery of this Agreement by U.S. Concrete and Buyer do not, and the consummation by U.S. Concrete and Buyer of the transactions contemplated hereby will not, violate or result in a breach of any provision of, or 21 constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under any of the terms, conditions or provisions of (i) the Certificate of Incorporation or By-Laws of U.S. Concrete or Buyer, (ii) any Law applicable to either U.S. Concrete or Buyer or any of its properties or assets or (iii) any material agreement, note, bond, mortgage, indenture, deed of trust, license, franchise, permit, concession, contract, lease or other instrument, obligation or agreement of any kind to which U.S. Concrete or Buyer is now a party or by which either U.S. Concrete or Buyer or any of its properties or assets may be bound or affected. (c) Except for such filings as may be required under federal or state securities Laws, no declaration, filing or registration with, or notice to, or authorization, consent or approval of, any Governmental Authority or other person or entity is necessary for the execution and delivery of this Agreement by U.S. Concrete and Buyer or the consummation by U.S. Concrete and Buyer of the transactions contemplated hereby. 6.03 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary contained in this Agreement, it is the express understanding of U.S. Concrete and Buyer that the Stockholders are not making any representation or warranty whatsoever, express or implied, other than those representations and warranties of the Stockholders expressly set forth in this Agreement. 6.04 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. ARTICLE VII CERTAIN COVENANTS 7.01 Release From Guarantees. U.S. Concrete shall use its commercially reasonable efforts to have the Stockholders released from the personal guarantees of the Company's indebtedness identified in Schedule 7.01 on the Closing Date and will continue such efforts after the Closing if not released prior thereto. U.S. Concrete hereby agrees to indemnify and defend the Stockholders and hold each Stockholder harmless for any amounts that such Stockholder is required to pay in connection with the enforcement of any obligations under such personal guarantees after the Closing, including without limitation any reasonable attorneys' fees and expenses incurred in connection therewith. 7.02 FUTURE COOPERATION; TAX MATTERS. The Stockholders and U.S. Concrete shall each deliver or cause to be delivered to the other following the Closing such additional instruments as the other may reasonably request for the purpose of fully carrying out this Agreement. The Stockholders shall be responsible for the payment of all Taxes attributable to all 22 periods prior to and including the Closing Date, including without limitation the period from the beginning of the Company's current Tax year through the Closing Date. The Stockholders shall be responsible for the preparation of all Tax returns covering the period from the beginning of the Company's current Tax year through the Closing Date, and shall be responsible for all costs and expenses incurred in connection with the preparation of such Tax returns. Buyer will cooperate with the Stockholders in their preparation of all Tax returns covering the period from the beginning of the Company's current Tax year through the Closing. In addition, U.S. Concrete will provide the Stockholders with access to such of its books and records as may be reasonably requested by the Stockholders in connection with federal, state and local tax matters relating to periods prior to the Closing. The Stockholders will cooperate and use their commercially reasonable efforts to encourage the present officers, directors and employees of the Company to cooperate with U.S. Concrete and Buyer at and after the Closing in furnishing information, evidence, testimony and other assistance in connection with any actions, proceedings, arrangements or disputes of any nature with respect to matters pertaining to all periods prior to the Closing. The party requesting cooperation, information or actions under this Section 7.02 shall reimburse the other party for all reasonable out-of-pocket costs and expenses paid or incurred in connection therewith, which costs and expenses shall not, however, include per diem charges for employees or allocations of overhead charges. 7.03 EXPENSES. U.S. Concrete will pay the fees, expenses and disbursements of U.S. Concrete and its agents, representatives, accountants and counsel incurred in connection with the execution, delivery and performance of this Agreement and any amendments hereto. The Company (as owned by U.S. Concrete after Closing) will be responsible for the fees and expenses of Arthur Andersen LLP's audit or audit related procedures in connection with the transactions contemplated hereby. The Stockholders will pay their fees, expenses and disbursements and those of their and the Company's agents, representatives, financial advisors, accountants and counsel incurred in connection with the execution, delivery and performance of this Agreement and any amendments hereto and the consummation of the transactions contemplated hereby, including, without limitation, accounting fees and related expenses attributable to the final Tax returns of the Company and the Stockholders for periods through the Closing. The Stockholders will also pay any costs associated with business brokers or other advisors engaged by the Stockholders or the Company. 7.04 INTERNAL REVENUE CODE ELECTION. (a) Each of the Stockholders agrees that, at Buyer's election, such Stockholder will consent to the treatment of this transaction in accordance with Section 338(h)(10) of the Code (the "Election"). (b) In connection with the Election, not later than 90 days after the Closing Date, each of the Stockholders and Buyer shall act together in good faith to (a) determine and agree upon the "Modified Aggregate Deemed Sale Price" of the assets of Company deemed attributable to "Section 751 Property" within the meaning of Section 751 of the Code (within that meaning of, and in accordance with, Treasury Regulation Section 1.338(h)(10)-1(f)) and (b) determine and agree upon the property allocations (the "Allocations") of the "Modified Aggregate Deemed Sale Price" among such assets (in accordance with Section 338(b)(5) of the Code and the Treasury Regulations promulgated thereunder). The Stockholders and Buyer shall (A) be bound by such 23 determination and such Allocations for purposes of determining any taxes, (B) prepare and file their tax returns on a basis consistent with such determination of the "Modified Aggregate Deemed Sale Price" and such Allocations and (C) take no position inconsistent with such determination and Allocations on any applicable tax return, in any proceeding before any taxing authority or otherwise. In the event that any such Allocations are disputed by any taxing authority, the party receiving notice of the dispute shall promptly notify the other party hereto concerning resolution of the dispute. 7.05 LEGAL OPINION. At the Closing, the Company and the Stockholders shall cause their legal counsel, Dykema Gossett PLLC, to deliver to U.S. Concrete a legal opinion in form and substance acceptable to U.S. Concrete. 7.06 EMPLOYMENT AGREEMENTS. Concurrently with the execution of this Agreement, Buyer, pursuant to the Fuel Merger Agreement, shall enter into a mutually acceptable Employment Agreements with each of Cornillie and Deneweth (collectively, the "Employment Agreements"). 7.07 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the execution of this Agreement, (a) the Stockholders shall repay to the Company all amounts outstanding as advances to or receivables from the Stockholders, each of which advances or receivables is specifically reflected in Schedule 5.07, and (b) the Company shall repay all amounts outstanding under loans to the Company from the Stockholders, each of which loans to the Company is specifically reflected in Schedule 5.06. 7.08 STOCK OPTIONS. U.S. Concrete shall grant nonqualified options to purchase an aggregate of 37,500 shares of U.S. Concrete Common Stock as of the Closing Date under U.S. Concrete's 1999 Incentive Plan (the "Incentive Plan") to certain key employees of the Company (other than the Stockholders), as set forth on Schedule 7.08 in the amounts listed thereon. Schedule 7.08 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. 7.09 PRE-CLOSING DISTRIBUTIONS. Prior to the Closing, the Company may have distributed to the Stockholders the cash and other assets set forth on Schedule 7.09. Any such distributions shall have been authorized by the Board of Directors of the Company prior to the Closing, and the Company and the Stockholders shall have used the respective best efforts to complete such distributions prior to the Closing. Notwithstanding the foregoing, if any such authorized distributions have not been completed prior to the Closing Buyer shall use reasonable efforts to complete such authorized distributions after the Closing. The Stockholders' sole recourse against Buyer and U.S. Concrete with respect to this Section 7.09 shall be to the assets to be distributed. 7.10 WORKING CAPITAL ADJUSTMENT. (a) As soon as practicable after the Closing Date, U.S. Concrete shall cause to be prepared and delivered to the Stockholders a consolidated balance sheet of Cornillie Leasing, Inc., Cornillie Fuel & Supply Inc. and the Company (collectively, the "Consolidated Companies") as of the Closing Date (the "Closing Date Balance Sheet 24 Date"), which has been prepared from the books and records of the Consolidated Companies in conformity with GAAP (the "Final Balance Sheet"), and a working capital adjustment schedule (the "Adjustment Schedule"). The Adjustment Schedule will set forth the computation of the Adjusted Working Capital Amount. As used in this Section 7.09, capitalized terms not otherwise defined in this Agreement shall have the following meanings: "Adjusted Current Assets" means the amount of current assets of the Consolidated Companies as set forth on the Closing Date Balance Sheet; "Adjusted Current Liabilities" means the amount of current liabilities of the Consolidated Companies as set forth on the Closing Date Balance Sheet less the current portion of Interest-Bearing Debt (if any) as set forth on the Closing Date Balance Sheet; and "Adjusted Working Capital Amount" means the amount computed by subtracting Adjusted Current Liabilities from Adjusted Current Assets as finally determined in accordance with Section 7.09(c). Adjusted Working Capital will exclude amounts relating to the 1999 Ross Portable Plant and the upgrade of the aggregate section of the Detroit batch plant (bins). (b) If the Adjusted Working Capital Amount is less than $250,000, then the Stockholders shall, no later than 15 days after delivery of the Adjustment Schedule as finally determined in accordance with Section 7.09(c) by U.S. Concrete, pay to the Surviving Corporation the amount by which $250,000 exceeds the Adjusted Working Capital Amount (the "Adjusted Working Capital Shortfall"). If the Adjusted Working Capital Amount is greater than $250,000, then the Surviving Corporation shall, no later than 15 days after delivery of the Adjustment Schedule as finally determined in accordance with Section 7.09(c), pay to the Stockholders, on a pro rata basis in proportion to their percentage ownership of the Company Common Stock outstanding immediately prior to the Closing, the amount by which the Adjusted Working Capital Amount exceeds $250,000 (the "Adjusted Working Capital Excess"). (c) The Closing Date Balance Sheet and Adjustment Schedule will be final and binding on the parties hereto unless, within 30 days following the delivery of the Adjustment Schedule by U.S. Concrete, the Stockholders notify U.S. Concrete in writing that the Stockholders disagree with all or any portion of the Closing Date Balance Sheet and/or the Adjustment Schedule. If the Stockholders and U.S. Concrete cannot mutually resolve any such disagreement within 30 days after the receipt by U.S. Concrete of the Stockholders' notice of disagreement, then the Stockholders and U.S. Concrete shall submit the dispute to a mutually agreeable certified public accounting firm (the "Accountant") within 20 days after the end of such 30- day period. If the Stockholders and U.S. Concrete are unable to agree upon such an accounting firm within such 20-day period, then the Stockholders and U.S. Concrete shall select a "Big Five" accounting firm by lot (after excluding any of their respective regular Big Five accounting firms), which accounting firm shall act as the Accountant. The Stockholders and U.S. Concrete shall request that the Accountant audit the Closing Date Balance Sheet and provide a computation of the Adjusted Working Capital Amount within 30 days thereafter, and this 25 computation will be final and binding upon the parties hereto and used to compute the Adjusted Working Capital Shortfall or Adjusted Working Capital Excess, as the case may be, the payment of any of which shall be made within five days of delivery by U.S. Concrete of the audited Closing Date Balance Sheet. In the event the Stockholders and U.S. Concrete submit any unresolved objections to an Accountant for resolution as provided in this Section 7.09, the Stockholders and U.S. Concrete will each pay one-half of the fees and expenses of the Accountant. 7.11 OTHER DOCUMENTS. At the Closing, U.S. Concrete shall receive the following additional certificates, instruments and documents: (a) Stock certificates representing all Company Common Stock duly endorsed in blank by the Stockholders, or accompanied by stock powers duly executed in blank by the Stockholders, and otherwise in a form acceptable to U.S. Concrete. (b) Written resignations of all directors and all officers of the Company, such resignations to be effective concurrently with the Closing on the Closing Date. (c) Releases in form and substance satisfactory to U.S. Concrete executed by the Stockholders releasing the Company from any liability or obligation to the Stockholders. (d) All of the Company's books and records, including, without limitation, minute books, corporate charters, by-laws, stock records, bank account records, computer records and all contracts with third parties; provided, however, that all of the foregoing, other than the minute books, corporate charters, by-laws and stock records, shall remain at the business location of Company where they are currently maintained. 7.12 BENEFIT PLANS. (a) U.S. Concrete shall not, and shall cause the Surviving Corporation not to at any time prior to 60 days after the Closing Date, effectuate a "plant closing" or "mass layoff" as those terms are defined in the Worker Adjustment and Restraining Notification Act of 1988 ("WARN") affecting in whole or in part any facility, site of employment, operating unit or employee of Company or any Company Subsidiary without complying fully with the requirements of WARN. (b) All health and welfare benefit plans of U.S. Concrete or the Surviving Corporation in which the employees of Company or any Company Subsidiary participate after the Effective Time shall (i) recognize expenses and claims that were incurred by such employees in the year in which the Effective Time occurs for purposes of computing deductible amounts and co-payments under such health and welfare plans as of the Effective Time, (ii) provide coverage for pre-existing health conditions to the extent covered under the applicable plans or programs as of the Effective Time, and (iii) credit any deductibles paid or co-payments made by employees of Company or any Company Subsidiary prior to the Effective Time for purposes of paying deductibles or making co-payments pursuant to the health and welfare benefit plans of U.S. Concrete or the Surviving Corporation. In addition, employees of the Surviving Corporation and its subsidiaries shall receive credit for their prior service with Company for eligibility and 26 vesting purposes and for vacation accrual purposes under all health and welfare, pension, 401(k) and other benefit programs. ARTICLE VIII INDEMNIFICATION The Stockholders, U.S. Concrete and Buyer each make the following covenants: 8.01 General Indemnification by the Stockholders. Subject to Section 8.05 and Section 8.06, the Stockholders covenant and agree that they will jointly and severally (without any right of indemnification or contribution from the Company) indemnify, defend, protect and hold harmless U.S. Concrete, Buyer and Buyer, and their respective officers, directors, employees, stockholders, agents, representatives and Affiliates, at all times from and after the date of this Agreement from and against all Losses incurred by any of such indemnified persons and entities as a result of or arising from (a) until the Expiration Date any breach of the representations and warranties of the Stockholders set forth herein or in the Schedules attached hereto, (b) any breach or nonfulfillment of any covenant or agreement on the part of the Stockholders under this Agreement, (c) all income Taxes payable by the Company for all periods prior to and including the Closing Date, (d) all transfer Taxes arising from the transactions contemplated by Section 7.08 of this Agreement, or (e) any litigation listed on Schedule 5.17. 8.02 INDEMNIFICATION BY U.S. CONCRETE. Subject to Section 8.06, U.S. Concrete covenants and agrees that it will indemnify, defend, protect and hold harmless the Stockholders and their respective agents, representatives, Affiliates, beneficiaries and heirs and employees at all times from and after the date of this Agreement from and against all Losses incurred by any of such indemnified persons as a result of or arising from (a) until the Expiration Date, any breach of the representations and warranties of U.S. Concrete or Buyer set forth herein or in the Schedules attached hereto or certificates delivered in connection herewith or (b) any breach or nonfulfillment of any covenant or agreement on the part of U.S. Concrete or Buyer under this Agreement. 8.03 THIRD PERSON CLAIMS. Promptly after any party entitled to indemnification under Sections 8.01 and 8.02 hereof (hereinafter the "Indemnified Party") has received notice of or has knowledge of any claim by a person or entity not a party to this Agreement ("Third Person"), or the commencement of any action or proceeding by a Third Person, which the Indemnified Party believes in good faith is an indemnifiable claim under this Agreement, the Indemnified Party shall give to the party obligated to provide indemnification pursuant to Sections 8.01 or 8.02 hereof (hereinafter the "Indemnifying Party") written notice of such claim or the commencement of such action or proceeding. Such notice shall state the nature and the basis of such claim and a reasonable estimate of the amount thereof. The Indemnifying Party shall have the right to defend and settle, at its own expense and by its own counsel reasonably acceptable to the Indemnified Party, any such matter so long as the Indemnifying Party pursues the same diligently and in good faith. If the Indemnifying Party undertakes to defend or settle, it shall promptly notify the Indemnified Party of its intention to do so, and the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in all commercially reasonable respects in the defense thereof and in any settlement thereof. Such cooperation shall include, but shall not be limited to, furnishing the Indemnifying Party with any books, records and other information reasonably 27 requested by the Indemnifying Party and in the Indemnified Party's possession or control. After the Indemnifying Party has notified the Indemnified Party of its intention to undertake to defend or settle any such asserted liability, and for so long as the Indemnifying Party diligently pursues such defense, the Indemnifying Party shall not be liable for any additional legal expenses incurred by the Indemnified Party in connection with any defense or settlement of such asserted liability; provided, however, that the Indemnified Party shall be entitled, at its expense, to participate in the defense of such asserted liability and the negotiations of the settlement thereof. The Indemnifying Party shall not settle any such Third Person claim without the consent of the Indemnified Party (which consent shall not be unreasonably withheld), unless the settlement thereof imposes no liability or obligation on, and includes a complete release from liability of, the Indemnified Party. If the Indemnifying Party desires to accept a final and complete settlement of any such Third Person claim and the Indemnified Party refuses to consent to such settlement, then the Indemnifying Party's liability under this Section with respect to such Third Person claim shall be limited to the amount so offered in settlement by said Third Person; provided, however, that notwithstanding the foregoing, the Indemnified Party shall be entitled to refuse to consent to any such proposed settlement and the Indemnifying Party's liability hereunder shall not be limited by the amount of the proposed settlement if such settlement imposes any liability or obligation on, or does not provide for the complete release of, the Indemnified Party. If, upon receiving notice, the Indemnifying Party does not timely undertake to defend such matter to which the Indemnified Party is entitled to indemnification hereunder, or fails diligently to pursue such defense, the Indemnified Party may undertake such defense through counsel of its choice, at the cost and expense of the Indemnifying Party, and the Indemnified Party may settle such matter, in its discretion, and the Indemnifying Party shall reimburse the Indemnified Party for the amount paid in such settlement and any other liabilities or expenses incurred by the Indemnified Party in connection therewith. 8.04 Non-Third Person Claims. In the event that any Indemnified Party asserts the existence of a claim giving rise to Losses (but excluding claims resulting from the assertion of liability by Third Persons), such party shall give written notice to the Indemnifying Party. Such written notice shall state that it is being given pursuant to this Section 8.04, specify the nature and amount of the claim asserted, and indicate the date on which such assertion shall be deemed accepted and the amount of the claim deemed a valid claim (such date to be established in accordance with the next sentence). If such Indemnifying Party, within 60 days after the mailing of notice by such Indemnified Party, shall not give written notice to such Indemnified Party announcing such Indemnifying Party's intent to contest such assertion of such Indemnified Party, such assertion shall be deemed accepted and the amount of such claim shall be deemed a valid claim. In the event, however, that such Indemnifying Party contests such assertion of a claim by giving such written notice to the Indemnified Party within said period, then the parties shall act in good faith to reach agreement regarding such claim. If the parties cannot resolve such dispute after good faith negotiations with respect thereto within 60 days after the notice provided by the Indemnifying Party, such dispute shall be submitted to arbitration in accordance with the provisions of Section 11.11. In the event that arbitration shall arise with respect to any such claim, the prevailing party shall be entitled to reimbursement of costs and expenses incurred in connection with such arbitration including reasonable attorneys' fees. 8.05 Indemnification Deductible. Neither U.S. Concrete, Buyer nor Buyer shall be entitled to indemnification or other relief from the Stockholders under the provisions of Section 8.01(a) until such time as, and only to the extent that, the claims subject to indemnification by 28 such other party exceed, in the aggregate, $100,760 when combined with the Leasing Merger Agreement and Fuel Merger Agreement. Notwithstanding the foregoing, the limitations set forth in this Section 8.05 shall not apply to fraudulent misrepresentations or the representation contained in Section 5.27. 8.06 INDEMNIFICATION LIMITATION. Subject to Section 8.05, the aggregate obligation of the Stockholders, on the one hand, and of U.S. Concrete and the Surviving Corporation, on the other hand, for any and all claims arising under this Agreement, the Leasing Merger Agreement, Fuel Merger Agreement or under Sections 3 or 7 of the Employment Agreements, shall be limited to $10,076,029. Notwithstanding the foregoing, the limitations set forth in this Section 8.06 shall not apply to fraudulent misrepresentations or the representation contained in Section 5.27. ARTICLE IX NONCOMPETITION COVENANTS 9.01 PROHIBITED ACTIVITIES. (a) For no additional consideration, each Stockholder will not for five years following the Closing Date (the "Noncompete Term"), directly or indirectly, for himself or on behalf of or in conjunction with any other person, company, partnership, corporation or business or other entity of whatever nature: (i) engage, as an officer, director, shareholder, owner, investor, lender, guarantor, partner, joint venturer, or in a managerial or advisory capacity, whether as an employee, independent contractor, consultant or advisor, or as a sales representative, dealer or distributor, in any Competitive Business within a radius of 100 air miles of any plant or other operating facility in which the Company was engaged in business on the date immediately prior to the Closing Date; (ii) call upon or otherwise solicit any person, who is, at that time, within the Territory, an employee or consultant of the Cornillie Companies, U.S. Concrete, Buyer or any of their respective subsidiaries, for the purpose or with the intent of enticing such employee or consultant out of the employ or contract with the Cornillie Companies, Buyer or any of their respective subsidiaries; (iii) call upon or otherwise solicit any person or entity which is, at that time, or which has been, within one year prior to that time, a customer of the Cornillie Companies, U.S. Concrete or Buyer or any of the subsidiaries of such parties within the Territory for the purpose of soliciting or selling services or products in a Competitive Business within the Territory; or (iv) call upon or otherwise solicit any entity which the Company or U.S. Concrete has called on in connection with the possible acquisition by either of them of such entity or of which either of them has made an acquisition 29 analysis, with the knowledge of that entity's status as an acquisition candidate of U.S. Concrete, for the purpose of (A) acquiring that entity or arranging the acquisition of that entity by any person or entity other than U.S. Concrete; and (B) engaging in a Competitive Business within the Territory. (b) Notwithstanding the above, Section 9.01(a) shall not be deemed to prohibit any Stockholder from acquiring, as a passive investor with no involvement in the operations of the business, not more than three percent of the capital stock of a Competitive Business whose stock is publicly traded on a national securities exchange, the NASDAQ National Market or over-the-counter. 9.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic losses to U.S. Concrete and Buyer as a result of a breach of the foregoing covenant, because a breach of such covenant would diminish the value of the assets, properties and business of the Company being sold pursuant to this Agreement, and because of the immediate and irreparable damage that could be caused to U.S. Concrete and Buyer for which it would have no other adequate remedy, since monetary damages alone may not be an adequate remedy, each Stockholder agrees that the foregoing covenant may be enforced against such individual by, without limitation, injunctions, restraining orders and other equitable actions. 9.03 REASONABLE RESTRAINT. It is agreed by the parties hereto that the foregoing covenants in this ARTICLE IX are necessary in terms of time, activity and territory to protect U.S. Concrete's and Buyer's interest in the assets, properties and business being acquired pursuant to the terms of this Agreement and impose a reasonable restraint on the Stockholders in light of the activities and businesses of U.S. Concrete on the date of the execution of this Agreement and the current plans of U.S. Concrete. 9.04 SEVERABILITY; REFORMATION. The covenants in this ARTICLE IX are severable and separate, and the unenforceability of any specific covenant shall not affect the continuing validity and enforceability of any other covenant. In the event any court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth in this ARTICLE IX are unreasonable and therefore unenforceable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which the court deems reasonable and this Agreement shall thereby be reformed. 9.05 MATERIAL AND INDEPENDENT COVENANT. The Stockholders acknowledge that their agreements and the covenants set forth in this ARTICLE IX are material conditions to U.S. Concrete's and Buyer's agreements to execute and deliver this Agreement and to consummate the transactions contemplated hereby and that U.S. Concrete and Buyer would not have entered into this Agreement without such covenants. All of the covenants in this ARTICLE IX shall be construed as an agreement independent of any other provision in this Agreement. The existence of any claim or cause of action by any Stockholder against U.S. Concrete, whether predicated on this Agreement or otherwise, will not constitute a defense to the enforcement by U.S. Concrete of any of the covenants of this ARTICLE IX. The covenants this ARTICLE IX contains will not be affected by any breach of any other provision hereof by any party hereto. 30 ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION 10.01 GENERAL. The Stockholders recognize and acknowledge that they had in the past, currently have, and in the future will have, access to certain confidential information relating to the businesses of the Company, Buyer and/or U.S. Concrete, including, without limitation, lists of customers, operational policies, and pricing and cost policies that are, and following the Closing will be, valuable, special and unique assets of Buyer 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 Buyer and/or U.S. Concrete, unless (a) such information becomes known to the public generally through no fault of the Stockholder or (b) disclosure is required by Law, provided that prior to disclosing any information pursuant to this clause (b) the disclosing Stockholder(s) shall give prior written notice thereof to U.S. Concrete and Buyer and provide U.S. Concrete with the opportunity to contest such disclosure. In the event of a breach or threatened breach by any Stockholder of the provisions of this Section, U.S. Concrete shall be entitled to an injunction restraining such Stockholder from disclosing, in whole or in part, such confidential information. Nothing herein shall be construed as prohibiting U.S. Concrete from pursuing any other available remedy for such breach or threatened breach, including, without limitation, the recovery of damages. 10.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic losses to U.S. Concrete and Buyer as a result of the breach of the foregoing covenant, because a breach of such covenant would diminish the value of the assets, properties and business of the Company being sold pursuant to this Agreement, and because of the immediate and irreparable damage that would be caused for which Buyer and/or U.S. Concrete would have no other adequate remedy, since monetary damages alone may not be an adequate remedy, each Stockholder agrees that the foregoing covenants may be enforced against such individual by, without limitation, injunctions, restraining orders and other equitable actions. ARTICLE XI 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, Buyer, Buyer and the Company, and the heirs and legal representatives of the Stockholders. Except as provided in ARTICLE VIII 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 Company, Buyer and U.S. Concrete and supersede any prior agreement and understanding relating to the subject matter of this Agreement, including, without limitation, the Letter of Intent. This Agreement may be modified or amended only by a written instrument executed by the Stockholders, the Company, Buyer and 31 U.S. Concrete. 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 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 a fee payable to Stockholders' agent, W.Y. Campbell, which Stockholders will pay, each party hereto represents and warrants that it employed no broker or agent in connection with the transactions contemplated by this Agreement. Each party agrees to indemnify each other party against all loss, cost, damages or expense arising out of claims for fees or commissions of brokers employed or alleged to have been employed by such indemnifying party. 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, Buyer or Buyer, addressed to them at: U.S. Concrete, Inc. 1300 Post Oak Blvd., Suite 1200 Houston, Texas 77056 Attn: Corporate Secretary If to the Stockholders, addressed as follows: Richard A. Deneweth 9940 Edgewood Traverse City, Michigan 49648 Joseph C. Cornillie, Trustee URTA of Joseph C. Cornillie, Dated October 4, 1995 3279 Wendover Troy, Michigan 48084 with a copy (which shall not constitute notice) to: D. Richard McDonald, Esq. Dykema Gossett PLLC 1577 N. Woodward Ave., Suite 300 Bloomfield Hills, Michigan 48304 32 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 V and ARTICLE VI shall survive the Closing for a period of two years from the Closing Date (the "Expiration Date"), except that the representations and warranties set forth in Sections 5.03, 5.11, 5.16 and 5.18 hereof shall survive until such time as the applicable statute of limitations period has run, which shall be deemed to be the Expiration Date for Sections 5.03, 5.11, 5.16 and 5.18, as the case may be. The respective parties shall remain liable after the Expiration Date for breaches of the representations and warranties set forth in ARTICLE V and ARTICLE VI, provided such breaches are asserted in good faith by notice in writing to the alleged breaching party prior to the Expiration Date. 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, subject to the limitations set forth in Sections 8.05 and 8.06. 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 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 Delaware (except for its principles governing conflicts of laws). 11.11 DISPUTE RESOLUTION. (a) Except with respect to injunctive relief as provided in Section 9.02 and Section 10.02 (which relief may be sought from any court or administrative agency with jurisdiction with respect thereto), any unresolved dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in 33 accordance with the rules of the American Arbitration Association then in effect. The arbitration shall be conducted by a retired judge employed by the Chicago, Illinois office of J.A.M.S./Endispute, Inc. ("JAMS"). The arbitration shall be held in JAMS' Chicago, Illinois office. (b) The parties shall obtain from JAMS a list of the retired judges available to conduct the arbitration. The parties shall use their reasonable efforts to agree upon a judge to conduct the arbitration. If the parties cannot agree upon a judge to conduct the arbitration within 10 days after receipt of the list of available judges, the parties shall ask JAMS to provide the parties a list of three available judges (the "Judge List"). Within five days after receipt of the Judge List, each party shall strike one of the names of the available judges from the Judge List and return a copy of such list to JAMS and the other party. If two different judges are stricken from the Judge List, the remaining judge shall conduct the arbitration. If only one judge is stricken from the Judge List, JAMS shall select a judge from the remaining two judges on the Judge List to conduct the arbitration. (c) The arbitrator shall not have the authority to add to, detract from, or modify any provision hereof nor to award punitive damages to any injured party. The arbitrator shall have the authority to order payment of damages, reimbursement of costs, including those incurred to enforce this Agreement, and interest thereon in the event the arbitrator determines that a material breach of this Agreement has occurred. A decision by the arbitrator shall be final and binding. Judgment may be entered on the arbitrator's award in any court having jurisdiction. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. U.S. CONCRETE, INC. By: /s/ Donald Wayne _____________________________ Donald Wayne, Vice President CORNILLIE FUEL & SUPPLY, INC. By: /s/ Donald Wayne _____________________________ Donald Wayne, Vice President DENCOR, INC. By: /s/ Joseph C. Cornillie _____________________________ Joseph C. Cornillie, President 34 STOCKHOLDERS: /s/ Richard A. Deneweth ------------------------------------- Richard A. Deneweth, Individually /s/ Joseph C. Cornillie -------------------------------------- Joseph C. Cornillie, Individually and As Trustee URTA of Joseph C. Cornillie Dated October 4, 1995 35 EXHIBIT A ALLOCATION OF CONSIDERATION Cash ---- Joseph C. Cornillie $3,246,627.50 Richard A. Deneweth $3,246,627.50 36 EX-2.15 6 ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION EXHIBIT 2.15 ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION BY AND AMONG U.S. CONCRETE, INC., CONCRETE XVIII ACQUISITION, INC., CORNILLIE LEASING, INC., RICHARD A. DENEWETH, AND JOSEPH C. CORNILLIE, TRUSTEE URTA OF JOSEPH C. CORNILLIE, DATED OCTOBER 4, 1995 Dated as of February 8, 2000 TABLE OF CONTENTS ARTICLE I DEFINITIONS.................................................... 1 1.01 Definitions.................................................... 1 1.02 Interpretation................................................. 5 ARTICLE II THE MERGER AND THE SURVIVING CORPORATION....................... 6 2.01 The Merger..................................................... 6 2.02 Effective Time of the Merger................................... 6 2.03 Certificate of Incorporation, Bylaws and Board of Directors of Surviving Corporation..................................... 6 ARTICLE III CONVERSION OF SHARES........................................... 6 3.01 Conversion of Shares........................................... 6 3.02 Newco Shares................................................... 7 3.03 Delivery of Merger Consideration............................... 7 ARTICLE IV CLOSING........................................................ 7 4.01 Closing........................................................ 7 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS............. 7 5.01 Due Organization and Qualification............................. 7 5.02 Authorization; Non-Contravention; Approvals.................... 8 5.03 Capitalization and Ownership................................... 9 5.04 Subsidiaries................................................... 9 5.05 Financial Statements........................................... 9 5.06 Liabilities and Obligations.................................... 10 5.07 Accounts and Notes Receivable.................................. 10 5.08 Properties and Assets.......................................... 10 5.09 Material Customers and Contracts............................... 12 5.10 Permits........................................................ 14 5.11 Environmental Matters.......................................... 14 5.12 Labor and Employee Relations; Employment Matters............... 15 5.13 Insurance...................................................... 15 5.14 Compensation; Employment Agreements............................ 15 5.15 Noncompetition, Confidentiality and Nonsolicitation Agreements; Employee Policies................................ 16 5.16 Employee Benefit Plans......................................... 16 5.17 Litigation and Compliance with Law............................. 18 5.18 Taxes.......................................................... 18 5.19 Absence of Changes............................................. 19 5.20 Accounts with Banks and Brokerages; Powers of Attorney......... 20 5.21 Absence of Certain Business Practices.......................... 20 5.22 Competing Lines of Business; Related-Party Transactions........ 20 5.23 Intangible Property............................................ 21 5.24 Capital Expenditures........................................... 21 5.25 Inventories.................................................... 21 5.26 Tax Reorganization Representation.............................. 21 5.27 Absence of Interest-Bearing Debt............................... 21 5.28 No Implied Representations..................................... 21 5.29 Disclosure..................................................... 21 i ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO...... 22 6.01 Organization................................................... 22 6.02 Authorization; Non-Contravention; Approvals.................... 22 6.03 U.S. Concrete Common Stock..................................... 23 6.04 Tax Reorganization Representations............................. 23 6.05 SEC Filings; Disclosure........................................ 24 6.06 No Implied Representations..................................... 24 6.07 Disclosure..................................................... 24 ARTICLE VII CERTAIN COVENANTS.............................................. 24 7.01 Release From Guarantees........................................ 24 7.02 Future Cooperation; Tax Matters................................ 24 7.03 Expenses....................................................... 25 7.04 Legal Opinion.................................................. 25 7.05 Employment Agreements.......................................... 25 7.06 Repayment of Related Party Indebtedness........................ 25 7.07 Stock Options.................................................. 25 7.08 Pre-Closing Distributions...................................... 26 7.09 Working Capital Adjustment..................................... 26 7.10 Other Documents................................................ 27 7.11 Benefit Plans.................................................. 28 ARTICLE VIII INDEMNIFICATION................................................ 28 8.01 General Indemnification by the Stockholders.................... 28 8.02 Indemnification by U.S. Concrete............................... 29 8.03 Third Person Claims............................................ 29 8.04 Non-Third Person Claims........................................ 30 8.05 Indemnification Deductible..................................... 30 8.06 Liability Limitation........................................... 30 8.07 Form of Indemnity Payment...................................... 30 ARTICLE IX NONCOMPETITION COVENANTS....................................... 31 9.01 Prohibited Activities.......................................... 31 9.02 Equitable Relief............................................... 31 9.03 Reasonable Restraint........................................... 32 9.04 Severability; Reformation...................................... 32 9.05 Material and Independent Covenant.............................. 32 ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION...................... 32 10.01 General........................................................ 32 10.02 Equitable Relief............................................... 33 ARTICLE XI INTENDED TAX TREATMENT......................................... 33 11.01 Tax-Free Reorganization........................................ 33 ARTICLE XII FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON STOCK................................... 33 12.01 Compliance with Law............................................ 33 12.02 Economic Risk; Sophistication; Accredited Investors............ 34 12.03 Rule 144 Reporting............................................. 34 12.04 Restriction on Sale or Other Transfer of Restricted Shares..... 34 12.05 Prospectus Delivery............................................ 35 12.06 Removal of Legends............................................. 35 ii ARTICLE XIII MISCELLANEOUS.................................................. 35 13.01 Successors and Assigns; Rights of Parties...................... 35 13.02 Entire Agreement............................................... 35 13.03 Counterparts................................................... 35 13.04 Brokers and Agents............................................. 36 13.05 Notices........................................................ 36 13.06 Survival of Representations and Warranties..................... 37 13.07 Exercise of Rights and Remedies; Remedies Cumulative........... 37 13.08 Reformation and Severability................................... 37 13.09 Section Headings; Gender....................................... 37 13.10 Governing Law.................................................. 37 13.11 Dispute Resolution............................................. 37 iii ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of February 8, 2000, by and among U.S. Concrete, Inc., a Delaware corporation ("U.S. Concrete"), Concrete XVIII Acquisition, Inc., a Delaware corporation that is a subsidiary of U.S. Concrete ("Newco"), Cornillie Leasing, Inc., a Michigan corporation (the "Company"), and Richard A. Deneweth ("Deneweth") and Joseph C. Cornillie, individually and as Trustee URTA of Joseph C. Cornillie, Dated October 4, 1995 ("Cornillie") (Deneweth and Cornillie are each referred to hereinafter as a "Stockholder" and collectively, the "Stockholders"), with the Stockholders being all of the Company's Stockholders. WHEREAS, the respective Boards of Directors of Newco and the Company (collectively referred to as "Constituent Corporations") deem it advisable and in the best interests of the Constituent Corporations and the stockholders of the Constituent Corporations that Newco merge with and into the Company (the "Merger"); WHEREAS, the Boards of Directors of the Constituent Corporations have approved and adopted this Agreement as a plan of reorganization within the provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"); WHEREAS, all of the stockholders of the Constituent Corporations have approved the Merger in accordance with the GCL and the MBCA; and WHEREAS, U.S. Concrete is also, pursuant to separate written agreements, acquiring the equity interests of Cornillie Fuel & Supply, Inc. (the "Fuel Merger Agreement") and Dencor, Inc. (the "Dencor Stock Purchase Agreement"); NOW, THEREFORE, in consideration of the premises and of the mutual agreements, representations, warranties, provisions and covenants contained herein, the parties hereto, intending to be legally bound, agree as follows: ARTICLE I DEFINITIONS 1.01 DEFINITIONS. Capitalized terms used in this Agreement shall have the following meanings: "Affiliate" of, or "Affiliated" with, a specified person or entity means a person or entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the specified person or entity. "Agreement" has the meaning set forth in the first paragraph of this Agreement. "Balance Sheet Date" has the meaning set forth in Section 5.05. "Broker" has the meaning set forth in Section 13.04. "Closing" has the meaning set forth in ARTICLE IV. "Closing Date" has the meaning set forth in ARTICLE IV. "Code" has the meaning set forth in the third paragraph of this Agreement. "Company" has the meaning set forth in the first paragraph of this Agreement. "Company Common Stock" means the Company's common stock, $10.00 par value per share. "Competitive Business" means any business that competes with any business of U.S. Concrete existing on the date hereof, including, without limitation, any business that involves the production and sale of ready-mixed concrete (including truck-mixed concrete) and other cement mixtures; pre-cast concrete products and slag products. "Constituent Corporations" has the meaning set forth in the second paragraph of this Agreement. "Effective Time" has the meaning set forth in Section 2.02. "Employee benefit plan" has the meaning set forth in Section 5.16. "Employee pension benefit plan" has the meaning set forth in Section 5.16. "Employment Agreements" has the meaning set forth in Section 7.05. "Encumbrances" means all liens, encumbrances, mortgages, pledges, security interests, conditional sales agreements, charges, options, preemptive rights, rights of first refusal, reservations, restrictions or other encumbrances or defects in title. "Environmental Laws" means any and all Laws or agreements between Company and any Governmental Authority relating to (a) the protection, preservation or restoration of the environment (including, without limitation, ambient air, surface water (including water management and runoff), groundwater, drinking water supply, surface land, subsurface strata, plant and animal life or any other natural resource) or human health or safety, (b) emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes (including, without limitation, Hazardous Substances) or noxious noise or odor into the environment or (c) the exposure to, or the use, storage, recycling, treatment, manufacture, generation, transport, processing, handling, labeling, production, removal or disposal of any pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes (including, without limitation, Hazardous Substances), in each case as amended from time to time and as now or hereafter in effect. The term "Environmental Laws" includes, without limitation, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), the Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste -2- Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, the Safe Drinking Water Act, the Atomic Energy Act and the Hazardous Materials Transportation Act, and any comparable or similar Michigan Law, in each case as amended from time to time, and any other Laws now or hereafter relating to any of the foregoing. "ERISA" has the meaning set forth in Section 5.16. "ERISA Affiliate" has the meaning set forth in Section 5.16. "Expiration Date" has the meaning set forth in Section 13.06. "Financial Statements" has the meaning set forth in Section 5.05. "GAAP" means generally accepted accounting principles as currently applied by the respective party on a basis consistent with preceding years and throughout the periods involved. "GCL" means the General Corporation Law of the State of Delaware, as amended. "Governmental Authority" means any federal, state, local or foreign government, political subdivision or governmental or regulatory authority, agency, board, bureau, commission, instrumentality or court or quasi- governmental authority. "Hazardous Substances" means any and all substances presently listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any Environmental Law. The term "Hazardous Substances" includes, without limitation, any substance to which exposure is regulated by any Environmental Law including, without limitation, any toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste, industrial substance or petroleum or any derivative or by- product thereof, radon, radioactive material, asbestos or asbestos containing material, urea formaldehyde foam insulation, lead or polychlorinated biphenyls. "Incentive Plan" has the meaning set forth in Section 7.07. "Indemnified Party" has the meaning set forth in Section 8.03. "Indemnifying Party" has the meaning set forth in Section 8.03. "Interest-Bearing Debt" means the total amount of outstanding indebtedness of the Company for borrowed money (including, without limitation, bank debt, equipment debt, capital lease obligations with non-affiliates of Company, bank overdrafts and any other indebtedness for borrowed money). "Interim Balance Sheet" has the meaning set forth in Section 5.05. "Interim Financial Statements" has the meaning set forth in Section 5.05. "IRCA" has the meaning set forth in Section 5.12. -3- "JAMS" has the meaning set forth in Section 13.10. "Judge List" has the meaning set forth in Section 13.10. "Laws" means any and all federal, state, local or foreign statutes, laws, ordinances, codes, rules, regulations, orders, decrees, judgments and injunctions of any Governmental Authority, including, without limitation, those covering Tax, energy, safety, health, transportation, bribery, record keeping, zoning, discrimination, antitrust and wage and hour matters, in each case as amended and in effect from time to time. "Letter of Intent" means that certain letter of intent dated December 15, 1999 by and among U.S. Concrete, the Company and the Stockholders, and the other parties named therein, as amended or supplemented. "Listed Agreements" has the meaning set forth in Section 5.09. "Lockup Period" has the meaning set forth in Section 12.04. "Losses" means any and all liabilities, losses, claims, damages, actions, suits, proceedings, demands, assessments, adjustments, fees, costs and expenses (including specifically, but without limitation, reasonable attorneys' fees and costs and expenses of investigation), net of (i) income Tax effects with respect thereto (including, without limitation, income Tax benefits recognized in connection therewith and income Taxes upon any indemnification recovery thereof), and (ii) insurance proceeds related to such Losses actually received by the Indemnified Party; provided, however, that no Indemnified Party shall be under any obligation either to insure any particular risk or to make a claim under an existing policy. "MBCA" means the Michigan Business Corporation Act, as amended. "Material Customers" has the meaning set forth in Section 5.09. "Merger" has the meaning set forth in the second paragraph of this Agreement. "Merger Consideration" has the meaning set forth in Section 3.01. "Merger Filings" has the meaning set forth in Section 2.02. "Newco" has the meaning set forth in the first paragraph of this Agreement. "Noncompete Term" has the meaning set forth in Section 9.01(a). "1933 Act" means the Securities Act of 1933, as amended. "1934 Act" means the Securities Exchange Act of 1934, as amended. "Permits" has the meaning set forth in Section 5.10. -4- "Permitted Encumbrances" means any and all (a) Encumbrances reserved against in the Interim Balance Sheet, (b) Encumbrances for property or ad valorem Taxes not yet due and payable or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the Company's books in accordance with GAAP, and (c) obligations described in Schedule 5.08. "Plan" has the meaning set forth in Section 5.16. "Qualified Plan" has the meaning set forth in Section 5.16. "Restricted Shares" has the meaning set forth in Section 12.01. "Rule 144" means Rule 144 as promulgated under the 1933 Act. "SEC" means the Securities and Exchange Commission. "Stockholders" has the meaning set forth in the first paragraph of this Agreement. "Structures" has the meaning set forth in Section 5.08. "Surviving Corporation" has the meaning set forth in Section 2.01. "Taxes" has the meaning set forth in Section 5.18. "Territory" has the meaning set forth in Section 9.01. "Third Person" has the meaning set forth in Section 8.03. "U.S. Concrete" has the meaning set forth in the first paragraph of this Agreement. "U.S. Concrete Common Stock" means U.S. Concrete's Common Stock, par value $.001 per share. "Year-End Financial Statements has the meaning set forth in Section 5.05. 1.02 INTERPRETATION . For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in Section 1.01 and elsewhere in this Agreement include the plural as well as the singular and vice versa; (b) all accounting terms not otherwise defined herein have the meanings ascribed to them in accordance with GAAP; and (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. -5- ARTICLE II THE MERGER AND THE SURVIVING CORPORATION 2.01 THE MERGER. Upon the terms and subject to the conditions of this Agreement, at the Effective Time in accordance with the MBCA and the GCL, Newco shall be merged with and into the Company and the separate existence of Newco shall thereupon cease. The Company shall be the surviving corporation in the Merger (hereinafter sometimes referred to as the "Surviving Corporation"). 2.02 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective at such time (the "Effective Time") as (a) holders of all of the Company Common Stock approve the Merger, and (b) a certificate of merger, in form mutually acceptable to U.S. Concrete and the Company, is filed with the Secretary of State of the State of Delaware and the Michigan Department of Consumer & Industry Services, respectively (the "Merger Filings"). The Merger Filings shall be made simultaneously with or as soon as practicable after the Closing. 2.03 CERTIFICATE OF INCORPORATION, BYLAWS AND BOARD OF DIRECTORS OF SURVIVING CORPORATION. As a result of the Merger and at the Effective Time: (a) The Certificate of Incorporation of the Company in effect immediately prior to the Effective Time shall become the Certificate of Incorporation of the Surviving Corporation. After the Effective Time, the Certificate of Incorporation of the Surviving Corporation may be amended in accordance with its terms and as provided in the MBCA. (b) The Bylaws of the Company in effect immediately prior to the Effective Time shall become the Bylaws of the Surviving Corporation, and thereafter may be amended in accordance with their terms and as provided by the Certificate of Incorporation of the Surviving Corporation and the MBCA. (c) The Board of Directors of Newco as constituted immediately prior to the Effective Time shall be the Board of Directors of the Surviving Corporation. ARTICLE III CONVERSION OF SHARES 3.01 CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger, and without any action on the part of any holder of any capital stock of the Company, the issued and outstanding shares of Company Common Stock as of the Effective Time shall be cancelled and retired and converted into the right to receive, and become exchangeable for an aggregate of $158,400 in cash and 87,394 shares of U.S. Concrete Common Stock (having an aggregate value of $633,600 at $7.25 per share) at Closing (the cash and U.S. Concrete Common Stock paid in exchange for the Company Common Stock being herein collectively referred to as the "Merger Consideration"). The Merger Consideration shall be allocated between Stockholders as set forth on Exhibit A, attached hereto and made a part hereof. -6- 3.02 NEWCO SHARES. The outstanding shares of common stock, par value $.01 per share, of Newco shall be converted into the right to receive, and become exchangeable for, 1,000 shares of Common Stock of the Surviving Corporation. 3.03 DELIVERY OF MERGER CONSIDERATION. At the Closing, (a) Stockholders shall cause each shareholder of Company to furnish to U.S. Concrete the certificates representing his or her Company Common Stock, duly endorsed in blank by such shareholder or accompanied by duly executed blank stock powers, and (b) U.S. Concrete shall deliver to each Stockholder cash (by wire transfer in accordance with the wiring instructions for such Stockholder set forth on Schedule 3.01) and a copy of an irrevocable instruction letter to U.S. Concrete's transfer agent directing that certificates representing the shares of U.S. Concrete Common Stock be delivered to such Stockholder pursuant to Section 3.01. Each Stockholder agrees promptly to cure any deficiencies with respect to the endorsement of the certificates or other documents of conveyance with respect to the Company Common Stock or with respect to the stock powers accompanying such stock. U.S. Concrete will take all steps necessary to ensure that the stock certificates are promptly issued by the transfer agent in accordance with the terms of this Agreement and the irrevocable instruction letter. ARTICLE IV CLOSING 4.01 CLOSING. The consummation of the Merger and delivery of the Merger Consideration and the other transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Baker & Hostetler LLP, 3200 National City Center, 1900 E. 9th Street, Cleveland, Ohio 44114, concurrently with the execution of this Agreement or at such other time and date as U.S. Concrete, the Company and the Stockholders may mutually agree, which date is herein referred to as the "Closing Date." ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS The Stockholders, jointly and severally, represent and warrant to U.S. Concrete as follows: 5.01 DUE ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Michigan and is duly authorized and qualified to do business under all applicable Laws and to carry on its business in the places and in the manner as now conducted. The Company has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as such business is currently being conducted. Schedule 5.01 includes (a) certificate(s) of existence and good standing for the Company issued by the appropriate Governmental Authorities of the State of Michigan, (b) a list of all jurisdictions in which the Company is authorized or qualified to do business and (c) certificate(s) of qualification or authority to do business (or similar certificates) for the Company issued by the appropriate Governmental Authorities of each of the jurisdictions in which the Company is authorized or qualified to do business. The Company does not own, lease or operate any assets or properties or carry on any business in any jurisdiction that -7- Schedule 5.01 does not list. True, complete and correct copies of the Articles of Incorporation and Bylaws, each as amended, of the Company are attached hereto as Schedule 5.01, and no breach of such Articles of Incorporation or Bylaws has occurred and is continuing. True, complete and correct copies of all stock records and minute books of the Company have been provided to U.S. Concrete. 5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. (a) The Company has the requisite corporate power and authority to enter into this Agreement and the ancillary documents and agreements described herein and to effect the Merger. Each Stockholder has the full legal right, power and authority to enter into this Agreement. The execution, delivery and performance of this Agreement and the transactions contemplated hereby have been approved by the board of directors of the Company and each of the shareholders of Company. No additional corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement and the consummation by the Company of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and the Stockholders, and, assuming the due authorization, execution and delivery hereof by U.S. Concrete and Newco, constitutes a valid and binding agreement of the Company and the Stockholders, enforceable against each of them in accordance with its terms, subject to general principles of equity and bankruptcy, insolvency and other similar laws relating to the enforcement of creditor's rights. (b) The execution and delivery of this Agreement by the Company and the Stockholders do not, and the consummation by the Company and the Stockholders of the transactions contemplated hereby will not, violate or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation of any Encumbrance upon any of the properties or assets of the Company under any of the terms, conditions or provisions of, (i) the Articles of Incorporation or Bylaws of the Company, (ii) any Law applicable to the Stockholders or the Company or any of the properties or assets of the Stockholders or the Company, or (iii) except as set forth in Schedule 5.02, any agreement, note, bond, mortgage, indenture, deed of trust, license, franchise, Permit, concession, lease or other instrument, obligation or agreement of any kind to which any Stockholder or the Company is now a party or by which the Company or any of its properties or assets may be bound or affected, except for any of the foregoing which would not have a material adverse effect on the financial condition or results of operations of Company or the Surviving Corporation. (c) Except for the Merger Filings and as set forth in Schedule 5.02, no declaration, filing or registration with, or notice to, or authorization, consent or approval of, any Governmental Authority or other person or entity is necessary for the execution and delivery of this Agreement by the Company and the Stockholders or the consummation by the Company and the Stockholders of the transactions contemplated hereby. Except as set forth in Schedule 5.02, none of the contracts or agreements with Material Customers or contracts providing for purchases or services individually in excess of $10,000, or in the aggregate in excess of $25,000, or leases or Permits to which -8- the Company is a party requires notice to, or the consent or approval of, any Governmental Authority or other person or entity to the execution and delivery of this Agreement by the Company and the Stockholders or to any of the transactions contemplated hereby to remain in full force and effect following such transaction. 5.03 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of the Company consists solely of 60,000 shares of Company Common Stock, of which 9,200 shares are issued and outstanding. All of the issued and outstanding shares of the Company Common Stock are owned beneficially and of record as set forth in Schedule 5.03. All of the issued and outstanding shares of the Company Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, and were offered, issued, sold and delivered by the Company in compliance with all applicable Laws, including, without limitation, those Laws concerning the issuance of securities. None of such shares were issued in violation of the preemptive rights of any past or present stockholder of the Company. At the Effective Time, by virtue of the Merger Filing in Michigan the Merger will become effective in Michigan. Except as set forth in Schedule 5.03, (a) no shares of Company Common Stock are held by the Company as treasury shares, and (b) no subscription, option, warrant, call, convertible or exchangeable security, other conversion right or commitment of any kind exists which obligates the Company to issue any of its capital stock or the Stockholders to transfer any of the capital stock of the Company. 5.04 SUBSIDIARIES. Except as set forth in Schedule 5.04, the Company owns, of record or beneficially, or controls, directly or indirectly, no capital stock, securities convertible into or exchangeable for capital stock or any other equity interest in any corporation, association or other business entity. Except as set forth in Schedule 5.04, the Company is not, directly or indirectly, a participant in any joint venture, limited liability company, partnership or other noncorporate entity. 5.05 FINANCIAL STATEMENTS. (a) The Company has delivered to U.S. Concrete true, complete and correct copies of the following financial statements: (i) the reviewed balance sheets of the Company as of December 31, 1996, 1997 and 1998, and the related reviewed statements of operations, stockholders' equity and cash flows for the three-year period ended December 31, 1998, together with the related notes, schedules and report of the Company's independent accountants (such balance sheets, the related statements of operations, stockholders' equity and cash flows and the related notes and schedules are referred to herein as the "Year-End Financial Statements"); and (ii) the unaudited balance sheet (the "Interim Balance Sheet") of the Company as of December 31, 1999 (the "Balance Sheet Date") and the related unaudited statements of operations, for the year ended on the Balance Sheet Date (such balance sheets, the related statements of operations, and any related notes and schedules are referred to herein as the "Interim Financial Statements"). The Year-End Financial Statements and the Interim Financial Statements (collectively, the "Financial Statements") are attached as Schedule 5.05 to this Agreement; -9- (b) Except as set forth in Schedule 5.05, the Financial Statements have been prepared from the books and records of the Company in conformity with GAAP and present fairly the financial position and results of operations of the Company in all material respects as of the dates of such statements and for the periods covered thereby; provided, however, that the Interim Financial Statements are subject to normal year-end adjustments and lack footnotes and other presentation items. The books of account of the Company have been kept accurately in all material respects in the ordinary course of business, the transactions entered therein represent bona fide transactions, and the revenues, expenses, assets and liabilities of the Company have been properly recorded therein in all material respects. Within the past five fiscal years of the Company, the Company has not received any correspondence with its accountants, including without limitation, management letters, which have indicated or disclosed that there is a "material weakness" in or "reportable condition" with respect to (as those terms are defined under GAAP) the Company's financial condition. 5.06 LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule 5.06, as of the Balance Sheet Date the Company did not have, nor has it incurred since that date, any liabilities or obligations (whether absolute, accrued, contingent or otherwise) of any nature, except liabilities, obligations or contingencies (a) that are reflected or accrued or reserved against in the Financial Statements or reflected in the notes thereto, (b) that are of a nature not required to be reflected in the Financial Statements in accordance with GAAP, or (c) that were incurred after the Balance Sheet Date and were incurred in the ordinary course of business, consistent with past practices. For each such liability for which the amount is not fixed or is contested, the Company has provided a summary description of the liability together with copies of all relevant documentation relating thereto. Except as set forth in Schedule 5.06, there are no prepayment penalties, termination fees or other payments triggered by the prepayment or termination of any loan or indebtedness of the Company. 5.07 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.07 sets forth an accurate list of the accounts and notes receivable of the Company as of the Balance Sheet Date and of those generated between the Balance Sheet Date and the second business day preceding the Closing Date, including any such amounts which are not reflected in the Interim Balance Sheet. Receivables from and advances to employees, the Stockholders and any entities or persons related to or Affiliates of the Stockholders are separately identified in Schedule 5.07. Schedule 5.07 also sets forth an accurate aging of all accounts and notes receivable as of the Balance Sheet Date, showing amounts due in 30-day aging categories. The trade and other accounts receivable of the Company, including without limitation those classified as current assets on the Interim Balance Sheet, are bona fide receivables, were acquired in the ordinary course of business, are stated in accordance with GAAP and are collectible in the amounts shown on Schedule 5.07, net of reserves reflected in the Interim Financial Statements with respect to the accounts receivable as of the Balance Sheet Date, and net of reserves reflected in the books and records of the Company (consistent with the methods used in the Interim Financial Statements) with respect to receivables of the Company after the Balance Sheet Date. 5.08 PROPERTIES AND ASSETS. (a) Schedule 5.08 sets forth an accurate list of all real and personal property included in "property and equipment" on the Interim Balance Sheet and all other tangible -10- assets of the Company with a book value in excess of $5,000 (i) owned by the Company as of the Balance Sheet Date and (ii) acquired since the Balance Sheet Date. Schedule 5.08 also sets forth an accurate list of all real and personal property currently leased by the Company, and includes complete and correct copies of leases for significant equipment and for all real property leased by the Company and descriptions of all real property (as currently owned or leased by the Company) on which plants, buildings, warehouses, workshops, garages and other structures (collectively, the "Structures") and vehicles used in the operation of the business of the Company are situated and, for each of those properties, the address thereof, the type and approximate square footage of each Structure located thereon and the use thereof in the business of the Company. Schedule 5.08 indicates which properties and assets used in the operation of the businesses of the Company are currently owned by the Stockholders or Affiliates of either of the Company or the Stockholders. Except as specifically identified in Schedule 5.08, all of the tangible assets, plants, Structures, vehicles and other significant machinery and equipment owned or leased by the Company listed in Schedule 5.08 have been maintained by the Company in the ordinary course of business consistent with past practice and are in such condition and repair as is suitable for the purpose for which they presently are being used or held for use, ordinary wear and tear excepted. Except as specifically described in Schedule 5.08, all properties and fixed assets used by the Company in its business are either owned by the Company or leased under agreements identified in Schedule 5.08 and are affixed only to one or more of the real properties Schedule 5.08 lists. All leases set forth in Schedule 5.08 are in full force and effect and constitute valid and binding agreements of the Company and the other parties thereto in accordance with their respective terms, and all amounts currently due and payable thereunder have been paid. Neither the Company nor any other party to the leases set forth in Schedule 5.08 is or has been asserted to be in default, violation or breach of any such lease in any material respects, and no event has occurred and is continuing that constitutes or, with notice or the passage of time or both, would constitute such a default, violation or breach under any such lease. The Company has good, valid and marketable title to the tangible and intangible assets, personal property and real property owned and used in its business, including, without limitation, the properties identified in Schedule 5.08 as owned real property (each of which the Company owns in fee), free and clear of all Encumbrances other than Permitted Encumbrances and those set forth in Schedule 5.08. Schedule 5.08 contains true, complete and correct copies of all title reports and title insurance policies in the possession or control of the Company with respect to the real property owned or leased by the Company. Schedule 5.08 includes a summary description of all commitments of the Company involving the opening of new operations, expansion of existing operations or the acquisition of any real property or existing business, to which management of the Company has devoted any significant effort or expenditure in the two-year period prior to the date of the Agreement and which the Surviving Corporation would be obligated to continue after the Merger. (b) Except as specifically described in Schedule 5.08, all uses of the real property owned and leased by the Company conform in all material respects to all applicable Laws and do not violate any instrument of record or agreement affecting any such property. Neither the Company nor the Stockholders have received from any insurance carrier insuring or proposing to insure any of the real property owned or leased by the Company or any other person or entity any written notice or communication -11- noting any dangerous or illegal condition at any such property or any other condition at any of such properties otherwise requiring corrective action as of the Closing Date. Except as otherwise described on Schedule 5.08, all of the real property owned and leased by the Company can be used by the Surviving Corporation for their intended purposes without violating any conditional use permit, variance or private restriction. Neither the Company nor the Stockholders have received any written notice nor have any knowledge that any of the real property owned or leased by the Company is or will be affected by any special assessments, condemnation, eminent domain, off-site improvements to be constructed, change in grade of public streets or similar proceedings. There is no writ, injunction, decree, order or judgment outstanding, nor any action, claim, suit or proceeding, pending or, to the Stockholders' knowledge, threatened, relating to the ownership, lease, use, occupancy or operation of any real property owned or leased by the Company. (c) There is ingress and egress to and from each of the real properties owned and leased by the Company of record adequate for the use of such properties as currently operated by the Company. Except as disclosed in Schedule 5.08, the Company has made no off-record agreements affecting the ownership, use or occupation of any such properties. All public utilities, including if applicable, without limitation, sewers, water, electric, gas and telephone, required for the operation of each of the real properties owned and leased by the Company as presently operated are installed and operating, and all installation and connection charges therefor have been paid in full. Neither the Company nor the Stockholders have received any written notice stating that the Company will not be able to obtain adequate supplies of water to operate its business on any such properties as presently conducted, or that the provision of utilities violates any public or private easement as of the Closing Date. Neither the Company nor the Stockholders have received written notice that any part of any improvements on the real property owned or leased by the Company (including any of the structures thereon) encroaches upon any property adjacent thereto or upon any easement, nor is there any encroachment or overlap upon the real property owned or leased by the Company as of the Closing Date. Each of the real property leases listed in Schedule 5.08 grants the Company the exclusive right to use and occupy the demised premises thereunder, and the Company enjoys peaceful and undisturbed possession under its respective real property leases listed on Schedule 5.08 for the real property leased by the Company. None of the real property leases requires the consent of the applicable landlord to the Merger or the transactions contemplated by this Agreement. Except as set forth on Schedule 5.08, no person or entity other than the Company is in possession of any of the real property owned or leased by the Company. Except as set forth on Schedule 5.08, to the knowledge of the Company there are no contracts outstanding for the sale, exchange, lease or transfer of any of the real property owned or leased by the Company, or any other right of a third party to acquire any interest therein. The heating, cooling, ventilation, electrical and plumbing systems at all of the real property owned and leased by the Company is in good working condition, in all material respects, ordinary wear and tear excepted. 5.09 MATERIAL CUSTOMERS AND CONTRACTS. (a) Schedule 5.09 (i) sets forth an accurate list of all customers representing 5% or more of the Company's revenues for each of the fiscal year ended in 1999 and the -12- interim period ended on the Balance Sheet Date (the "Material Customers"), and (ii) sets forth an accurate list and briefly describes all material contracts, warranties, commitments, understandings, instruments and similar agreements and arrangements to which the Company is currently a party or by which it or any of its properties is bound (the "Listed Agreements"), including, but not limited to, (A) all customer contracts in excess of $10,000, individually, or $25,000 in the aggregate, (B) contracts with any labor organizations, (C) leases providing for annual rental payments in excess of $5,000, individually, or $10,000 in the aggregate, (D) loan agreements, (E) pledge and security agreements, (F) financing agreements, (G) indemnity or guaranty agreements or obligations, (H) bonds, debentures and indentures, (I) notes, (J) mortgages, (K) joint venture, partnership or cost-sharing agreements, (L) options to purchase real or personal property, (M) agreements relating to the purchase or sale by the Company of assets or securities for more than $5,000, individually, or $10,000 in the aggregate, (N) agreements, which, by their terms, require the consent of any party thereto to the consummation of the transactions contemplated hereby, (O) voting trust agreements or similar stockholders' agreements, (P) agreements providing for the purchase from a supplier of all or substantially all the requirements of the Company of a particular product, material or service and (Q) any other contracts, warranties, commitments, understandings, instruments and similar agreements and arrangements which involve aggregate payments in excess of $10,000 that cannot be canceled in 30 days' or less notice without penalty or premium or any continuing obligation or liability. Prior to the date hereof, the Company has made available to U.S. Concrete true, complete and correct copies of all the Listed Agreements. (b) Except as set forth in Schedule 5.09, since December 31, 1999 (i) no Material Customer has canceled or substantially reduced or, to the knowledge of the Company and the Stockholders, is threatening to cancel or substantially reduce its purchases of the Company's products or services, and (ii) neither the Company nor any other party to the Listed Agreements is or has been asserted to be in default, violation or breach in any material respect of any such Listed Agreement, and no event has occurred and is continuing that constitutes or with notice or the passage of time or both, would constitute such a default, violation or breach under any such Listed Agreement. The Listed Agreements are in full force and effect and constitute valid and binding agreements of the Company and the other parties thereto in accordance with their respective terms. (c) Except as set forth in Schedule 5.09, the Company is not a party to any contracts subject to price redetermination or renegotiation. Except to the extent set forth in Schedule 5.09, the Company is not required to provide any bonding or other financial security arrangements in any material amount in connection with any transactions with any of its customers or suppliers. (d) Except as set forth in Schedule 5.09, neither the Company, the Stockholders nor, to the Stockholders' knowledge, any officer, employee, stockholder, director, representative or agent thereof is a party to any contract, arrangement, commitment or understanding among themselves or with any of the Company's customers for the repurchase of products, sharing of fees, rebating of charges, bribes, kickbacks or other similar arrangements. -13- (e) Schedule 5.09 sets forth a summary of each outstanding bid or proposal by the Company that, if awarded to the Company, contemplates payments to the Company in excess of $50,000. (f) Except as set forth in Schedule 5.09, neither the Company nor the Stockholders have any knowledge of any plan or intention of any other party to any Listed Agreement to exercise any right to cancel or terminate that Listed Agreement, and neither the Company nor the Stockholders have any knowledge of any condition or state of facts which would justify the exercise of such a right. 5.10 PERMITS. Schedule 5.10 contains an accurate list, and copies of all licenses, franchises, permits, approvals, certificates, transportation authorities and other governmental authorizations and intangible assets held by the Company that are material to the conduct of its business, including, without limitation, permits, licenses and operating authorizations, fuel permits, franchises and certificates owned or held by the Company (collectively, the "Permits"). The Permits are valid, and the Company has not received any written notice that any Governmental Authority intends to cancel, terminate or not renew any such Permit. The Permits are all the permits, licenses, operating authorizations, franchises, approvals, certificates, transportation authorities and other governmental authorizations and intangible assets that are required by Law for the operation of the businesses of the Company as conducted at the Balance Sheet Date and the ownership of the assets and properties of the Company. The Company has conducted and is conducting its business in substantial compliance with the requirements, standards, criteria and conditions set forth in the Permits, as well as the applicable orders, approvals and variances related thereto, and is not in substantial violation of any of the foregoing. Except as specifically provided in Schedule 5.10, the transactions contemplated by this Agreement will not result in a default under, a breach or violation of, a termination of, or adversely affect the rights and benefits afforded to the Company by, any Permits. 5.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5.11, (a) the Company has complied with and is in compliance with all Environmental Laws, (b) the Company has obtained and complied with all necessary permits, licenses, authorizations and other approvals necessary to treat, transport, store, dispose of and otherwise handle Hazardous Substances and has reported, to the extent required by all Environmental Laws, all past and present sites owned or operated by the Company where Hazardous Substances have been treated, stored, disposed of or otherwise handled, (c) there have been no "releases" or threats of "releases" (as defined in any Environmental Laws) by the Company, its agents, employees or representatives at, from, in, to, under or on any property currently or previously owned or operated by the Company, (d) there is no on-site or off-site location to which the Company has transported or disposed of Hazardous Substances or arranged for the transportation or disposal of Hazardous Substances which, to the Stockholders' knowledge, is the subject of any federal, state, local or foreign enforcement action or any other investigation which could lead to any claim against the Surviving Corporation, U.S. Concrete or Newco for any clean-up cost, remedial work, damage to natural resources or personal injury, including, but not limited to, any claim under any Environmental Law and (e) the Company has no contingent liability in connection with any release or disposal of any Hazardous Substance by the Company, its agents, employees or representatives into the environment. None of the past or present sites owned or operated by the Company is currently or has during Stockholders' ownership of Company been designated as a treatment, storage -14- and/or disposal facility, nor, to the Stockholders' knowledge, has any such facility ever applied for a permit, license, authorization or other approval designating it as a treatment, storage and/or disposal facility, under any Environmental Law. The Company has provided U.S. Concrete with copies (or, if not available, accurate written summaries) of all environmental investigations, studies, audits, reviews and other analyses conducted by or on behalf, or which otherwise are in the possession, of the Company respecting any facility site or other property previously or presently owned or operated by the Company. 5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS. (a) Company has no employees. (b) Except as set forth in Schedule 5.12, (i) no action, suit, complaint, charge, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority brought by or on behalf of any prospective employee, former employee, retiree, labor organization or other representative is pending or, to the Stockholders' knowledge, threatened against the Company, (ii) no grievance is pending or threatened against the Company, (iii) the Company is not a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Authority relating to employees or employment practices. 5.13 INSURANCE. Schedule 5.13 sets forth an accurate list as of the Balance Sheet Date of (a) all insurance policies carried by the Company, copies of which are attached as Schedule 5.13, (b) all insurance loss runs or workmen's compensation claims received for the past five policy years, and (c) the following information with respect to all insurance policies currently carried by the Company and previously carried by the Company within the last five years: (i) insurer, (ii) type of policy, (iii) coverage period, and (iv) policy limits and amount of deductible or loss retention. Except as set forth in Schedule 5.13, none of such policies are "claims made" policies. The policies described in Schedule 5.13 for the current policy year provide adequate coverage against the risks customarily involved in the Company's business based on historical experiences and are currently in full force and effect. Any open claims as of the Closing Date are recoverable under such policies, except to the extent of any applicable deductible or loss retention as set forth on Schedule 5.13. 5.14 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 5.14 sets forth an accurate schedule of all officers and directors of the Company listing the rate of compensation (and the portions thereof attributable to salary, bonus, benefits and other compensation, respectively) of each of such persons as of (a) the Balance Sheet Date and (b) the date hereof. Neither the Company nor the Stockholders have any knowledge that any of such individuals has any present intention of terminating his or her association with the Company. Company has no employment or consulting agreements with any person or entity. Except as set forth in Schedule 5.14, the Company is not a party to any agreement, nor has it established any plan, policy, practice or program, requiring it to make a payment or provide any other form of compensation or benefit or vesting rights to any officer, director or stockholder of the Company or other person performing services for the Company which would not be payable or provided in the absence of this Agreement or the consummation of the transactions contemplated hereby, including any parachute payment under Section 280G of the Code. -15- 5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS; EMPLOYEE POLICIES. Schedule 5.15 sets forth all agreements containing covenants not to compete or solicit employees or to maintain the confidentiality of information to which the Company or any of the Stockholders is bound or under which the Company or any of the Stockholders has any rights or obligations. Schedule 5.15 lists all employee manuals and all material policies, procedures and work-related rules that apply to any employee, director or officer of, or any other individual performing consulting or other independent contractor services for, the Company. The Company has provided U.S. Concrete with a copy of all such written policies and procedures and a written description of all such unwritten policies and procedures. 5.16 EMPLOYEE BENEFIT PLANS. (a) Schedule 5.16 sets forth an accurate schedule of each "employee benefit plan," as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") (other than a "multiemployer plan", as defined in Section 3(37) of ERISA), and all deferred compensation or retirement funding arrangements, whether formal or informal and whether legally binding or not, under which the Company or an ERISA Affiliate has any current or future obligation or liability or under which any present or former employee of the Company or an ERISA Affiliate, or such present or former employee's dependents or beneficiaries, has any current or future right to benefits (each such plan and arrangement referred to hereinafter as a "Plan"). Company has provided to U.S. Concrete true and complete copies of such Plans, arrangements and any trusts related thereto, and classifications of employees covered thereby as of the Balance Sheet Date. Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate sponsors, maintains or contributes currently, or sponsored, maintained or contributed at any time during the preceding five years, to any plan, program, fund or arrangement that constitutes an employee pension benefit plan. Except as set forth in Schedule 5.16, each Plan may be terminated by the Company, or if applicable, by an ERISA Affiliate at any time without any liability, cost or expense, other than costs and expenses that are customary in connection with the termination of a Plan. For purposes of this Agreement, the term "employee pension benefit plan" shall have the meaning given that term in Section 3(2) of ERISA (other than a multiemployer plan), and the term "ERISA Affiliate" means any corporation or trade or business under common control with the Company as determined under Section 414(b), (c), (m) or (o) of the Code. (b) Each Plan listed in Schedule 5.16 is in compliance in all material respects with the applicable provisions of ERISA, the Code and any other applicable Law. Except as set forth in Schedule 5.16, with respect to each Plan of the Company and each ERISA Affiliate, all reports and other documents required under ERISA or other applicable Law to be filed with any Governmental Authority, including without limitation all Forms 5500, or required to be distributed to participants or beneficiaries, have been duly and timely filed or distributed. True and complete copies of all such reports and other documents with respect to the past three years for each Plan have been provided to U.S. Concrete. No "accumulated funding deficiency" (as defined in Section 412(a) of the Code) with respect to any Plan has been incurred (without regard to any waiver granted under Section 412 of the Code), nor has any funding waiver from the Internal Revenue Service been received or requested. Except as set forth in Schedule 5.16, each Plan that -16- is intended to be "qualified" within the meaning of Section 401(a) of the Code (a "Qualified Plan") is, and has been during the period from its adoption to the date hereof, so qualified, both as to form and operation and all necessary approvals of Governmental Authorities, including a favorable determination as to the qualification under the Code of each of such Qualified Plans and each amendment thereto, have been timely obtained. Except as set forth in Schedule 5.16, all accrued contribution obligations of the Company with respect to any Plan have either been fulfilled in their entirety or are fully reflected in the Financial Statements. (c) No Plan has incurred or will incur, and neither the Company nor any ERISA Affiliate has incurred or will incur, with respect to any Plan, any liability for excise tax or penalty due to the Internal Revenue Service. There have been no terminations, partial terminations or discontinuances of contributions to any Qualified Plan during the preceding five years without notice to and approval by the Internal Revenue Service and payment of all obligations and liabilities attributable to such Qualified Plan. (d) Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate has made any promises of retirement or other benefits to employees, except as set forth in the Plans, and neither the Company nor any ERISA Affiliate maintains or has established any Plan that is a "welfare benefit plan" within the meaning of Section 3(1) of ERISA that provides for continuing benefits or coverage for any participant or any beneficiary of a participant after such participant's termination of employment, except as may be required by Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code and similar state Law provisions, and at the expense of the participant or the beneficiary of the participant, or retiree medical liabilities. Neither the Company nor any ERISA Affiliate maintains, has established or has ever participated in a multiple employer welfare benefit arrangement as described in Section 3(40)(A) of ERISA. Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate has any current or future obligation or liability with respect to a Plan pursuant to the provisions of a collective bargaining agreement. (e) Neither the Company nor any ERISA Affiliate has incurred, nor will it incur as a result of past activities, any material liability to the Pension Benefit Guaranty Corporation in connection with any Plan. Except as set forth on Schedule 5.16, the assets of each Plan that are subject to Title IV of ERISA are sufficient to provide the benefits under such Plan, the payment of which the Pension Benefit Guaranty Corporation would guarantee if such Plan were terminated, and such assets are also sufficient to provide all other "benefits liabilities" (as defined in ERISA Section 4001(a)(16)) due under such Plan upon termination. (f) No "reportable event" (as defined in Section 4043 of ERISA) has occurred and is continuing with respect to any Plan. There are no pending, or to the Company's and the Stockholders' knowledge, threatened claims, lawsuits or actions (other than routine claims for benefits in the ordinary course) asserted or instituted against, and neither the Company nor any ERISA Affiliate has knowledge of any threatened litigation or claims against, the assets of any Plan or its related trust or against any fiduciary of a Plan with respect to the operation of such Plan. To the Company's and the Stockholders' -17- knowledge, there are no investigations or audits of any Plan by any Governmental Authority currently pending and there have been no such investigations or audits that have been concluded that resulted in any liability to the Company or any ERISA Affiliate that has not been fully discharged. Neither the Company nor any ERISA Affiliate has participated in any voluntary compliance or closing agreement programs established with respect to the form or operation of a Plan. (g) Neither the Company nor any ERISA Affiliate has engaged in any prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, in connection with any Plan for which exemption was not available. No person or entity that was engaged by the Company or an ERISA Affiliate as an independent contractor within the last five years reasonably can or will be characterized or deemed to be an employee of the Company or an ERISA Affiliate under applicable Laws for any purpose whatsoever, including, without limitation, for purposes of federal, state and local income taxation, workers' compensation and unemployment insurance and Plan eligibility. (h) Schedule 5.16 also sets forth an accurate schedule of each multiemployer plan to which the Company or any ERISA Affiliate is, or ever has been, a participant in or obligated to make any payment. With respect to each such multiemployer plan: (i) none of the foregoing representations and warranties of this Section 5.16 shall apply; and (ii) except as set forth on Schedule 5.16, all contributions required to be made by the Company or any ERISA Affiliate to such multiemployer plan have been made or are accrued and fully reflected in the Financial Statements. 5.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in Schedule 5.17, there are no claims, actions, suits or proceedings, pending or, to the knowledge of the Company and the Stockholders, threatened against or affecting the Company, at law or in equity, or before or by any Governmental Authority having jurisdiction over the Company. No written notice of any claim, action, suit or proceeding, whether pending or threatened, has been received by the Company and, to the Stockholders' and the Company's knowledge, there are no facts or circumstances existing which, with delivery of notice or passage of time or both would constitute such a claim, action, suit or proceeding. Except to the extent set forth in Schedule 5.17, the Company has conducted and is conducting its business in substantial compliance with all Laws applicable to the Company, its assets or the operation of its business. Also listed on Schedule 5.17 are all other instances where the Company is a plaintiff or complaining or moving party, under any of the above types of proceedings. 5.18 TAXES. For purposes of this Agreement, the term "Taxes" shall mean all taxes, charges, fees, levies or other assessments including, without limitation, income, gross receipts, excise, property, sales, withholding, social security, unemployment, occupation, use, service, service use, license, payroll, franchise, transfer and recording taxes, fees and charges, imposed by the United States or any state, local or foreign government or subdivision or agency thereof, whether computed on a separate, consolidated, unitary, combined or any other basis; and such term shall include any interest, fines, penalties or additional amounts attributable to or imposed with respect to any such taxes, charges, fees, levies or other assessments. The Company has timely filed all requisite federal, state, local and other tax returns for all fiscal periods ended on or before the Closing, and has duly paid in full or made adequate provision in the year-end -18- Financial Statements for the payment of all Taxes for all periods ending at or prior to the Closing Date. The Company has duly withheld and paid or remitted all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other person or entity that required withholding under any applicable Law, including, without limitation, any amounts required to be withheld or collected with respect to social security, unemployment compensation, sales or use taxes or workers' compensation. There have not been during the past three years nor are there currently in progress any examinations, audits, proceedings, notices, waivers, asserted deficiencies or disputed valuations or other claims against the Company relating to Taxes for any period or periods prior to and including the Balance Sheet Date and no notice of any claim for Taxes has been received. The Company has not granted or been requested to grant any extension of the limitation period applicable to any claim for Taxes or assessments with respect to Taxes. The Company is not a party to any Tax allocation or sharing agreement and is not otherwise liable or obligated to indemnify any person or entity with respect to any Taxes. True and complete copies of (a) any tax examinations or audits, (b) extensions of statutory limitations and (c) the federal, state and local Tax returns of the Company for the last three fiscal years have been previously provided to U.S. Concrete. There are no requests for ruling in respect of any Tax pending between the Company and any Taxing authority. The Company is taxed under the provisions of Subchapter C of the Code. The Company currently utilizes the accrual method of accounting for income tax purposes. Such method of accounting has not changed in the past five years. 5.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth in Schedule 5.19, the Company has conducted its operations in the ordinary course and there has not been: (a) any material adverse change in the business, operations, properties, condition (financial or other), assets, liabilities (contingent or otherwise), or results of operations of the Company; (b) any damage, destruction or loss (whether or not covered by insurance) materially adversely affecting the assets, properties or business of the Company; (c) any change in the authorized capital stock of the Company or in its outstanding securities or any change in the Stockholders' ownership interests in the Company or any grant of any options, warrants, calls, conversion rights or commitments; (d) any declaration or payment of any dividend or distribution in respect of the capital stock or any direct or indirect redemption, purchase or other acquisition of any of the capital stock of the Company; (e) any increase in the compensation payable or to become payable by the Company to the Stockholders or any of its officers, directors, employees, consultants or agents, except for ordinary and customary bonuses and salary increases for employees in accordance with past practice, which bonuses and salary increases are set forth in Schedule 5.19; (f) any work interruptions, labor grievances or claims filed; -19- (g) except for the Merger, any sale or transfer, or any agreement to sell or transfer, any material assets, properties or rights of the Company to any person or entity, including, without limitation, the Stockholders and their Affiliates; (h) any cancellation, or agreement to cancel, any indebtedness or other obligation owing to the Company; (i) any increase in the indebtedness of the Company, other than accounts payable incurred in the ordinary course of business, consistent with past practices, or incurred in connection with the transactions contemplated by this Agreement; (j) any plan, agreement or arrangement granting any preferential rights to purchase or acquire any interest in any of the assets, properties or rights of the Company or requiring consent of any party to the transfer and assignment of any such assets, properties or rights; (k) any purchase or acquisition of, or agreement, plan or arrangement to purchase or acquire, any assets, properties or rights outside of the ordinary course of the Company's business; (l) any waiver of any material rights or claims of the Company; or (m) any other material transaction by the Company outside the ordinary course of business. 5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY. Schedule 5.20 sets forth an accurate schedule, as of the date of this Agreement, of (a) the name of each financial institution or brokerage firm in which the Company has accounts or safe deposit boxes; (b) the names in which the accounts or boxes are held; (c) the type of account and the cash, cash equivalents and securities held in such account as of the second business day prior to the Closing, none of which assets have been withdrawn from such accounts since such date except for bona fide business purposes in the ordinary course of the business of the Company; and (d) the name of each person authorized to draw thereon or have access thereto. Schedule 5.20 also sets forth the name of each person, corporation, firm or other entity holding a general or special power of attorney from the Company and a description of the terms thereof. 5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor the Stockholders nor any of their respective Affiliates has given or offered to give anything of value to any governmental official, political party or candidate for government office that was illegal to give or offer to give nor has it otherwise taken any action which would constitute a violation of the Foreign Corrupt Practices Act of 1977, as amended, or any similar Law. 5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as set forth in Schedule 5.22, neither the Stockholders nor any other Affiliate of the Company owns, directly or indirectly, any interest in, or is an officer, director, employee or consultant of or otherwise receives remuneration from, any Competitive Business, lessor, lessee, customer or supplier of the Company. Except as set forth in Schedule 5.22, no officer or director of the Company nor the -20- Stockholders have, nor had any interest in any tangible or intangible assets or real or personal property used in or pertaining to the business of the Company. 5.23 INTANGIBLE PROPERTY. Schedule 5.23 sets forth an accurate list of all patents, patent applications, trademarks, service marks, technology, licenses, trade names, copyrights and other intellectual property or proprietary property rights owned or used by the Company. The Company owns or possesses, and the assets of the Company include, sufficient legal rights to use all of such items without conflict with or infringement of the rights of others. 5.24 CAPITAL EXPENDITURES. Schedule 5.24 sets forth the total amount of capital expenditures currently budgeted to be incurred by the company in excess of $25,000 in the aggregate during the balance of the Company's current fiscal year. 5.25 INVENTORIES. Except as Schedule 5.25 sets forth: (i) all inventories, net of reserves determined in accordance with GAAP, of the Company which are classified as such on the Interim Balance Sheet are merchantable and salable or usable in the ordinary course of business of the Company; and (ii) the Company does not depend on any single vendor for its inventories the loss of which could have a material adverse effect on the business or financial condition of the Company or during the past five years has sustained a difficulty material to the Company in obtaining its inventories. 5.26 TAX REORGANIZATION REPRESENTATION. The Surviving Corporation will acquire substantially all of the properties of the Company within the meaning of Section 368(a)(2)(D) of the Code. 5.27 ABSENCE OF INTEREST-BEARING DEBT. As of the Closing Date, Company shall have no Interest-Bearing Debt and no Interest-Bearing Debt shall be assumed by the Surviving Corporation. 5.28 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary contained in this Agreement, it is the express understanding of the Stockholders and the Company that U.S. Concrete and Newco are not making any representation or warranty whatsoever, express or implied, other than those representations and warranties of U.S. Concrete and Newco expressly set forth in this Agreement. 5.29 DISCLOSURE. The Stockholders and the Company have fully provided U.S. Concrete or its representatives with all the information that U.S. Concrete has requested in analyzing whether to consummate the Merger and the other transactions contemplated by this Agreement. None of the information so provided nor any representation or warranty of the Stockholders to U.S. Concrete or Newco in this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein, in light of the circumstances under which they were made, not misleading. -21- ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO U.S. Concrete and Newco jointly and severally represent and warrant to the Stockholders as follows: 6.01 ORGANIZATION. Each of U.S. Concrete and Newco is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, and is duly authorized and qualified under all applicable Laws to carry on its business in the places and in the manner now conducted. Each of U.S. Concrete and Newco has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as such business is currently being conducted. 6.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. (a) Each of U.S. Concrete and Newco has the full legal right, power and authority to enter into this Agreement and the ancillary documents and agreements described herein and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement has been approved by the boards of directors of U.S. Concrete and Newco and by U.S. Concrete, as the sole stockholder of Newco. No additional corporate or shareholder proceedings on the part of U.S. Concrete or Newco are necessary to authorize the execution and delivery of this Agreement and the consummation by U.S. Concrete and Newco of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by U.S. Concrete and Newco, and, assuming the due authorization, execution and delivery by the Company and the Stockholders, constitutes valid and binding agreements of U.S. Concrete and Newco, enforceable against U.S. Concrete and Newco in accordance with its terms. (b) The execution and delivery of this Agreement by U.S. Concrete and Newco do not, and the consummation by U.S. Concrete and Newco of the transactions contemplated hereby will not, violate or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under any of the terms, conditions or provisions of (i) the Certificate of Incorporation or By-Laws of U.S. Concrete or Newco, (ii) any Law applicable to either U.S. Concrete or Newco or any of its properties or assets or (iii) any material agreement, note, bond, mortgage, indenture, deed of trust, license, franchise, permit, concession, contract, lease or other instrument, obligation or agreement of any kind to which U.S. Concrete or Newco is now a party or by which either U.S. Concrete or Newco or any of its properties or assets may be bound or affected. (c) Except for the Merger Filings and such filings as may be required under federal or state securities Laws, no declaration, filing or registration with, or notice to, or authorization, consent or approval of, any Governmental Authority or other person or entity is necessary for the execution and delivery of this Agreement by U.S. Concrete and Newco or the consummation by U.S. Concrete and Newco of the transactions contemplated hereby. -22- 6.03 U.S. CONCRETE COMMON STOCK. The shares of U.S. Concrete Common Stock to be issued and delivered to the Stockholders pursuant to the Merger are duly authorized and, when issued in accordance with the terms of the irrevocable instruction letter contemplated by Section 3.03, will be validly issued, fully paid and nonassessable. The issuance of U.S. Concrete Common Stock pursuant to the Merger will transfer to the Stockholders valid title to such shares of U.S. Concrete Common Stock, free and clear of all Encumbrances, except for any Encumbrances created by the Stockholders. 6.04 TAX REORGANIZATION REPRESENTATIONS. (a) Prior to the Merger, U.S. Concrete will be in control of Newco within the meaning of Section 368(c) of the Code. (b) U.S. Concrete has no plan or intention to cause the Surviving Corporation to issue additional shares of its stock that would result in U.S. Concrete losing control of the Surviving Corporation within the meaning of Section 368(c) of the Code. (c) U.S. Concrete has no plan or intention to reacquire any of its stock issued in the Merger. (d) U.S. Concrete has no plan or intention to liquidate the Surviving Corporation; to merge the Surviving Corporation with or into another corporation; to sell or otherwise dispose of the stock of the Surviving Corporation except for transfers of stock to another corporation controlled by U.S. Concrete; or to cause the Surviving Corporation to sell or otherwise dispose of any of its assets, except for dispositions made in the ordinary course of business or transfers of assets to a corporation controlled by U.S. Concrete. (e) Following the Closing, U.S. Concrete's intention is that the Surviving Corporation will continue the historic business of the Company or use a significant portion of the historic business assets of the Company in a business, all as required to satisfy the "continuity of business enterprise" requirement under Section 368 of the Code. (f) U.S. Concrete does not own, nor has it owned during the past five years, any shares of the stock of the Company. (g) Each of U.S. Concrete and Newco is undertaking the Merger for a bona fide business purpose and not merely for the avoidance of federal income tax. (h) Neither U.S. Concrete nor Newco is an investment company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code. (i) As of the Closing Date, the fair market value of the assets of Newco will exceed the sum of Newco's liabilities plus the amount of other liabilities, if any, to which Newco's assets are subject. -23- 6.05 SEC FILINGS; DISCLOSURE. U.S. Concrete has filed with the SEC all material forms, statements, reports and documents required to be filed by it prior to the date hereof under each of the 1933 Act and the 1934 Act and the respective rules and regulations thereunder, (a) all of which, as amended, if applicable, complied when filed in all material respects with all applicable requirements of the appropriate Act and the rules and regulations thereunder, and (b) none of which, as amended, if applicable, contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made and at the time they were made, not misleading. Since the date of the information provided in the most recent filing, there has been no material adverse change in the financial condition or results of operations of U.S. Concrete, taken as a whole. 6.06 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary contained in this Agreement, it is the express understanding of U.S. Concrete and Newco that the Stockholders are not making any representation or warranty whatsoever, express or implied, other than those representations and warranties of the Stockholders expressly set forth in this Agreement. 6.07 DISCLOSURE. U.S. Concrete has fully provided the Stockholders or their representatives with all the information that the Stockholders have requested in analyzing whether to consummate the Merger. None of the information so provided nor any representation or warranty of U.S. Concrete contained in this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. ARTICLE VII CERTAIN COVENANTS 7.01 RELEASE FROM GUARANTEES. U.S. Concrete shall use its commercially reasonable efforts to have the Stockholders released from the personal guarantees of the Company's indebtedness identified in Schedule 7.01 on the Closing Date and will continue such efforts after the Closing if not released prior thereto. U.S. Concrete hereby agrees to indemnify and defend the Stockholders and hold each Stockholder harmless for any amounts that such Stockholder is required to pay in connection with the enforcement of any obligations under such personal guarantees after the Closing, including without limitation any reasonable attorneys' fees and expenses incurred in connection therewith. 7.02 FUTURE COOPERATION; TAX MATTERS. The Stockholders and U.S. Concrete shall each deliver or cause to be delivered to the other following the Closing such additional instruments as the other may reasonably request for the purpose of fully carrying out this Agreement. The Stockholders shall be responsible for the payment of all Taxes attributable to all periods prior to and including the Closing Date, including without limitation the period from the beginning of the Company's current Tax year through the Closing Date. The Stockholders shall be responsible for the preparation of all Tax returns covering the period from the beginning of the Company's current Tax year through the Closing Date, and shall be responsible for all costs and expenses incurred in connection with the preparation of such Tax returns. The Surviving Corporation will cooperate with the Stockholders in their preparation of all Tax returns covering -24- the period from the beginning of the Company's current Tax year through the Closing. In addition, U.S. Concrete will provide the Stockholders with access to such of its books and records as may be reasonably requested by the Stockholders in connection with federal, state and local tax matters relating to periods prior to the Closing. The Stockholders will cooperate and use their commercially reasonable efforts to encourage the present officers, directors and employees of the Company to cooperate with U.S. Concrete and the Surviving Corporation at and after the Closing in furnishing information, evidence, testimony and other assistance in connection with any actions, proceedings, arrangements or disputes of any nature with respect to matters pertaining to all periods prior to the Closing. The party requesting cooperation, information or actions under this Section 7.02 shall reimburse the other party for all reasonable out-of-pocket costs and expenses paid or incurred in connection therewith, which costs and expenses shall not, however, include per diem charges for employees or allocations of overhead charges. 7.03 EXPENSES. U.S. Concrete will pay the fees, expenses and disbursements of U.S. Concrete and its agents, representatives, accountants and counsel incurred in connection with the execution, delivery and performance of this Agreement and any amendments hereto. The Company (as owned by U.S. Concrete after Closing) will be responsible for the fees and expenses of Arthur Andersen LLP's audit or audit related procedures in connection with the transactions contemplated hereby. The Stockholders will pay their fees, expenses and disbursements and those of their and the Company's agents, representatives, financial advisors, accountants and counsel incurred in connection with the execution, delivery and performance of this Agreement and any amendments hereto and the consummation of the transactions contemplated hereby, including, without limitation, accounting fees and related expenses attributable to the final Tax returns of the Company and the Stockholders for periods through the Closing. The Stockholders will also pay any costs associated with business brokers or other advisors engaged by the Stockholders or the Company. 7.04 LEGAL OPINION. At the Closing, the Company and the Stockholders shall cause their legal counsel, Dykema Gossett PLLC, to deliver to U.S. Concrete a legal opinion in form and substance acceptable to U.S. Concrete. 7.05 EMPLOYMENT AGREEMENTS. Concurrently with the execution of this Agreement, the Surviving Corporation pursuant to the Fuel Merger Agreement shall enter into a mutually acceptable Employment Agreements with each of Cornillie and Deneweth (collectively, the "Employment Agreements"). 7.06 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the execution of this Agreement, (a) the Stockholders shall repay to the Company all amounts outstanding as advances to or receivables from the Stockholders, each of which advances or receivables is specifically reflected in Schedule 5.07, and (b) the Company shall repay all amounts outstanding under loans to the Company from the Stockholders, each of which loans to the Company is specifically reflected in Schedule 5.06. 7.07 STOCK OPTIONS. U.S. Concrete shall grant nonqualified options to purchase an aggregate of zero shares of U.S. Concrete Common Stock as of the Closing Date under U.S. Concrete's 1999 Incentive Plan (the "Incentive Plan") to certain key employees of the Company (other than the Stockholders), as set forth on Schedule 7.07 in the amounts listed -25- thereon. Schedule 7.07 shall also include the social security number and home address of each individual listed thereon. Such options shall vest in equal annual increments for four years, commencing on the first anniversary of the Closing Date. 7.08 PRE-CLOSING DISTRIBUTIONS. Prior to the Closing, the Company may have distributed to the Stockholders the cash and other assets set forth on Schedule 7.08. Any such distributions shall have been authorized by the Board of Directors of the Company prior to the Closing, and the Company and the Stockholders shall have used the respective best efforts to complete such distributions prior to the Closing. Notwithstanding the foregoing, if any such authorized distributions have not been completed prior to the Closing the Surviving Corporation shall use reasonable efforts to complete such authorized distributions after the Closing. The Stockholders' sole recourse against the Surviving Corporation and U.S. Concrete with respect to this Section 7.08 shall be to the assets to be distributed. 7.09 WORKING CAPITAL ADJUSTMENT. (a) As soon as practicable after the Closing Date, U.S. Concrete shall cause to be prepared and delivered to the Stockholders a consolidated balance sheet of Cornillie Fuel & Supply Inc., Dencor, Inc. and the Company (collectively, the "Consolidated Companies") as of the Closing Date (the "Closing Date Balance Sheet Date"), which has been prepared from the books and records of the Consolidated Companies in conformity with GAAP (the "Final Balance Sheet"), and a working capital adjustment schedule (the "Adjustment Schedule"). The Adjustment Schedule will set forth the computation of the Adjusted Working Capital Amount. As used in this Section 7.09, capitalized terms not otherwise defined in this Agreement shall have the following meanings: "Adjusted Current Assets" means the amount of current assets of the Consolidated Companies as set forth on the Closing Date Balance Sheet; "Adjusted Current Liabilities" means the amount of current liabilities of the Consolidated Companies as set forth on the Closing Date Balance Sheet less the current portion of Interest-Bearing Debt (if any) as set forth on the Closing Date Balance Sheet; and "Adjusted Working Capital Amount" means the amount computed by subtracting Adjusted Current Liabilities from Adjusted Current Assets as finally determined in accordance with Section 7.09(c). Adjusted Working Capital will exclude amounts relating to the 1999 Ross Portable Plant and the upgrade of the aggregate section of the Detroit batch plant (bins). (b) If the Adjusted Working Capital Amount is less than $250,000, then the Stockholders shall, no later than 15 days after delivery of the Adjustment Schedule as finally determined in accordance with Section 7.09(c) by U.S. Concrete, pay to the Surviving Corporation the amount by which $250,000 exceeds the Adjusted Working Capital Amount (the "Adjusted Working Capital Shortfall"). If the Adjusted Working Capital Amount is greater than $250,000, then the Surviving Corporation shall, no later than 15 days after delivery of the Adjustment Schedule as finally determined in accordance with Section 7.09(c), pay to the Stockholders, on a pro rata basis in -26- proportion to their percentage ownership of the Company Common Stock outstanding immediately prior to the Closing, the amount by which the Adjusted Working Capital Amount exceeds $250,000 (the "Adjusted Working Capital Excess"). (c) The Closing Date Balance Sheet and Adjustment Schedule will be final and binding on the parties hereto unless, within 30 days following the delivery of the Adjustment Schedule by U.S. Concrete, the Stockholders notify U.S. Concrete in writing that the Stockholders disagree with all or any portion of the Closing Date Balance Sheet and/or the Adjustment Schedule. If the Stockholders and U.S. Concrete cannot mutually resolve any such disagreement within 30 days after the receipt by U.S. Concrete of the Stockholders' notice of disagreement, then the Stockholders and U.S. Concrete shall submit the dispute to a mutually agreeable certified public accounting firm (the "Accountant") within 20 days after the end of such 30- day period. If the Stockholders and U.S. Concrete are unable to agree upon such an accounting firm within such 20-day period, then the Stockholders and U.S. Concrete shall select a "Big Five" accounting firm by lot (after excluding any of their respective regular Big Five accounting firms), which accounting firm shall act as the Accountant. The Stockholders and U.S. Concrete shall request that the Accountant audit the Closing Date Balance Sheet and provide a computation of the Adjusted Working Capital Amount within 30 days thereafter, and this computation will be final and binding upon the parties hereto and used to compute the Adjusted Working Capital Shortfall or Adjusted Working Capital Excess, as the case may be, the payment of any of which shall be made within five days of delivery by U.S. Concrete of the audited Closing Date Balance Sheet. In the event the Stockholders and U.S. Concrete submit any unresolved objections to an Accountant for resolution as provided in this Section 7.09, the Stockholders and U.S. Concrete will each pay one-half of the fees and expenses of the Accountant. 7.10 OTHER DOCUMENTS. At the Closing, U.S. Concrete shall receive the following additional certificates, instruments and documents: (a) Stock certificates representing all Company Common Stock duly endorsed in blank by the Stockholders, or accompanied by stock powers duly executed in blank by the Stockholders, and otherwise in a form acceptable to U.S. Concrete. (b) Written resignations of all directors and all officers of the Company, such resignations to be effective concurrently with the Closing on the Closing Date. (c) Releases in form and substance satisfactory to U.S. Concrete executed by the Stockholders releasing the Company from any liability or obligation to the Stockholders. (d) All of the Company's books and records, including, without limitation, minute books, corporate charters, by-laws, stock records, bank account records, computer records and all contracts with third parties; provided, however, that all of the foregoing, other than the minute books, corporate charters, by-laws and stock records, shall remain at the business location of Company where they are currently maintained. -27- 7.11 BENEFIT PLANS. (a) U.S. Concrete shall not , and shall cause the Surviving Corporation not to at any time prior to 60 days after the Closing Date, effectuate a "plant closing" or "mass layoff" as those terms are defined in the Worker Adjustment and Restraining Notification Act of 1988 ("WARN") affecting in whole or in part any facility, site of employment, operating unit or employee of Company or any Company Subsidiary without complying fully with the requirements of WARN. (b) All health and welfare benefit plans of U.S. Concrete or the Surviving Corporation in which the employees of Company or any Company Subsidiary participate after the Effective Time shall (i) recognize expenses and claims that were incurred by such employees in the year in which the Effective Time occurs for purposes of computing deductible amounts and co-payments under such health and welfare plans as of the Effective Time, (ii) provide coverage for pre-existing health conditions to the extent covered under the applicable plans or programs as of the Effective Time, and (iii) credit any deductibles paid or co-payments made by employees of Company or any Company Subsidiary prior to the Effective Time for purposes of paying deductibles or making co-payments pursuant to the health and welfare benefit plans of U.S. Concrete or the Surviving Corporation. In addition, employees of the Surviving Corporation and its subsidiaries shall receive credit for their prior service with Company for eligibility and vesting purposes and for vacation accrual purposes under all health and welfare, pension, 401(k) and other benefit programs. ARTICLE VIII INDEMNIFICATION The Stockholders, U.S. Concrete and Newco each make the following covenants: 8.01 General Indemnification by the Stockholders. Subject to Section 8.05 and Section 8.06, the Stockholders covenant and agree that they will jointly and severally (without any right of indemnification or contribution from the Company) indemnify, defend, protect and hold harmless U.S. Concrete, Newco and the Surviving Corporation, and their respective officers, directors, employees, stockholders, agents, representatives and Affiliates, at all times from and after the date of this Agreement from and against all Losses incurred by any of such indemnified persons and entities as a result of or arising from (a) until the Expiration Date any breach of the representations and warranties of the Stockholders set forth herein or in the Schedules attached hereto, (b) any breach or nonfulfillment of any covenant or agreement on the part of the Stockholders under this Agreement, (c) all income Taxes payable by the Company for all periods prior to and including the Closing Date, (d) all transfer Taxes arising from the transactions contemplated by Section 7.08 of this Agreement, (e) any litigation listed on Schedule 5.17, or (f) any claim by David Klepac for fraud, misrepresentation, failure to disclose information or any other basis whatsoever relating to his redemption of shares of Company by Company on February 7, 2000. -28- 8.02 INDEMNIFICATION BY U.S. CONCRETE. Subject to Section 8.06, U.S. Concrete covenants and agrees that it will indemnify, defend, protect and hold harmless the Stockholders and their respective agents, representatives, Affiliates, beneficiaries and heirs and employees at all times from and after the date of this Agreement from and against all Losses incurred by any of such indemnified persons as a result of or arising from (a) until the Expiration Date, any breach of the representations and warranties of U.S. Concrete or Newco set forth herein or in the Schedules attached hereto or certificates delivered in connection herewith or (b) any breach or nonfulfillment of any covenant or agreement on the part of U.S. Concrete or Newco under this Agreement. 8.03 THIRD PERSON CLAIMS. Promptly after any party entitled to indemnification under Sections 8.01 and 8.02 hereof (hereinafter the "Indemnified Party") has received notice of or has knowledge of any claim by a person or entity not a party to this Agreement ("Third Person"), or the commencement of any action or proceeding by a Third Person, which the Indemnified Party believes in good faith is an indemnifiable claim under this Agreement, the Indemnified Party shall give to the party obligated to provide indemnification pursuant to Sections 8.01 or 8.02 hereof (hereinafter the "Indemnifying Party") written notice of such claim or the commencement of such action or proceeding. Such notice shall state the nature and the basis of such claim and a reasonable estimate of the amount thereof. The Indemnifying Party shall have the right to defend and settle, at its own expense and by its own counsel reasonably acceptable to the Indemnified Party, any such matter so long as the Indemnifying Party pursues the same diligently and in good faith. If the Indemnifying Party undertakes to defend or settle, it shall promptly notify the Indemnified Party of its intention to do so, and the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in all commercially reasonable respects in the defense thereof and in any settlement thereof. Such cooperation shall include, but shall not be limited to, furnishing the Indemnifying Party with any books, records and other information reasonably requested by the Indemnifying Party and in the Indemnified Party's possession or control. After the Indemnifying Party has notified the Indemnified Party of its intention to undertake to defend or settle any such asserted liability, and for so long as the Indemnifying Party diligently pursues such defense, the Indemnifying Party shall not be liable for any additional legal expenses incurred by the Indemnified Party in connection with any defense or settlement of such asserted liability; provided, however, that the Indemnified Party shall be entitled, at its expense, to participate in the defense of such asserted liability and the negotiations of the settlement thereof. The Indemnifying Party shall not settle any such Third Person claim without the consent of the Indemnified Party (which consent shall not be unreasonably withheld), unless the settlement thereof imposes no liability or obligation on, and includes a complete release from liability of, the Indemnified Party. If the Indemnifying Party desires to accept a final and complete settlement of any such Third Person claim and the Indemnified Party refuses to consent to such settlement, then the Indemnifying Party's liability under this Section with respect to such Third Person claim shall be limited to the amount so offered in settlement by said Third Person; provided, however, that notwithstanding the foregoing, the Indemnified Party shall be entitled to refuse to consent to any such proposed settlement and the Indemnifying Party's liability hereunder shall not be limited by the amount of the proposed settlement if such settlement imposes any liability or obligation on, or does not provide for the complete release of, the Indemnified Party. If, upon receiving notice, the Indemnifying Party does not timely undertake to defend such matter to which the Indemnified Party is entitled to indemnification hereunder, or fails diligently to pursue such defense, the Indemnified Party may undertake such defense through counsel of its choice, at the cost and expense of the Indemnifying Party, and the -29- Indemnified Party may settle such matter, in its discretion, and the Indemnifying Party shall reimburse the Indemnified Party for the amount paid in such settlement and any other liabilities or expenses incurred by the Indemnified Party in connection therewith. 8.04 NON-THIRD PERSON CLAIMS. In the event that any Indemnified Party asserts the existence of a claim giving rise to Losses (but excluding claims resulting from the assertion of liability by Third Persons), such party shall give written notice to the Indemnifying Party. Such written notice shall state that it is being given pursuant to this Section 8.04, specify the nature and amount of the claim asserted, and indicate the date on which such assertion shall be deemed accepted and the amount of the claim deemed a valid claim (such date to be established in accordance with the next sentence). If such Indemnifying Party, within 60 days after the mailing of notice by such Indemnified Party, shall not give written notice to such Indemnified Party announcing such Indemnifying Party's intent to contest such assertion of such Indemnified Party, such assertion shall be deemed accepted and the amount of such claim shall be deemed a valid claim. In the event, however, that such Indemnifying Party contests such assertion of a claim by giving such written notice to the Indemnified Party within said period, then the parties shall act in good faith to reach agreement regarding such claim. If the parties cannot resolve such dispute after good faith negotiations with respect thereto within 60 days after the notice provided by the Indemnifying Party, such dispute shall be submitted to arbitration in accordance with the provisions of Section 13.11. In the event that arbitration shall arise with respect to any such claim, the prevailing party shall be entitled to reimbursement of costs and expenses incurred in connection with such arbitration including reasonable attorneys' fees. 8.05 INDEMNIFICATION DEDUCTIBLE. Neither U.S. Concrete, Newco nor the Surviving Corporation shall be entitled to indemnification or other relief from the Stockholders under the provisions of Section 8.01(a) until such time as, and only to the extent that, the claims subject to indemnification by such other party exceed, in the aggregate, $100,760 when combined with the Fuel Merger Agreement and Dencor Stock Purchase Agreement. Notwithstanding the foregoing, the limitations set forth in this Section 8.05 shall not apply to fraudulent misrepresentations or the representation contained in Section 5.27, the representation contained in Section 5.27, or the obligation to indemnify set forth in Section 8.01(f). 8.06 LIABILITY LIMITATION. Subject to Section 8.05, the aggregate obligation of the Stockholders, on the one hand, and of U.S. Concrete and the Surviving Corporation, on the other hand, for any and all claims arising under this Agreement, the Fuel Merger Agreement, Dencor Stock Purchase Agreement, or under Sections 3 or 7 of the Employment Agreements, shall be limited to $10,076,029. Notwithstanding the foregoing, the limitations set forth in this Section 8.06 shall not apply to fraudulent misrepresentations or the representation contained in Section 5.27, or the obligation to indemnify set forth in Section 8.01(f). 8.07 FORM OF INDEMNITY PAYMENT. Any payment required to be made by the Stockholders pursuant to this Agreement shall first be made from the cash portion of the Merger Consideration. In the event of a payment obligation which exceeds such cash portion, then Stockholders may make payment by delivering to U.S. Concrete such required number of shares of U.S. Concrete Common Stock valued at the Average Closing Price. -30- ARTICLE IX NONCOMPETITION COVENANTS 9.01 PROHIBITED ACTIVITIES. (a) For no additional consideration, each Stockholder will not for five years following the Closing Date (the "Noncompete Term"), directly or indirectly, for himself or on behalf of or in conjunction with any other person, company, partnership, corporation or business or other entity of whatever nature: (i) engage, as an officer, director, shareholder, owner, investor, lender, guarantor, partner, joint venturer, or in a managerial or advisory capacity, whether as an employee, independent contractor, consultant or advisor, or as a sales representative, dealer or distributor, in any Competitive Business within a radius of 100 air miles of any plant or other operating facility in which the Company was engaged in business on the date immediately prior to the Closing Date; (ii) call upon or otherwise solicit any person, who is, at that time, within the Territory, an employee or consultant of the Cornillie Companies, U.S. Concrete, the Surviving Corporation or any of their respective subsidiaries, for the purpose or with the intent of enticing such employee or consultant out of the employ or contract with the Cornillie Companies, the Surviving Corporation or any of their respective subsidiaries; (iii) call upon or otherwise solicit any person or entity which is, at that time, or which has been, within one year prior to that time, a customer of the Cornillie Companies, U.S. Concrete or the Surviving Corporation or any of the subsidiaries of such parties within the Territory for the purpose of soliciting or selling services or products in a Competitive Business within the Territory; or (iv) call upon or otherwise solicit any entity which the Company or U.S. Concrete has called on in connection with the possible acquisition by either of them of such entity or of which either of them has made an acquisition analysis, with the knowledge of that entity's status as an acquisition candidate of U.S. Concrete, for the purpose of (A) acquiring that entity or arranging the acquisition of that entity by any person or entity other than U.S. Concrete; and (B) engaging in a Competitive Business within the Territory. (b) Notwithstanding the above, Section 9.01(a) shall not be deemed to prohibit any Stockholder from acquiring, as a passive investor with no involvement in the operations of the business, not more than three percent of the capital stock of a Competitive Business whose stock is publicly traded on a national securities exchange, the NASDAQ National Market or over-the-counter. 9.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic losses to U.S. Concrete and the Surviving Corporation as a result of a breach of the foregoing covenant, because a breach of such covenant would diminish the value of the assets, properties and -31- business of the Company being sold pursuant to this Agreement, and because of the immediate and irreparable damage that could be caused to U.S. Concrete and the Surviving Corporation for which it would have no other adequate remedy, since monetary damages alone may not be an adequate remedy, each Stockholder agrees that the foregoing covenant may be enforced against such individual by, without limitation, injunctions, restraining orders and other equitable actions. 9.03 REASONABLE RESTRAINT. It is agreed by the parties hereto that the foregoing covenants in this ARTICLE IX are necessary in terms of time, activity and territory to protect U.S. Concrete's and the Surviving Corporation's interest in the assets, properties and business being acquired pursuant to the terms of this Agreement and impose a reasonable restraint on the Stockholders in light of the activities and businesses of U.S. Concrete on the date of the execution of this Agreement and the current plans of U.S. Concrete. 9.04 SEVERABILITY; REFORMATION. The covenants in this ARTICLE IX are severable and separate, and the unenforceability of any specific covenant shall not affect the continuing validity and enforceability of any other covenant. In the event any court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth in this ARTICLE IX are unreasonable and therefore unenforceable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which the court deems reasonable and this Agreement shall thereby be reformed. 9.05 MATERIAL AND INDEPENDENT COVENANT. The Stockholders acknowledge that their agreements and the covenants set forth in this ARTICLE IX are material conditions to U.S. Concrete's and Newco's agreements to execute and deliver this Agreement and to consummate the transactions contemplated hereby and that U.S. Concrete and Newco would not have entered into this Agreement without such covenants. All of the covenants in this ARTICLE IX shall be construed as an agreement independent of any other provision in this Agreement. The existence of any claim or cause of action by any Stockholder against U.S. Concrete, whether predicated on this Agreement or otherwise, will not constitute a defense to the enforcement by U.S. Concrete of any of the covenants of this ARTICLE IX. The covenants this ARTICLE IX contains will not be affected by any breach of any other provision hereof by any party hereto. ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION 10.01 GENERAL. The Stockholders recognize and acknowledge that they had in the past, currently have, and in the future will have, access to certain confidential information relating to the businesses of the Company, the Surviving Corporation and/or U.S. Concrete, including, without limitation, lists of customers, operational policies, and pricing and cost policies that are, and following the Closing will be, valuable, special and unique assets of the Surviving Corporation and U.S. Concrete. Each Stockholder agrees that he or she will not use or disclose such confidential information to any person, firm, corporation, association or other entity for any purpose whatsoever, except as is required in the course of performing his or her duties, if any, to the Surviving Corporation and/or U.S. Concrete, unless (a) such information becomes known to the public generally through no fault of the Stockholder or (b) disclosure is required by Law, provided that prior to disclosing any information pursuant to this clause (b) the disclosing Stockholder(s) shall give prior written notice thereof to U.S. Concrete and the Surviving -32- Corporation and provide U.S. Concrete with the opportunity to contest such disclosure. In the event of a breach or threatened breach by any Stockholder of the provisions of this Section, U.S. Concrete shall be entitled to an injunction restraining such Stockholder from disclosing, in whole or in part, such confidential information. Nothing herein shall be construed as prohibiting U.S. Concrete from pursuing any other available remedy for such breach or threatened breach, including, without limitation, the recovery of damages. 10.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic losses to U.S. Concrete and the Surviving Corporation as a result of the breach of the foregoing covenant, because a breach of such covenant would diminish the value of the assets, properties and business of the Company being sold pursuant to this Agreement, and because of the immediate and irreparable damage that would be caused for which the Surviving Corporation and/or U.S. Concrete would have no other adequate remedy, since monetary damages alone may not be an adequate remedy, each Stockholder agrees that the foregoing covenants may be enforced against such individual by, without limitation, injunctions, restraining orders and other equitable actions. ARTICLE XI INTENDED TAX TREATMENT 11.01 TAX-FREE REORGANIZATION. U.S. Concrete and the Stockholders are entering into this Agreement with the intention that the Merger qualify as a tax-free reorganization for federal income tax purposes, except to the extent of any "boot" received, and neither U.S. Concrete nor the Stockholders will take any actions that disqualify the Merger for such treatment. ARTICLE XII FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON STOCK 12.01 COMPLIANCE WITH LAW. The Stockholders acknowledge the shares of U.S. Concrete Common Stock issued in accordance with the terms of this Agreement (the "Restricted Shares") will not be registered under the 1933 Act and therefore may not be resold without compliance with the 1933 Act. The Restricted Shares are being or will be acquired by the Stockholders solely for their own account, for investment purposes only, and with no present intention of distributing, selling or otherwise disposing of them in connection with a distribution. Each Stockholder covenants, warrants and represents that none of the Restricted Shares held by such Stockholder will be, directly or indirectly, offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of except after full compliance with all of the applicable provisions of the 1933 Act and the rules and regulations of the SEC. Certificates representing the Restricted Shares shall bear the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE WERE NOT ISSUED IN A TRANSACTION REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. THE SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE -33- SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE OPINION OF COUNSEL TO THE ISSUER, IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. 12.02 ECONOMIC RISK; SOPHISTICATION; ACCREDITED INVESTORS. Each Stockholder is able to bear the economic risk of an investment in the Restricted Shares and can afford to sustain a total loss of such investment. Each Stockholder has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the proposed investment and therefore has the capacity to protect his or her own interests in connection with the acquisition of the Restricted Shares pursuant hereto. Each Stockholder represents to U.S. Concrete and Newco that he or she is an "accredited investor," as that term is defined in Regulation D under the 1933 Act. Each Stockholder or his or her representatives have had an adequate opportunity to ask questions of, and receive answers from the appropriate officers and representatives of U.S. Concrete and Newco concerning, among other matters, U.S. Concrete, its management, business, operations and financial condition, its plans for the operation of its business and potential additional acquisitions, and to obtain any additional information requested by such Stockholder or his or her representatives concerning such matters. 12.03 RULE 144 REPORTING. With a view to making available the benefits of certain rules and regulations of the SEC that may permit the resale of U.S. Concrete Common Stock to the public without registration, for a period of two years after the Closing, U.S. Concrete agrees to use its commercially reasonable efforts to: (a) make and keep public information (as such terms are defined in Rule 144) regarding U.S. Concrete available; (b) file with the SEC in a timely manner all reports and other documents required of U.S. Concrete under the 1933 Act and the 1934 Act; and (c) furnish to a Stockholder upon written request a written statement by U.S. Concrete as to its compliance with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, a copy of the most recent annual or quarterly report of U.S. Concrete, and such other reports and documents so filed as such Stockholder may reasonably request in availing himself or herself of any rule or regulation of the SEC allowing such Stockholder to sell any such shares without registration. 12.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES. The Stockholders covenant, warrant and represent that (i) none of the Restricted Shares will be offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of, directly or indirectly, during the two-year period commencing on the Closing Date (the "Lockup Period"); (ii) after the Lockup Period, the Restricted Shares may be offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of directly or indirectly, only after full compliance with all of the applicable provisions of the 1933 Act and the rules and regulations of the SEC; (iii) during the one-year period commencing on the Closing Date, the Stockholders shall not engage in put, call, short-sale, hedge, straddle, collar or similar -34- transactions with respect to any of the Restricted Shares intended to reduce the Stockholders' risk of owning such Restricted Shares; and (iv) following the one- year period described in clause (iii) and for the remainder of the Lockup Period, the Stockholders shall not engage in put, call, short-sale, hedge, straddle, collar or similar transactions with respect to 50% or more of the Restricted Shares intended to reduce the Stockholders' risk of owning such Restricted Shares. Certificates representing the Restricted Shares shall bear the following legend, which shall reflect the Lockup Period, in addition to the legend under Section 12.01: THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A CONTRACTUAL RESTRICTION ON TRANSFER THAT EXPIRES ON FEBRUARY 7, 2002 AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF DURING THE PERIOD OF SUCH CONTRACTUAL RESTRICTION WITHOUT THE PRIOR WRITTEN CONSENT OF U.S. CONCRETE, INC. 12.05 PROSPECTUS DELIVERY. Each Stockholder represents and acknowledges that he or she has been provided with the most current prospectus of U.S. Concrete, dated May 25, 1999, at least 20 days prior to the date hereof. 12.06 REMOVAL OF LEGENDS. Upon expiration of the Lockup Period, U.S. Concrete will cause its transfer agent to issue one or more certificates without such legend as to any Restricted Shares that are no longer subject to the legends set forth in Section 12.01 and 12.04, respectively; provided, however, that U.S. Concrete shall not be deemed to be in breach of this Section unless it fails to cause its transfer agent to issue such certificates after receipt of written request from a Stockholder. ARTICLE XIII MISCELLANEOUS 13.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES. This Agreement and the rights of the parties hereunder may not be assigned (except by operation of Law) and shall be binding upon and shall inure to the benefit of the parties hereto, the successors of U.S. Concrete, Newco, the Surviving Corporation and the Company, and the heirs and legal representatives of the Stockholders. Except as provided in ARTICLE VIII or in this Section 13.01, nothing in this Agreement is intended or will be construed to confer upon or give any person or entity other than the parties hereto any rights or remedies under or by reason of this Agreement or any transaction contemplated hereby. 13.02 ENTIRE AGREEMENT. This Agreement (including the Schedules, exhibits and annexes attached hereto) and the documents delivered pursuant hereto constitute the entire agreement and understanding among the Stockholders, the Company, Newco and U.S. Concrete and supersede any prior agreement and understanding relating to the subject matter of this Agreement, including, without limitation, the Letter of Intent. This Agreement may be modified or amended only by a written instrument executed by the Stockholders, the Company, Newco and U.S. Concrete. Any right hereunder may be waived only by a written instrument executed by the party waiving such right. 13.03 COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument. Facsimile transmission of any signed original document and/or retransmission of any signed facsimile transmission will be deemed the same as delivery of an -35- original. At the request of any party, the parties will confirm facsimile transmission by signing a duplicate original document. 13.04 BROKERS AND AGENTS. Except for a fee payable to Stockholders' agent, W.Y. Campbell, which Stockholders will pay, each party hereto represents and warrants that it employed no broker or agent in connection with the transactions contemplated by this Agreement. Each party agrees to indemnify each other party against all loss, cost, damages or expense arising out of claims for fees or commissions of brokers employed or alleged to have been employed by such indemnifying party. 13.05 NOTICES. All notices and communications required or permitted hereunder shall be in writing and may be given by depositing the same in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested (which will be deemed given three business days after deposit), or by delivering the same in person to an officer or agent of such party (which will be deemed given when actually received), as follows: If to U.S. Concrete, Newco or the Surviving Corporation, addressed to them at: U.S. Concrete, Inc. 1300 Post Oak Blvd. Suite 1200 Houston, Texas 77056 Attn: Corporate Secretary If to the Stockholders, addressed as follows: Richard A. Deneweth 9940 Edgewood Traverse City, Michigan 49648 Joseph C. Cornillie, Trustee URTA of Joseph C. Cornillie, Dated October 4, 1995 3279 Wendover Troy, Michigan 48084 David Klepac 879 Carver St. Traverse City, Michigan 49696 with a copy (which shall not constitute notice) to: D. Richard McDonald, Esq. Dykema Gossett PLLC 1577 N. Woodward Ave. Suite 300 Bloomfield Hills, Michigan 48304 -36- or such other address as any party hereto shall specify pursuant to this Section 13.05 from time to time. 13.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties set forth in ARTICLE V and ARTICLE VI shall survive the Closing for a period of two years from the Closing Date (the "Expiration Date"), except that the representations and warranties set forth in Sections 5.03, 5.11, 5.16 and 5.18 hereof shall survive until such time as the applicable statute of limitations period has run, which shall be deemed to be the Expiration Date for Sections 5.03, 5.11, 5.16 and 5.18, as the case may be. The respective parties shall remain liable after the Expiration Date for breaches of the representations and warranties set forth in ARTICLE V and ARTICLE VI, provided such breaches are asserted in good faith by notice in writing to the alleged breaching party prior to the Expiration Date. 13.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE. Except as otherwise provided herein, no delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver. No right, remedy or election any term of this Agreement gives will be deemed exclusive, but each will be cumulative with all other rights, remedies and elections available at law or in equity, subject to the limitations set forth in Sections 8.05 and 8.06. 13.08 REFORMATION AND SEVERABILITY. In case any provision of this Agreement shall be invalid, illegal or unenforceable, it shall, to the extent possible, be modified in such manner as to be valid, legal and enforceable, but so as to most nearly retain the intent of the parties, and if such modification is not possible, such provision shall be severed from this Agreement, and in either case, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby. 13.09 Section Headings; Gender. The Section headings contained in this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement. Words of the masculine gender in this Agreement shall be deemed and construed to include correlative words of the feminine and neuter genders and words of the neuter gender shall be deemed and construed to include correlative words of the masculine and feminine genders. 13.10 GOVERNING LAW. This Agreement shall be construed in accordance with the laws of the State of Delaware (except for its principles governing conflicts of laws). 13.11 DISPUTE RESOLUTION. (a) Except with respect to injunctive relief as provided in Section 9.02 and Section 10.02 (which relief may be sought from any court or administrative agency with jurisdiction with respect thereto), any unresolved dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in accordance with the rules of the American Arbitration Association then in effect. The -37- arbitration shall be conducted by a retired judge employed by the Chicago, Illinois office of J.A.M.S./Endispute, Inc. ("JAMS"). The arbitration shall be held in JAMS' Chicago, Illinois office. (b) The parties shall obtain from JAMS a list of the retired judges available to conduct the arbitration. The parties shall use their reasonable efforts to agree upon a judge to conduct the arbitration. If the parties cannot agree upon a judge to conduct the arbitration within 10 days after receipt of the list of available judges, the parties shall ask JAMS to provide the parties a list of three available judges (the "Judge List"). Within five days after receipt of the Judge List, each party shall strike one of the names of the available judges from the Judge List and return a copy of such list to JAMS and the other party. If two different judges are stricken from the Judge List, the remaining judge shall conduct the arbitration. If only one judge is stricken from the Judge List, JAMS shall select a judge from the remaining two judges on the Judge List to conduct the arbitration. (c) The arbitrator shall not have the authority to add to, detract from, or modify any provision hereof nor to award punitive damages to any injured party. The arbitrator shall have the authority to order payment of damages, reimbursement of costs, including those incurred to enforce this Agreement, and interest thereon in the event the arbitrator determines that a material breach of this Agreement has occurred. A decision by the arbitrator shall be final and binding. Judgment may be entered on the arbitrator's award in any court having jurisdiction. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. U.S. CONCRETE, INC. By:/s/ Donald Wayne -------------------------------- Donald Wayne, Vice President CONCRETE XVIII ACQUISITION, INC. By:/s/ Donald Wayne -------------------------------- Donald Wayne, President CORNILLIE LEASING, INC. By:/s/ Joseph C. Cornillie -------------------------------- Joseph C. Cornillie, President -38- STOCKHOLDERS: /s/ Richard A. Deneweth -------------------------------- Richard A. Deneweth, Individually /s/ Joseph C. Cornillie -------------------------------- Joseph C. Cornillie, Individually and As Trustee URTA of Joseph C. Cornillie Dated October 4, 1995 -39- EXHIBIT A ALLOCATION OF CONSIDERATION Stock Cash ----- ---- Joseph C. Cornillie $316,800* $79,200 Richard A. Deneweth $316,800* $79,200 * 43,697 shares -40- EX-2.16 7 ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION EXHIBIT 2.16 ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION by and among U.S. CONCRETE, INC., CONCRETE XXIV ACQUISITION, INC., STANCON INC. AND DONALD S. BUTLER AND JOHN GRACE Dated as of March 2, 2000 TABLE OF CONTENTS ARTICLE I DEFINITIONS.................................................... 1 1.01 Definitions.......................................................... 1 1.02 Interpretation....................................................... 6 ARTICLE II THE MERGER AND THE SURVIVING CORPORATION....................... 6 2.01 The Merger........................................................... 6 2.02 Effective Time of the Merger......................................... 6 2.03 Certificate of Incorporation, Bylaws and Board of Directors of Surviving Corporation.............................................. 6 2.04 Tax Treatment........................................................ 7 ARTICLE III CONVERSION OF SHARES........................................... 7 3.01 Conversion of Shares................................................. 7 3.02 Newco Shares......................................................... 8 3.03 Delivery of Merger Consideration..................................... 8 ARTICLE IV CLOSING........................................................ 8 4.01 Closing.............................................................. 8 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS............. 8 5.01 Due Organization and Qualification................................... 8 5.02 Authorization; Non-Contravention; Approvals.......................... 9 5.03 Capitalization and Ownership......................................... 10 5.04 Subsidiaries......................................................... 10 5.05 Financial Statements................................................. 10 5.06 Liabilities and Obligations.......................................... 11 5.07 Accounts and Notes Receivable........................................ 11 5.08 Properties and Assets................................................ 12 5.09 Material Customers and Contracts..................................... 14 5.10 Permits.............................................................. 15 5.11 Environmental Matters................................................ 16 5.12 Labor and Employee Relations; Employment Matters..................... 16 5.13 Insurance............................................................ 17 5.14 Compensation; Employment Agreements.................................. 18 5.15 Noncompetition, Confidentiality and Nonsolicitation Agreements; Employee Policies.................................................. 18 5.16 Employee Benefit Plans............................................... 18 5.17 Litigation and Compliance with Law................................... 21 5.18 Taxes................................................................ 21 5.19 Absence of Changes................................................... 22 5.20 Accounts with Banks and Brokerages; Powers of Attorney............... 23 i 5.21 Absence of Certain Business Practices................................ 23 5.22 Competing Lines of Business; Related-Party Transactions.............. 23 5.23 Intangible Property.................................................. 24 5.24 Capital Expenditures................................................. 24 5.25 Inventories.......................................................... 24 5.26 Backlog.............................................................. 24 5.27 Product Warranties................................................... 24 5.28 No Implied Representations........................................... 24 5.29 Disclosure........................................................... 24 5.30 Year 2000 Compliance................................................. 25 ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO... 25 6.01 Organization......................................................... 25 6.02 Authorization; Non-Contravention; Approvals.......................... 25 6.03 U.S. Concrete Common Stock........................................... 26 6.04 SEC Filings; Disclosure.............................................. 26 6.05 No Implied Representations........................................... 26 6.06 Disclosure........................................................... 27 ARTICLE VII CERTAIN COVENANTS........................................... 27 7.01 Release From Guarantees.............................................. 27 7.02 Future Cooperation; Tax Matters...................................... 27 7.03 Expenses............................................................. 28 7.04 Legal Opinion........................................................ 28 7.05 Employment Agreements................................................ 28 7.06 Repayment of Related Party Indebtedness.............................. 28 7.07 Stock Options........................................................ 29 7.08 Pre-Closing Distributions............................................ 29 7.09 Working Capital Adjustment........................................... 29 7.10 Interest-Bearing Debt Adjustment..................................... 30 ARTICLE VIII INDEMNIFICATION............................................. 31 8.01 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS.......................... 31 8.02 Indemnification by U.S. Concrete..................................... 31 8.03 Third Person Claims.................................................. 32 8.04 Non-Third Person Claims.............................................. 33 8.05 Indemnification Deductible........................................... 33 8.06 Indemnification Limitation........................................... 33 8.07 Indemnification for Negligence of Indemnified Party.................. 34 ARTICLE IX NONCOMPETITION COVENANTS.................................... 34 ii 9.01 Prohibited Activities................................................ 34 9.02 Equitable Relief..................................................... 35 9.03 Reasonable Restraint................................................. 35 9.04 Severability; Reformation............................................ 35 9.05 Material and Independent Covenant.................................... 35 ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION................... 36 10.01 General............................................................. 36 10.02 Equitable Relief.................................................... 36 ARTICLE XI FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON STOCK....................................... 37 11.01 Compliance with Law................................................. 37 11.02 Economic Risk; Sophistication; Accredited Investors................. 37 11.03 Rule 144 Reporting.................................................. 37 11.04 Restriction on Sale or Other Transfer of Restricted Shares.......... 38 11.05 Prospectus Delivery................................................. 38 ARTICLE XII MISCELLANEOUS............................................... 39 12.01 Successors and Assigns; Rights of Parties........................... 39 12.02 Entire Agreement.................................................... 39 12.03 Counterparts........................................................ 39 12.04 Brokers and Agents.................................................. 39 12.05 Notices............................................................. 39 12.06 Survival of Representations and Warranties.......................... 40 12.07 Exercise of Rights and Remedies; Remedies Cumulative................ 40 12.08 Reformation and Severability........................................ 41 12.09 Section Headings; Gender............................................ 41 12.10 Governing Law....................................................... 41 12.11 Dispute Resolution.................................................. 41 12.12 Integration of Operations........................................... 42 12.13 Exceptions regarding Lewisville Lease............................... 42 iii ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of March 2, 2000, by and among U.S. Concrete, Inc., a Delaware corporation ("U.S. Concrete"), Concrete XXIV Acquisition, Inc., a Delaware corporation that is a subsidiary of U.S. Concrete ("Newco"), Stancon Inc., d/b/a Butler Ready Mix Concrete, a Texas corporation, including its subsidiaries set forth on Schedule 5.04 (the "Company") and Donald S. Butler and John Grace (each a "Stockholder" and collectively, the "Stockholders"), with the Stockholders being all of the Company's Stockholders. WHEREAS, the respective Boards of Directors of Newco and the Company (collectively referred to as "Constituent Corporations") deem it advisable and in the best interests of the Constituent Corporations and the stockholders of the Constituent Corporations that Newco merge with and into the Company (the "Merger"); and WHEREAS, the stockholders of the Constituent Corporations have approved the Merger in accordance with the GCL (as herein defined) and the TBCA (as herein defined). NOW, THEREFORE, in consideration of the premises and of the mutual agreements, representations, warranties, provisions and covenants contained herein, the parties hereto, intending to be legally bound, agree as follows: ARTICLE I DEFINITIONS 1.01 DEFINITIONS. Capitalized terms used in this Agreement shall have the following meanings: "Accountant" has the meaning set forth in Section 7.09. "Adjustment Schedule" has the meaning set forth in Section 7.09. "Affiliate" of, or "Affiliated" with, a specified person or entity means a person or entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the specified person or entity. "Agreement" has the meaning set forth in the first paragraph of this Agreement. "Balance Sheet Date" has the meaning set forth in Section 5.05. "Best of the Stockholders' Knowledge" means knowledge of facts actually possessed by such Stockholders after reasonable inquiry of the Company's other senior executives, principals, accounting personnel and unit or plant managers who might reasonably be expected to have knowledge of the specific matter in issue. 1 "Closing" has the meaning set forth in ARTICLE IV. "Closing Date" has the meaning set forth in ARTICLE IV. "Closing Date Balance Sheet Date" has the meaning set forth in Section 7.09. "Closing Date Interest-Bearing Debt Amount" has the meaning set forth in Section 7.10. "Code" means the Internal Revenue Code of 1986, as amended. "Company" has the meaning set forth in the first paragraph of this Agreement. "Company Common Stock" means the Company's common stock, $0.10 par value per share. "Competitive Business" means any business that competes with the Company or the Surviving Corporation, including, without limitation, any business that involves the production and sale of ready-mixed concrete (including truck-mixed concrete) and other cement mixtures and the manufacture and sale of pre-cast concrete products and any logical extension of or business activity reasonably related to any of the foregoing ("Concrete Manufacturing Operations"), but excluding any business activity, other than Concrete Manufacturing Operations, involving the job-site installation, placement or finishing of ready-mixed concrete mixed and delivered to the site by others or the job-site pumping of ready-mixed concrete mixed and delivered to the site by others. "Constituent Corporations" has the meaning set forth in the second paragraph of this Agreement. "Debt Schedule" has the meaning set forth in Section 7.10. "Determination Date" has the meaning set forth in Section 7.09. "Effective Time" has the meaning set forth in Section 2.02. "Employee benefit plan" has the meaning set forth in Section 5.16. "Employee pension benefit plan" has the meaning set forth in Section 5.16. "Employment Agreements" has the meaning set forth in Section 7.05. "Encumbrances" means all liens, encumbrances, mortgages, pledges, security interests, conditional sales agreements, charges, options, preemptive rights, rights of first refusal, reservations, restrictions or other encumbrances or defects in title. "Environmental Laws" means any and all Laws or agreements with any Governmental Authority relating to (a) the protection, preservation or restoration of the environment (including, without limitation, ambient air, surface water (including water management and runoff), groundwater, drinking water supply, surface land, subsurface 2 strata, plant and animal life or any other natural resource) or human health or safety, (b) emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes (including, without limitation, Hazardous Substances) or noxious noise or odor into the environment or (c) the exposure to, or the use, storage, recycling, treatment, manufacture, generation, transport, processing, handling, labeling, production, removal or disposal of any pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes (including, without limitation, Hazardous Substances), in each case as amended from time to time and as now or hereafter in effect. The term "Environmental Laws" includes, without limitation, (i) the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), the Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, the Safe Drinking Water Act, the Atomic Energy Act and the Hazardous Materials Transportation Act, in each case as amended from time to time, and any other Laws now or hereafter relating to any of the foregoing, and (ii) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of, effects of or exposure to any Hazardous Substance. "ERISA" has the meaning set forth in Section 5.16. "ERISA Affiliate" has the meaning set forth in Section 5.16. "Expiration Date" has the meaning set forth in Section 12.06. "Final Balance Sheet" has the meaning set forth in Section 7.09. "Financial Statements" has the meaning set forth in Section 5.05. "GAAP" means generally accepted accounting principles as currently applied by the respective party on a basis consistent with preceding years and throughout the periods involved. "GCL" means the General Corporation Law of the State of Delaware, as amended. "Governmental Authority" means any federal, state, local or foreign government, political subdivision or governmental or regulatory authority, agency, board, bureau, commission, instrumentality or court or quasi- governmental authority. "Hazardous Substances" means any and all substances presently listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any Environmental Law. The term "Hazardous Substances" includes, 3 without limitation, any substance to which exposure is regulated by any Governmental Authority or any Environmental Law including, without limitation, any toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste, industrial substance or petroleum or any derivative or by-product thereof, radon, radioactive material, asbestos or asbestos containing material, urea formaldehyde foam insulation, lead or polychlorinated biphenyls. "Incentive Plan" has the meaning set forth in Section 7.07. "Indemnified Party" has the meaning set forth in Section 8.03. "Indemnifying Party" has the meaning set forth in Section 8.03. "Interest-Bearing Debt" means the total amount of outstanding indebtedness of the Company for borrowed money (including, without limitation, bank debt, equipment debt, capital lease obligations, bank overdrafts and any other indebtedness for borrowed money). "IRCA" has the meaning set forth in Section 5.12. "Judge List" has the meaning set forth in Section 12.11. "Laws" means any and all federal, state, local or foreign statutes, laws, ordinances, proclamations, codes, regulations, licenses, permits, authorizations, rulings, approvals, consents, legal doctrines, published requirements, orders, decrees, judgments, injunctions and rules of any Governmental Authority, including, without limitation, those covering environmental, Tax, energy, safety, health, transportation, bribery, recordkeeping, zoning, discrimination, antitrust and wage and hour matters, in each case as amended and in effect from time to time. "Letter of Intent" means that certain letter of intent dated January 8, 2000 by and among U.S. Concrete, the Company and the Stockholders, and the other parties named therein, as amended or supplemented. "Listed Agreements" has the meaning set forth in Section 5.09. "Lockup Period" has the meaning set forth in Section 11.04. "Losses" means any and all liabilities, losses, claims, damages, actions, suits, proceedings, demands, assessments, adjustments, fees, costs and expenses (including specifically, but without limitation, reasonable attorneys' fees and costs and expenses of investigation), net of income Tax effects with respect thereto (including, without limitation, income Tax benefits recognized in connection therewith and income Taxes upon any indemnification recovery thereof). "Material Customers" has the meaning set forth in Section 5.09. "Merger" has the meaning set forth in the second paragraph of this Agreement. 4 "Merger Consideration" has the meaning set forth in Section 3.01. "Merger Filings" has the meaning set forth in Section 2.02. "Newco" has the meaning set forth in the first paragraph of this Agreement. "Noncompete Term" has the meaning set forth in Section 9.01(a). "1933 Act" means the Securities Act of 1933, as amended. "1934 Act" means the Securities Exchange Act of 1934, as amended. "1999 Financial Statements" has the meaning set forth in Section 5.05. "Permits" has the meaning set forth in Section 5.10. "Permitted Encumbrances" means any and all (a) Encumbrances reserved against in the balance sheet included in the 1999 Financial Statements, (b) Encumbrances for property or ad valorem Taxes not yet due and payable or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the Company's books in accordance with GAAP, and (c) obligations under operating and capital leases described in Schedule 5.08. "Plan" has the meaning set forth in Section 5.16. "Prior Years' Financial Statements" has the meaning set forth in Section 5.09. "Qualified Plan" has the meaning set forth in Section 5.16. "Restricted Shares" has the meaning set forth in Section 12.01. "Rule 144" means Rule 144 as promulgated under the 1933 Act. "SEC" means the Securities and Exchange Commission. "Section 338(h)(10) Election" has the meaning set forth in Section 2.04. "Stockholders" has the meaning set forth in the first paragraph of this Agreement. "Structures" has the meaning set forth in Section 5.08. "Surviving Corporation" has the meaning set forth in Section 2.01. "Taxes" has the meaning set forth in Section 5.18. "TBCA" means the Texas Business Corporation Act, as amended. "Territory" has the meaning set forth in Section 9.01. 5 "Third Person" has the meaning set forth in Section 8.03. "U.S. Concrete" has the meaning set forth in the first paragraph of this Agreement. "U.S. Concrete Common Stock" means U.S. Concrete's Common Stock, par value $.001 per share. "Working Capital Adjustment" has the meaning set forth in Section 7.09. "Year 2000 Compliant" has the meaning set forth in Section 5.30. 1.02 Interpretation. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in Section 1.01 and elsewhere in this Agreement include the plural as well as the singular and vice versa; (b) all accounting terms not otherwise defined herein have the meanings ascribed to them in accordance with GAAP; and (c) the words "herein," "hereof," and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. ARTICLE II THE MERGER AND THE SURVIVING CORPORATION 2.01 The Merger. Upon the terms and subject to the conditions of this Agreement, at the Effective Time in accordance with the TBCA and the GCL, Newco shall be merged with and into the Company and the separate existence of Newco shall thereupon cease. The Company shall be the surviving corporation in the Merger (hereinafter sometimes referred to as the "Surviving Corporation"). 2.02 Effective Time of the Merger. The Merger shall become effective at such time (the "Effective Time") as (a) holders of all of the Company Common Stock approve the Merger, and (b) a certificate of merger, in form mutually acceptable to U.S. Concrete and the Company, is filed with the Secretaries of State of the States of Delaware and Texas, respectively (the "Merger Filings"). The Merger Filings shall be made simultaneously with or as soon as practicable after the Closing. 2.03 Certificate of Incorporation, Bylaws and Board of Directors of Surviving Corporation. As a result of the Merger and at the Effective Time: (a) The Certificate of Incorporation of the Company in effect immediately prior to the Effective Time shall become the Certificate of Incorporation of the Surviving 6 Corporation. After the Effective Time, the Certificate of Incorporation of the Surviving Corporation may be amended in accordance with its terms and as provided in the TBCA. (b) The Bylaws of the Company in effect immediately prior to the Effective Time shall become the Bylaws of the Surviving Corporation, and thereafter may be amended in accordance with their terms and as provided by the Certificate of Incorporati on of the Surviving Corporation and the TBCA. (c) The Board of Directors of Newco as constituted immediately prior to the Effective Time shall be the Board of Directors of the Surviving Corporation. 2.04 TAX TREATMENT. (a) U.S. Concrete and each Stockholder shall timely make a joint election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the "Code"), and Treas. Reg. (S)1.338(h)(10-1(d)(1) (and any corresponding elections under state, local or foreign tax law) (collectively the "Section 338(h)(10) Election") with respect to the transactions contemplated by this Agreement, such that the Company will be treated as having sold all of its assets in a single transaction on the Closing Date before Closing and while an S corporation pursuant to Section 1361 of the Code. U.S. Concrete will prepare the election forms and provide them to each Stockholder for their review within a reasonable time after the Closing Date. Each Stockholder will within five days of receipt execute and return the election forms to U.S. Concrete, and U.S. Concrete will file such election forms on or before the respective due dates for each such election form. U.S. Concrete and the Stockholders shall agree to an allocation of the deemed purchase price among the assets of the Company in compliance with Temp. Treas. Reg. (S)1.338(b)-2T(b). (b) The parties each hereby covenant and agree that they will not take a position with respect to the allocation of the Merger Consideration (as herein defined) (i) for purposes of any tax return filed with any governmental agency charged with the collection of any taxes or, for so long as commercially reasonable, for purposes of any judicial proceeding, that is in any way inconsistent with the allocation made under Section 2.04 or (ii) for financial reporting or accounting purposes that is in any way inconsistent with such allocation unless a different allocation for financial reporting or accounting purposes is required by law, regulation or court order or decree. ARTICLE III CONVERSION OF SHARES 3.01 Conversion of Shares. At the Effective Time, by virtue of the Merger, and without any action on the part of any holder of any capital stock of the Company, the issued and outstanding shares of Company Common Stock as of the Effective Time shall be converted into the right to receive, and become exchangeable for $10,603,000 in cash (subject to reduction for payment at Closing of Interest-Bearing Debt) and 339,119 shares of U.S. Concrete Common Stock at Closing (the cash (inclusive of amounts paid to reduce Interest-Bearing Debt) and U.S. Concrete Common Stock paid in exchange for the 7 Company Common Stock being herein collectively referred to as the "Merger Consideration"). 3.02 NEWCO SHARES. The outstanding shares of common stock, par value $.01 per share, of Newco shall be converted into the right to receive, and become exchangeable for, 1,000 shares of Company Common Stock. 3.03 DELIVERY OF MERGER CONSIDERATION. At the Closing, (a) each Stockholder shall furnish to U.S. Concrete the certificates representing his Company Common Stock, duly endorsed in blank by such Stockholder or accompanied by duly executed blank stock powers, and (b) U.S. Concrete shall deliver to each Stockholder cash (by wire transfer in accordance with the wiring instructions for such Stockholder set forth on Schedule 3.01) and a copy of an irrevocable instruction letter to U.S. Concrete's transfer agent directing that certificates representing the shares of U.S. Concrete Common Stock be delivered to such Stockholder pursuant to Section 3.01. Each Stockholder agrees promptly to cure any deficiencies with respect to the endorsement of the certificates or other documents of conveyance with respect to the Company Common Stock or with respect to the stock powers accompanying such stock. ARTICLE IV CLOSING 4.01 CLOSING. The consummation of the Merger and delivery of the Merger Consideration and the other transactions contemplated by this Agreement (the "Closing") shall take place at the offices of U.S. Concrete, 1300 Post Oak Blvd., Suite 1220, Houston, Texas 77056, concurrently with the execution of this Agreement or at such other time and date as U.S. Concrete, the Company and the Stockholders may mutually agree, which date is herein referred to as the "Closing Date." ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS The Stockholders, jointly and severally, represent and warrant to U.S. Concrete as follows: 5.01 DUE ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Texas and is duly authorized and qualified to do business under all applicable Laws and to carry on its business in the places and in the manner as now conducted. The Company has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as such business is currently being conducted. Schedule 5.01 includes (a) certificate(s) of existence and good standing for the Company issued by the appropriate Governmental Authorities of the State of Texas, (b) a list of all jurisdictions in which the Company is authorized or qualified to do business and (c) certificate(s) of qualification or authority to do business (or similar certificates) for the Company issued by the appropriate Governmental Authorities of each of the jurisdictions in which the 8 Company is authorized or qualified to do business. The Company does not own, lease or operate any assets or properties or carry on any business in any jurisdiction that Schedule 5.01 does not list. Schedule 5.01 also contains a list of each county in Texas in which the Company conducts business or has conducted business within the past three years. True, complete and correct copies of the Articles of Incorporation and Bylaws, each as amended, of the Company are attached hereto as Schedule 5.01, and no breach of such Articles of Incorporation or Bylaws has occurred and is continuing. True, complete and correct copies of all stock records and minute books of the Company have been provided to U.S. Concrete. 5.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. (a) The Company has the requisite corporate power and authority to enter into this Agreement and the ancillary documents and agreements described herein and to effect the Merger. Each Stockholder has the full legal right, power and authority to enter into this Agreement. The execution, delivery and performance of this Agreement and the transactions contemplated hereby have been approved by the board of directors of the Company and by the Stockholders. No additional corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement and the consummation by the Company of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and the Stockholders, and, assuming the due authorization, execution and delivery hereof by U.S. Concrete and Newco, constitutes a valid and binding agreement of the Company and the Stockholders, enforceable against each of them in accordance with its terms. (b) The execution and delivery of this Agreement by the Company and the Stockholders do not, and the consummation by the Company and the Stockholders of the transactions contemplated hereby will not, violate or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation of any Encumbrance upon any of the properties or assets of the Company under any of the terms, conditions or provisions of, (i) the Articles of Incorporation or Bylaws of the Company, (ii) any Law applicable to the Stockholders or the Company or any of the properties or assets of the Stockholders or the Company, or (iii) except as set forth in Schedule 5.02, any agreement, note, bond, mortgage, indenture, deed of trust, license, franchise, Permit, concession, lease or other instrument, obligation or agreement of any kind to which any Stockholder or the Company is now a party or by which the Company or any of its properties or assets may be bound or affected. (c) Except for the Merger Filings and as set forth in Schedule 5.02, no declaration, filing or registration with, or notice to, or authorization, consent or approval of, any Governmental Authority or other person or entity is necessary for the execution and delivery of this Agreement by the Company and the Stockholders or the consummation by the Company and the Stockholders of the transactions contemplated hereby. Except as set forth in Schedule 5.02, none of the contracts or agreements with Material Customers or contracts providing for purchases or services individually in 9 excess of $10,000, or in the aggregate in excess of $25,000, or other agreements, licenses or Permits to which the Company is a party requires notice to, or the consent or approval of, any Governmental Authority or other person or entity to the execution and delivery of this Agreement by the Company and the Stockholders or to any of the transactions contemplated hereby to remain in full force and effect following such transaction. 5.03 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of the Company consists solely of 100,000 shares of Company Common Stock, of which 9,000 shares are issued and outstanding. All of the issued and outstanding shares of the Company Common Stock are owned beneficially and of record by the Stockholders as set forth in Schedule 5.03. All of the issued and outstanding shares of the Company Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, and were offered, issued, sold and delivered by the Company in compliance with all applicable Laws, including, without limitation, those Laws concerning the issuance of securities. None of such shares were issued in violation of the preemptive rights of any past or present stockholder of the Company. The exchange of Company Common Stock for U.S. Concrete Common Stock pursuant to the Merger will transfer to U.S. Concrete good, valid and marketable title in the shares of the Company Common Stock owned by the Stockholders, free and clear of all Encumbrances except for those created by U.S. Concrete. At the Effective Time, by virtue of the Merger Filing in Texas the Merger will become effective in Texas. Except as set forth in Schedule 5.03, (a) no shares of Company Common Stock are held by the Company as treasury shares, and (b) no subscription, option, warrant, call, convertible or exchangeable security, other conversion right or commitment of any kind exists which obligates the Company to issue any of its capital stock or the Stockholders to transfer any of the capital stock of the Company. 5.04 SUBSIDIARIES. Except as set forth in Schedule 5.04, the Company owns, of record or beneficially, or controls, directly or indirectly, no capital stock, securities convertible into or exchangeable for capital stock or any other equity interest in any corporation, association or other business entity. Except as set forth in Schedule 5.04, the Company is not, directly or indirectly, a participant in any joint venture, limited liability company, partnership or other noncorporate entity. 5.05 FINANCIAL STATEMENTS. (a) The Company has delivered to U.S. Concrete true, complete and correct copies of the following financial statements: (i) the unaudited balance sheets of the Company as of December 31, 1997 and 1998 and the related unaudited statements of operations, for the years then ended, prepared on an income tax basis (such balance sheets and the related statements of operations are referred to herein as the "Prior Years Financial Statements"); and (ii) the audited balance sheet of the Company as of December 31, 1999 (the "Balance Sheet Date") and the related audited statements of operations, 10 stockholders' equity and cash flows for the twelve-month period ended on the Balance Sheet Date, together with the related notes and schedules (such balance sheets, the related statements of operations, stockholders' equity and cash flows and the related notes and schedules are referred to herein as the "1999 Financial Statements"). The Prior Years' Financial Statements and the 1999 Financial Statements (collectively, the "Financial Statements") are attached as Schedule 5.05 to this Agreement; (b) Except as set forth in Schedule 5.05, the Financial Statements have been prepared from the books and records of the Company in conformity with income tax preparation requirements for the Prior Years' Financial Statements, and in conformity with GAAP for the 1999 Financial Statements and in each case present fairly the financial position and results of operations of the Company as of the dates of such statements and for the periods covered thereby. The books of account of the Company have been kept accurately in all material respects in the ordinary course of business, the transactions entered therein represent bona fide transactions, and the revenues, expenses, assets and liabilities of the Company have been properly recorded therein in all material respects. Within the past three fiscal years of the Company, the Company has not received any written correspondence from its accountants, including without limitation, management letters, which have indicated or disclosed that there is a "material weakness" in or "reportable condition" with respect to (as those terms are defined under GAAP) the Company's financial condition. 5.06 LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule 5.06, as of the Balance Sheet Date the Company does not have, nor has it incurred since that date, any liabilities or obligations (whether absolute, accrued, contingent or otherwise) of any nature, except liabilities, obligations or contingencies (a) that are reflected or accrued or reserved against in the Financial Statements or reflected in the notes thereto, (b) that are of a nature not required to be reflected in the Financial Statements and that do not exceed and could not reasonably be expected to exceed $5,000 individually or $10,000 in the aggregate or (c) that were incurred after the Balance Sheet Date and were incurred in the ordinary course of business, consistent with past practices. Schedule 5.06 contains a reasonable estimate by the Company and the Stockholders of the maximum amount that may be payable with respect to liabilities which are not fixed as of January 31, 2000. For each such liability for which the amount is not fixed or is contested, the Company has provided a summary description of the liability together with copies of all relevant documentation relating thereto. Except as set forth in Schedule 5.06, there are no prepayment penalties, termination fees or other payments triggered by the prepayment or termination of any loan or indebtedness of the Company. 5.07 ACCOUNTS AND NOTES RECEIVABLE. Schedule 5.07 sets forth an accurate list of the accounts and notes receivable of the Company as of January 31, 2000, including any such amounts which are not reflected in the Balance Sheet. Receivables from and advances to employees, the Stockholders and any entities or persons related to or Affiliates of the Stockholders are separately identified in Schedule 5.07. Schedule 5.07 also sets forth an accurate aging of all accounts and notes receivable as of January 31, 2000, showing amounts due in 30- day aging categories. The trade and other accounts 11 receivable of the Company, including without limitation those classified as current assets on the Balance Sheet and as of January 31, 2000, are bona fide receivables, were acquired in the ordinary course of business, are stated in accordance with GAAP and are collectible in the amounts shown on Schedule 5.07, net of reserves reflected in the 1999 Financial Statements with respect to the accounts receivable as of the Balance Sheet Date, and net of reserves reflected in the books and records of the Company (consistent with the methods used in the 1999 Financial Statements) with respect to receivables of the Company after the Balance Sheet Date. 5.08 PROPERTIES AND ASSETS. (a) Schedule 5.08 sets forth an accurate list of all real and personal property included in "property and equipment" on the balance sheet included in the 1999 Financial Statements and all other tangible assets of the Company with a book value in excess of $5,000 (i) owned by the Company as of the Balance Sheet Date and (ii) acquired since the Balance Sheet Date. Schedule 5.08 also sets forth an accurate list of all real and personal property currently leased by the Company, and includes complete and correct copies of leases for significant equipment and for all real property leased by the Company and descriptions of all real property (as currently owned or leased by the Company) on which plants, buildings, warehouses, workshops, garages and other structures (collectively, the "Structures") and vehicles used in the operation of the business of the Company are situated and, for each of those properties, the address thereof, the type and approximate square footage of each Structure located thereon and the use thereof in the business of the Company. Schedule 5.08 indicates which properties and assets used in the operation of the businesses of the Company are currently owned by the Stockholders or Affiliates of either of the Company or the Stockholders. Except as specifically identified in Schedule 5.08, all of the tangible assets, plants, Structures, vehicles and other significant machinery and equipment owned or leased by the Company listed in Schedule 5.08 are in good working order and condition, ordinary wear and tear excepted, have been maintained in accordance with standard industry practice and are adequate for the purpose for which they presently are being used or held for use. Except as specifically described in Schedule 5.08, all properties and fixed assets used by the Company in its business are either owned by the Company or leased under agreements identified in Schedule 5.08 and are affixed only to one or more of the real properties Schedule 5.08 lists. All leases set forth in Schedule 5.08 are in full force and effect and constitute valid and binding agreements of the Company and the other parties thereto in accordance with their respective terms, and all amounts currently payable thereunder have been paid. Neither the Company nor any other party to the leases set forth in Schedule 5.08 is or has received written notice or, to the Best of the Stockholders' Knowledge, verbal notice to the effect that it is in default, violation or breach of any such lease, and no event has occurred and is continuing that constitutes or, with notice or the passage of time or both, would constitute a default, violation or breach under any such lease. The Company has good, valid and marketable title to the tangible and intangible assets, personal property and real property owned and used in its business, including, without limitation, the properties identified in Schedule 5.08 as owned real property (each of which the Company owns in fee), free and clear of all Encumbrances other than Permitted Encumbrances and those set forth in Schedule 5.08. Schedule 5.08 contains 12 true, complete and correct copies of all title reports and title insurance policies received or owned by the Company with respect to the real property owned or leased by the Company. Schedule 5.08 includes a summary description of all commitments of the Company involving the opening of new operations, expansion of existing operations or the acquisition of any real property or existing business, to which management of the Company has devoted any significant effort or expenditure in the two-year period prior to the date of the Agreement. (b) Except as specifically described in Schedule 5.08, all uses of the real property owned and leased by the Company conform in all material respects to all applicable Laws (other than Environmental Laws, which are dealt with elsewhere in Section 5.11 of this Agreement) and do not violate any instrument of record or agreement affecting any such property. Neither the Company nor the Stockholders have received any written notice or communication or, to the Best of the Stockholders' Knowledge, verbal notice from any Governmental Authority or other person or entity indicating that any condition exists with respect to any of the real property owned or leased by the Company or with respect to the improvements thereon that violates any Law, including without limitation, any Environmental Law. Neither the Company nor the Stockholders have received from any insurance carrier insuring or proposing to insure any of the real property owned or leased by the Company or any other person or entity any written notice or other communication or, to the Best of the Stockholders' Knowledge, verbal notice, noting any dangerous or illegal condition at any such property or any other condition at any of such properties otherwise requiring corrective action. Except as otherwise described on Schedule 5.08, all of the real property owned and leased by the Company is in good, usable and operating condition without the necessity of any major repairs, and all such real properties can be used by the Surviving Corporation for the purposes currently used and operated by the Company without violating any conditional use permit, variance or private restriction. Neither the Company nor the Stockholders have received any written notice or, to the Best of the Stockholders' Knowledge, verbal notice of, nor do they have any knowledge that any of the real property owned or leased by the Company is or will be affected by any special assessments, condemnation, eminent domain, off-site improvements to be constructed, change in grade of public streets or similar proceedings. There is no writ, injunction, decree, order or judgment outstanding, nor any action, claim, suit or proceeding, pending or threatened, relating to the ownership, lease, use, occupancy or operation of any real property owned or leased by the Company. (c) There is ingress and egress to and from each of the real properties owned and leased by the Company of record adequate for the use of such properties as currently operated by the Company. Except as disclosed in Schedule 5.08, the Company has made no off-record agreements affecting the ownership, use or occupation of any such properties. All public utilities, including, without limitation, sewers, water, electric, gas and telephone, required for the operation of each of the real properties owned and leased by the Company as presently operated are installed and operating, and all installation and connection charges therefor have been paid in full. Neither the Company nor the Stockholders have received any written notice or, to the Best of the Stockholders' Knowledge, verbal notice stating that the Company will not be able to obtain adequate 13 supplies of water to operate its business on any such properties as presently conducted, or that the provision of utilities violates any public or private easement. Neither the Company nor the Stockholders have received written notice or, to the Best of the Stockholders' Knowledge, verbal notice that any part of any improvements on the real property owned or leased by the Company (including any of the structures thereon) encroaches upon any property adjacent thereto or upon any easement, nor is there any encroachment or overlap upon the real property owned or leased by the Company. Each of the real property leases listed in Schedule 5.08 grants the Company the exclusive right to use and occupy the demised premises thereunder, and the Company enjoys peaceful and undisturbed possession under its respective real property leases listed on Schedule 5.08 for the real property leased by the Company. None of the real property leases requires the consent of the applicable landlord to the Merger or the transactions contemplated by this Agreement. No person or entity other than the Company is in possession of any of the real property owned or leased by the Company. To the Best of the Stockholders' Knowledge, there are no contracts outstanding for the sale, exchange, lease or transfer of any of the real property owned or leased by the Company, or any other right of a third party to acquire any interest therein. To the Best of the Stockholders' Knowledge, the heating, cooling, ventilation, electrical and plumbing systems at all of the real property owned and leased by the Company is in good working condition. 5.09 MATERIAL CUSTOMERS AND CONTRACTS. (a) Schedule 5.09 (i) sets forth an accurate list containing the Company's five top customers with respect to the Company's revenues for the 1999 fiscal year (the "Material Customers"), and (ii) sets forth an accurate list and briefly describes all material contracts, warranties, commitments, understandings, instruments and similar agreements and arrangements to which the Company is currently a party or by which it or any of its properties is bound (the "Listed Agreements"), including, but not limited to, (A) all customer unexpired executory contracts in excess of $10,000, individually, or $25,000 in the aggregate, (B) unexpired executory contracts with any labor organizations, (C) unexpired leases providing for annual rental payments in excess of $5,000, individually, or $10,000 in the aggregate, (D) loan agreements, (E) pledge and security agreements, (F) financing agreements, (G) indemnity or guaranty agreements or obligations, (H) bonds, debentures and indentures, (I) notes, (J) mortgages, (K) existing joint venture, partnership or cost-sharing agreements, (L) options to purchase real or personal property, (M) agreements relating to the purchase or sale by the Company of assets or securities for more than $5,000, individually, or $10,000 in the aggregate or which contain, or commit or will commit the Company for a fixed term, (N) unexpired executory agreements, which, by their terms, require the consent of any party thereto to the consummation of the transactions contemplated hereby, (O) voting trust agreements or similar stockholders' agreements, (P) agreements providing for the purchase from a supplier of all or substantially all the requirements of the Company of a particular product, material or service and (Q) any other unexpired executory contracts, warranties, commitments, understandings, instruments and similar agreements and arrangements which involve aggregate payments in excess of $10,000 that cannot be canceled in 30 days' or less notice without penalty or premium or any continuing obligation or liability. Prior to the 14 date hereof, the Company has made available to U.S. Concrete true, complete and correct copies and complete written descriptions of all the Listed Agreements. (b) Except as set forth in Schedule 5.09, since December 31, 1999 (i) no Material Customer has canceled or substantially reduced or, to the Best of the Stockholders' Knowledge, is threatening to cancel or substantially reduce its purchases of the Company's products or services, and (ii) neither the Company nor any other party to the Listed Agreements is, or has received written notice or, to the Best of the Stockholders' Knowledge, verbal notice of any default, violation or breach of any such Listed Agreement, and no event has occurred and is continuing that constitutes or with notice or the passage of time or both, would constitute a default, violation or breach under any such Listed Agreement. The Listed Agreements are in full force and effect and constitute valid and binding agreements of the Company and the other parties thereto in accordance with their respective terms. (c) Except as set forth in Schedule 5.09, the Company is not a party to any contracts subject to price redetermination or renegotiation. Except to the extent set forth in Schedule 5.09, the Company is not required to provide any bonding or other financial security arrangements in any material amount in connection with any transactions with any of its customers or suppliers. (d) Except as set forth in Schedule 5.09, neither the Company, the Stockholders nor any officer, stockholder, director, representative, agent or, to the Best of the Stockholders' Knowledge, employee thereof is a party to any contract, arrangement, commitment or understanding among themselves or with any of the Company's customers for the repurchase of products, sharing of fees, rebating of charges, bribes, kickbacks or other similar arrangements. (e) Schedule 5.09 sets forth a summary of each outstanding bid or proposal by the Company that, if awarded to the Company, contemplates payments to the Company in excess of $150,000. (f) Except as set forth in Schedule 5.09, to the Best of the Stockholders' Knowledge, there is no plan or intention of any other party to any Listed Agreement to exercise any right to cancel or terminate that Listed Agreement, nor any condition or state of facts which would justify the exercise of such a right. 5.10 PERMITS. Schedule 5.10 contains an accurate list, summary description and copies of all licenses, franchises, permits, approvals, certificates, transportation authorities and other governmental authorizations and intangible assets held by the Company that are material to the conduct of its business, including, without limitation, permits, licenses and operating authorizations, titles (including motor vehicle titles and current registrations but excluding vehicle licenses and drivers' licenses possessed by the Company, but which need not be scheduled), fuel permits, franchises, certificates, trademarks, trade names, patents, patent applications and copyrights owned or held by the Company (collectively, the "Permits"). The Permits are valid, and the Company has not received any written notice that any Governmental Authority intends to cancel, terminate 15 or not renew any such Permit. The Permits are all the permits, licenses, operating authorizations, franchises, approvals, certificates, transportation authorities and other governmental authorizations and intangible assets that are required by Law for the operation of the businesses of the Company as conducted at the Balance Sheet Date and the ownership of the assets and properties of the Company. The Company has conducted and is conducting its business in substantial compliance with the requirements, standards, criteria and conditions set forth in the Permits, as well as the applicable orders, approvals and variances related thereto, and is not in violation of any of the foregoing. Except as specifically provided in Schedule 5.10, the transactions contemplated by this Agreement will not result in a default under, a breach or violation of, a termination of, or adversely affect the rights and benefits afforded to the Company by, any Permits. None of the Permits require notice to, or the consent or approval of, any Governmental Authority to the Merger or to the use of such Permit by the Surviving Corporation after the Merger. 5.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 5.11: (a) the Company has complied with and is in compliance with all Environmental Laws, (b) the Company has obtained and complied with all necessary permits, licenses, authorizations and other approvals necessary to treat, transport, store, dispose of and otherwise handle Hazardous Substances and has reported, to the extent required by all Environmental Laws, all past and present sites owned or operated by the Company where Hazardous Substances have been treated, stored, disposed of or otherwise handled, (c) there have been no "releases" or threats of "releases" (as defined in any Environmental Laws) at, from, in, to, under or on any property currently or previously owned or operated by the Company, (d) there is no on-site or off-site location to which the Company has transported or disposed of Hazardous Substances or arranged for the transportation or disposal of Hazardous Substances which is or could be the subject of any federal, state, local or foreign enforcement action or any other investigation which could lead to any claim against the Surviving Corporation, U.S. Concrete or Newco for any clean-up cost, remedial work, damage to natural resources or personal injury, including, but not limited to, any claim under any Environmental Law and (e) the Company has no contingent liability in connection with any release or disposal of any Hazardous Substance into the environment; provided, however, that notwithstanding any such disclosure on Schedule 5.11, the Stockholders shall be responsible for the costs and expense of appropriate remedial action with respect to the matters disclosed on Schedule 5.11 (subject to the provisions of Sections 8.01(a), 8.05 and 8.06 below). None of the past or present sites owned or operated by the Company is currently or has ever been designated as a treatment, storage and/or disposal facility, nor has any such facility ever applied for a permit, license, authorization or other approval designating it as a treatment, storage and/or disposal facility, under any Environmental Law. The Company has provided U.S. Concrete with copies (or, if not available, accurate written summaries) of all environmental investigations, studies, audits, reviews and other analyses conducted by or on behalf, or which otherwise are in the possession, of the Company respecting any facility site or other property previously or presently owned or operated by the Company. 5.12 LABOR AND EMPLOYEE RELATIONS; EMPLOYMENT MATTERS. 16 (a) Except as set forth in Schedule 5.12: (i) the Company is not bound by or subject to any arrangement with any labor union and (ii) no employees of the Company are represented by any labor union or covered by any collective bargaining agreement nor, to the Best of the Stockholders' Knowledge, is any campaign to establish such representation in progress nor has there been any campaign to establish such representation within the last three years. There is no pending or, to the Best of the Stockholders' Knowledge, threatened labor dispute involving the Company and any group of its employees nor has the Company experienced any significant labor interruptions over the past five years. Neither the Company nor the Stockholders have any knowledge of any significant issues or problems in connection with the relationship of the Company with its employees. The Company considers its relationship with its employees to be good. (b) Except as set forth in Schedule 5.12: (i) there is no unfair labor practice charge or complaint pending or, to the Best of the Stockholders Knowledge, threatened against or otherwise affecting the Company, (ii) no action, suit, complaint, charge, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority brought by or on behalf of any employee, prospective employee, former employee, retiree, labor organization or other representative of the Company's employees is pending or, to the Best of the Stockholders' Knowledge, threatened against the Company, (iii) no grievance is pending or, to the Best of the Stockholders' Knowledge, threatened against the Company, (iv) the Company is not a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Authority relating to employees or employment practices, (v) the Company is in compliance with and has complied with all applicable Laws, agreements, contracts and policies relating to employment, employment practices, wages, hours and terms and conditions of employment, (vi) the Company has paid in full to, or accrued in its financial books and records, all employees of the Company all wages, salaries, commissions, bonuses, benefits and other compensation due to such employees or otherwise arising under any policy, practice, agreement, plan, program, statute or other law and (vii) the Company is in substantial compliance with its obligations pursuant to the Worker Adjustment and Retraining Notification Act of 1988, and all other notification and bargaining obligations arising under any collective bargaining agreement, statute or otherwise. (c) Except as set forth in Schedule 5.12, all employees of the company are (i) citizens of the United States or (ii) not citizens of the United States, but, in accordance with the Immigration Reform and Control Act of 1986 ("IRCA") and other applicable Laws are either (A) immigrants authorized to work in the United States or (B) nonimmigrants authorized to work in the United States for the Company in their specific jobs. 5.13 INSURANCE. Schedule 5.13 sets forth an accurate list as of the Balance Sheet Date of (a) all insurance policies carried by the Company, copies of which are attached as Schedule 5.13, (b) all insurance loss runs or workmen's compensation claims received for the past policy year, and (c) the following information with respect to all insurance policies currently carried by the Company and previously carried by the Company within the last two years: (i) insurer, (ii) type of policy, (iii) coverage period, 17 and (iv) policy limits and amount of deductible or loss retention. Except as set forth in Schedule 5.13, none of such policies are "claims made" policies. The policies described in Schedule 5.13 for the current policy year provide adequate coverage against the risks involved in the Company's business and are currently in full force and effect. Any open claims as of the Closing Date (including, without limitation, the Monarch Hills Condominium Association litigation disclosed in Schedules 5.06 and 5.17) are recoverable under such policies, except to the extent of any applicable deductible or loss retention as set forth on Schedule 5.13. 5.14 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 5.14 sets forth an accurate schedule of all officers, directors and Stockholder employees of the Company with annual salaries of $50,000 or more, listing the rate of compensation (and the portions thereof attributable to salary, bonus, benefits and other compensation, respectively) of each of such persons as of (a) the Balance Sheet Date and (b) the date hereof. Neither the Company nor the Stockholders have any knowledge that any of such individuals has any present intention of terminating his or her employment or association with the Company. Attached to Schedule 5.14 are true, complete and correct copies of each employment or consulting agreement with any employee of the Company or the Stockholders. Except as set forth in Schedule 5.14, the Company is not a party to any agreement, nor has it established any plan, policy, practice or program, requiring it to make a payment or provide any other form of compensation or benefit or vesting rights to any officer, director, stockholder, member or employee of the Company or other person performing services for the Company which would not be payable or provided in the absence of this Agreement or the consummation of the transactions contemplated hereby, including any parachute payment under Section 280G of the Code. 5.15 NONCOMPETITION, CONFIDENTIALITY AND NONSOLICITATION AGREEMENTS; EMPLOYEE POLICIES. Schedule 5.15 sets forth all agreements containing covenants not to compete or solicit employees or to maintain the confidentiality of information to which the Company or any of the Stockholders is bound or under which the Company or any of the Stockholders has any rights or obligations. Schedule 5.15 lists all employee manuals and all material policies, procedures and work-related rules that apply to any employee, director or officer of, or any other individual performing consulting or other independent contractor services for, the Company. The Company has provided U.S. Concrete with a copy of all such written policies and procedures and a written description of all such unwritten policies and procedures. 5.16 EMPLOYEE BENEFIT PLANS. (a) Schedule 5.16 sets forth an accurate schedule of each "employee benefit plan," as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and all deferred compensation or retirement funding arrangements, whether formal or informal and whether legally binding or not, under which the Company or an ERISA Affiliate has any current or future obligation or liability or under which any present or former employee of the Company or an ERISA Affiliate, or such present or former employee's dependents or beneficiaries, has any current or future right to benefits (each such plan and arrangement referred to hereinafter as a 18 "Plan"), together with true and complete copies of such Plans, arrangements and any trusts related thereto, and classifications of employees covered thereby as of the Balance Sheet Date. Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate sponsors, maintains or contributes currently, or sponsored, maintained or contributed at any time during the preceding five years, to any plan, program, fund or arrangement that constitutes an employee pension benefit plan. Each Plan may be terminated by the Company, or if applicable, by an ERISA Affiliate at any time without any liability, cost or expense, other than costs and expenses that are customary in connection with the termination of a Plan. For purposes of this Agreement, the term "employee pension benefit plan" shall have the meaning given that term in Section 3(2) of ERISA, and the term "ERISA Affiliate" means any corporation or trade or business under common control with the Company as determined under Section 414(b), (c), (m) or (o) of the Code. (b) Each Plan listed in Schedule 5.16 is in compliance in all material respects with the applicable provisions of ERISA, the Code and any other applicable Law. Except as set forth in Schedule 5.16, with respect to each Plan of the Company and each ERISA Affiliate (other than a "multiemployer plan," as defined in Section 4001(a)(3) of ERISA), all reports and other documents required under ERISA or other applicable Law to be filed with any Governmental Authority, including without limitation all Forms 5500, or required to be distributed to participants or beneficiaries, have been duly and timely filed or distributed. True and complete copies of all such reports and other documents with respect to the past five years for each Plan have been provided to U.S. Concrete. No "accumulated funding deficiency" (as defined in Section 412(a) of the Code) with respect to any Plan has been incurred (without regard to any waiver granted under Section 412 of the Code), nor has any funding waiver from the Internal Revenue Service been received or requested. Except as set forth in Schedule 5.16, each Plan that is intended to be "qualified" within the meaning of Section 401(a) of the Code (a "Qualified Plan") is, and has been during the period from its adoption to the date hereof, so qualified, both as to form and operation and all necessary approvals of Governmental Authorities, including a favorable determination as to the qualification under the Code of each of such Qualified Plans and each amendment thereto, have been timely obtained. Except as set forth in Schedule 5.16, all accrued contribution obligations of the Company with respect to any Plan have either been fulfilled in their entirety or are fully reflected in the Financial Statements. (c) No Plan has incurred or will incur, and neither the Company nor any ERISA Affiliate has incurred or will incur, with respect to any Plan, any liability for excise tax or penalty due to the Internal Revenue Service. There have been no terminations, partial terminations or discontinuances of contributions to any Qualified Plan during the preceding five years without notice to and approval by the Internal Revenue Service and payment of all obligations and liabilities attributable to such Qualified Plan. (d) Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate has made any promises of retirement or other benefits to employees, except as set forth in the Plans, and neither the Company nor any ERISA Affiliate maintains or has 19 established any Plan that is a "welfare benefit plan" within the meaning of Section 3(1) of ERISA that provides for continuing benefits or coverage for any participant or any beneficiary of a participant after such participant's termination of employment, except as may be required by Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code and similar state Law provisions, and at the expense of the participant or the beneficiary of the participant, or retiree medical liabilities. Neither the Company nor any ERISA Affiliate maintains, has established or has ever participated in a multiple employer welfare benefit arrangement as described in Section 3(40)(A) of ERISA. Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate has any current or future obligation or liability with respect to a Plan pursuant to the provisions of a collective bargaining agreement. (e) Neither the Company nor any ERISA Affiliate has incurred, nor will it incur as a result of past activities, any material liability to the Pension Benefit Guaranty Corporation in connection with any Plan. The assets of each Plan that are subject to Title IV of ERISA are sufficient to provide the benefits under such Plan, the payment of which the Pension Benefit Guaranty Corporation would guarantee if such Plan were terminated, and such assets are also sufficient to provide all other "benefits liabilities" (as defined in ERISA Section 4001(a)(16)) due under such Plan upon termination. (f) No "reportable event" (as defined in Section 4043 of ERISA) has occurred and is continuing with respect to any Plan. There are no pending, or to the Company's and the Stockholders' knowledge, threatened claims, lawsuits or actions (other than routine claims for benefits in the ordinary course) asserted or instituted against, and neither the Company nor any ERISA Affiliate has knowledge of any threatened litigation or claims against, the assets of any Plan or its related trust or against any fiduciary of a Plan with respect to the operation of such Plan. To the Company's and the Stockholders' knowledge, there are no investigations or audits of any Plan by any Governmental Authority currently pending and there have been no such investigations or audits that have been concluded that resulted in any liability to the Company or any ERISA Affiliate that has not been fully discharged. Neither the Company nor any ERISA Affiliate has participated in any voluntary compliance or closing agreement programs established with respect to the form or operation of a Plan. (g) Neither the Company nor any ERISA Affiliate has engaged in any prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, in connection with any Plan for which exemption was not available. Except as set forth in Schedule 5.16, neither the Company nor any ERISA Affiliate is, or ever has been, a participant in or is obligated to make any payment to a multiemployer plan. No person or entity that was engaged by the Company or an ERISA Affiliate as an independent contractor within the last five years reasonably can or will be characterized or deemed to be an employee of the Company or an ERISA Affiliate under applicable Laws for any purpose whatsoever, including, without limitation, for purposes of federal, state and local income taxation, workers' compensation and unemployment insurance and Plan eligibility. 20 5.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in Schedule 5.17, there are no claims, actions, suits or proceedings, pending or, to the Best of the Stockholders' Knowledge, threatened against or affecting the Company, at law or in equity, or before or by any Governmental Authority having jurisdiction over the Company. No written notice of any claim, action, suit or proceeding, whether pending or threatened, has been received by the Company and, to the Best of the Stockholders' Knowledge, there is no basis therefor. Except to the extent set forth in Schedule 5.17, the Company has conducted and is conducting its business in compliance with all Laws applicable to the Company, its assets or the operation of its business. Also listed on Schedule 5.17 are all other instances where the Company is a plaintiff or complaining or moving party, under any of the above types of proceedings. 5.18 TAXES. For purposes of this Agreement, the term "Taxes" shall mean all taxes, charges, fees, levies or other assessments including, without limitation, income, gross receipts, excise, property, sales, withholding, social security, unemployment, occupation, use, service, service use, license, payroll, franchise, transfer and recording taxes, fees and charges, imposed by the United States or any state, local or foreign government or subdivision or agency thereof, whether computed on a separate, consolidated, unitary, combined or any other basis; and such term shall include any interest, fines, penalties or additional amounts attributable to or imposed with respect to any such taxes, charges, fees, levies or other assessments. The Company has timely filed all requisite federal, state, local and other tax returns for all fiscal periods ended on or before the Closing, and has duly paid in full or made adequate provision in the Financial Statements for the payment of all Taxes for all periods ending at or prior to the Closing Date. The Company has duly withheld and paid or remitted all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other person or entity that required withholding under any applicable Law, including, without limitation, any amounts required to be withheld or collected with respect to social security, unemployment compensation, sales or use taxes or workers' compensation. There have not been during the past three years nor are there currently in progress any examinations, audits, proceedings, notices, waivers, asserted deficiencies or disputed valuations or other claims against the Company relating to Taxes for any period or periods prior to and including the Balance Sheet Date and no notice of any claim for Taxes, whether pending or threatened, has been received. The Company has not granted or been requested to grant any extension of the limitation period applicable to any claim for Taxes or assessments with respect to Taxes. The Company is not a party to any Tax allocation or sharing agreement and is not otherwise liable or obligated to indemnify any person or entity with respect to any Taxes. The amounts shown as accruals for Taxes on the 1999 Financial Statements as of the Balance Sheet Date are sufficient for the payment of all Taxes for all fiscal periods ended on or before that date. True and complete copies of (a) any tax examinations or audits, (b) extensions of statutory limitations and (c) the federal, state and local Tax returns of the Company for the last three fiscal years have been previously provided to U.S. Concrete. There are no requests for ruling in respect of any Tax pending between the Company and any Taxing authority. The Company has been taxed under the provisions of Subchapter S of the Code since April 1, 1989. The Company 21 currently utilizes the accrual method of accounting for income tax purposes. Such method of accounting has not changed in the past five years. 5.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth in Schedule 5.19, the Company has used its best efforts to preserve its business organization intact and has conducted its operations in the ordinary course and there has not been: (a) any material adverse change in the business, operations, properties, condition (financial or other), assets, liabilities (contingent or otherwise), results of operations or prospects of the Company; (b) any damage, destruction or loss (whether or not covered by insurance) materially adversely affecting the assets, properties or business of the Company; (c) any change in the authorized capital stock of the Company or in its outstanding securities or any change in the Stockholders' ownership interests in the Company or any grant of any options, warrants, calls, conversion rights or commitments; (d) any declaration or payment of any dividend or distribution in respect of the capital stock or any direct or indirect redemption, purchase or other acquisition of any of the capital stock of the Company; (e) any increase in the compensation payable or to become payable by the Company to the Stockholders or any of its officers, directors, employees, consultants or agents, except for ordinary and customary bonuses and salary increases for employees in accordance with past practice, which bonuses and salary increases are set forth in Schedule 5.19; (f) any failure to keep available the services of the Company's key employees; (g) any work interruptions, labor grievances or claims filed; (h) any proposed law, regulation or event or condition of any character materially adversely affecting the assets, properties or business of the Company; (i) except for the Merger, any sale or transfer, or any agreement to sell or transfer, any material assets, properties or rights of the Company to any person or entity, including, without limitation, the Stockholders and their Affiliates; (j) any cancellation, or agreement to cancel, any indebtedness or other obligation owing to the Company; (k) any increase in the indebtedness of the Company, other than accounts payable incurred in the ordinary course of business, consistent with past practices, or incurred in connection with the transactions contemplated by this Agreement; 22 (l) any plan, agreement or arrangement granting any preferential rights to purchase or acquire any interest in any of the assets, properties or rights of the Company or requiring consent of any party to the transfer and assignment of any such assets, properties or rights; (m) any purchase or acquisition of, or agreement, plan or arrangement to purchase or acquire, any assets, properties or rights outside of the ordinary course of the Company's business; (n) any waiver of any material rights or claims of the Company; (o) any material breach, amendment or termination of any Listed Agreement (including any such agreement with any customer or supplier), Permit or other right to which the Company is a party or any of its property is subject; (p) any material discount to any accounts receivable from any customer; (q) any failure to pay any vendor or any supplier on a timely basis; (r) any failure to preserve the Company's existing relationships with its customers, suppliers and others having business relationships with it and to maintain the goodwill enjoyed by it with such persons; or (s) any other material transaction by the Company outside the ordinary course of business. 5.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY. Schedule 5.20 sets forth an accurate schedule, as of the date of this Agreement, of (a) the name of each financial institution or brokerage firm in which the Company has accounts or safe deposit boxes; (b) the names in which the accounts or boxes are held; (c) the type of account and the cash, cash equivalents and securities held in such account as of the second business day prior to the Closing, none of which assets have been withdrawn from such accounts since such date except for bona fide business purposes in the ordinary course of the business of the Company; and (d) the name of each person authorized to draw thereon or have access thereto. Schedule 5.20 also sets forth the name of each person, corporation, firm or other entity holding a general or special power of attorney from the Company and a description of the terms thereof. 5.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor the Stockholders nor any of their respective Affiliates has given or offered to give anything of value to any governmental official, political party or candidate for government office that was illegal to give or offer to give nor has it otherwise taken any action which would constitute a violation of the Foreign Corrupt Practices Act of 1977, as amended, or any similar Law. 5.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as set forth in Schedule 5.22, neither the Stockholders nor any other Affiliate of the Company owns, directly or indirectly, any interest in, or is an officer, director, employee 23 or consultant of or otherwise receives remuneration from, any Competitive Business, lessor, lessee, customer or supplier of the Company. Except as set forth in Schedule 5.22, no officer or director of the Company nor the Stockholders have, nor had any interest in any tangible or intangible assets or real or personal property used in or pertaining to the business of the Company. 5.23 INTANGIBLE PROPERTY. Schedule 5.23 sets forth an accurate list of all patents, patent applications, trademarks, service marks, technology, licenses, trade names, copyrights and other intellectual property or proprietary property rights owned or used by the Company. The Company owns or possesses, and the assets of the Company include, sufficient legal rights to use all of such items without conflict with or infringement of the rights of others. 5.24 CAPITAL EXPENDITURES. Schedule 5.24 sets forth the total amount of capital expenditures currently budgeted to be incurred by the company in excess of $25,000 in the aggregate during the balance of the Company's current fiscal year. 5.25 INVENTORIES. All inventories, net of reserves determined in accordance with GAAP, of the Company which are classified as such on the balance sheet included in the 1999 Financial Statements are merchantable and salable or usable in the ordinary course of business of the Company. The Company does not depend on any single vendor for its inventories the loss of which could have a material adverse effect on the business or financial condition of the Company or during the past five years has sustained a difficulty material to the Company in obtaining its inventories. 5.26 BACKLOG. All unfilled orders to purchase product from the Company are pending in the ordinary course of business and are firm and binding commitments of the respective purchasers. 5.27 PRODUCT WARRANTIES. Schedule 5.27 sets forth all the terms and conditions of all product or service warranties and guarantees given by the Company. The aggregate amount of losses and expenses incurred by reason of allowances, customer dissatisfaction or liabilities arising under such warranties and guarantees did not exceed $25,000 per year during any one of the five years ended December 31, 1999, and there has been no materially adverse change in that experience since said date. 5.28 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary contained in this Agreement, it is the express understanding of the Stockholders and the Company that U.S. Concrete and Newco are not making any representation or warranty whatsoever, express or implied, other than those representations and warranties of U.S. Concrete and Newco expressly set forth in this Agreement. 5.29 DISCLOSURE The Stockholders and the Company have fully provided U.S. Concrete or its representatives with all the information that U.S. Concrete has requested in analyzing whether to consummate the Merger and the other transactions contemplated by this Agreement. None of the information so provided nor any representation or warranty of the Stockholders to U.S. Concrete or Newco in this 24 Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein, in light of the circumstances under which they were made, not misleading. There is no fact known to the Stockholders which has specific application to the Company (other than general economic or industry conditions) and which materially adversely affects or, so far as the Stockholders can reasonably foresee, materially threatens, the business or financial condition of the Company which has not been described in the Agreement or the Schedules hereto or disclosed in writing to U.S. Concrete. 5.30 YEAR 2000 COMPLIANCE. All devices, systems, machinery, information technology, computer software and hardware, and other date sensitive technology (jointly and severally its "systems") necessary for the Company's business as presently conducted are Year 2000 Compliant within a period of time calculated to result in no material disruption of any of its business operations, and no such material disruptions have yet occurred. For purposes hereof, "Year 2000 Compliant" means that such systems are designed to be used prior to, during and after the Gregorian calendar year 2000 A.D. and have operated and will continue to operate during each such remaining time period without error relating to date data, specifically including any error relating to, or the product of, date data which represents or references different centuries or more than one century. ARTICLE VI REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE AND NEWCO U.S. Concrete and Newco jointly and severally represent and warrant to the Stockholders as follows: 6.01 ORGANIZATION. Each of U.S. Concrete and Newco is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, and is duly authorized and qualified under all applicable Laws to carry on its business in the places and in the manner now conducted. Each of U.S. Concrete and Newco has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as such business is currently being conducted. 6.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. (a) Each of U.S. Concrete and Newco has the full legal right, power and authority to enter into this Agreement and the ancillary documents and agreements described herein and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement has been approved by the boards of directors of U.S. Concrete and Newco and by U.S. Concrete, as the sole stockholder of Newco. No additional corporate proceedings on the part of U.S. Concrete or Newco are necessary to authorize the execution and delivery of this Agreement and the consummation by U.S. Concrete and Newco of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by U.S. Concrete and Newco, and, assuming the due authorization, execution and delivery by the Company and 25 the Stockholders, constitutes valid and binding agreements of U.S. Concrete and Newco, enforceable against U.S. Concrete and Newco in accordance with its terms. (b) The execution and delivery of this Agreement by U.S. Concrete and Newco do not, and the consummation by U.S. Concrete and Newco of the transactions contemplated hereby will not, violate or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under any of the terms, conditions or provisions of (i) the Certificate of Incorporation or Bylaws of U.S. Concrete or Newco, (ii) any Law applicable to either U.S. Concrete or Newco or any of its properties or assets or (iii) any material note, bond, mortgage, indenture, deed of trust, license, franchise, permit, concession, contract, lease or other instrument, obligation or agreement of any kind to which U.S. Concrete or Newco is now a party or by which either U.S. Concrete or Newco or any of its properties or assets may be bound or affected. (c) Except for the Merger Filings and such filings as may be required under federal or state securities Laws, no declaration, filing or registration with, or notice to, or authorization, consent or approval of, any Governmental Authority is necessary for the execution and delivery of this Agreement by U.S. Concrete and Newco or the consummation by U.S. Concrete and Newco of the transactions contemplated hereby. 6.03 U.S. CONCRETE COMMON STOCK. The shares of U.S. Concrete Common Stock to be issued to the Stockholders pursuant to the Merger are duly authorized and, when issued in accordance with the terms of this Agreement, will be validly issued, fully paid and nonassessable. The issuance of U.S. Concrete Common Stock pursuant to the Merger will transfer to the Stockholders valid title to such shares of U.S. Concrete Common Stock, free and clear of all Encumbrances, except for any Encumbrances created by the Stockholders. 6.04 SEC FILINGS; DISCLOSURE. U.S. Concrete has filed with the SEC all material forms, statements, reports and documents required to be filed by it prior to the date hereof under each of the 1933 Act and the 1934 Act and the respective rules and regulations thereunder, (a) all of which, as amended, if applicable, complied when filed in all material respects with all applicable requirements of the appropriate Act and the rules and regulations thereunder, and (b) none of which, as amended, if applicable, contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made and at the time they were made, not misleading. 6.05 NO IMPLIED REPRESENTATIONS. Notwithstanding anything to the contrary contained in this Agreement, it is the express understanding of U.S. Concrete and Newco that the Stockholders are not making any representation or warranty whatsoever, express or implied, other than those representations and warranties of the Stockholders expressly set forth in this Agreement. 26 6.06 DISCLOSURE. U.S. Concrete has fully provided the Stockholders or their representatives with all the information that the Stockholders have requested in analyzing whether to consummate the Merger. None of the information so provided nor any representation or warranty of U.S. Concrete contained in this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein or therein, in light of the circumstances under which they were made, not misleading. ARTICLE VII CERTAIN COVENANTS 7.01 RELEASE FROM AND INDEMNITY WITH RESPECT TO GUARANTEES. U.S. Concrete shall use its commercially reasonable efforts to have the Stockholders released from the personal guarantees of the Company's indebtedness identified in Schedule 7.01 on or before 90 days after the Closing Date. U.S. CONCRETE HEREBY AGREES TO INDEMNIFY AND DEFEND THE STOCKHOLDERS AND HOLD EACH STOCKHOLDER HARMLESS FOR ANY LOSSES INCURRED BY SUCH STOCKHOLDER IN CONNECTION WITH THE ENFORCEMENT OF ANY OBLIGATIONS UNDER SUCH PERSONAL GUARANTEES AFTER THE CLOSING, INCLUDING WITHOUT LIMITATION ANY REASONABLE ATTORNEYS' FEES AND EXPENSES INCURRED IN CONNECTION THEREWITH. 7.02 FUTURE COOPERATION; TAX MATTERS. The Stockholders and U.S. Concrete shall each deliver or cause to be delivered to the other following the Closing such additional instruments as the other may reasonably request for the purpose of fully completing the transactions and terms set forth in this agreement. Except as otherwise expressly provided below, the Stockholders shall be responsible for the payment of all Taxes attributable to all periods prior to and including the Closing Date, including without limitation the period from the beginning of the Company's current Tax year through the Closing Date. Except as otherwise expressly provided below, the Stockholders shall be responsible for the preparation of all Tax returns covering the period from the beginning of the Company's current Tax year through the Closing Date, and shall be responsible for all costs and expenses incurred in connection with the preparation of such Tax returns. Notwithstanding any warranty, representation, indemnity or covenant elsewhere in this Agreement to the contrary, the Surviving Corporation and the Stockholders (but the Stockholder's one-half of such taxes to be allocated among them in proportion to their relative equity interests) will each pay and be responsible for one-half of the Texas corporate franchise taxes for the current franchise tax year which is due on or before March 15, 2000, (which shall include all franchise taxes computed on the periods of calendar year 1999 and on the period from January 1, 2000 through the Closing Date) which covers the privilege of the Company in franchise tax year 2000, together with all other Texas corporate franchise taxes payable by the Company in connection with the transactions contemplated by this Agreement. The Surviving Corporation will cooperate with the Stockholders in the preparation of all Tax returns covering the period from the beginning of the Company's current Tax year 27 through the Closing. In addition, U.S. Concrete will provide the Stockholders with access to such of its books and records as may be reasonably requested by the Stockholders in connection with federal, state and local tax matters relating to periods prior to the Closing and other matters involving the personal liability of Stockholder(s) relating to such period(s). The Stockholders will cooperate and use their commercially reasonable best efforts to have the present officers, directors and employees of the Company cooperate with U.S. Concrete and the Surviving Corporation at and after the Closing in furnishing information, evidence, testimony and other assistance in connection with any actions, proceedings, arrangements or disputes of any nature with respect to matters pertaining to all periods prior to the Closing. The party requesting cooperation, information or actions under this Section 7.02 shall reimburse the other party for all reasonable out-of-pocket costs and expenses paid or incurred in connection therewith, which costs and expenses shall not, however, include per diem charges for employees or allocations of overhead charges. 7.03 EXPENSES. U.S. Concrete will pay the fees, expenses and disbursements of U.S. Concrete and its agents, representatives, accountants and counsel incurred in connection with the execution, delivery and performance of this Agreement and any amendments hereto. U.S. Concrete will be responsible for the fees and expenses of Arthur Andersen LLP's audit or audit related procedures in connection with the transactions contemplated hereby. The Stockholders will pay their fees, expenses and disbursements and those of their and the Company's agents, representatives, financial advisors, accountants and counsel incurred in connection with the execution, delivery and performance of this Agreement and any amendments hereto and the consummation of the transactions contemplated hereby, including, without limitation, accounting fees and related expenses attributable to the final Tax returns of the Company and the Stockholders for periods through the Closing. The Stockholders will also pay any costs associated with business brokers or other advisors engaged by the Stockholders or the Company. 7.04 LEGAL OPINION. At the Closing, the Company and the Stockholders shall cause their legal counsel, Adams, Lynch & Loftin, P.C., to deliver to U.S. Concrete a legal opinion in the form of Exhibit A attached hereto. 7.05 EMPLOYMENT AGREEMENTS. Concurrently with the execution of this Agreement, the Surviving Corporation shall enter into a mutually acceptable Employment Agreement with each of the individuals identified on Schedule 7.05 (collectively, the "Employment Agreements"). 7.06 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with the execution of this Agreement, (a) the Stockholders shall repay to the Company all amounts outstanding as advances to or receivables from the Stockholders, each of which advances or receivables is specifically reflected in Schedule 5.07, and (b) the Company shall repay all amounts outstanding under loans to the Company from the Stockholders, each of which loans to the Company is specifically reflected in Schedule 5.06. 28 7.07 STOCK OPTIONS. U.S. Concrete shall grant nonqualified options to purchase an aggregate of 25,000 shares of U.S. Concrete Common Stock as of the Closing Date under U.S. Concrete's 1999 Incentive Plan (the "Incentive Plan") to certain key employees of the Company (other than the Stockholders), as set forth on Schedule 7.07 in the amounts listed thereon at an exercise price equal to the greater of (i) the closing price of the Purchaser's Common Stock on the Nasdaq National Market as of the Closing Date, or (ii) $8.00 per share. Schedule 7.07 shall also include the social security number and home address of each individual listed thereon. Such options shall vest in equal annual increments for four years, commencing on the first anniversary of the Closing Date. 7.08 PRE-CLOSING DISTRIBUTIONS. Prior to the Closing, the Company may have distributed to the Stockholders the cash and other assets set forth on Schedule 7.08. Any such distributions shall have been authorized by the Board of Directors of the Company prior to the Closing, and the Company and the Stockholders shall have used the respective best efforts to complete such distributions prior to the Closing. Notwithstanding the foregoing, if any such authorized distributions have not been completed prior to the Closing the Surviving Corporation shall use reasonable efforts to complete such authorized distributions after the Closing. The Stockholders' sole recourse against the Surviving Corporation and U.S. Concrete with respect to this Section 7.08 shall be to the assets distributed. 7.09 WORKING CAPITAL ADJUSTMENT. (a) As soon as practicable after the Closing Date, but in no event prior to 21 days after the Closing Date, the Stockholders shall cause to be prepared and delivered to U.S. Concrete a balance sheet of the Company as of the Closing Date (the "Closing Date Balance Sheet Date"), which has been prepared from the books and records of the Company in conformity with GAAP (the "Final Balance Sheet"), and a working capital adjustment schedule (the "Adjustment Schedule"). The Adjustment Schedule will set forth the computation of the Adjusted Working Capital Amount. As used in this Section 7.09, capitalized terms not otherwise defined in this Agreement shall have the following meanings: "Adjusted Current Assets" means the amount of current assets of the Company as set forth on the Closing Date Balance Sheet less cash in excess of $150,000 and less reserves for accounts receivable determined in accordance with GAAP and, without duplication, adjustments for any receivables determined to be uncollectable ; "Adjusted Current Liabilities" means the amount of current liabilities of the Company as set forth on the Closing Date Balance Sheet less the current portion of Interest Bearing Debt as set forth on the Closing Date Balance Sheet; and "Adjusted Working Capital Amount" means the amount computed by subtracting Adjusted Current Liabilities from Adjusted Current Assets. 29 (b) If the Adjusted Working Capital Amount is less than $478,859.00, then the Stockholders shall, no later than 15 days after the Determination Date (as defined below), pay to the Surviving Corporation the amount by which $478,859.00 exceeds the Adjusted Working Capital Amount. If the Adjusted Working Capital Amount is greater than $478,859.00, then U.S. Concrete shall, no later than 15 days after the Determination Date pay to the Stockholders the amount by which the Adjusted Working Capital Amount exceeds $478,859.00. The amount payable pursuant to whichever of the two preceding sentences applies, if either, is referred to herein as the "Working Capital Adjustment." (c) The Closing Date Balance Sheet and Adjustment Schedule will be final and binding on the parties hereto unless, within 15 days following the delivery of the Adjustment Schedule by the Stockholders, U.S. Concrete notifies the Stockholders in writing that U.S. Concrete disagrees with all or any portion of the Closing Date Balance Sheet and/or the Adjustment Schedule. If the Stockholders and U.S. Concrete cannot mutually resolve any such disagreement within 15 days after the receipt by the Stockholders of U.S. Concrete's notice of disagreement, then the Stockholders and U.S. Concrete shall submit the dispute to a mutually agreeable certified public accounting firm (the "Accountant") within 10 days after the end of such 15-day period. If the Stockholders and U.S. Concrete are unable to agree upon such an accounting firm within such 10-day period, then the Stockholders and U.S. Concrete shall select a "Big Five" accounting firm by lot (after excluding any of their respective regular Big Five accounting firms), which accounting firm shall act as the Accountant. The Stockholders and U.S. Concrete shall request that the Accountant audit the Closing Date Balance Sheet and provide a computation of the Working Capital Adjustment within 30 days thereafter, and this computation will be final and binding upon the parties hereto and used to compute the Working Capital Adjustment, the payment of any of which shall be made within five days of delivery by U.S. Concrete of the audited Closing Date Balance Sheet. In the event the Stockholders and U.S. Concrete submit any unresolved objections to an Accountant for resolution as provided in this Section 7.09, the Stockholders and U.S. Concrete will each pay one-half of the fees and expenses of the Accountant. For purposes hereof, "Determination Date" shall mean the date on which the final determination of the Working Capital Adjustment is made in the manner prescribed in this Section 7.09(c). 7.10 INTEREST-BEARING DEBT ADJUSTMENT. As soon as practicable, and in any event within 75 days after the Closing Date, U.S. Concrete shall deliver to the Stockholders a schedule (the "Debt Schedule") which sets forth the amount of the Company's Interest-Bearing Debt as of the Closing Date (the "Closing Date Interest-Bearing Debt Amount"). If the Closing Date Interest-Bearing Debt Amount is greater than $2,668,999.60, then the Stockholders shall, no later than 15 days after delivery of the Debt Schedule by U.S. Concrete, pay to the Surviving Corporation the amount by which the Closing Date Interest-Bearing Debt Amount exceeds $2,668,999.60. 30 ARTICLE VIII INDEMNIFICATION The Stockholders, U.S. Concrete and Newco each make the following covenants: 8.01 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. SUBJECT TO SECTION 8.05 AND SECTION 8.06, THE STOCKHOLDERS COVENANT AND AGREE THAT THEY WILL JOINTLY AND SEVERALLY (WITHOUT ANY RIGHT OF INDEMNIFICATION OR CONTRIBUTION FROM THE COMPANY) INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS U.S. CONCRETE, NEWCO AND THE SURVIVING CORPORATION, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, STOCKHOLDERS, AGENTS, REPRESENTATIVES AND AFFILIATES, AT ALL TIMES FROM AND AFTER THE DATE OF THIS AGREEMENT FROM AND AGAINST ALL LOSSES INCURRED BY ANY OF SUCH INDEMNIFIED PERSONS AND ENTITIES AS A RESULT OF OR ARISING FROM (A) UNTIL THE EXPIRATION DATE ANY BREACH OF THE REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS SET FORTH HEREIN OR IN THE SCHEDULES ATTACHED HERETO OR CERTIFICATES DELIVERED IN CONNECTION HEREWITH, (B) ANY BREACH OR NONFULFILLMENT OF ANY COVENANT OR AGREEMENT ON THE PART OF THE STOCKHOLDERS OR THE COMPANY UNDER THIS AGREEMENT, (C) ALL INCOME TAXES PAYABLE BY THE COMPANY FOR ALL PERIODS PRIOR TO AND INCLUDING THE CLOSING DATE, (D) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN SECTION 5.11 ABOVE, ALL TRANSFER AND OTHER TAXES ARISING FROM THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (E) ANY LITIGATION, WHETHER OR NOT LISTED ON SCHEDULE 5.17, OR (F) ANY EVENTS OCCURRING, CONDITIONS EXISTING, PRODUCTS OR SERVICES SOLD OR ANY ACTS OR OMISSION OF THE COMPANY OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR STOCKHOLDERS OCCURRING ON OR PRIOR TO THE CLOSING DATE WITH RESPECT TO THE OPERATION OF THE BUSINESS OF THE COMPANY OR OWNERSHIP OF ANY OF THE PROPERTIES OR ASSETS OF THE COMPANY. 8.02 INDEMNIFICATION BY U.S. CONCRETE. SUBJECT TO SECTION 8.05 AND SECTION 8.06, U.S. CONCRETE COVENANTS AND AGREES THAT IT WILL INDEMNIFY, DEFEND, PROTECT AND HOLD HARMLESS THE STOCKHOLDERS AND THEIR RESPECTIVE AGENTS, REPRESENTATIVES, AFFILIATES, BENEFICIARIES AND HEIRS AND EMPLOYEES AT ALL TIMES FROM AND AFTER THE DATE OF THIS AGREEMENT FROM AND AGAINST ALL LOSSES INCURRED BY ANY OF SUCH INDEMNIFIED PERSONS AS A RESULT OF OR ARISING FROM (A) UNTIL THE EXPIRATION DATE, ANY BREACH OF THE REPRESENTATIONS AND WARRANTIES OF U.S. CONCRETE OR NEWCO SET FORTH HEREIN OR IN THE SCHEDULES ATTACHED HERETO OR CERTIFICATES DELIVERED IN CONNECTION HEREWITH OR (B) ANY 31 BREACH OR NONFULFILLMENT OF ANY COVENANT OR AGREEMENT ON THE PART OF U.S. CONCRETE OR NEWCO UNDER THIS AGREEMENT. 8.03 THIRD PERSON CLAIMS. Promptly after any party entitled to indemnification under Sections 8.01 and 8.02 hereof (hereinafter the "Indemnified Party") has received notice of or has knowledge of any claim by a person or entity not a party to this Agreement ("Third Person"), or the commencement of any action or proceeding by a Third Person, which the Indemnified Party believes in good faith is an indemnifiable claim under this Agreement, the Indemnified Party shall give to the party obligated to provide indemnification pursuant to Sections 8.01 or 8.02 hereof (hereinafter the "Indemnifying Party") written notice of such claim or the commencement of such action or proceeding. Such notice shall state the nature and the basis of such claim and a reasonable estimate of the amount thereof. The Indemnifying Party shall have the right to defend and settle, at its own expense and by its own counsel reasonably acceptable to the Indemnified Party, any such matter so long as all Losses are borne and paid by the Indemnifying Party and the Indemnifying Party pursues the same diligently and in good faith. If the Indemnifying Party undertakes to defend or settle, it shall promptly notify the Indemnified Party of its intention to do so, and the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in all commercially reasonable respects in the defense thereof and in any settlement thereof, so long as all Losses are borne and paid by the Indemnifying Party. Such cooperation shall include, but shall not be limited to, furnishing the Indemnifying Party with any books, records and other information reasonably requested by the Indemnifying Party and in the Indemnified Party's possession or control. After the Indemnifying Party has notified the Indemnified Party of its intention to undertake to defend or settle any such asserted liability, and for so long as the Indemnifying Party diligently pursues such defense, and the interest of the Indemnifying Party is reasonably represented in accordance with applicable law and Texas Bar Rules, the Indemnifying Party shall not be liable for any additional legal expenses incurred by the Indemnified Party in connection with any defense or settlement of such asserted liability; provided, however, that the Indemnified Party shall be entitled, at its expense, to participate in the defense of such asserted liability and the negotiations of the settlement thereof. The Indemnifying Party shall not settle any such Third Person claim without the consent of the Indemnified Party, unless the settlement thereof imposes no Loss, liability or obligation on, and includes a complete release from all liability of, the Indemnified Party. If the Indemnifying Party desires to accept a final and complete settlement of any such Third Person claim (which pays or otherwise satisfies all Losses which the Indemnified Party is entitled to have indemnified under this Agreement) and the Indemnified Party refuses to consent to such settlement, then the Indemnifying Party's liability under this Section with respect to such Third Person claim shall be limited to the amount so offered in settlement by said Third Person; provided, however, that notwithstanding the foregoing, the Indemnified Party shall be entitled to refuse to consent to any such proposed settlement and the Indemnifying Party's liability hereunder shall not be limited by the amount of the proposed settlement if such settlement imposes any liability or obligation on, or does not provide for the complete release of, the Indemnified Party. If, upon receiving notice, the Indemnifying Party does not timely undertake to defend such matter to which the Indemnified Party is entitled to indemnification hereunder, or fails diligently to pursue such defense, the Indemnified Party may 32 undertake such defense through counsel of its choice, at the cost and expense of the Indemnifying Party, and the Indemnified Party may settle such matter, in its discretion, and the Indemnifying Party shall reimburse the Indemnified Party for the amount paid in such settlement and any other Losses, liabilities or expenses incurred by the Indemnified Party in connection therewith. 8.04 NON-THIRD PERSON CLAIMS. In the event that any Indemnified Party asserts the existence of a claim giving rise to Losses (but excluding claims resulting from the assertion of liability by Third Persons), such party shall give written notice to the Indemnifying Party. Such written notice shall state that it is being given pursuant to this Section 8.04, specify the nature and amount of the claim asserted, and indicate the date on which such assertion shall be deemed accepted and the amount of the claim deemed a valid claim (such date to be established in accordance with the next sentence). If such Indemnifying Party, within 60 days after the mailing of notice by such Indemnified Party, shall not give written notice to such Indemnified Party announcing such Indemnifying Party's intent to contest such assertion of such Indemnified Party, such assertion shall be deemed accepted and the amount of such claim shall be deemed a valid claim. In the event, however, that such Indemnifying Party contests such assertion of a claim by giving such written notice to the Indemnified Party within said period, then the parties shall act in good faith to reach agreement regarding such claim. If the parties cannot resolve such dispute after good faith negotiations with respect thereto within 60 days after the notice provided by the Indemnifying Party, such dispute shall be submitted to arbitration in accordance with the provisions of Section 13.11. In the event that arbitration shall arise with respect to any such claim, the prevailing party shall be entitled to reimbursement of costs and expenses incurred in connection with such arbitration including reasonable attorneys' fees. 8.05 INDEMNIFICATION DEDUCTIBLE. Neither the Stockholders, on the one hand, nor U.S. Concrete, Newco and the Surviving Corporation, on the other hand, shall be entitled to indemnification from the other under the provisions of Section 8.01(a) or Section 8.02(a), as the case may be, until such time as, and only to the extent that, the claims subject to indemnification by such other party exceed, in the aggregate, $100,000. Notwithstanding the foregoing, the limitations set forth in this Section 8.05 shall not apply to fraudulent misrepresentations. 8.06 INDEMNIFICATION LIMITATION. Subject to Section 8.05, the aggregate indemnification obligation of each Stockholder under Section 8.01(a) shall be limited to such Stockholder's pro rata share (in relation to their respective equity interests) of the aggregate Merger Consideration provided in Section 3.01 and shall be limited, as to any particular indemnification obligation, to each Stockholder's pro rata share (in relation to their respective equity interests) of such indemnification obligation. Subject to Section 8.05, the aggregate indemnification obligation of U.S. Concrete and Newco under Section 8.02(a) shall be limited to the amount of Merger Consideration. Notwithstanding the foregoing, the limitations set forth in this Section 8.06 shall not apply to fraudulent misrepresentations. Except as to fraud, deceit and/or willful misconduct and except for any party's right to pursue any available equitable remedy in an appropriate case, the indemnity rights set forth in Section 8.01 and 8.02 above are the sole and exclusive 33 remedies for the breaches of warranty and other matters expressly made the subject of such indemnities. 8.07 INDEMNIFICATION FOR NEGLIGENCE OF INDEMNIFIED PARTY. THE RIGHTS TO INDEMNIFICATION UNDER THIS ARTICLE VIII INCLUDE RIGHTS TO INDEMNIFICATION FOR THE RESULTS OF AN INDEMNIFIED PARTY'S ACTUAL OR ALLEGED NEGLIGENCE, IF SUCH INDEMNIFIED PARTY WOULD OTHERWISE BE ENTITLED TO INDEMNIFICATION HEREUNDER. ARTICLE IX NONCOMPETITION COVENANTS 9.01 PROHIBITED ACTIVITIES. (a) For no additional consideration, (i) Donald S. Butler will not for five years following the Closing Date and, if longer, one year following his termination of employment with the Surviving Corporation or its Affiliates (with the applicable period being herein referred to as the "Noncompete Term") and (ii) John Grace will not for three years following the Closing Date and, if longer, upon the termination of his employment with the Surviving Corporation or its Affiliates (with the applicable period being herein referred to as the "Noncompete Term"), directly or indirectly, for themselves or on behalf of or in conjunction with any other person, company, partnership, corporation or business or other entity of whatever nature: (i) engage, as an officer, director, shareholder, owner, investor, partner, joint venturer, or in a managerial or advisory capacity, whether as an employee, independent contractor, consultant or advisor, or as a sales representative, dealer or distributor, in any Competitive Business within any Territory surrounding any plant or other operating facility in which the Company was engaged in business on the date immediately prior to the Closing Date (for purposes of this ARTICLE IX, the "Territory" surrounding any plant or other operating facility will be: (A) the city, town or village in which that plant or facility is located, (B) the county or parish in which that plant or facility is located, (C) the counties or parishes contiguous to the county or parish in which that plant or facility is located, (D) the area located within 50 miles of that plant or facility, (E) the area located within 100 miles of that plant or facility and (F) the area in which that plant or facility regularly provides products or services at the locations of its customers); (ii) call upon or otherwise solicit any person, who is, at that time, an employee or consultant of U.S. Concrete, the Surviving Corporation or any of their respective subsidiaries, for the purpose or with the intent or effect of enticing such employee or consultant away from or out of the employ or contract with U.S. Concrete, the Surviving Corporation or any of their respective subsidiaries; (iii) call upon or otherwise solicit any person or entity which is, at that time, or which has been, within two years prior to that time, a customer of the Company, U.S. Concrete or the Surviving Corporation or any of the subsidiaries of such parties 34 within the Territory for the purpose of soliciting or selling services or products in a Competitive Business within the Territory; or (iv) call upon or otherwise solicit any entity which the Company or U.S. Concrete has called on in connection with the possible acquisition by either of them of such entity or of which either of them has made an acquisition analysis, with the knowledge of that entity's status as an acquisition candidate of U.S. Concrete, for the purpose of acquiring that entity or arranging the acquisition of that entity by any person or entity other than U.S. Concrete. (b) Notwithstanding the above, Section 9.01(a) shall not be deemed to prohibit any Stockholder from acquiring, as a passive investor with no involvement in the operations of the business, not more than one percent of the capital stock of a Competitive Business whose stock is publicly traded on a national securities exchange, the Nasdaq National Market or over-the-counter. 9.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic losses to U.S. Concrete and the Surviving Corporation as a result of a breach of the foregoing covenant, because a breach of such covenant would diminish the value of the assets, properties and business of the Company being sold pursuant to this Agreement, and because of the immediate and irreparable damage that could be caused to U.S. Concrete and the Surviving Corporation for which it would have no other adequate remedy, since monetary damages alone may not be an adequate remedy, each Stockholder agrees that the foregoing covenant may be enforced against such individual by, without limitation, injunctions, restraining orders and other equitable actions. 9.03 REASONABLE RESTRAINT. It is agreed by the parties hereto that the foregoing covenants in this ARTICLE IX are necessary in terms of time, activity and territory to protect U.S. Concrete's and the Surviving Corporation's interest in the assets, properties and business being acquired pursuant to the terms of this Agreement and impose a reasonable restraint on the Stockholders in light of the activities and businesses of U.S. Concrete on the date of the execution of this Agreement and the current plans of U.S. Concrete. 9.04 SEVERABILITY; REFORMATION. The covenants in this ARTICLE IX are severable and separate, and the unenforceability of any specific covenant shall not affect the continuing validity and enforceability of any other covenant. In the event any court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth in this ARTICLE IX are unreasonable and therefore unenforceable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which the court deems reasonable and this Agreement shall thereby be reformed. 9.05 MATERIAL AND INDEPENDENT COVENANT. The Stockholders acknowledge that their agreements and the covenants set forth in this ARTICLE IX are material conditions to U.S. Concrete's and Newco's agreements to execute and deliver this Agreement and to consummate the transactions contemplated hereby and that U.S. Concrete and Newco would not have entered into this Agreement without such 35 covenants. All of the covenants in this ARTICLE IX shall be construed as an agreement independent of any other provision in this Agreement. The existence of any claim or cause of action by any Stockholder against U.S. Concrete, whether predicated on this Agreement or otherwise, will not constitute a defense to the enforcement by U.S. Concrete of any of the covenants of this ARTICLE IX. It is specifically agreed that the time period Section 9.01 specifies will be computed in the case of each Stockholder by excluding from that computation any time during which that Stockholder is in violation of any provision of Section 9.01. The covenants this ARTICLE IX contains will not be affected by any breach of any other provision hereof by any party hereto. ARTICLE X NONDISCLOSURE OF CONFIDENTIAL INFORMATION 10.01 General. The Stockholders recognize and acknowledge that they had in the past, currently have, and in the future will have, access to certain confidential information relating to the businesses of the Company, the Surviving Corporation and/or U.S. Concrete, including, without limitation, lists of customers, operational policies, and pricing and cost policies that are, and following the Closing will be, valuable, special and unique assets of the Surviving Corporation and U.S. Concrete. Each Stockholder agrees that he or she will not use or disclose such confidential information to any person, firm, corporation, association or other entity for any purpose whatsoever, except as is required in the course of performing his or her duties, if any, to the Surviving Corporation and/or U.S. Concrete, unless (a) such information becomes known to the public generally through no fault of the Stockholder or (b) disclosure is required by Law, provided that prior to disclosing any information pursuant to this clause (c) the disclosing Stockholder(s) shall give prior written notice thereof to U.S. Concrete and the Surviving Corporation and provide U.S. Concrete with the opportunity to contest such disclosure. In the event of a breach or threatened breach by any Stockholder of the provisions of this Section, U.S. Concrete shall be entitled to an injunction restraining such Stockholder from disclosing, in whole or in part, such confidential information. Nothing herein shall be construed as prohibiting U.S. Concrete from pursuing any other available remedy for such breach or threatened breach, including, without limitation, the recovery of damages. 10.02 EQUITABLE RELIEF. Because of the difficulty of measuring economic losses to U.S. Concrete and the Surviving Corporation as a result of the breach of the foregoing covenant, because a breach of such covenant would diminish the value of the assets, properties and business of the Company being sold pursuant to this Agreement, and because of the immediate and irreparable damage that would be caused for which the Surviving Corporation and/or U.S. Concrete would have no other adequate remedy, since monetary damages alone may not be an adequate remedy, each Stockholder agrees that the foregoing covenants may be enforced against such individual by, without limitation, injunctions, restraining orders and other equitable actions. 36 ARTICLE XI FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON U.S. CONCRETE COMMON STOCK 11.01 COMPLIANCE WITH LAW. The Stockholders acknowledge the shares of U.S. Concrete Common Stock issued in accordance with the terms of this Agreement (the "Restricted Shares") will not be registered under the 1933 Act and therefore may not be resold without compliance with the 1933 Act. The Restricted Shares are being or will be acquired by the Stockholders solely for their own account, for investment purposes only, and with no present intention of distributing, selling or otherwise disposing of them in connection with a distribution. Each Stockholder covenants, warrants and represents that none of the Restricted Shares held by such Stockholder will be, directly or indirectly, offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of except after full compliance with all of the applicable provisions of the 1933 Act and the rules and regulations of the SEC. Certificates representing the Restricted Shares shall bear the following legend: The shares represented by this certificate were not issued in a transaction registered under the Securities Act of 1933, as amended ("Securities Act"), or any applicable state securities laws. The shares represented hereby have been acquired for investment and may not be sold or transferred unless such sale or transfer is covered by an effective registration statement under the Securities Act and applicable state securities laws or, in the opinion of counsel to the issuer, is exempt from the registration requirements of the Securities Act and such laws. 11.02 ECONOMIC RISK; SOPHISTICATION; ACCREDITED INVESTORS. Each Stockholder is able to bear the economic risk of an investment in the Restricted Shares and can afford to sustain a total loss of such investment. Each Stockholder has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the proposed investment and therefore has the capacity to protect his or her own interests in connection with the acquisition of the Restricted Shares pursuant hereto. Each Stockholder represents to U.S. Concrete and Newco that he or she is an "accredited investor," as that term is defined in Regulation D under the 1933 Act. Each Stockholder or his or her representatives have had an adequate opportunity to ask questions of, and receive answers from the appropriate officers and representatives of U.S. Concrete and Newco concerning, among other matters, U.S. Concrete, its management, business, operations and financial condition, its plans for the operation of its business and potential additional acquisitions, and to obtain any additional information requested by such Stockholder or his or her representatives concerning such matters. 11.03 RULE 144 REPORTING. With a view to making available the benefits of certain rules and regulations of the SEC that may permit the resale of U.S. Concrete Common Stock to the public without registration, for a period of two years after the Closing, U.S. Concrete agrees to use its commercially reasonable efforts to: 37 (a) make and keep public information (as such terms are defined in Rule 144) regarding U.S. Concrete available; (b) file with the SEC in a timely manner all reports and other documents required of U.S. Concrete under the 1933 Act and the 1934 Act; and (c) furnish to a Stockholder upon written request a written statement by U.S. Concrete as to its compliance with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, a copy of the most recent annual or quarterly report of U.S. Concrete, and such other reports and documents so filed as such Stockholder may reasonably request in availing himself or herself of any rule or regulation of the SEC allowing such Stockholder to sell any such shares without registration. 11.04 RESTRICTION ON SALE OR OTHER TRANSFER OF RESTRICTED SHARES. The Stockholders covenant, warrant and represent that (i) none of the Restricted Shares will be offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of, directly or indirectly, during the two-year period commencing on the Closing Date (the "Lockup Period"); (ii) after the Lockup Period, the Restricted Shares may be offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of directly or indirectly, only after full compliance with all of the applicable provisions of the 1933 Act and the rules and regulations of the SEC; (iii) during the one-year period commencing on the Closing Date, the Stockholders shall not engage in put, call, short-sale, hedge, straddle, collar or similar transactions with respect to any of the Restricted Shares intended to reduce the Stockholders' risk of owning such Restricted Shares; and (iv) following the one-year period described in clause (iii) and for the remainder of the Lockup Period, the Stockholders shall not engage in put, call, short-sale, hedge, straddle, collar or similar transactions with respect to 50% or more of the Restricted Shares intended to reduce the Stockholders' risk of owning such Restricted Shares. Certificates representing the Restricted Shares shall bear the following legend, which shall reflect the Lockup Period, in addition to the legend under Section 11.01: The shares represented by this certificate are subject to a contractual restriction on transfer that expires on March 2, 2002 and may not be offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of during the period of such contractual restriction without the prior written consent of U.S. Concrete, Inc. 11.05 PROSPECTUS DELIVERY. Each Stockholder represents and acknowledges that he or she has been provided with the most current prospectus of U.S. Concrete, dated May 25, 1999, (solely for information purposes as to U.S. Concrete and not in connection with the offering of securities effectuated thereby) and all subsequent periodic reports filed by U.S. Concrete with the SEC at least 20 days prior to the date hereof. 38 ARTICLE XII MISCELLANEOUS 12.01 SUCCESSORS AND ASSIGNS; RIGHTS OF PARTIES. This Agreement and the rights of the parties hereunder may not be assigned (except by operation of Law) and shall be binding upon and shall inure to the benefit of the parties hereto, the successors of U.S. Concrete, Newco, the Surviving Corporation and the Company, and the heirs and legal representatives of the Stockholders. Except as provided in ARTICLE VIII or in this Section 12.01, nothing in this Agreement is intended or will be construed to confer upon or give any person or entity other than the parties hereto any rights or remedies under or by reason of this Agreement or any transaction contemplated hereby. 12.02 ENTIRE AGREEMENT. This Agreement (including the Schedules, exhibits and annexes attached hereto) and the documents delivered pursuant hereto constitute the entire agreement and understanding among the Stockholders, the Company, Newco and U.S. Concrete and supersede any prior agreement and understanding relating to the subject matter of this Agreement, including, without limitation, the Letter of Intent. This Agreement may be modified or amended only by a written instrument executed by the Stockholders, the Company, Newco and U.S. Concrete, acting through their respective officers, duly authorized by their respective Boards of Directors. Any right hereunder may be waived only by a written instrument executed by the party waiving such right. 12.03 COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument. Facsimile transmission of any signed original document and/or retransmission of any signed facsimile transmission will be deemed the same as delivery of an original. At the request of any party, the parties will confirm facsimile transmission by signing a duplicate original document. 12.04 BROKERS AND AGENTS. Each party hereto represents and warrants that it employed no broker or agent in connection with the transactions contemplated by this Agreement. EACH PARTY AGREES TO INDEMNIFY EACH OTHER PARTY AGAINST ALL LOSS, COST, DAMAGES OR EXPENSE ARISING OUT OF CLAIMS FOR FEES OR COMMISSIONS OF BROKERS EMPLOYED OR ALLEGED TO HAVE BEEN EMPLOYED BY SUCH INDEMNIFYING PARTY. 12.05 NOTICES. All notices and communications required or permitted hereunder shall be in writing and may be given by depositing the same in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested (which will be deemed given three business days after deposit), or by delivering the same in person to an officer or agent of such party (which will be deemed given when actually received), as follows: 39 If to U.S. Concrete, Newco or the Surviving Corporation, addressed to them at: U.S. Concrete, Inc. 1300 Post Oak Blvd., Suite 1200 Houston, Texas 77056 Attn: Corporate Secretary If to the Stockholders, addressed as follows: Donald S. Butler 4301 Hidden Valley Court Colleyville, Texas 76034 John Grace 3402 Pembrooke Parkway South Colleyville, Texas 76034 with a copy (which shall not constitute notice) to: John T. Lynch, IV Adams, Lynch & Loftin, P.C. 1903 Central Drive, Suite 400 Bedford, Texas 76201 Fax: (817) 571-2947 or such other address as any party hereto shall specify pursuant to this Section 12.05 from time to time. 12.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties set forth in ARTICLE V and ARTICLE VI shall survive the Closing for a period of three years from the Closing Date (the "Expiration Date"), except that the representations and warranties set forth in Sections 5.03, 5.11, 5.16 and 5.18 hereof shall survive until such time as the applicable statute of limitations period has run, which shall be deemed to be the Expiration Date for Sections 5.03, 5.11, 5.16 and 5.18, as the case may be. The respective parties shall remain liable after the Expiration Date for breaches of the representations and warranties set forth in ARTICLE V and ARTICLE VI, provided such breaches are asserted in good faith by notice in writing to the alleged breaching party prior to the Expiration Date. 12.07 EXERCISE OF RIGHTS AND REMEDIES; REMEDIES CUMULATIVE. Except as otherwise provided herein, no delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver. No right, remedy or election any term of this Agreement gives will be deemed exclusive, but each 40 will be cumulative with all other rights, remedies and elections available at law or in equity. 12.08 REFORMATION AND SEVERABILITY. In case any provision of this Agreement shall be invalid, illegal or unenforceable, it shall, to the extent possible, be modified in such manner as to be valid, legal and enforceable, but so as to most nearly retain the intent of the parties, and if such modification is not possible, such provision shall be severed from this Agreement, and in either case, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby. 12.09 SECTION HEADINGS; GENDER. The Section headings contained in this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement. Words of the masculine gender in this Agreement shall be deemed and construed to include correlative words of the feminine and neuter genders and words of the neuter gender shall be deemed and construed to include correlative words of the masculine and feminine genders. 12.10 GOVERNING LAW. This Agreement shall be construed in accordance with the laws of the State of Texas (except for its principles governing conflicts of laws). 12.11 DISPUTE RESOLUTION. (a) Except with respect to injunctive relief as provided in Section 9.02 and Section 10.02 (which relief may be sought from any court or administrative agency with jurisdiction with respect thereto), any unresolved dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in accordance with the rules of the American Arbitration Association ("AAA") then in effect through its Dallas, Texas offices. The arbitration shall be conducted by a single arbitrator who is a retired state or federal judge in Texas selected in accordance with AAA rules and procedures then in effect. The arbitration shall be conducted in Dallas, Texas. (b) The parties shall obtain from AAA a list of the retired judges available to conduct the arbitration. The parties shall use their reasonable efforts to agree upon a judge to conduct the arbitration. If the parties cannot agree upon a judge to conduct the arbitration within 10 days after receipt of the list of available judges, the parties shall ask AAA to provide the parties a list of three available judges (the "Judge List"). Within five days after receipt of the Judge List, each party shall strike one of the names of the available judges from the Judge List and return a copy of such list to AAA and the other party. If two different judges are stricken from the Judge List, the remaining judge shall conduct the arbitration. If only one judge is stricken from the Judge List, AAA shall select a judge from the remaining two judges on the Judge List to conduct the arbitration. (c) The arbitrator shall not have the authority to add to, detract from, or modify any provision hereof nor to award punitive damages to any injured party. The arbitrator shall have the authority to order payment of damages, reimbursement of costs, 41 including those incurred to enforce this Agreement, and interest thereon in the event the arbitrator determines that a material breach of this Agreement has occurred. A decision by the arbitrator shall be final and binding. Judgment may be entered on the arbitrator's award in any court having jurisdiction. 12.12 INTEGRATION OF OPERATIONS. The Stockholders and the Company acknowledge that U.S. Concrete intends to integrate the operations conducted by the Company with the operations of other companies owned now or in the future by U.S. Concrete in the Dallas-Fort Worth Metroplex area, Texas. 12.13 EXCEPTIONS REGARDING LEWISVILLE LEASE (a) Stockholders warrant and represent to U.S. Concrete that the real property ("Lewisville Property") which is the subject of the Lewisville Plant Site of Company has a valid certificate of occupancy and is in compliance with the ordinances of the city of Lewisville and meets the city of Lewisville requirements for use of the Lewisville Plant in its current manner; however, the Lewisville Property is not platted. Stockholders warrant and represent that the current use and development status of the Lewisville Property and appurtenant plant and improvements are lawful, nonconforming uses and structures with respect to the City of Lewisville Development Code. (b) Stockholders assert that any new construction, additional improvements to the realty, and other actions set forth in the City of Lewisville Development Code will trigger the requirement for platting, and that platting will require a number of improvements and other actions at a significant cost and delay. Stockholders further assert that it was the plan and intent of Company to use the Lewisville Property "as is" until such time that any event triggered the requirement to meet the City of Lewisville Development Code, at which time the Lewisville Plant would be moved to an alternate location. It is stipulated and agreed that notwithstanding anything in this Agreement to the contrary, except for any material misrepresentation or material incorrectness of the warranties and representations set forth in Section 12.13(a) above, any cost or other requirements to meet the City of Lewisville Development Code or move to an alternate location are excluded from any warranty, representation, covenant and indemnity obligations of Stockholders set forth in this Agreement. [Remainder of page intentionally left blank] 42 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. U.S. CONCRETE, INC. By:/s/ Donald Wayne ------------------------------ Donald Wayne, Vice President CONCRETE XXIV ACQUISITION, INC. By:/s/ Donald Wayne ------------------------------- Donald Wayne, President STANCON INC. By:/s/ Donald S. Butler ------------------------------- Donald S. Butler, President STOCKHOLDERS: /s/ Donald S. Butler ---------------------------------- Donald S. Butler, Individually /s/ John Grace ---------------------------------- John Grace, Individually 43 STATE OF TEXAS (S) (S) COUNTY OF Harris (S) ------ The above and foregoing instrument was acknowledged before me on the 2nd day of March, 2000, by Donald Wayne of U.S. CONCRETE, a Delaware corporation, on behalf of the corporation. /s/ Stephanie A. Thomas -------------------------------- Notary Public My Commission Expires: 5/10/2000 - -------------------------- (Seal) STATE OF TEXAS (S) (S) COUNTY OF Harris (S) ------ The above and foregoing instrument was acknowledged before me on the 2nd day of March, 2000, by Donald Wayne of CONCRETE XXIV ACQUISITION, INC., a Delaware corporation, on behalf of the corporation. /s/ Stephanie A. Thomas ---------------------------- Notary Public My Commission Expires: 5/10/2000 - ------------------------------ (Seal) 44 STATE OF TEXAS (S) (S) COUNTY OF Tarrant (S) ------- The above and foregoing instrument was acknowledged before me on the 2nd day of March, 2000, by Donald S. Butler of STANCON, INC., a Texas corporation, on behalf of the corporation. /s/ Stacy D. Turner ---------------------------- Notary Public My Commission Expires: 6/25/2000 - --------------------------- (Seal) STATE OF TEXAS (S) (S) COUNTY OF Tarrant (S) The above and foregoing instrument was acknowledged before me on the 2nd day of March, 2000, by Donald S. Butler. /s/ Stacy D. Turner ----------------------------- Notary Public My Commission Expires: 6/25/2000 - ------------------------------ (Seal) STATE OF TEXAS (S) (S) COUNTY OF Tarrant (S) ------- The above and foregoing instrument was acknowledged before me on the 2nd day of March, 2000, by John Grace. /s/ Stacy D. Turner ------------------------------ Notary Public My Commission Expires: 6/25/2000 - ----------------------------- (Seal) 45 EX-4.6 8 AMENDED AND RESTATED CREDIT AGREEMENT EXHIBIT 4.6 AMENDED AND RESTATED CREDIT AGREEMENT among U.S. CONCRETE, INC. as the Borrower, THE GUARANTORS, party hereto, THE LENDERS, party hereto, CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as Administrative Agent, BANKERS TRUST COMPANY as syndication agent, and FIRST UNION NATIONAL BANK, as documentation agent, and BANK ONE, TEXAS, NA BRANCH BANKING & TRUST COMPANY CREDIT LYONNAIS NEW YORK BRANCH THE BANK OF NOVA SCOTIA, as co-managing agents, and CHASE SECURITIES INC., as Sole Book Manager and Lead Arranger $200,000,000 REVOLVING CREDIT LOAN FEBRUARY 9, 2000 ANDREWS & KURTH L.L.P. COUNSEL TO THE ADMINISTRATIVE AGENT TABLE OF CONTENTS Page ARTICLE I DEFINITIONS................................................... 1 SECTION 1.01. Defined Terms............................................ 1 SECTION 1.02. Classification of Loans and Borrowings................... 18 SECTION 1.03. Terms Generally.......................................... 19 SECTION 1.04. Accounting Terms; GAAP................................... 19 ARTICLE II THE CREDITS.................................................. 19 SECTION 2.01. Commitments.............................................. 19 SECTION 2.02. Loans and Borrowings..................................... 20 SECTION 2.03. Requests for Revolving Borrowings........................ 20 SECTION 2.04. Swingline Loans.......................................... 21 SECTION 2.05. Letters of Credit........................................ 22 SECTION 2.06. Funding of Borrowings.................................... 26 SECTION 2.07. Interest Elections....................................... 27 SECTION 2.08. Termination and Reduction of Commitments................. 28 SECTION 2.09. Repayment of Loans; Evidence of Debt..................... 29 SECTION 2.10. Prepayment of Loans...................................... 30 SECTION 2.11. Fees..................................................... 30 SECTION 2.12. Interest................................................. 31 SECTION 2.13. Alternate Rate of Interest............................... 32 SECTION 2.14. Increased Costs.......................................... 33 SECTION 2.15. Break Funding Payments................................... 34 SECTION 2.16. Taxes.................................................... 34 SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs...................................... 35 SECTION 2.18. Mitigation Obligations; Replacement of Lenders........... 37 SECTION 2.19. Effect of Increased Costs................................ 37 ARTICLE III REPRESENTATIONS AND WARRANTIES.............................. 38 SECTION 3.01. Organization; Powers..................................... 38 SECTION 3.02. Authorization; Enforceability............................ 38 SECTION 3.03. Governmental Approvals; No Conflicts..................... 38 SECTION 3.04. Financial Condition; No Material Adverse Change.......... 38 SECTION 3.05. Properties............................................... 39 SECTION 3.06. Litigation and Environmental Matters..................... 40 SECTION 3.07. Compliance with Laws and Agreements...................... 40 SECTION 3.08. Investment and Holding Company Status.................... 40 SECTION 3.09. Taxes.................................................... 40 SECTION 3.10. ERISA.................................................... 41 SECTION 3.11. Disclosure............................................... 41 SECTION 3.12. Year 2000................................................ 41 SECTION 3.13 Solvency................................................. 41 SECTION 3.14 Insurance................................................ 41 SECTION 3.15. Subsidiaries............................................. 42 ARTICLE IV CONDITIONS................................................... 42 SECTION 4.01. Effective Date........................................... 42 SECTION 4.02. Each Credit Event........................................ 45 ARTICLE V AFFIRMATIVE COVENANTS.......................................... 46 i SECTION 5.01. FINANCIAL STATEMENTS; AND OTHER INFORMATION.............. 46 SECTION 5.02. Notices of Material Events............................... 47 SECTION 5.03. Existence; Conduct of Business; Location................. 48 SECTION 5.04. Payment of Obligations................................... 48 SECTION 5.05. Maintenance of Properties; Insurance..................... 48 SECTION 5.06. Books and Records; Inspection Rights; Audits............. 49 SECTION 5.07. Compliance with Laws..................................... 49 SECTION 5.08. Use of Proceeds and Letters of Credit.................... 49 SECTION 5.09. Subsidiaries............................................. 49 SECTION 5.10. Collateral............................................... 50 SECTION 5.11. Employee Agreements...................................... 51 SECTION 5.12. Compliance With Leases................................... 51 ARTICLE VI NEGATIVE COVENANTS........................................... 51 SECTION 6.01. Indebtedness............................................. 51 SECTION 6.02. Liens.................................................... 52 SECTION 6.03. Fundamental Changes...................................... 53 SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions............................................. 53 SECTION 6.05. Restricted Payments...................................... 54 SECTION 6.06. Transactions with Affiliates............................. 54 SECTION 6.07. Restrictive Agreements................................... 54 SECTION 6.08. Financial Ratios......................................... 55 SECTION 6.09. Net Worth................................................ 56 SECTION 6.10. Capital Expenditures..................................... 56 SECTION 6.11. Limitation of Acquisitions............................... 56 SECTION 6.12. Hedging Agreement........................................ 58 SECTION 6.13 Additional Borrowings Under Union Bank Indebtedness...... 58 SECTION 6.14. Prepayment of Other Indebtedness......................... 58 SECTION 6.15. Fiscal Year.............................................. 58 SECTION 6.16. Sale and Leaseback....................................... 58 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES.............................. 59 SECTION 7.01. Events of Default........................................ 59 SECTION 7.02. Remedies................................................. 61 ARTICLE VIII THE ADMINISTRATIVE AGENT.................................... 61 ARTICLE IX MISCELLANEOUS............................................... 63 SECTION 9.01. Notices.................................................. 63 SECTION 9.02. Waivers; Amendments...................................... 65 SECTION 9.03. Expenses; Indemnity; Damage Waiver....................... 66 SECTION 9.04. Successors and Assigns................................... 67 SECTION 9.05. Survival................................................. 69 SECTION 9.06. Counterparts; Integration; Effectiveness................. 69 SECTION 9.07. Severability............................................. 70 SECTION 9.08. Right of Setoff.......................................... 70 SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process....................................... 70 SECTION 9.10. WAIVER OF JURY TRIAL..................................... 71 SECTION 9.11. Headings................................................. 71 SECTION 9.12. Confidentiality.......................................... 72 SECTION 9.13. Interest Rate Limitation................................. 72 SECTION 9.14. FINAL AGREEMENT OF THE PARTIES........................... 73 SECTION 9.15. Limited Liability........................................ 73 ARTICLE X GUARANTY....................................................... 73 ii SECTION 10.01. Guaranty................................................ 73 SECTION 10.02. Continuing Guaranty..................................... 74 SECTION 10.03. Effect of Debtor Relief Laws............................ 75 SECTION 10.04. Partial Waiver of Subrogation........................... 75 SECTION 10.05. Subordination........................................... 76 SECTION 10.06. Waiver.................................................. 76 SECTION 10.07. Full Force and Effect................................... 77 SECTION 10.08. Termination of Guaranty................................. 77 iii SCHEDULES: - --------- Schedule 2.01 Commitments Schedule 3.05(b) Leases Schedule 3.05(d) Location of Business/Chief Executive Office Schedule 3.06 Disclosed Matters Schedule 3.15 Subsidiaries Schedule 6.01 Existing Indebtedness Schedule 6.04 Existing Investments Schedule 6.07 Existing Restrictions EXHIBITS: - -------- Exhibit 1.01A Form of Assignment and Acceptance Exhibit 1.01B Form of Note Exhibit 1.01C Form of Terms of Subordination for Subordinated Debt Exhibit 5.09 Form of Joinder Agreement Exhibit 6.11 Form of Acquisition Information Worksheet iv AMENDED AND RESTATED CREDIT AGREEMENT THIS AMENDED AND RESTATED AGREEMENT dated as of February 9, 2000, among the Borrower, the Guarantors, the Lenders, Bankers Trust Company, as syndication agent, First Union National Bank, as documentation agent, Bank One, Texas, NA, Branch Banking & Trust Company, Credit Lyonnais New York Branch and The Bank of Nova Scotia, as co-managing agents and Chase Bank of Texas, N.A., as the Administrative Agent. The Borrower, certain Guarantors, certain Lenders and the Administrative Agent entered into the Prior Credit Agreement dated May 28, 1999. The Borrower now requests that the Lenders amend and restate the Prior Credit Agreement and provide the Borrower with a credit facility pursuant to which the Lenders will commit to make Revolving Credit Loans of up to an additional $100,000,000, for a total of $200,000,000. The proceeds of the Revolving Credit Loans shall be used to finance working capital needs of the Borrower and its Subsidiaries and, for their general corporate purposes, including permitted acquisitions. In connection therewith, the Administrative Agent has agreed to serve in such capacity for the Lenders and the Administrative Agent and the Lenders are agreeable to the Borrower's request, subject to the terms of this Agreement. All capitalized terms used in this introductory paragraph are defined in Article I, Definitions. NOW THEREFORE, in consideration of the foregoing and the mutual covenants set forth herein, the Borrower, the Administrative Agent and the Lenders agree to amend and restate the Prior Credit Agreement in its entirety as follows: ARTICLE I Definitions SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below: "ABR" when used in reference to any Loan or Borrowing, refers to a Loan or Borrowing bearing interest at a rate determined by reference to the Alternate Base Rate. "Acquisition" means any transaction, or any series of related transactions, by which the Borrower or any of its Subsidiaries (a) acquires all or substantially all of the assets of any Qualified Company (including the Acquisition Targets), or division thereof, whether through purchase of assets, merger or otherwise or (b) directly or indirectly acquires all of the securities of or outstanding ownership interests or control of any Qualified Company (including the Acquisition Targets). "Acquisition Documents" means any and all purchase agreements, in each case among the Borrower, and any Qualified Company that is the subject of an Acquisition and/or the stockholders of such Qualified Company and all other conveyance documents, bills of sale and all other written agreements, documents, instruments and certificates now or hereafter executed and delivered by any Person required to be delivered to consummate any Acquisition and any and all amendments, supplements, and other modifications thereof, in each case other than from the Borrower or another Subsidiary. "Acquisition Targets" means collectively, the following Qualified Companies: the Allega Cement Companies and the Beall Industries Companies, and individually, any of the foregoing. "Add-Back Adjustments" means the pro forma adjustments of the types referred to in 17 CFR 210.11-02(b)(6). "Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period, the interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the statutory Reserve Rate. "Administrative Agent" means Chase Bank of Texas, National Association, a national banking association, in its capacity as administrative agent for the Lenders hereunder. "Administrative Questionnaire" means an Administrative Questionnaire in a form supplied by the Administrative Agent. "Affiliate" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "Agreement" means this agreement, as the same may be amended, amended and restated, modified or supplemented from time to time. "Allega Cement Companies" means Allega Cement, an Ohio corporation and its subsidiaries. "Alternate Base Rate" means for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day, and (b) the Federal Funds Effective Rate in effect on such day plus 0.5% per annum. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "Applicable Percentage" means, with respect to any Lender, the percentage of the total Commitments represented by such Lender's Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments. 2 "Applicable Margin" means, for any day during any period between two successive Financial Statement Delivery Dates commencing on the first Financial Statement Delivery Date in such period and ending on the day before the following Financial Statement Delivery Date, with respect to any ABR Loan, Eurodollar Revolving Loan, or with respect to the commitment fees payable hereunder, as the case may be, the applicable margin per annum set forth in the appropriate column below under the caption "ABR Spread", "Eurodollar Spread" or "Commitment Fee Rate", as the case may be, for the ratio of Funded Debt to EBITDA for the fiscal period for which such financial statements were delivered as of the Financial Statement Delivery Date; provided, that upon the occurrence of any Capital Markets Event, each of the applicable margins per annum set forth in the appropriate column below under the caption "ABR Spread" and "Eurodollar Spread", as the case may be, shall be equal to the amount set forth below minus .25%, however, the applicable margin under the caption "Commitment Fee" shall remain unchanged:
Ratio of Funded Debt to EBITDA ABR Eurodollar Commitment - ------------------------------ ------- ---------- ---------- Spread Spread Fee Rate ------- ---------- ---------- *3.0 to 1.0 2.00% 3.00% .50% *2.5 to 1.0 but **3.0 to 1.0 1.75% 2.75% .50% *2.0 to 1.0 but **2.5 to 1.0 1.50% 2.50% .50% *1.5 to 1.0 but **2.0 to 1.0 1.00% 2.00% .50% *1.0 to 1.0 but **1.5 to 1.0 .75% 1.75% .375% *.5 to 1.0 but **1.0 to 1.0 .50% 1.50% .375% **.5 to 1.0 .25% 1.25% .250%
* Greater than or equal to ** Lesser than As of the date hereof and until delivery of the Financial Statements for the period ending December 31, 1999 required under Section 5.01, the Applicable Margin for Eurodollar Loans shall be 2.50% per annum, for ABR Loans, 1.50% per annum, and the Commitment Fee Rate shall be .50% per annum. For purposes of the foregoing, (a) if sufficient information does not exist to calculate the Applicable Margin, or the Borrower has not delivered such information to the Administrative Agent in a timely manner, Eurodollar Loans shall not be available to the Borrower and the Applicable Margin for ABR Loans shall be 2.00% per annum and for the commitment fee shall be .50% per annum; and (b) if (i) the Ratio of Funded Debt to EBITDA shall change upon delivery of any financial statement required under Section 5.01 or (ii) a Capital Markets Event shall have occurred, such change in the Applicable Margin shall be effective as of the date on which any such financial statement is delivered or on the date of the Capital Markets Event shall have occurred, as the case may be, irrespective of whether it is in the middle of an Interest Period or when notice of such change shall have been furnished by the Borrower to the Administrative Agent and the Lenders pursuant to Section 5.01(c) hereof or otherwise. Each change in the Applicable Margin shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. 3 "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit 1.01A or any other form approved by the Administrative Agent. "Availability Period" means the period from and including the Effective Date to but excluding the earlier of thirty (30) days prior to the Maturity Date and the date of termination of the Commitments. "Autoborrow Agreement" means the Autoborrow Service Agreement dated as of July 30, 1999, between the Borrower and the Swingline Lender. "BT" means Bankers Trust Company. "Beall Companies" means Beall Industries, Inc. a Texas corporation, its subsidiaries, Beall Management, Inc., a Texas corporation, Beall Investment Corporation, Inc., a Delaware corporation and Beall Concrete Enterprises, Ltd., a Texas limited partnership. "Board" means the Board of Governors of the Federal Reserve System of the United States of America. "Borrower" means U.S. Concrete, Inc., a Delaware corporation. "Borrowing" means (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, and (b) Swingline Loans. "Borrowing Request" means a request by the Borrower for a Revolving Borrowing in accordance with Section 2.03. "Business Day" means any day that is not a Saturday, Sunday or other day on which commercial banks in Houston, Texas are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market. "Capital Expenditures" of any Person means the expenditures for any purchase or other acquisition of any asset (other than for any Acquisition) which are required to be classified and accounted for as a capital asset on a consolidated balance sheet of such Person under GAAP and the amount of such expenditures shall be the capitalized amount thereof determined in accordance with GAAP. "Capital Lease Obligations" of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and 4 accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. "Capital Markets Event" means the first issuance after the Effective Date by the Borrower or any Subsidiary of (i) Subordinated Debt, (ii) preferred stock on terms reasonably satisfactory to the Administrative Agent and the Lenders or (iii) common equity of the Borrower, from which the gross proceeds to the Borrower are in an aggregate principal amount of not less than $100,000,000. "Certificate of Title" means any written instrument which may be issued solely by and under the authority of any jurisdiction for any vehicle which is required by such jurisdiction to be licensed or registered. "Change in Control" means (a) the failure of Vincent Foster to be Chairman of the Board of Directors of the Borrower; (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated by the board of directors of the Borrower nor (ii) appointed by directors so nominated; or (c) the acquisition of direct or indirect Control of the Borrower by any Person or group other than the shareholders of the Borrower beneficially as shown on page 60 of the Registration Statement. "Change in Law" means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof having the effect of law by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.14(b), by any lending office of such Lender or by such Lender's or the Issuing Bank's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. "Class", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Swingline Loans. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Collateral" means all of the material assets of the Borrower and its Subsidiaries, including, all accounts, inventory, vehicles, equipment (including rolling stock), furniture, fixtures, general intangibles, capital stock of subsidiaries and all real property and leasehold estates (including improvements thereon) held by such Person. "Commitment" means (a) with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder, as such commitment may be (i) reduced from time to time pursuant to Section 2.08 or and (ii) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04 and (b) with respect to the Swingline Lender, its commitment to make Swingline Loans. The initial amount of each Lender's 5 Commitment is set forth on Schedule 2.01 under the caption "Initial Commitment", or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable. The aggregate amount of the Lenders' total Commitments is $200,000,000.00 initially, and reduces to $175,000,000 upon and after the occurrence of a Capital Markets Event. "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto. "Default" means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. "Default Rate" has the meaning specified in Section 2.12(c). "Disclosed Matters" means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06. "dollars" or "$" refers to lawful money of the United States of America. EBITDA means, determined for the most recently ended period of four full fiscal quarters of the Borrower, the sum of: (a) consolidated operating income of the Borrower before any deduction for federal, state and local income and franchise taxes, excluding any extraordinary gains or losses, plus (to the extent deducted in determining income for such period) the aggregate amount which was deducted for such period in determining such income for interest expense, depreciation expense and amortization expense, plus, for each such period that includes the fiscal quarter of the Borrower ending March 31, 1999, the noncash, nonrecurring stock compensation charge of the Borrower in that fiscal quarter as reflected in the Registration Statement, plus, for each such period that includes dates prior to May 29, 1999, the Add-Back Adjustments of the Founding Companies from the beginning of the relevant fiscal period to the end of each such period; provided, that for any such period that includes May 28, 1999 as to the Founding Companies, EBITDA under this subparagraph (a) will be determined as if the Borrower and the Founding Companies had been a consolidated entity from the beginning of such applicable period; and (b) for each Qualified Company whose Acquisition by the Borrower occurs during the four quarters preceding the date as of which EBITDA is calculated and with respect to the period beginning four quarters prior to the calculation of EBITDA through the date of such Acquisition, the sum of the consolidated operating income of such Qualified Company before any deduction for federal, state and local income and franchise taxes, excluding any extraordinary gains or losses, plus the aggregate amount which was deducted for such period in determining such income for interest expense, depreciation expense and amortization expense, plus Add-Back Adjustments of such Qualified Company; provided, said pre-acquisition EBITDA of any Qualified Company shall be included in EBITDA only to the extent any such amount (i) is not included in subparagraph (a) 6 above, (ii) if the statement of operations of such Qualified Company for its most recently ended fiscal year prior to its Acquisition (or, if that fiscal year is not a calendar year, for the most recently ended calendar year, at the option of the Borrower) has been audited by independent public accountants of recognized standing, is derived from that audited statement and from such Qualified Company's interim unaudited statement of operations prepared on the same basis as that audited statement for the period since the year covered in that audited statement and (iii) if not included in clause (ii) of this proviso, is (A) approved for inclusion in such calculation by the Required Lenders, (B) not in excess of $1,000,000 in the aggregate for all such acquisitions during any rolling 12 month period or (C) is pre-acquisition EBITDA of Olive Branch. "Effective Date" means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02). "Environmental Laws" means all final laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters to the extent binding on the Borrower and its Subsidiaries and their properties. "Environmental Liability" means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials in a manner that results in damage to the environment, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "ERISA Affiliate" means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. "ERISA Event" means (a) any "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate 7 from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA. "Eurodollar", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate. "Event of Default" has the meaning assigned to such term in Article VII. "Excluded Taxes" means, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.18(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender's failure to comply with Section 2.16(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.16(a). "Federal Funds Effective Rate" means (a) for the first day of an ABR Borrowing or Swingline Loan, the rate per annum which is the average of the rates on the offered side of the Federal funds market quoted by three interbank Federal funds brokers, selected by the Administrative Agent, at approximately the time the Borrower request such Borrowing or Swingline Loan, for dollar deposits in immediately available funds, for a period and in an amount, comparable to the principal amount of such ABR Borrowing or Swingline Loan, as the case may be, and (b) for each other day of such ABR Borrowing or Swingline Loan thereafter, or for any other amount hereunder which bears interest at the Alternate Base Rate, the rate per annum which is the average of the rates on the offered side of the Federal funds market quoted by three interbank Federal funds brokers, selected by the Administrative Agent, at approximately 2:00 p.m. New York City time on such day for dollar deposits in immediately available funds, for a period and in an amount, comparable to the principal amount of such ABR Borrowing, Swingline Loan or other amount, as the case may be; in the case of both clauses (a) and (b), as determined by the Administrative Agent and rounded upwards, if necessary, to the nearest 1/100 of 1%. 8 "Financial Officer" means the chief executive officer or the chief financial officer of the Borrower. "Financial Statement Delivery Date" means the earlier of the date on which the financial statements of the Borrower are delivered or are required to be delivered to the Administrative Agent and the Lenders pursuant to Section 5.01(a) or 5.01(b), as the case may be. "Founding Companies" means Central Concrete Supply Co., Inc., a California corporation; Walker's Concrete, Inc., a California corporation; Bay Cities Building Materials Co., Inc., a California corporation; Opportunity Concrete Corporation, a District of Columbia corporation; Baer Concrete, Incorporated, a New Jersey corporation; and R.G. Evans/Associates d/b/a/ Santa Rosa Cast Products Co., a California corporation. "Foreign Lender" means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction. "Funded Debt" means, as to any Person on a consolidated basis, all Indebtedness for borrowed money evidenced by a note, agreement, debenture, bond or similar writing and requiring periodic payments of interest and/or principal, Capitalized Lease Obligations, the aggregate LC Exposure and Indebtedness evidenced by any Guaranty of Indebtedness other than the Guaranty of the Indebtedness hereunder. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time. "Governmental Authority" means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "Guaranty" of or by any Person (the "guarantor") means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or 9 obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. "Guarantors" means the Persons on the signature pages hereto under the caption "Guarantors" and any other Person that shall become a Guarantor hereunder pursuant to Section 5.09. "Guaranteed Obligations" has the meaning specified in Section 10.01 hereof. "Hazardous Materials" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. "Hedging Agreement" means any foreign currency exchange agreement, commodity price protection agreement or other currency exchange rate or commodity price hedging arrangement. "Highest Lawful Rate" means as to any Lender, the maximum nonusurious rate of interest that, under applicable law, may be contracted for, taken, reserved, charged or received by such Lender on the Loans or under the Loan Documents at any time or from time to time. If the maximum rate of interest which, under applicable law, any of the Lenders is permitted to charge the Borrower on its Loans shall change after the date hereof, to the extent permitted by applicable law, the Highest Lawful Rate applicable to such Loans shall be automatically increased or decreased, as the case may be, as of the effective time of such change without notice to the Borrower or any other Person. "Indebtedness" of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person (excluding accounts payable and accrued liabilities incurred in the ordinary course of business), (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable and accrued liabilities incurred in the ordinary course of business), (f) all Indebtedness of others secured by any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guaranties by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of Letters of Credit, any other letters of credit, letters of guaranty supporting Indebtedness and the net amount under any Interest Rate Risk Indebtedness, any and (j) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as 10 a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. "Indemnified Taxes" means Taxes other than Excluded Taxes. "Information Memorandum" means the Confidential Information Memorandum dated January, 2000, relating to the Borrower and the Transactions. "Interest Election Request" means a request by the Borrower to convert or continue a Revolving Borrowing in accordance with Section 2.07. "Interest Payment Date means (a) with respect to any ABR Loan (including any Swingline Loan), the last day of each March, June, September and December and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period. "Interest Period" means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter; "provided," that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing. "Interest Rate Risk Agreement" means the program, and all documents related thereto, for the hedging of interest rate risk provided for in any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or similar arrangement entered into by the Borrower with any Lender for the purpose of reducing its exposure to interest rate fluctuations in connection with this Agreement and not for speculative purposes. "Interest Rate Risk Indebtedness" means all obligations and Indebtedness of the Borrower to one or more of the Lenders with respect to the program for the hedging of interest rate risk provided for in any Interest Rate Risk Agreement. "Issuing Bank" means Chase Bank of Texas, National Association, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.05(i). The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit 11 to be issued by Affiliates of the Issuing Bank, in which case the term "Issuing Bank" shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. "Joinder Agreement" has the meaning specified in Section 5.09 hereof. "LC Disbursement" means a payment made by the Issuing Bank pursuant to a Letter of Credit. "LC Exposure" means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time. "Leases" means those certain material lease agreements executed by any Person, as lessor, and the Borrower or any Subsidiary, as lessee (or any lease agreement, sublease or other similar arrangement entered into by the Borrower or any Subsidiary after the Effective Date) under the terms of which the Borrower or any Subsidiary occupies or uses real property and any improvements located thereon in the ordinary course of its business. "Lenders" means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance. Unless the context otherwise requires, the term "Lenders" includes the Swingline Lender. "Letter of Credit" means any letter of credit issued pursuant to this Agreement. "LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service (or any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period. "Lien" means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement 12 relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities. "Loan Documents" means this Agreement, the Notes, the Autoborrow Agreement, the Security Documents, any Interest Rate Risk Agreement with any of the Lenders, any applications or requests for Letters of Credit hereunder and all documents related thereto. "Loans" means the loans made by the Lenders to the Borrower pursuant to this Agreement. "Maintenance Capital Expenditure" of any Person means the actual depreciation expense required to be classified and accounted for as depreciation expense on a consolidated income statement of such Person under GAAP. "Material Adverse Effect" means a material adverse effect on (a) the business, assets, operations, prospects, or condition, financial or otherwise, of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower and its Subsidiaries taken as a whole, to perform any of its obligations under this Agreement or (c) the material rights of or benefits available to the Lenders under this Agreement to enforce collection of the Obligations. "Material Indebtedness" means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Hedging Agreements or Interest Rate Risk Agreements, of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $1,000,000 outstanding. For purposes of determining Material Indebtedness, the "principal amount" of the obligations of the Borrower or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time. "Maturity Date" means May 28, 2002 unless accelerated pursuant to Section 7.02 hereof. "Maximum Guaranteed Amount" means the maximum amount which any Subsidiary could pay or agree to pay under its Guaranty of the Obligations contained in Article X hereof without having such agreement or payment set aside as a fraudulent transfer or similar action under the Bankruptcy Code Title II (United States Code) or applicable state or foreign law. "Multiemployer Plan" means a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Note" means the promissory note executed by the Borrower payable to each Lender in the amount of such Lender's Commitment, each substantially in the form of Exhibit 1.01B hereto. "Obligations" means all obligations of the Borrower and each of its Subsidiaries hereunder (including the obligations of each Subsidiary under the Guaranty in Article X hereof) and 13 under each of the other Loan Documents for the payment of money the performance of any action or any other type of obligation. "Olive Branch" means Olive Branch Ready Mix, Inc., a Delaware corporation. "Other Taxes" means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement. "PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions. "Permitted Encumbrances" means: (a) Liens imposed by law for taxes that are not yet due or are being contested or otherwise exist in compliance with Section 5.04; (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's and other like Liens imposed by law, arising in the ordinary course of business or are being contested or otherwise exist in compliance with Section 5.04; (c) pledges and deposits made in the ordinary course of business in compliance with workers' compensation, unemployment insurance and other social security laws or regulations; (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business; (e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (k) of Section 7.01; and (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any Indebtedness and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower and its Subsidiaries, taken as a whole, including all of such as disclosures in the preliminary title reports prepared by Chicago Title Insurance Company in connection with the Security Documents executed and delivered pursuant to Section 4.01(c)(iv); provided that the term "Permitted Encumbrances" shall not include any Lien securing Indebtedness. "Permitted Investments" means: 14 (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof; (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody's; and (c) investments in certificates of deposit, banker's acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000. (d) accounts receivable and payroll advances in the ordinary course of business; (e) other advances and loans to officers and employees of the Borrower or any Subsidiary, so long as the aggregate principal amount of such advances and loans does not exceed $250,000 at any one time outstanding; (f) Interest Rate Risk Indebtedness with respect to any Indebtedness that is permitted by the terms of this Agreement to be outstanding; and (g) Investments in prepaid expenses, negotiable instruments held for collection and lease, utility, worker's compensation and performance and other similar deposits in the ordinary course of business. "Permitted Liens" means, collectively, Permitted Encumbrances and Liens permitted under Section 6.02 of this Agreement. "Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. "Plan" means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Pledge Agreement" means that certain Amended and Restated Pledge Agreement of even date herewith executed by the Borrower and its Subsidiaries to the Administrative Agent for the benefit of itself and the Lenders pledging the shares of stock of each of the Subsidiaries as security for the Obligations. 15 "Prime Rate" means the rate of interest per annum publicly announced from time to time by The Chase Manhattan Bank as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. "Prior Credit Agreement" means that certain Credit Agreement among the Borrower, certain Guarantors, certain Lenders party thereto and the Administrative Agent dated May 28, 1999, as amended by that certain First Amendment to Credit Agreement dated June 30, 1999, that certain Second Amendment to Credit Agreement effective July 31, 1999, that certain Third Amendment to Credit Agreement effective August 31, 1999 and that certain Fourth Amendment to Credit Agreement dated effective December 6, 1999, under the terms of which the Lenders agreed to make revolving loans and acquire participations in letters of credit and Swingline loans not to exceed in the aggregate, $100,000,000. "Qualified Company" means any provider of ready-mixed concrete, concrete products or related products and services to the construction industry in major markets in the United States. "Register" has the meaning set forth in Section 9.04. "Registration Statement" means that certain Registration Statement of the Borrowers on Form S-1 filed with the SEC on March 25, 1999, as amended. "Related Parties" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates. "Required Lenders" means, at any time, Lenders having Revolving Credit Exposures and unused Commitments representing at least 66 2/3% of the sum of the total Revolving Credit Exposures and unused Commitments at such time. "Restricted Payment" means any dividend or other distribution (whether in cash, securities or other property, except distributions payable in capital stock) with respect to any shares of any class of capital stock of the Borrower or any Subsidiary (other than distributions to the Borrower or any Subsidiary), or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such shares of capital stock of the Borrower, any option, warrant or other right to acquire any such shares of capital stock of the Borrower or any debt of the Borrower subordinated to the Obligations; provided Restrictive Payment shall not include any scheduled interest payment made on Subordinated Debt, which Subordinated Debt is otherwise permitted pursuant to the terms hereof. 16 "Revolving Credit Exposure" means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender's Revolving Loans and its LC Exposure and Swingline Exposure at such time. "Revolving Loan" means a Loan made pursuant to Section 2.03. "Santa Rosa" means R.G. Evans/Associates dba Santa Rosa Cast Products Co., a California corporation. "Security Agreements" means (a) that certain Amended and Restated Security Agreement of even date herewith executed by each of the Borrower and its Subsidiaries to the Administrative Agent for the benefit of itself and the Lenders and (b) that certain Collateral Assignment of Partnership Interests of even date herewith executed by USC GP, Inc. and USC LP, Inc. to the Administrative Agent for the benefit of itself and the Lenders. "Security Documents" means the guaranty of each of the Guarantors contained in Article X hereof, together with any guaranty delivered pursuant to Section 5.09 hereof, the Pledge Agreement, the Security Agreements, each Joinder Agreement and any and all those security agreements, pledge agreements, mortgages, deeds of trust, leasehold mortgages, leasehold deeds of trust, guaranty agreements, landlord's consents, estoppels, assignments, UCC financing statements and all similar documents executed by any Person in connection herewith including those listed in Section 4.01(c) hereof, together with any agreements delivered pursuant to Section 5.09 or Section 5.10 hereof, granting to the Administrative Agent for the benefit of the Lenders a first Lien and security interest in substantially all of the Collateral of the Borrower and its Subsidiaries as security for the Obligations, subject to Permitted Liens. "Significant Subsidiary" means any Subsidiary, the net book value of whose assets are equal to or greater than 5% of the consolidated net book value of the assets of the Borrower and its consolidated subsidiaries or whose gross revenues are equal to or greater than 5% of the consolidated revenues of the Borrower and its consolidated Subsidiaries, in each case, measured by the most recent financial statements delivered under Section 5.01(a) or (b) at the time of determination. "statutory Reserve Rate" means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage. 17 "Subordinated Debt" means any Indebtedness of the Borrower or any Subsidiary permitted hereunder that is subordinated to the Indebtedness incurred under this Agreement on terms substantially in form and substance to those contained in Exhibit 1.01C hereto, including such incurred in connection with a Capital Markets Event, and to the extent complying with the terms contained in Exhibit 1.01C hereto, any renewals or extensions thereof, amendments thereto, substitutions therefor or restatements and refinancings thereof. "subsidiary" means, with respect to any Person (the "parent") at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held. "Subsidiary" means any direct or indirect subsidiary of the Borrower. "Swingline Exposure" means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be its Applicable Percentage of the total Swingline Exposure at such time. "Swingline Lender" means Bank of America, N.A., in its capacity as lender of Swingline Loans hereunder or such other Person designated as Swingline Lender hereunder. "Swingline Loan" means a Loan made pursuant to Section 2.04. "Taxes" means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority. "Transactions" means the execution, delivery and performance by the Borrower of this Agreement, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder. "Type", when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate. "Withdrawal Liability" means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. SECTION 1.02. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings 18 also may be classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing"). SECTION 1.03. Terms Generally The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. SECTION 1.04. Accounting Terms; GAAP Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. ARTICLE II The Credits SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in (a) such Lender's Revolving Credit Exposure exceeding such Lender's Commitment or (b) the sum of the total Revolving Credit Exposures exceeding the total Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans. 19 SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender's failure to make Loans as required. (b) Subject to Section 2.13, each Revolving Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith; provided each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement. (c) At the commencement of each Interest Period for any Eurodollar Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $1,000,000, unless such Borrowing represents a Borrowing of all of the unused Commitment. At the time that each ABR Revolving Borrowing is made (other than Swingline Borrowings), such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $1,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e). At any time when the Autoborrow Agreement is in effect, the provisions thereof shall govern the advancing of a Swingline Borrowing. At any time when the Autoborrow Agreement is not in effect, each Swingline Borrowing shall be in an amount not less than $50,000 and integral multiples of $10,000 in excess thereof. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of seven (7) Eurodollar Revolving Borrowings outstanding. (d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date. SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., Houston, Texas time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 10:00 a.m., Houston, Texas time, on the date of the proposed Borrowing; provided that any such notice of an ABR Revolving Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e) may be given not later than 10:00 a.m., Houston, Texas time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02: 20 (i) the aggregate amount of the requested Borrowing; (ii) the date of such Borrowing, which shall be a Business Day; (iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Interest Period"; (v) the location and number of the account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05; and (vi) the aggregate Revolving Credit Exposure of the Lenders after giving effect to such requested Borrowing. If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing. SECTION 2.04. Swingline Loans. (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrower from time to time during the Availability Period on same-day notice, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $5,000,000 or (ii) the sum of the total Revolving Credit Exposure exceeding the total Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans. (b) At any time when the Autoborrow Agreement is in effect, the provisions thereof shall govern the advancing of a Swingline Loan. At any time when the Autoborrow Agreement is not in effect, the provisions of this Section 2.04(b) shall govern the request for and the advance of a Swingline Loan. To request a Swingline Loan, the Borrower shall notify the Swingline Lender (with a copy of such notification to the Administrative Agent) of such request not later than 12:00 noon, Houston, Texas time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan. The Swingline Lender shall make each Swingline Loan available to the Borrower by means of a credit to the general deposit account of the Borrower with the Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e), by remittance to the Issuing Bank) by 3:00 p.m., Houston, Texas time, on the requested date of such Swingline Loan. 21 (c) The Swingline Lender may by written notice given to the Administrative Agent not later than 10:00 a.m., Houston, Texas time, on any Business Day following an Event of Default including the failure of Borrower to pay any principal, interest, fees or other amounts with respect to a Swingline Loan at the time required by this Agreement, require the Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Lender, specifying in such notice such Lender's Applicable Percentage of such Swingline Loan or Loans. Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to promptly pay to the Administrative Agent, for the account of the Swingline Lender, such Lender's Applicable Percentage of such Swingline Loan or Loans. Each Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender shall comply with its obligation under this paragraph by wire transferring immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Lenders. The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Promptly after receipt, the Swingline Lender shall remit to the Administrative Agent any amounts received by the Swingline Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof. SECTION 2.05. Letters of Credit. (a) General. Subject to the terms and conditions set forth herein, the Borrower may request a portion of the Revolving Credit Facility not in excess of $5,000,000 be made available for the issuance of Letters of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, 22 amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit (which shall be denominated in U.S. dollars), the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (and any substantially contemporaneous amendment, reduction or release of any LC Exposure) (i) the LC Exposure shall not exceed $5,000,000 and (ii) the sum of the total Revolving Credit Exposures shall not exceed the total Commitments. The Issuing Bank will confirm to the Administrative Agent the issuance of any Letter of Credit and, if requested by the Administrative Agent or any Lender, will provide a copy of any Letter of Credit issued, renewed or extended hereunder. The Administrative Agent will promptly notify each Lender of the issuance, amendment or extension of any Letter of Credit. The terms of payment of any Letter of Credit shall be at sight. (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five (5) Business Days prior to the Maturity Date. (d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender's Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, Houston, Texas time, on the date that such LC Disbursement is made, if the Borrower shall have received 23 notice of such LC Disbursement prior to 10:00 a.m., Houston, Texas time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 12:00 noon, Houston, Texas time, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to 10:00 a.m., Houston, Texas time, on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt. If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender's Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement shall not relieve the Borrower of its obligation to reimburse such LC Disbursement. (f) Obligations Absolute. The Borrower's obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower's obligations hereunder other than any matter arising out of the gross negligence or willful misconduct of the Issuing Bank, the Administrative Agent or any of their employees, officers, agents, successors and assigns. Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank's failure to exercise care when determining whether drafts and other documents presented 24 under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank, the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, acting in good faith, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit. Any standby Letter of Credit issued hereunder shall be subject to the International Standby Practices (ISP 98) as it may be amended, restated or revised from time to time (as used in this Section, the "ISP"), or the UCP (as defined below) and all documentary (commercial) Letters of Credit issued hereunder shall be subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce, Publication No. 500, as it may be amended, restated or revised from time to time (as used in this Section, the "UCP") and, all Letters of Credit to the extent not inconsistent therewith, shall be subject to the Uniform Commercial Code of the State of Texas. The Borrower agrees that any action taken or omitted by the Issuing Bank under or in connection with any Letter of Credit or the related drafts or documents, if done in accordance with the standards of care specified in the ISP or the UCP, as applicable, shall not result in any liability of the Issuing Bank to the Borrower. (g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to any such LC Disbursement. (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.12(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment. (i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to 25 Section 2.10(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. (j) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives written notice from the Administrative Agent or the Required Lenders demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (h) or (i) of Section 7.01. Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the Obligations. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower's risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other Obligations. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence and continuance of an Event of Default, (i) such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived or (ii) any amount of such cash collateral in excess of the unpaid Obligations shall be returned to the Borrower upon the Borrower's written request. SECTION 2.06. Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 1:30 p.m., Houston, Texas time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that Swingline Loans shall be made as provided in Section 2.04. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent in Houston, Texas or other location as designated by the Borrower in the applicable Borrowing Request. (b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the 26 Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate requested by the Borrower to be applicable to such Borrowing. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender's Loan included in such Borrowing. SECTION 2.07. Interest Elections. (a) Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Revolving Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. (b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower. (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02: (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing); (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; 27 (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period". If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender's portion of each resulting Borrowing. (e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Revolving Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if a Default has occurred and is continuing, then, so long as a Default is continuing (i) no outstanding Revolving Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Revolving Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto. SECTION 2.08. Termination and Reduction of Commitments. (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date. (b) Immediately upon the occurrence of a Capital Markets Event, the Commitment of each Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder shall, without any further action, be automatically and permanently reduced on such date by twelve and one- half percent (12 1/2%). Upon the occurrence of such event, the aggregate amount of each Lender's Commitment is set forth on Schedule 2.01 under the caption "Commitment Subsequent to a Capital Markets Event" or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable. (c) The Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.10, the sum of the LC Exposure plus the aggregate principal amount of outstanding Loans would exceed the total Commitments. (d) The Borrower shall notify the Administrative Agent of its exercise of any election to terminate or reduce the Commitments under paragraph (c) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election 28 and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities or other circumstances, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. In the event of any termination, the Administrative Agent and the Lenders agree to use their best efforts to execute releases or assignments of Liens, and take other reasonable actions as may be reasonably requested by the Borrower at the expense of the Borrower. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments. SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Lender, the then unpaid principal amount of each Revolving Loan on the Maturity Date and (ii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the Maturity Date. (b) Concurrently upon the occurrence of a Capital Markets Event, the Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Lender, the aggregate principal amount, if any, required to reduce such Lender's Revolving Credit Exposure to an amount not in excess of such Lender's Commitment as such Lender's Commitment is reduced pursuant to Section 2.08(b). (c) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (d) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof. (e) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement. (f) The Loans made by each Lender shall be evidenced by a Note payable to said Lender. 29 SECTION 2.10. Prepayment of Loans. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (b) of this Section. (b) The Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan at any time when the Autoborrow Agreement is not in effect, the Swingline Lender) by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m., Houston, Texas time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., Houston, Texas time, one Business Day before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan at any time when the Autoborrow Agreement is not in effect, not later than 12:00 noon, Houston, Texas time, on the date of prepayment. At any time when the Autoborrow Agreement is in effect, the provisions thereof shall govern the prepayment of a Swingline Loan. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.08, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.08. Promptly following receipt of any such notice relating to a Revolving Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.12. SECTION 2.11. Fees. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee, which shall accrue at the then Applicable Margin shown under the column for "Commitment Fee Rate" in the definition of Applicable Margin on the daily average Commitment of each Lender less the Revolving Credit Exposure for such Lender during the period from and including the date of this Agreement to but excluding the date on which such Commitment terminates, provided, for purposes of this Section 2.11(a) only, but for no other purpose, Revolving Credit Exposure shall not include any Lender's Swingline Exposure. Accrued and unpaid commitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Commitments terminate, commencing on the first such date to occur after the date hereof; provided that any unpaid commitment fees accruing after the date on which the Commitments terminate shall be payable on demand. All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respect to each Letter of Credit issued hereunder equal to the greater of (A) the then Applicable Margin shown under the column captioned "Eurodollar" spread in the definition of Applicable Margin, multiplied by the face amount of each Letter of Credit or (B) $500, and (ii) to the Issuing Bank a fronting fee, equal to .25% per annum multiplied times the face amount of such Letter of Credit, as well as the Issuing Bank's standard fees with respect 30 to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees shall be payable in arrears on the last day of March, June, September and December of each year; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (c) The Borrower agrees to pay to Chase Securities Inc., for its own account, and BT, for its own account, the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower, the Administrative Agent and BT. (d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the Issuing Bank, in the case of letter of credit related fees payable to it) for distribution, in the case of commitment fees and participation fees, to the Lenders pro rata in accordance with their respective Commitments. Fees paid shall not be refundable under any circumstances. SECTION 2.12. Interest. (a) (i) The Loans comprising each ABR Borrowing (excluding each Swingline Loan) shall bear interest at a rate per annum equal to the lesser of: (y) the Alternate Base Rate plus the Applicable Margin and (z) the Highest Lawful Rate. (ii) Each Swingline Loan shall bear interest at a rate per annum equal to the lesser of (y) the Alternate Base Rate plus the Applicable Margin for ABR Loans less the applicable Commitment Fee Rate and (z) the Highest Lawful Rate. (b) The Loans comprising each Eurodollar Borrowing shall bear interest at a rate per annum equal to the lesser of: (i) the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin and (ii) the Highest Lawful Rate. (c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest payable on demand, after as well as before judgment, at a rate per annum equal to the lesser of: (i)(x) in the case of overdue principal of any Loan, 2% per annum plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (y) in the case of any other amount, 2% per annum plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section (such increased rate per annum in (x) or (y) being, the "Default Rate") and (ii) the Highest Lawful Rate. (d) Accrued and unpaid interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans and Swingline Loans, upon termination of the Commitments; provided that (i) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan or a repayment of a Swingline Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid 31 shall be payable on the date of such repayment or prepayment and (ii) in the event of any conversion of any Eurodollar Revolving Loan prior to the end of the current Interest Period therefor, accrued and unpaid interest on such Loan shall be payable on the effective date of such conversion. (e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be prima facie evidence of the correctness thereof. SECTION 2.13. Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurodollar Borrowing: (a) the Administrative Agent reasonably determines (which determination shall be prima facie evidence of the correctness thereof) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period; or (b) the Administrative Agent is advised by the Required Lenders that they have reasonably determined in good faith that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period; or (c) any Lender advises the Administrative Agent of any Change in Law or that the interpretation thereof by any Governmental Authority shall make it unlawful for such Lender to make or maintain any Eurodollar Borrowing or Eurodollar Loan or to give effect to its obligations as contemplated hereby. then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist (which notice the Administrative Agent agrees to give promptly after a reasonable basis therefor exists), (i) any Interest Election Request that requests the conversion of any Revolving Borrowing to, or continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be ineffective; (ii) if any Borrowing Request requests a Eurodollar Revolving Borrowing, such Borrowing shall be made as an ABR Borrowing and (iii) with respect to clause (c) above, require that all outstanding Eurodollar Loans made by such Lender be converted to ABR Loans, in which event all such Eurodollar Loans of such Lender shall be automatically converted to ABR Loans as of the effective date of such notice. 32 SECTION 2.14. Increased Costs. (a) If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or (ii) impose on any Lender or the Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as, in the reasonable judgment of the affected Lender, will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered. (b) If any Lender or the Issuing Bank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the Issuing Bank's capital or on the capital of such Lender's or the Issuing Bank's holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the Issuing Bank's policies and the policies of such Lender's or the Issuing Bank's holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts reasonably determined by such Lender as will compensate such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company for any such reduction suffered. (c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be prima facie evidence of the correctness thereof. The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within fifteen (15) days after receipt thereof. (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's or the Issuing Bank's right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or the Issuing Bank, as the 33 case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Issuing Bank's intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. SECTION 2.15. Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.10(b) and is revoked in accordance therewith), or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.18, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount reasonably determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be prima facie evidence of the correctness thereof. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof. SECTION 2.16. Taxes. (a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within fifteen (15) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing 34 Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, prima facie evidence of the correctness thereof. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate. SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set- offs. (a) The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.14, 2.15 or 2.16, or otherwise) prior to 12:00 noon, Houston, Texas time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the recipient, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All other such payments shall be made to the Administrative Agent at its offices at 712 Main St., Houston, Texas 77002, except payment to be made directly to the Issuing Bank or Swingline Lenders as expressly provided herein or in any other Loan Document, and except that payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars. (b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal 35 and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties. (c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise, after the occurrence and during the continuance of an Event of Default, against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation. (d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. (e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.05(d) or (e), 2.06(b) or 2.17(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received 36 by the Administrative Agent for the account of such Lender to satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid. SECTION 2.18. Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such Lender shall, following a request by Borrower, use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. (b) If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, or if any Lender defaults in its obligation to fund Loans hereunder, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Commitment is being assigned, the Issuing Bank and Swingline Lender), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.14 or payments required to be made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. SECTION 2.19. Effect of Increased Costs. The provisions of Sections 2.05, 2.14, 2.15, 2.16, 2.17 and 2.18 shall be interpreted in the broadest possible terms to include any increased costs, payments or reduced income for any reason, including but specifically not by way of limitation, due to taxes, capital adequacy provisions, reserve requirements, withholding obligations, costs due to the payment of any sums on a date other than the regularly scheduled date or for any other reason. The Borrower does hereby indemnify and hold harmless the Administrative Agent and each Lender for all such costs and does hereby agree to pay same or cover the Administrative Agent's or any Lender's expenses or losses in regard to same. The Borrower shall pay such sums to the Administrative Agent or to any Lender as are necessary to mitigate all such items. This obligation is in addition to all other Obligations of the Borrower hereunder. 37 ARTICLE III Representations and Warranties The Borrower for itself and each of its Subsidiaries, and each Subsidiary as to itself, represents and warrants to the Lenders that: SECTION 3.01. Organization; Powers. Each of the Borrower and its Subsidiaries is duly organized or formed, as the case may be, validly existing and in good standing under the laws of the jurisdiction of its organization or formation, has all requisite power and authority to carry on its business as now conducted and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required except, in each case, where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. SECTION 3.02. Authorization; Enforceability. Each of the Borrower and its Subsidiaries has the requisite power and authority to execute, deliver and perform its obligations hereunder and under the Loan Documents to which it is a party and all such action has been duly authorized by all necessary corporate and, if required, stockholder or other organizational action. The Loan Documents to which each such Person is a party have been duly executed and delivered by such Person and constitute a legal, valid and binding obligation of such Person, enforceable in accordance with the respective terms thereof, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (b) will not violate any applicable law or regulation including, without limitations, ERISA or the charter, by-laws or other organizational documents of the Borrower or any of its Subsidiaries or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any of its Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries other than Permitted Encumbrances and Liens granted pursuant to the Loan Documents. SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The Borrower has heretofore furnished or, as applicable will furnish, to the Lenders (i) the unaudited, consolidated balance sheet and statement of operations, stockholder's equity and cash flows of the Borrower and its Subsidiaries for fiscal quarters ending June 1999 and September 1999; (ii) the unaudited, consolidated pro forma balance sheets, statement of operations, stockholder's equity and 38 cash flows of the Borrower and its Subsidiaries and the Acquisition Targets as of and for the periods ending December 31, 1998 and December 31, 1999, (iii) upon acquisition of the Beall Companies, audited financial statements (including balance sheet and statement of operations) for the Beall Companies (representing eighty-five percent (85%) of the operations of the Beall Companies) for the twelve-month period ending December 31, 1998; and (iv) upon acquisition of the Allega Companies, audited financial statements (including balance sheet and statement of operations) for the Allega Companies (representing sixty-five percent (65%) of the operations of the Allega Companies) for the twelve-month period ending December 31, 1998. Effective upon the respective acquisition, such audited financial statements to the knowledge of the Borrower present fairly, in all material respects, the financial position and results of operations and cash flows of the Allega Companies and the Beall Companies, respectively, as of such dates and for such periods stated in such financial statements in accordance with GAAP. Such pro forma financial statements fairly present the financial position and results of operations and cash flows of the Borrower and its consolidated Subsidiaries as of such dates and for such period in accordance with GAAP, subject to the assumptions made by the Borrower in its reasonable judgment. Such unaudited financial statements fairly present the financial position and results of operations and cash flows of the Borrower and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and exclusion of detailed footnotes. (b) Since September 30, 1999, there has been no material adverse change in the business, assets, operations or condition, financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole. (c) Neither USC LP, Inc. nor Beall Investment Corporation, Inc. owns or will own any assets other than a 99% limited partnership interest in USC Management Co., L.P. and Beall Concrete Enterprises, Ltd., respectively. SECTION 3.05. Properties. (a) Each of the Borrower and its Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, subject to no Liens except those in favor of the Administrative Agent and other Permitted Liens, and except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes. (b) Schedule 3.05(b) describes all of the Leases in effect as of the Effective Date (copies of each of which have been provided to the Administrative Agent), each of which to the knowledge of the Borrower and the Subsidiary that is a party thereto, (i) has been duly executed and delivered by and constitutes the legal, valid and binding obligation of, the Borrower or the Subsidiary, as the case may be, party thereto in accordance with its terms, except for creditors' rights and equitable principles, (ii) is in full force and effect and there is no default thereunder and (iii) has not been amended or modified, nor any provisions thereof waived, except for matters affecting the enforceability, effectiveness, breaches or amendments and modifications which in the aggregate are not reasonably likely to result in a Material Adverse Effect. (c) Each of the Borrower and its Subsidiaries owns, or is licensed to use, all trademarks, trade names, copyrights, patents and other intellectual property material to its business, 39 and the use thereof by the Borrower and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. (d) The place of business or chief executive office of the Borrower and each Subsidiary is at the location shown on Schedule 3.05(d) or at such other locations as disclosed to the Administrative Agent in writing after the date hereof. The federal employee identification number for the Borrower and each of its Subsidiaries is set forth on Schedule 3.05(d). SECTION 3.06. Litigation and Environmental Matters. (a) There are no actions, suits, arbitrations or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower or any Subsidiary, threatened against or affecting the Borrower or any of its Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve this Agreement or the Borrower's payment Obligations hereunder. (b) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any reasonable basis for any Environmental Liability. (c) Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in a Material Adverse Effect. SECTION 3.07. Compliance with Laws and Agreements. Each of the Borrower and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, and all material contracts that significantly impact the operations of the Borrower or its Subsidiaries in each case, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No default has occurred and is continuing hereunder or under any such other document. SECTION 3.08. Investment and Holding Company Status. Neither the Borrower nor any of its Subsidiaries is (a) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, 40 has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. SECTION 3.11. Disclosure. Each of the Borrower and its Subsidiaries has disclosed to the Lenders all material agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. Neither the Information Memorandum nor any of the other written reports, financial statements, certificates or other information furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time and the Administrative Agent and the Lenders acknowledge that such projections are not facts and that actual results will differ. SECTION 3.12. Year 2000 Any reprogramming required to permit the proper functioning, in and following the year 2000, of (i) the Borrower's computer systems and (ii) equipment containing embedded microchips (including systems and equipment supplied by others or with which the Borrower's systems interface) and the testing of all such systems and equipment, as so reprogrammed, has been completed. The cost to the Borrower of such reprogramming and testing and of the reasonably foreseeable consequences of year 2000 to the Borrower (including reprogramming errors and the failure of others' systems or equipment) has not resulted and will not result in a Default or a Material Adverse Effect. SECTION 3.13 Solvency. After giving effect to the Loans and the terms of this Agreement, the Borrower and each of its Subsidiaries, taken as a whole, have assets that exceed their liabilities, are able to pay their debts as they accrue and has reasonable capital to carry on their business. SECTION 3.14 Insurance. Each of the Borrower and its Subsidiaries maintains insurance of such types as is usually carried by corporations of established reputation engaged in the same or similar businesses and similarly situated with financially sound, responsible and reputable insurance companies or associations (or, as to workers' compensation or similar insurance, with an insurance fund or by self-insurance authorized by the jurisdiction in which its operations are carried on) and in such amounts (and with co-insurance and deductibles) as such insurance is usually carried by corporations of established reputation and engaged in the same or similar businesses and similarly situated, or self insurance programs, but in any event, with respect to improvements to real property and tangible personal property insuring the full replacement cost of such improvement and such tangible personal property, subject to standard and customary deductibles. 41 SECTION 3.15. Subsidiaries. Schedule 3.15 contains an accurate list of all of the Subsidiaries of the Borrower as of the Effective Date setting forth their respective jurisdictions of organization and the percentage of their respective capital stock owned by the Borrower or any Subsidiary, and each of said Subsidiaries, other than USC LP, Inc. has executed this Agreement as a Guarantor. Such Subsidiaries, together with each of the Subsidiaries of the Borrower who have complied with the requirements of Section 5.09 hereof, are all of the Subsidiaries of the Borrower. All of the issued and outstanding shares of capital stock of such Subsidiaries have been duly authorized and issued and are fully paid and non-assessable. ARTICLE IV Conditions SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on which the Administrative Agent shall have received the following (or such shall have been waived in accordance with Section 9.02), each in form and substance reasonably satisfactory to the Administrative Agent unless otherwise required: (a) this Agreement executed by the Borrower; (b) one Note for each Lender, each executed by the Borrower and payable to the order of said Lender in the amount of its Commitment; (c) the following Security Documents executed by the parties thereto granting to the Administrative Agent and the Lenders a first and prior Lien on the collateral described therein (subject only to Permitted Liens) as security for the Obligations; (i) the Pledge Agreement; (ii) the Security Agreements; (iii) a Guaranty from each of the Borrower's Subsidiaries included in Article X hereof; (iv) All mortgages, deeds of trust, assignments and related documents in regard to the real property described in Section 4.01(c)(iv) of the Prior Credit Agreement and; all applicable similar documents in regard to real property of all Qualified Companies acquired by the Borrower or any Subsidiary subsequent to the Prior Credit Agreement as follows: (A) AFTM Corporation 42 (1) leasehold interest (3655 Grand Oaks Drive, Howell) Livingston County, MI; (B) Carrier Excavation and Foundation Company (1) fee interests (four parcels in Memphis) Shelby County, TN, (2) leasehold interest (5441 Pleasant View, Memphis) Shelby County, TN, (3) leasehold interest (5585 Commander Road, Arlington) Shelby County, TN, (4) leasehold interest (8031 Alexander, Olive Branch) Desoto County, MS, and (5) leasehold interest (2141 E. Person, Memphis) Shelby County, TN; (C) Fendt Transit Mix, Inc. (1) leasehold interest (43443 Flint Road, Novi) Oakland County, MI; (D) Olive Branch Ready Mix, Inc. (1) leasehold interest (2940 Frayser Blvd, Memphis) Shelby County, TN, (2) fee interest (1960 Old Hwy 51, Nesbit) Desoto County, MS, and (3) fee interest (4994 Hwy. 305 South, Olive Branch) Desoto County, MS; (E) Ready Mix Concrete Company of Knoxville (1) fee interests (nine parcels) Knox County, TN; (F) Western Concrete Products, Inc. (1) leasehold interest (3500 Boulder Street, Pleasanton) Alameda County, CA; (v) Landlord's Consent, Acknowledgment and Estoppel Certificates executed on behalf of any landlord under any leasehold estate covered by any deed of trust/mortgage delivered under clause (iv) above if requested by the Administrative Agent; and (vi) modification agreements to each of the mortgages and deeds of trust recorded under the Prior Credit Agreement; and 43 (vii) UCC-1 Financing Statements as reasonably requested by the Administrative Agent; (d) a certificate of an officer and of the secretary or an assistant secretary of the Borrower and each Subsidiary certifying, inter alia, (i) true and complete copies of each of the articles or certificate of incorporation, as amended and in effect, of such Person, the bylaws, as amended and in effect, of such Person and the resolutions adopted by the Board of Directors of such Person (A) authorizing the execution, delivery and performance by such Person of the Loan Documents to which it is or will be a party and, as to the Borrower, the Loans to be made hereunder, (B) approving the forms of the Loan Documents to which it is or will be a party and which will be delivered at or prior to the date of the initial Borrowing and (C) authorizing officers of such Person to execute and deliver the Loan Documents to which it is or will be a party and any related documents, including, any agreement contemplated by this Agreement and (ii) the incumbency and specimen signatures of the officers of such Person executing any documents on its behalf; (e) a signed enforceability opinion addressed to the Administrative Agent and the Lenders from Baker Botts L.L.P., counsel to the Borrower and its Subsidiaries and a signed opinion addressed to the Administrative Agent and the Lenders from the General Counsel of the Borrower, in each case, in form and substance satisfactory to the Administrative Agent and the Lenders and their counsel; (f) receipt of (i) audited financial statements for each of Carrier Excavation & Foundation Company and Pleasant View Associates, L.L.C., Ready Mix Concrete Company of Knoxville, San Diego Precast Concrete, Inc., Western Concrete Products, Inc., American Ready Mix, Inc., Fendt Transit Mix Inc. & combined companies, and DYNA Corporation and (ii) a copy of the review of Olive Branch as agreed by Arthur Andersen LLP and the Borrower; (g) the payment to the Administrative Agent, Chase Securities Inc., BT and the Lenders, as applicable, of all fees and expenses (other than the fees and disbursements of Andrews & Kurth L.L.P. pursuant to Section 9.03, which will be paid within 30 days of the Closing) which payments may be made with proceeds of the initial Advance; (h) certificates of appropriate public officials as to the existence and good standing of the Borrower and each Subsidiary and a certificate of an appropriate official as to the qualification to do business as a foreign corporation of the Borrower and each Subsidiary in each jurisdiction in which the ownership of its properties or the conduct of its business requires such qualifications and where the failure to so qualify would have a Material Adverse Effect, each of such certificates to be dated no earlier than January 20, 2000; (i) certificates of insurance showing the Administrative Agent as loss payee or additional insured, as appropriate, and a schedule of existing insurance, in each case reasonably satisfactory to the Administrative Agent evidencing the existence of all insurance required to be maintained pursuant to Section 5.05 hereof; 44 (j) determination that no material part of the property covered by the mortgages to be delivered pursuant to Section 4.01(c)(iii) lies in a Special Flood Hazard Area or other hazard or flood plain area however designated, as determined in accordance with the criteria established by the Federal Insurance Administration or any other governmental authority having jurisdiction over the subject property; (k) lien searches on the Borrower and its Subsidiaries in the jurisdictions requested by the Administrative Agent, together with waivers from the holders of any Liens (other than Permitted Liens) as reasonably requested by the Administrative Agent; (l) evidence that all governmental and third-party approvals or consents necessary, or in the discretion of the Administrative Agent, advisable in connection with the Transactions and the continuing operations of the Borrower and its Subsidiaries; (m) such other consents, approvals, opinions or documents as the Administrative Agent or the Lenders may reasonably request. The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) on or prior to 2:00 p.m., Houston, Texas time, on February 10, 2000 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time). SECTION 4.02. Each Credit Event. The effectiveness of this Agreement and the obligation of each Lender (including the Swingline Lender) to make a Loan on the occasion of any Borrowing which increases the aggregate principal amount of the Obligations, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions: (a) The representations and warranties of the Borrower set forth in this Agreement shall be true and correct on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, except to the extent such representations and warranties relate to a prior date or after prior notice to the Administrative Agent are untrue or incorrect as a result of transactions permitted by the Loan Documents. (b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing. Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section. 45 ARTICLE V Affirmative Covenants Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees and other amounts payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower for itself and each of its Subsidiaries and each Subsidiary, for itself, covenants and agrees with the Lenders that: SECTION 5.01. Financial Statements; and Other Information. The Borrower will furnish to the Administrative Agent and each Lender: (a) within 90 days after the end of each fiscal year of the Borrower, its audited consolidated balance sheet and related consolidated statements of operations, stockholders' equity and cash flows as of the end of and for such year, setting forth in each case (commencing with the financial statements for the 2000 fiscal year) in comparative form the figures for the previous fiscal year, all reported on by Arthur Andersen LLP or other independent public accountants of recognized national standing (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the consolidated financial position and consolidated results of operations of the Borrower and its consolidated Subsidiaries in conformity with GAAP, and all to be prepared in accordance with GAAP consistently applied, except to the extent the Borrower's independent auditors concur with any such inconsistency; (b) within 45 days after the end of each fiscal quarter (excluding any quarter containing the Borrower's fiscal year end) of the Borrower, its consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case (commencing with financial statements for periods ending after May 28, 2000) in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the consolidated financial condition and consolidated results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, except for such changes with which the Borrower's independent auditors concur, subject to normal year-end audit adjustments and the absence of footnotes; (c) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Borrower (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Sections 6.08, 6.09, 6.10 and 6.11 and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate; 46 (d) concurrently with any delivery of financial statements under clause (a) above, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines); (e) promptly upon receipt thereof, a copy of any management letter or report submitted to the Borrower by its independent accountants in connection with any regular or special audit; (f) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by the Borrower to its shareholders generally; (g) as soon as available and in any event within sixty (60) days after the end of each fiscal year of the Borrower, the annual financial projections and budgets of the Borrower and its Subsidiaries; (h) concurrently with the delivery of financial statements under (a) and (b) above, a summary of (i) all of the fee and leasehold properties of the Borrower and its Subsidiaries, including ownership interest, location and whether such property is subject to a Lien in favor of the Administrative Agent, and (ii) all vehicles and rolling stock of the Borrower and its Subsidiaries, including description and serial number; and (i) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request. SECTION 5.02. Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following: (a) the occurrence of any Default; (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Affiliate thereof that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect; (c) the occurrence of any ERISA Event that could reasonably be expected to have a Material Adverse Effect; and (d) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect. 47 Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto. SECTION 5.03. Existence; Conduct of Business; Location. (a) The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business, unless the failure to so maintain would not reasonably be expected to have a Material Adverse Effect. (b) The Borrower will promptly notify the Administrative Agent of any change of the Borrower's or any Subsidiary's name, corporate structure, federal employer identification number, address of its principal place of business or chief executive office where such Person maintains its books and records. SECTION 5.04. Payment of Obligations. The Borrower will, and will cause each of its Subsidiaries to, pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect. SECTION 5.05. Maintenance of Properties; Insurance. (a) The Borrower will, and will cause each of its Subsidiaries to, keep and maintain all property material to the conduct of its business in good working order and condition, force majeure and ordinary wear and tear excepted. (b) The Borrower will, and will cause each of its Subsidiaries to, maintain (i) "all risk" insurance (at replacement cost) against loss or damage to all property of the Borrower and its Subsidiaries, (ii) commercial general liability insurance (including contractual liability, independent contractors, products liability and completed operations coverage, (iii) directors and officers liability insurance (iv) workers compensation/employers liability insurance (in amounts not less than minimum applicable statutory requirements), (v) automobile liability insurance, (vi) surety bond program, (vii) flood insurance for any real property constituting Collateral determined to be in a "special flood hazard area" as set forth by the Federal Emergency Management Agency and (viii) such other insurance of such types as is usually carried by corporations of established reputation engaged in the same or similar businesses and similarly situated, and in each case with financially sound, responsible and reputable insurance companies or associations (or, as to workers' compensation or similar insurance, with an insurance fund or by self-insurance authorized by the jurisdiction in which its operations are carried on) and in such amounts (and with co-insurance and deductibles) as such insurance is usually carried by corporations of established reputation and engaged in the same or similar businesses and similarly situated, or self insurance programs reasonably satisfactory to the Administrative Agent in respect of employee health insurance programs only, but in any event, with respect to improvements to real property and tangible personal 48 property insuring the full replacement cost of such improvements and the tangible personal property, subject to standard and customary deductibles. All insurance policies required pursuant to this Section 5.05 shall (i) name the Administrative Agent on behalf of the Lenders as mortgagee (in the case of property insurance) or additional insured (in the case of liability insurance), as applicable, and provide that no cancellation or modification of the policies will be made without thirty (30) days' prior written notice to the Administrative Agent. SECTION 5.06. Books and Records; Inspection Rights; Audits. (a) The Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities which shall, to the maximum extent possible, be kept in accordance with GAAP. The Borrower will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested so long as the Borrower has an opportunity to have a representative participate or be present. (b) The Borrower will, and will cause each of its Subsidiaries to, within 90 days of the completion of an audit by the Administrative Agent of the information technology systems of the Borrower and its Subsidiaries, complete installation or implementation, as necessary, of the changes, revisions, upgrades or equipment as requested by the Administrative Agent as a result of such audit. SECTION 5.07. Compliance with Laws. The Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property including, without limitation, ERISA and all Environmental Laws, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. SECTION 5.08. Use of Proceeds and Letters of Credit. The proceeds of the Loans will be used only for (a) for Acquisition of the Acquisition Targets, (b) refinancing Indebtedness incurred in connection with the acquisition of the Founding Companies, (c) subject to Section 6.11, the Acquisition of any Qualified Company and (d) for other general corporate purposes. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the regulations of the Board, including Regulations U and X. Letters of Credit will be issued only to support activities in connection with the uses permitted hereunder. SECTION 5.09. Subsidiaries. (a) The Borrower will, and will cause each of its Subsidiaries to, cause any Person becoming a Subsidiary, other than USC LP, Inc. and Beall Investment Corporation, Inc., to become a Guarantor of the Obligations under this Agreement, the Notes and the other Loan Documents and grant to the Administrative Agent for the benefit of the Lenders a first priority Lien on all of such Subsidiary's material assets, subject to Permitted Liens. Each such Subsidiary shall, within ten (10) days of becoming a Subsidiary, execute and deliver to the Administrative Agent (i) together with the parent of such Subsidiary, a joinder agreement 49 substantially in the form of Exhibit 5.09 hereto (a "Joinder Agreement"), (ii) subject to Section 5.10, a deed of trust, mortgage, leasehold mortgage and/or other security agreement granting Liens on the fee and leasehold interests of such Subsidiary; provided that the Administrative Agent may waive, without the consent of any Lender, the requirement that security interests be granted on any leasehold interest if the underlying lease by its terms expressly prohibits such assignment, or if the Administrative Agent makes a good faith determination that a Lien on such leasehold interest is not required and (iii) UCC-1 financing statements to be filed in connection with such Liens. (b) The Borrower and each Subsidiary, other than USC LP, Inc. and Beall Investment Corporation, Inc., shall have pledged at all times 100% of such Person's ownership interest in any Subsidiary to the Administrative Agent for the benefit of the Lenders pursuant to the Pledge Agreement, a Joinder Agreement or other pledge or security agreement in form and substance reasonably satisfactory to the Administrative Agent. SECTION 5.10. Collateral. (a) The Borrower will, and will cause each of its Subsidiaries (other than USC LP, Inc. and Beall Investment Corporation, Inc.) to, for each vehicle with a gross vehicle weight in excess of 40,000 pounds, including all mixer trucks and aggregate delivery trucks, and which is less than seven (7) years old (as determined by the date on the Certificate of Title for such vehicle), (i) within thirty (30) days of the Effective Date, provide evidence satisfactory to the Administrative Agent that all Certificates of Title for each such vehicle owned by the Borrower or any such Subsidiary have been submitted to the appropriate state department of motor vehicles or other regulatory authority as appropriate for the jurisdiction of location of such vehicle for the purpose of having the Administrative Agent for the benefit of the Lenders recorded as lienholder on each of such Certificates of Title, (ii) within thirty (30) days of the acquisition of any new vehicle, provide evidence satisfactory to the Administrative Agent that the Certificate of Title for such newly acquired vehicle shall have been submitted to the appropriate state department of motor vehicles or other regulatory authority as appropriate for the jurisdiction of location of such vehicle for the purpose of having the Administrative Agent for the benefit of the Lenders recorded as lienholder on each such Certificate of Title; provided, that in either case of (i) or (ii) above and so long as there is no Default or Event of Default, any Certificate of Title which evidences the Administrative Agent for the benefit of the Lenders as lienholder shall be returned to the Borrower, and (iii) within thirty (30) days of the submission of any Certificate of Title to the appropriate authority of recordation of the Lien, provide to the Administrative Agent a copy of each Certificate of Title reflecting the Administrative Agent as lienholder. (b) Within thirty (30) days of the acquisition of any (i) fee interest in any real property or (ii) material leasehold interest in any real property used in the operation (as opposed to administration) of the business of the Borrower or any Subsidiary (other than USC LP, Inc. and Beall Investment Corporation, Inc.), the Borrower will, and will cause each of such Subsidiaries to, (w) execute in form and substance reasonably satisfactory to the Administrative Agent, a deed of trust or mortgage, as applicable, in respect of such fee interest and (x) use reasonably commercial efforts to execute in form and substance reasonably satisfactory to the Administrative Agent, a leasehold deed of trust or mortgage, as applicable, in each case granting a first priority perfected Lien on such property as collateral for the Obligations, subject only to Permitted Liens, (y) provide a preliminary title report in favor of the Administrative Agent and the Lenders in form and substance reasonably 50 satisfactory to the Administrative Agent for any property on which a lien is granted pursuant to clause (w) or (x), and (z) for any property acquired for which the Borrower or any such Subsidiary obtains an owner's policy of title insurance, provide a copy of such owner's policy. For purposes of this Section 5.10(b) and (c) below, a leasehold interest shall be deemed material if the Borrower, in its good faith judgment, determines (1) that said leasehold provides a significant portion of the product supplied by the Borrower and its Subsidiaries in the geographic market in which said leasehold is located and (2) that the Borrower could not readily replace such leasehold with a comparable property on substantially similar terms and conditions. (c) The Borrower will, and will cause each of its Subsidiaries (other than USC LP, Inc. and Beall Investment Corporation, Inc.) to, use commercially reasonable efforts in negotiating any new material lease or the renewal or extension of any existing lease covering real property to provide in such lease that the interest of the lessee may be hypothecated without any further approval of the landlord. SECTION 5.11. Employee Agreements. Upon request of the Administrative Agent, the Borrower and its Subsidiaries shall provide to the Administrative Agent copies of all material agreements relating to the employees of the Borrower and its Subsidiaries, including all collective bargaining agreements, employment contracts, non-compete agreements, employee savings, employee retirement and employee benefit plans. Upon request of the Administrative Agent, the Borrower will provide a list of (a) each employment agreement between the Borrower and each of its officers, (b) each employment agreement between any Subsidiary and the key employees of such Subsidiary (or its predecessor), (c) each union with which any Subsidiary of the Borrower has entered into a collective bargaining agreement, and (iv) each employee pension benefit plan (as defined in ERISA) sponsored by the Borrower or any Subsidiary. SECTION 5.12. Compliance With Leases. The Borrower shall, and shall cause each of its Subsidiaries to, perform and observe all covenants, agreements, terms, conditions and limitations applicable to such Person contained in any Lease and shall do all things necessary to keep unimpaired all of its rights thereunder and to prevent any default thereunder or any forfeiture or impairment thereof, except as to any nonperformance, nonobservance, default or forfeiture which would not reasonably be expected to result in a Material Adverse Effect. ARTICLE VI Negative Covenants Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees and other amounts payable hereunder have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that: SECTION 6.01. Indebtedness. The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except: 51 (a) Indebtedness created hereunder; (b) Indebtedness existing on the date hereof and set forth in Schedule 6.01 and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; (c) Indebtedness of the Borrower to any wholly-owned Subsidiary and of any Subsidiary to the Borrower or any other Subsidiary; (d) Indebtedness of the Borrower or any Subsidiary incurred to finance, or assumed in connection with, any Acquisition or the acquisition of other assets, including Capital Lease Obligations and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; provided that (i) such Indebtedness is incurred prior to or within 90 days after such Acquisition or acquisition, (ii) such Indebtedness was not incurred by such Person in contemplation of such Acquisition and (iii) the aggregate principal amount of Indebtedness permitted by clause (b) above and this clause (d) shall not exceed the greater of (1) 5% of the consolidated tangible net worth of the Borrower or (2) $3,000,000 at any time outstanding; (e) Subordinated Debt incurred in respect of a Capital Markets Event (including the Guaranty thereof by the Subsidiaries); and (f) Interest Rate Risk Indebtedness. SECTION 6.02. Liens. The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except: (a) Permitted Encumbrances; (b) Any Lien on any property or asset of the Borrower or any Subsidiary securing Indebtedness permitted in Section 6.01(b) or 6.01(d); provided that (i) such Lien shall not apply to any other property or asset other than accessions, improvements, upgrades and the proceeds thereof of the Borrower or any Subsidiary and (ii) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof; (c) Liens in favor of the Administrative Agent securing the Obligations; (d) Liens securing potential prepayment obligations of Walker's Concrete, Inc. to Union Bank of California, N.A. encumbering assets of Walker's Concrete, Inc.; provided no further Indebtedness is owing by the Borrower or any Subsidiary to said bank; and 52 (e) Renewals and extensions of the above on similar terms and conditions. SECTION 6.03. Fundamental Changes. (a) The Borrower will not, and will not permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or any substantial part of its assets, or all or substantially all of the stock of any of its Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing, (i) any Subsidiary may merge into the Borrower in a transaction in which the Borrower is the surviving Person, (ii) any Subsidiary may merge into any Subsidiary in a transaction in which the surviving entity is a Subsidiary, (iii) the Borrower or any Subsidiary may sell, transfer, lease or otherwise dispose of its assets (A) to the Borrower or to another Subsidiary (B) in the ordinary course of its business or (C) which are surplus, obsolete or no longer useful in the operation of its business and do not materially prejudice the Lenders in any way, and (iv) any Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders. (b) The Borrower will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by the Borrower and its Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto. SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. The Borrower will not, and will not permit any of its Subsidiaries to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary prior to such merger) any capital stock, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit, except: (a) Permitted Investments; (b) investments by the Borrower existing on the date hereof as set forth on Schedule 6.04, including investments in its direct and indirect Subsidiaries; (c) equity investments by the Borrower or any Subsidiary in any Subsidiary and loans or advances made by the Borrower to any wholly-owned Subsidiary and made by any wholly-owned Subsidiary to the Borrower or any other Subsidiary; (d) subject to the limitations contained in Section 6.11, investments in the stock, warrants, stock appreciation rights, other securities and/or other assets of Qualified Companies; and 53 (e) guaranties of the Subordinated Debt incurred in connection with a Capital Market Event that are subordinated in the same manner as the Subordinated Debt. SECTION 6.05. Restricted Payments. The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except (a) Subsidiaries may declare and pay dividends to the Borrower and other Subsidiaries and (b) the Borrower may redeem capital stock in an aggregate amount not to exceed $500,000.00. SECTION 6.06. Transactions with Affiliates. The Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm's-length basis from unrelated third parties, (b) transactions between or among the Borrower and its wholly owned Subsidiaries not involving any other Affiliate provided; no transfer of assets may be made to Beall Investment Corporation, Inc., USC LP, Inc. or any other Subsidiary that has not complied with the requirements of Sections 5.09 and 5.10 hereof, (c) any Restricted Payment permitted by Section 6.05, (d) compensation and other benefits paid to officers, directors and employees, and (e) transactions in connection with the acquisition of any Qualified Company. SECTION 6.07. Restrictive Agreements. Except for restrictions contained in the indenture governing the Subordinated Debt incurred as a result of the Capital Market Event, the Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to guarantee Indebtedness of the Borrower or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement or the Loan Documents, (ii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iii) clause (a) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof and (iv) and the foregoing shall not apply to restrictions (A) existing on the Effective Date and disclosed on Schedule 6.07 hereto; (B) effecting a refinancing of Indebtedness incurred pursuant to an agreement referred to in clause (A), so long as the encumbrances and restrictions contained in any such refinancing agreement are no more restrictive than the encumbrances and restrictions contained in such agreements; 54 (C) constituting restrictions on the sale or other disposition of any Property securing Indebtedness as a result of a Permitted Encumbrance on such property; and (D) constituting provisions contained in agreements or instruments relating to Indebtedness which prohibit the transfer of all or substantially all of the assets of the obligor thereunder unless the transferee shall assume the obligations of the obligor under such agreement or instrument. SECTION 6.08. Financial Ratios. The following financial ratios will be calculated as of each Financial Statement Delivery Date for the immediately preceding period of four quarters to which the financial statements relate after giving pro forma effect to the Acquisitions. (a) Fixed Charge Coverage Ratio. The Borrower will not at any time permit the ratio of (i) EBITDA calculated on a rolling four (4) quarter basis (excluding any EBITDA computed pursuant to clause (b) of the definition of EBITDA) minus cash federal, state and local income and franchise taxes actually paid during such period (or, for any period prior to the Acquisition of the Founding Companies, 40.8% of pro forma consolidated pre-tax net income of the Borrower and its Subsidiaries for such included period), to (ii) cash interest expense, actually paid during such period (including the interest expense portion of any payments on Capitalized Lease Obligations but net of cash interest income actually received during such period) plus Maintenance Capital Expenditures for said period, to be less than 2.00 to 1.0 at any time during the term hereof. For purposes of determining interest expense during the first fiscal year of this Agreement, actual cash interest expense for any period from the May 28, 1999 through the end of the period being calculated shall be annualized and interest expense prior to the May 28, 1999 shall be disregarded. (b) Asset Coverage Ratio. The Borrower will not at any time permit the ratio of: (a) (i) accounts receivable plus (ii) inventory plus (iii) the net book value of all property, plant and equipment in each case as reflected on the financial statements delivered pursuant to Section 5.01, to (b) Funded Debt minus Subordinated Debt, to be less than (i) 1.0 to 1.0 for the period from the Effective Date through September 29, 2000 and (ii) 1.25 to 1.0 for the period from September 30, 2000 and thereafter; provided, that upon the occurrence of a Capital Markets Event, such ratio will not be less than 1.5 to 1.0 for the period from the date of occurrence of the Capital Markets Event and thereafter. For the purposes of calculating this Asset Coverage Ratio, the Borrower may use (i) the book value of such assets as recorded on the financials delivered under Section 5.01 hereof or (ii) the fair market value of such assets, as such fair market value is determined by a third party approved by the Administrative Agent in its sole discretion; provided, that in the event any fair market valuation has been determined which for any asset is less that its book value, such fair market valuation must be used in the calculation of this Asset Coverage Ratio. (c) Senior Debt Leverage Ratio. The Borrower will not at any time permit the ratio of (i) Funded Debt minus Subordinated Debt to (ii) EBITDA calculated on a rolling four (4) quarter basis, to be greater than (i) 2.75 to 1.0 for the period from the Effective Date through June 29, 2000, (ii) 2.50 to 1.0 for the period from June 30, 2000 through September 29, 2000 and (iii) 2.25 to 1.0 for the period from September 30, 2000 and thereafter; provided, that upon the occurrence of 55 a Capital Markets Event, such ratio will not be greater than 2.25 to 1.0 for the period from the date of occurrence of the Capital Markets Event and thereafter. (d) Total Debt Leverage Ratio. The Borrower will not at any time permit the ratio of (i) Funded Debt (including all Subordinated Debt) to (ii) EBITDA calculated on a rolling four (4) quarters basis, to be greater than 3.25 to 1.0. SECTION 6.09. Net Worth. The Borrower will not permit at any time during the term hereof consolidated net worth to be less than $69,113,000, plus commencing May 28, 1999, fifty percent (50%) of after tax net income (if positive) of the Borrower and its Subsidiaries for each theretofore completed fiscal year during the term hereof, plus one hundred percent (100%) of the net cash proceeds theretofore received subsequent to May 28, 1999 from the issuance of any capital stock by the Borrower or any Subsidiary (other than from the Borrower or another Subsidiary) subsequent to the date hereof, plus, without duplication, one hundred percent (100%) of any amount recorded on the balance sheet of the Borrower from the issuance of any equity. SECTION 6.10. Capital Expenditures The Borrower will not, and will not permit its Subsidiaries to, make any Capital Expenditure (including any Capitalized Lease Obligations) during any fiscal year if, after giving effect thereto, the aggregate of all such expenditures would exceed five percent (5%) of actual total revenues of the Borrower and its Subsidiaries for the immediately preceding four quarters. SECTION 6.11. Limitation on Acquisitions The Borrower will not, and will not permit any Subsidiary to, acquire any stock or assets of any Qualified Company (other than (i) upon the receipt of an audited balance sheet and statement of operations of the Allega Companies for the fiscal year ending December 31, 1998, the Allega Companies and, (ii) upon receipt of a Joinder Agreement and the documents and other items required by the Joinder Agreement from the applicable Beall Companies, the Beall Companies) without the prior written consent of the Required Lenders if (a) the cash consideration (defined as total net cash to be paid plus Indebtedness to be assumed) for any such proposed acquisition exceeds 7.50% of the consolidated net worth of the Borrower and its Subsidiaries (pre-acquisition) as reflected in the most recent consolidated balance sheet delivered pursuant to Section 5.01 hereof or (b) the total consideration (defined as total net cash to be paid plus Indebtedness to be assumed plus the value of any stock of the Borrower or any Subsidiary given as consideration, (as reflected on the Borrower's consolidated balance sheet,) plus related Acquisition costs) exceeds 15.0% of the consolidated net worth of the Borrower and its Subsidiaries (pre-acquisition) as reflected on the most recent consolidated balance sheet delivered pursuant to Section 5.01 hereof; and provided the Borrower is in compliance with all of the following: (i) no Default or Event of Default is in existence at the time of the consummation of such proposed Acquisition or would exist after giving effect thereto, all representations and warrants contained herein and in the other Loan Documents shall be true and correct in all material respects with the same effect as though such representations and warranties were made on and as of the date of such proposed Acquisition (both before and after giving effect thereto) except to the extent limited to a specific prior date or incorrect as 56 a result of transactions permitted under the Loan Documents, and no other agreement, contract or instrument to which the Borrower is a party restricts such proposed Acquisition; (ii) the Borrower shall have given the Administrative Agent and the Lenders at least ten (10) Business Days prior written notice of any such proposed Acquisition (each of such notices, a "Permitted Acquisition Notice"), which notice must be timely provided and must be accompanied by all of the information required in this Section 6.11 and shall (A) contain the estimated date such proposed Acquisition is scheduled to be consummated, (B) attach a true and correct copy of the draft purchase agreement (if available), letter of intent, description of material terms or similar agreements executed by the parties thereto in connection with such proposed Acquisition, (C) contain the estimated aggregate purchase price of such proposed Acquisition and the estimated amount of related costs and expenses and the intended method of financing thereof, and (D) contain the estimated amount of Loans required to effect such proposed Acquisition; (iii) concurrently with delivery of the Permitted Acquisition Notice, the Borrower shall have provided the Administrative Agent and the Lenders with all information related to the proposed Acquisition as is reasonably required in the form of Acquisition Information Worksheet attached hereto as Exhibit 6.11, and, promptly upon request, such additional information as the Administrative Agent shall reasonably request, including, delivery of the expert reports (if any) prepared by accounting, environmental, and/or other experts which the Borrower has obtained and the Administrative Agent shall reasonably request; (iv) (A) as soon as available but not less than the earlier of three (3) days after the execution thereof, a copy of the executed principal Acquisition Documents with respect to such proposed Acquisition and (B) at the time of delivery of the Acquisition Documents, certification from the Borrower as to the purchase price for the Acquisition (or a formula therefor) and the estimated amount of all related costs, fees and expenses and that, except as described, there are no other amounts which will be payable in connection with such proposed Acquisition; (v) concurrently with the delivery of the Permitted Acquisition Notice, the Borrower shall have provided to the Administrative Agent and the Lenders recalculations of the calculations set forth in the certificate most recently delivered pursuant to Section 5.01(c) are made by the Borrower evidencing its compliance with the covenants contained in Section 6.08 (excluding Section 6.08(c)) through 6.10, inclusive, and such recalculations shall show that during the period of four fiscal quarters covered by that certificate, on a pro forma basis, the Borrower would have been in compliance therewith. (vi) at any time prior to the occurrence of a Capital Markets Event, concurrently with the delivery of the Permitted Acquisition Notice, the Borrower shall have provided to the Administrative Agent and the Lenders a calculation by the Borrower of the ratio of pro forma Funded Debt minus Subordinated Debt (after giving effect to the proposed Acquisition) to pro forma EBITDA (after giving effect to the proposed Acquisition) showing 57 that such ratio will not at any time be greater than (A) 2.50 to 1.0 for the period from the Effective Date through June 29, 2000, (B) 2.25 to 1.0 for the period from June 30, 2000 through September 29, 2000 and (C) 2.00 to 1.0 for the period from September 30, 2000 and thereafter. (vii) the Borrower shall have delivered updated schedules to any Acquisition Agreement related to such proposed Acquisition to the Administrative Agent; and (viii) prior to the consummation of the proposed Acquisition, the Borrower shall furnish the Administrative Agent and the Lenders an officer's certificate executed by a Financial Officer of the Borrower, certifying as to compliance with the requirements of the applicable preceding clauses (i) through (vi), containing the calculations required in this Section 6.11. The consummation of each Acquisition shall be deemed to be a representation and warranty by the Borrower that all conditions thereto have been satisfied and that same is permitted in accordance with the terms of this Agreement, which representation and warranty shall be deemed to be a representation and warranty for all purposes hereunder; and further provided, that for any Acquisition, regardless of the consideration paid, the Borrower must be in compliance with clauses (i) and (iii) above. SECTION 6.12. Hedging Agreement. The Borrower will not, and will not permit any Subsidiary to, enter into any Hedging Agreement. SECTION 6.13 Additional Borrowings Under Union Bank Indebtedness. The Company will not, and will not permit any Subsidiary, including, without limitation, Walker's Concrete, Inc., to borrow, accept any advances under, or in any manner increase its liability in respect of, the documents evidencing certain Indebtedness and obligations of said Subsidiary to Union Bank of California, N.A. SECTION 6.14. Prepayment of Other Indebtedness. The Borrower will not, and will not permit any Subsidiary to, make any voluntary prepayments of principal or interest on, defease or establish any escrow or defeasance accounts or trusts in respect of any Subordinated Debt. The Borrower will not, and will not permit any Subsidiary to, amend or obtain or grant a waiver of any repayment schedule (other than a deferral), subordination provision or related definition contained in the note agreement or indenture entered into in connection with the Subordinated Debt without the prior written consent of the Required Lenders. SECTION 6.15. Fiscal Year. The Borrower will not change its fiscal year from December 31st. SECTION 6.16. Sale and Leaseback. The Borrower will not, and will not permit any Subsidiary to, directly or indirectly enter into any agreement or arrangement providing for the sale or transfer by it of any property (now owned or hereafter acquired) to a Person and the subsequent lease or rental of such property or similar property from such Person. 58 ARTICLE VII Events of Default and Remedies SECTION 7.01. Events of Default. The following events ("Events of Default") shall constitute Events of Default hereunder: (a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise; (b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Section 7.01) payable under this Agreement, when and as the same shall become due and payable; (c) any representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any amendment or modification hereof or waiver hereunder, shall prove to have been incorrect in any material respect when made or deemed made; (d) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02(a), 5.03 (with respect to the Borrower's existence) or 5.08 or in Article VI; (e) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (d) of this Section 7.01), and such failure shall continue unremedied for a period of fifteen (15) days after notice thereof from the Administrative Agent to the Borrower (which notice will be given at the request of any Lender); (f) the Borrower or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Subordinated Debt or any Material Indebtedness, when and as the same shall become due and payable; (g) any event or condition occurs that results in any Subordinated Debt or any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits the holder or holders of any Subordinated Debt or any Material Indebtedness or any trustee or agent on its or their behalf to cause any Subordinated Debt or any Material Indebtedness to become due, or 59 to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Significant Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Significant Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; (i) the Borrower or any Significant Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Section 7.01, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Significant Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; (j) the Borrower or any Significant Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due; (k) one or more judgments for the payment of money in an aggregate amount in excess of $1,000,000 (not covered by insurance subject to customary deductible) shall be rendered against the Borrower, any Significant Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Subsidiary to enforce any such judgment; (l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding (i) $1,000,000 in any year or (ii) $1,000,000 for all periods; (m) a Change in Control shall occur; or (n) any material Loan Document shall be determined by the Administrative Agent, in its good faith judgment to be unenforceable in any material respect or Borrower or any Subsidiary shall claim such to be the case other than in accordance with its terms or the terms of the other Loan Documents. 60 SECTION 7.02. Remedies. On the occurrence of any event described in Section 7.01 (other than an event with respect to the Borrower described in clause (h) or (i) thereof), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same time or different times: (i) terminate the Commitments (including the Commitment of the Swingline Lender with respect to its obligation to advance Swingline Loans), and thereupon the Commitments shall terminate immediately; provided that in the case of the Commitment of the Swingline Lender with respect to its obligation to advance Swingline Loans, the Swingline Lender may, by notice to the Borrower (with a copy to the Administrative Agent) and regardless of whether the Required Lenders elect to terminate the Commitments hereunder, terminate such Commitment, and thereupon such Commitment shall terminate immediately, (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued and unpaid interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without notice, presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (h) or (i) of Section 7.01 of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower, (iii) set off any amounts of the Borrower or any Subsidiary held by it, (d) exercise any other rights or remedies described in the other Loan Documents, including, without limitation, each of the Security Documents, and (iv) exercise such other rights as are available to lenders and secured parties at law or in equity. ARTICLE VIII The Administrative Agent Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto. The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default 61 has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries or Affiliates that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor. If no successor shall have 62 been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent which shall be a bank with an office in Houston, Texas, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent's resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder. None of the documentation agent, the syndication agent or any of the co-managing agents in their respective capacities as such shall have any duties or responsibilities to any other Person under this Agreement or any other Loan Document. ARTICLE IX Miscellaneous SECTION 9.01. Notices. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: 63 (a) if to the Borrower or to any Guarantor, U.S. Concrete 1300 Post Oak Blvd., Suite 1220 Houston, Texas 77056 Attention: Michael Harlan Telephone No.: (713) 499-6203 Telecopy No.: (713) 499-6201 (b) if to the Administrative Agent, Chase Bank of Texas, National Association 712 Main Street, 5th Floor East Houston, Texas 77002 Attention: James R. Dolphin Telephone No.: (713) 216-5347 Telecopy No.: (713) 216-6004 with copies to The Chase Manhattan Bank Agency Services One Chase Manhattan Plaza, 8th Floor New York, New York 10081 Attention: Muniram Appanna Telecopy No.: (212) 552-7940 Telephone No.: (212) 552-7943 (c) if to the Issuing Bank, Chase Bank of Texas, National Association 712 Main Street, 5th Floor East Houston, Texas 77002 Attention: James R. Dolphin Telecopy No.: (713) 216-5347 Telephone No.: (713) 216-6004 (d) if to the Swingline Lender, Bank of America, N.A., 700 Louisiana, 7th Floor, Houston, Texas 77002, Attention: William Borus Telecopy No.: (713) 247-7748 Telephone No.: (713) 247-7756 64 (e) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire. Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on (a) if delivered in person, when delivered, (b) if delivered by telecopy, on the date of confirmed transmission, (c) if delivered by overnight courier, one (1) Business Day after deliver to the courier properly addressed or (d) if by mail, four (4) days after deposit in the United States mails (by certified mail, return receipt requested), with proper postage prepaid. SECTION 9.02. Waivers; Amendments. (a) To the extent permitted by law, no failure or delay by the Administrative Agent, the Issuing Bank or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. To the extent permitted by law, the rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. To the extent permitted by law, no waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time. (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees or other amounts payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees or other amounts payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.17(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) release any Collateral securing the Obligations, without the written consent of each Lender, provided that the Administrative Agent may release any collateral sold or transferred as permitted under this Agreement by the Borrower or any Subsidiary in the ordinary course of business or as otherwise permitted under this Agreement, (vi) release the Borrower or any Guarantor or any other Person liable for the repayment of the Obligations, without the written consent of each Lender or (vii) change any of the provisions of this Section or the definition of "Required Lenders" or any other 65 provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Issuing Bank or the Swingline Lender hereunder without the prior written consent of the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be. SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation, execution and delivery of this Agreement or any amendments, modifications or waivers of the provisions hereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank and the Swingline Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or any Lender, including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent, the Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement, the Security Documents and the other Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable out-of-pocket expenses incurred during any workout or restructuring of such Loans or Letters of Credit. (b) The Borrower shall and hereby does indemnify Chase Securities, Inc., the Administrative Agent, the Issuing Bank, the Swingline Lender and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an "Indemnitee") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related reasonable expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, the Security Documents and the other Loan Documents or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; PROVIDED THAT IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT SUCH INDEMNITY SHALL BE APPLICABLE REGARDLESS OF WHETHER ANY LOSS OR LIABILITY WAS CAUSED BY ANY INDEMNITEE'S OWN NEGLIGENCE OR ARISES FROM ANY THEORY OF STRICT LIABILITY but shall not, 66 as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined to have resulted from the gross negligence or willful misconduct of such Indemnitee. (c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be, such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Issuing Bank or the Swingline Lender in its capacity as such. (d) To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof. (e) All amounts due under this Section shall be payable not later than fifteen (15) days after written demand therefor. SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) except in the case of an assignment to a Lender or an Affiliate of a Lender, each of the Borrower and the Administrative Agent (and, in the case of an assignment of all or a portion of a Commitment or any Lender's obligations in respect of its LC Exposure or Swingline Exposure, the Issuing Bank and the Swingline Lender) must give their prior written consent to such assignment (which consent shall not be unreasonably withheld), (ii) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender's Commitment, the amount of the Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be 67 less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, (iii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement, (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500, and (v) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; and provided further that any consent of the Borrower otherwise required under this paragraph shall not be required if an Event of Default under clause (h) or (i) of Article VII has occurred and is continuing. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03). (c) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in Houston, Texas a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be prima facie evidence of the correctness thereof, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. (e) Any Lender may, without the consent of the Borrower, the Administrative Agent, the Issuing Bank, or the Swingline Lender sell participations to one or more banks or other entities (a "Participant") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations 68 under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (f) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.17(c) as though it were a Lender. (f) A Participant shall not be entitled to receive any greater payment under Section 2.14, 2.15 or 2.16 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.16 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.16(e) as though it were a Lender. (g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. SECTION 9.05. Survival. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof. SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. 69 This Agreement and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 9.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. SECTION 9.08. Right of Setoff. Without limiting the remedies provided for in Article VII hereof, if an Event of Default shall have occurred and be continuing and after acceleration of the Obligations, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender to or for the credit or the account of the Borrower or any Guarantor against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement, its Notes or the Obligations and although Obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) THIS AGREEMENT, ALL NOTES, THE OTHER LOAN DOCUMENTS AND ALL OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH, EXCEPT AS OTHERWISE PROVIDED THEREIN, SHALL BE DEEMED TO BE CONTRACTS AND AGREEMENTS UNDER THE LAWS OF THE STATE OF TEXAS AND OF THE UNITED STATES OF AMERICA AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF TEXAS AND OF THE UNITED STATES. Without limitation of the foregoing, nothing in this Agreement, or in the Notes or in any other Loan Document shall be deemed to constitute a waiver of any rights which any Lender may have under applicable federal legislation relating to the amount of interest which such Lender may contract for, take, receive or charge in respect of the Loan and the Loan Documents, including any right to take, receive, reserve and charge interest at the rate allowed by the law of the state where any Lender is located. The Administrative Agent, each Lender and the Borrower further agree that insofar as the provisions of the Texas Finance Code, Chapter 303, as amended, are applicable to the determination of the Highest Lawful Rate with respect to the Notes and the Obligations hereunder and under the other Loan Documents, the indicated rate ceiling of such Code shall be applicable; provided, however, that to the extent permitted by such Code, the Administrative Agent may from time to time by notice to the Borrower revise the election of such interest rate 70 ceiling as such ceiling affects the then current or future balances of the Loans. The provisions of the Texas Finance Code, Chapter 346, do not apply to this Agreement, any Note issued hereunder or the other Loan Documents. (b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the district courts of Harris County, Texas and of the United States District Court of the Southern District of Texas, sitting in Houston, Texas and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction. (c) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this agreement to serve process in any other manner permitted by law. SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 9.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. 71 SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential) to be used solely in connection with the administration of the Loan Documents, (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than the Borrower. For the purposes of this Section, "Information" means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower; provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. SECTION 9.13. Interest Rate Limitation. Each provision in this Agreement and each other Loan Document is expressly limited so that in no event whatsoever shall the amount paid, or otherwise agreed to be paid, to the Administrative Agent or any Lender, or charged, contracted for, reserved, taken or received by the Administrative Agent or any Lender, for the use, forbearance or detention of the money to be loaned under this Agreement or any Loan Document or otherwise (including any sums paid as required by any covenant or obligation contained herein or in any other Loan Document which is for the use, forbearance or detention of such money), exceed the Highest Lawful Rate, and all amounts owed under this Agreement and each other Loan Document shall be held to be subject to reduction so that any and all amounts so paid or agreed to be paid, charged, contracted for, reserved, taken or received which are for the use, forbearance or detention of money under this Agreement or such Loan Document shall in no event exceed the Highest Lawful Rate. Anything in any Note or any other Loan Document to the contrary notwithstanding, the Borrower shall not be required to pay unearned interest on any Note and the Borrower shall not be required to pay interest on the Obligations at a rate in excess of the Highest Lawful Rate, and if the effective rate of interest which would otherwise be payable under such Note and such Loan Documents would exceed the Highest Lawful Rate, or if the holder of such Note shall receive any unearned interest or shall receive monies that are deemed to constitute interest which would increase the effective rate of interest payable by the Borrower under such Note and the other Loan Documents to a rate in excess of the Highest Lawful Rate, then (a) the amount of interest which would otherwise be payable 72 by the Borrower shall be reduced to the amount allowed under applicable law and (b) any unearned interest paid by the Borrower or any interest paid by the Borrower in excess of the Highest Lawful Rate shall in the first instance be credited on the principal of the Obligations of the Borrower (or if all such Obligations shall have been paid in full, refunded to the Borrower). It is further agreed that, without limitation of the foregoing, all calculations of the rate of interest contracted for, reserved, taken, charged or received by any Lender under the Notes and the Obligations and under the other Loan Documents are made for the purpose of determining whether such rate exceeds the Highest Lawful Rate, and shall be made, to the extent permitted by usury laws applicable to such Lender, by amortizing, prorating and spreading in equal parts during the period of the full stated term of the Notes and this Agreement and all interest at any time contracted for, charged or received by such Lender in connection therewith. SECTION 9.14. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT (INCLUDING THE SCHEDULES AND EXHIBITS HERETO), THE NOTES, THE GUARANTY IN ARTICLE X HEREOF, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. SECTION 9.15. Limited Liability. No director, officer, employee, incorporator or stockholder of the Borrower or any Subsidiary, as such, shall have any liability for any obligations of the Borrower under the Notes, the Guarantors under the Guaranty or the Loan Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Lender waives and releases all such liability. The waiver and release are part of the consideration for Transactions. ARTICLE X Guaranty SECTION 10.01. Guaranty In consideration of, and in order to induce the Lenders to make the Loans hereunder, each Subsidiary as a Guarantor hereby absolutely, unconditionally and irrevocably, jointly and severally guarantees the punctual payment and performance when due, whether at stated maturity, by acceleration or otherwise, of the Obligations, and all other obligations and covenants of the Borrower now or hereafter existing under this Agreement, the Notes and the other Loan Documents whether for principal, interest (including interest accruing or becoming owing both prior to and subsequent to the commencement of any proceeding against or with respect to the Borrower under any chapter of the Bankruptcy Code), Fees, commissions, expenses (including reasonable attorneys' fees and expenses) or otherwise, and all reasonable costs and expenses, if any, incurred by the Administrative Agent or any Lender in connection with enforcing any rights under this Guaranty (all such obligations being the "Guaranteed Obligations"), and agrees to pay any and all reasonable expenses incurred by each Lender and the Administrative Agent in enforcing this 73 Guaranty; provided that notwithstanding anything contained herein or in any of the Loan Documents to the contrary, the maximum liability of each Guarantor hereunder and under the other Loan Documents shall in no event exceed such Guarantor's Maximum Guaranteed Amount, and provided further, each Guarantor shall be unconditionally required to pay all amounts demanded of it hereunder prior to any determination of such Maximum Guaranteed Amount and the recipient of such payment, if so required by a final non-appealable order of a court of competent jurisdiction, shall then be liable for the refund of any excess amounts. If any such rebate or refund is ever required, all other Guarantors (and the Borrower) shall be fully liable for the repayment thereof to the maximum extent allowed by applicable law. This Guaranty is an absolute, unconditional, present and continuing guaranty of payment and not of collectibility and is in no way conditioned upon any attempt to collect from the Borrower or any other action, occurrence or circumstance whatsoever. Each Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the Maximum Guaranteed Amount of such Guarantor without impairing this Guaranty or affecting the rights and remedies of the Lenders hereunder. SECTION 10.02. Continuing Guaranty. Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of this Agreement, the Notes and the other Loan Documents. Each Guarantor agrees that the Guaranteed Obligations and Loan Documents may be extended or renewed, and Loans repaid and reborrowed in whole or in part, without notice to or assent by such Guarantor, and that it will remain bound upon this Guaranty notwithstanding any extension, renewal or other alteration of any Guaranteed Obligations or Loan Documents, or any repayment and reborrowing of Loans. To the maximum extent permitted by applicable law, the obligations of each Guarantor under this Guaranty shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms hereof under any circumstances whatsoever, including: (a) any extension, renewal, modification, settlement, compromise, waiver or release in respect of any Guaranteed Obligations; (b) any extension, renewal, amendment, modification, rescission, waiver or release in respect of any Loan Documents; (c) any release, exchange, substitution, non-perfection or invalidity of, or failure to exercise rights or remedies with respect to, any direct or indirect security for any Guaranteed Obligations, including the release of any Guarantor or other Person liable on any Guaranteed Obligations; (d) any change in the corporate existence, structure or ownership of the Borrower, any Guarantor, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Borrower, such Guarantor, any other Guarantor or any of their respective assets; (e) the existence of any claim, defense, set-off or other rights or remedies which such Guarantor at any time may have against the Borrower, or the Borrower or such Guarantor may have at any time against the Administrative Agent, any Lender, any other Guarantor or any other Person, whether in connection with this Guaranty, the Loan Documents, the transactions 74 contemplated thereby or any other transaction other than by the payment in full by the Borrower of the Guaranteed Obligations after the termination of the Commitments of the Lenders; (f) any invalidity or unenforceability for any reason of this Agreement or other Loan Documents, or any provision of law purporting to prohibit the payment or performance by the Borrower, such Guarantor or any other Guarantor of the Guaranteed Obligations or Loan Documents, or of any other obligation to the Administrative Agent or any Lender; or (g) any other circumstances or happening whatsoever, whether or not similar to any of the foregoing. SECTION 10.03. Effect of Debtor Relief Laws. If after receipt of any payment of, or proceeds of any security applied (or intended to be applied) to the payment of all or any part of the Guaranteed Obligations, the Administrative Agent or any Lender is for any reason compelled to surrender or voluntarily surrenders (under circumstances in which it believes it could reasonably be expected to be so compelled if it did not voluntarily surrender), such payment or proceeds to any Person (a) because such payment or application of proceeds is or may be avoided, invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, fraudulent conveyance, fraudulent transfer, impermissible set-off or a diversion of trust funds or (b) for any other similar reason, including (i) any judgment, decree or order of any court or administrative body having jurisdiction over the Administrative Agent, any Lender or any of their respective properties or (ii) any settlement or compromise of any such claim effected by the Administrative Agent or any Lender with any such claimant (including the Borrower), then the Guaranteed Obligations or part thereof intended to be satisfied shall be reinstated and continue, and this Guaranty shall continue in full force as if such payment or proceeds have not been received, notwithstanding any revocation thereof or the cancellation of any Note or any other instrument evidencing any Guaranteed Obligations or otherwise; and the Guarantors, jointly and severally, shall be liable to pay the Administrative Agent and the Lenders, and hereby do indemnify the Administrative Agent and the Lenders and hold them harmless for the amount of such payment or proceeds so surrendered and all expenses (including reasonable attorneys' fees, court costs and expenses attributable thereto) incurred by the Administrative Agent or any Lender in the defense of any claim made against it that any payment or proceeds received by the Administrative Agent or any Lender in respect of all or part of the Guaranteed Obligations must be surrendered. The provisions of this paragraph shall survive the termination of this Guaranty, and any satisfaction and discharge of the Borrower by virtue of any payment, court order or any federal or state law. SECTION 10.04. Partial Waiver of Subrogation. Notwithstanding any payment or payments made by any Guarantor hereunder, or any set-off or application by the Administrative Agent or any Lender of any security or of any credits or claims, no Guarantor will assert or exercise any rights of the Administrative Agent or any Lender or of such Guarantor against the Borrower to recover the amount of any payment made by such Guarantor to the Administrative Agent or any Lender hereunder by way of any claim, remedy or subrogation, reimbursement, exoneration, contribution, indemnity, participation or otherwise arising by contract, by statute, under common law or otherwise, and such Guarantor shall not have any right to exercise any right of recourse to or any claim against assets or property of the Borrower, in each case unless and until the Obligations of the 75 Borrower guaranteed hereby have been fully and finally satisfied. Until such time (but not thereafter), each Guarantor hereby expressly waives any right to exercise any claim, right or remedy which such Guarantor may now have or hereafter acquire against the Borrower that arises under this Agreement or any other Loan Document or from the performance by any Guarantor of the Guaranty hereunder including any claim, remedy or right of subrogation, reimbursement, exoneration, contribution, indemnification or participation in any claim, right or remedy of the Administrative Agent or any Lender against the Borrower or any Guarantor, or any security that the Administrative Agent or any Lender now has or hereafter acquires, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise. If any amount shall be paid to a Guarantor by the Borrower or another Guarantor after payment in full of the Obligations, and the Obligations shall thereafter be reinstated in whole or in part and the Administrative Agent or any Lender forced to repay any sums received by any of them in payment of the Obligations, this Guaranty shall be automatically reinstated and such amount shall be held in trust for the benefit of the Administrative Agent and the Lenders and shall forthwith be paid to the Administrative Agent to be credited and applied to the Guaranteed Obligations, whether matured or unmatured. The provisions of this paragraph shall survive the termination of this Guaranty, and any satisfaction and discharge of the Borrower by virtue of any payment, court order or any federal or state law. SECTION 10.05. Subordination. If any Guarantor becomes the holder of any indebtedness payable by the Borrower or another Guarantor, each Guarantor hereby subordinates all indebtedness owing to it from the Borrower or such other Guarantor to all indebtedness of the Borrower to the Administrative Agent and the Lenders, and agrees that during the continuance of any Event of Default it shall not accept any payment on the same until payment in full of the Obligations of the Borrower under this Agreement and the other Loan Documents after the termination of the Commitments of the Lenders and shall in no circumstance whatsoever attempt to set-off or reduce any obligations hereunder because of such indebtedness. If any amount shall nevertheless be paid in violation of the foregoing to a Guarantor by the Borrower or another Guarantor prior to payment in full of the Guaranteed Obligations, such amount shall be held in trust for the benefit of the Administrative Agent and the Lenders and shall forthwith be paid to the Administrative Agent to be credited and applied to the Guaranteed Obligations, whether matured or unmatured. SECTION 10.06. Waiver. To the extent permitted by applicable law, each Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and waives presentment, demand of payment, notice of intent to accelerate, notice of dishonor or nonpayment and any requirement that the Administrative Agent or any Lender institute suit, collection proceedings or take any other action to collect the Guaranteed Obligations, including any requirement that the Administrative Agent or any Lender protect, secure, perfect or insure any Lien against any property subject thereto or exhaust any right or take any action against the Borrower or any other Person or any collateral (it being the intention of the Administrative Agent, the Lenders and each Guarantor that this Guaranty is to be a guaranty of payment and not of collection). It shall not be necessary for the Administrative Agent or any Lender, in order to enforce any payment by any Guarantor hereunder, to institute suit or exhaust its rights and remedies against the Borrower, any other Guarantor or any other Person, including others liable to pay any Guaranteed Obligations, or to enforce its rights against any security 76 ever given to secure payment thereof. Each Guarantor hereby expressly waives to the maximum extent permitted by applicable law each and every right to which it may be entitled by virtue of the suretyship laws of the State of Texas, including any and all rights it may have pursuant to Rule 31, Texas Rules of Civil Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code and Chapter 34 of the Texas Business and Commerce Code. Each Guarantor hereby waives marshaling of assets and liabilities, notice by the Administrative Agent or any Lender of any indebtedness or liability to which such Lender applies or may apply any amounts received by such Lender, and of the creation, advancement, increase, existence, extension, renewal, rearrangement or modification of the Guaranteed Obligations. Each Guarantor expressly waives, to the extent permitted by applicable law, the benefit of any and all laws providing for exemption of property from execution or for valuation and appraisal upon foreclosure. SECTION 10.07. Full Force and Effect. This Guaranty is a continuing guaranty and shall remain in full force and effect until all of the Obligations of the Borrower under this Agreement and the other Loan Documents and all other amounts payable under this Guaranty have been paid in full (after the termination of the Commitments of the Lenders). All rights, remedies and powers provided in this Guaranty may be exercised, and all waivers contained in this Guaranty may be enforced, only to the extent that the exercise or enforcement thereof does not violate any provisions of applicable law which may not be waived. SECTION 10.08. Termination of Guaranty. Upon the sale or other disposition (by merger or otherwise) of a Guarantor (or all or substantially all of such Guarantor's voting stock or its property and assets) to a Person other than the Borrower or another Guarantor and pursuant to a transaction that is otherwise in compliance with this Agreement, such Guarantor (unless it otherwise remains a Subsidiary) shall be deemed released from its Guaranty and the related Obligations set forth in this Agreement and the other Loan Documents to which Guarantor is a party and all Liens on the capital stock of such Guarantor and Liens on the property or assets created or existing under the Loan Documents shall automatically and without further action be terminated and of no further force and effect. The Administrative Agent and the Lenders agree to execute and deliver any releases, termination statements, reassignments, discharges of liens, pledges, security interests and amend any Loan Document or any other document executed pursuant to the Agreement to evidence such termination; provided no Default or Event of Default shall have occurred and be continuing and provided further that any such termination shall occur only to the extent that all Obligations of such Guarantor under all of its guarantees of and under all of its pledges of assets or other security interests which secure, other Indebtedness of the Borrower shall also terminate or be released upon such sale or other disposition. 77 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. BORROWER: U.S. CONCRETE, INC., a Delaware corporation By:/s/ Michael W. Harlan ---------------------------------------- Michael W. Harlan Senior Vice President Each of the undersigned by executing this Agreement acknowledges that it is a Guarantor hereunder and, as such, is subject to and agrees to be bound by all of the terms and conditions of Article X hereof. GUARANTORS: AFTM Corporation, a Michigan corporation B.C.B.M. Transport, Inc., a California corporation Baer Concrete, Inc., a New Jersey corporation Bay Cities Building Materials Co., Inc., a California corporation Carrier Excavation and Foundation Company, a Delaware corporation Central Concrete Supply Co., Inc., a California corporation Concrete XIV Acquisition, Inc., a Delaware corporation Concrete XV Acquisition, Inc., a Delaware corporation Concrete XVIII Acquisition, Inc., a Delaware corporation Concrete XIX Acquisition, Inc., a Delaware corporation Concrete XX Acquisition, Inc., a Delaware corporation DYNA, Inc., a Delaware corporation Fendt Transit Mix, Inc., a Michigan corporation Hunter Equipment Company, a Michigan corporation Olive Branch Ready Mix, Inc., a Delaware corporation Opportunity Concrete Corporation , a District of Columbia corporation R.G. Evans/Associates d/b/a/ Santa Rosa Cast Products Co., a California corporation Ready Mix Concrete Company of Knoxville, a Delaware corporation San Diego Precast Concrete, Inc., a Delaware corporation USC GP, Inc., a Delaware corporation Walker's Concrete, Inc., a California corporation Western Concrete Products, Inc., a Delaware corporation By:/s/ Michael W. Harlan --------------------------------------- Michael W. Harlan Vice President USC Management Co., L.P. By: USC GP, Inc. By:/s/ Michael W. Harlan ----------------------------------- Michael W. Harlan Vice President ADMINISTRATIVE AGENT/LENDER: --------------------------- CHASE BANK OF TEXAS, NATIONAL ASSOCIATION By: /s/ James R. Dolphin ----------------------------- Name: James R. Dolphin --------------------------- Title: Senior Vice President ------------------------- ADDRESS FOR NOTICE: Chase Bank of Texas, National Association 712 Main Street 5th Floor East Houston, Texas 77008 Telephone: (713) 216-5347 Telecopy: (713) 216-6004 Attn.: James R. Dolphin Syndication Agent/Lender: ------------------------ BANKERS TRUST COMPANY By: /s/ Andrew Keith ---------------------------- Name: Andrew Keith ------------------------- Title: Vice President ------------------------ ADDRESS FOR NOTICE: BANKERS TRUST COMPANY 130 Liberty Street, 27th Floor New York, New York 10006 Telephone: (212) 250-8617/9080 Telecopy: (212) 250-7218 Attn: Andrew Keith/Alex Bici DOCUMENTATION AGENT/LENDER: -------------------------- FIRST UNION NATIONAL BANK By:/s/ Tom Bohrer --------------------- Name: Tom Bohrer Title: Vice President ADDRESS FOR NOTICE: First Union National Bank One First Union Center 301 South College Street, DC-5 Charlotte, North Carolina 28288-0737 Telephone: (704) 383-3544 Telecopy: (704) 374-4793 Attn.: David C. Hauglid Lender: ------ BANK OF AMERICA, N.A. By:/s/ William B. Borus ---------------------------- William B. Borus Vice President ADDRESS FOR NOTICE: BANK OF AMERICA, N.A. 700 Louisiana, 7th Floor Houston, Texas 77002 Telephone: (713) 247-7756 Telecopy: (713) 247-7748 Attn: William Borus CO-MANAGING AGENT/LENDER: ------------------------ BANK ONE, TEXAS, NA By:/s/ John J. Zollinger, IV ----------------------------- John J. Zollinger, IV Vice President ADDRESS FOR NOTICE: BANK ONE, TEXAS, NA 910 Travis Street, 7th Floor Houston, Texas 77002 Telephone: (713) 751-6188 Telecopy: (713) 751-6777 Attn: John J. Zollinger, IV CO-MANAGING AGENT/LENDER: ------------------------ CREDIT LYONNAIS NEW YORK BRANCH By:/s/ Robert Ivosevich ---------------------- Name: Robert Ivosevich Title: Senior Vice President ADDRESS FOR NOTICE: c/o CREDIT LYONNAIS REPRESENTATIVE OFFICE 2200 Ross Avenue, Suite 4400W Dallas, Texas 75201 Telephone: (214) 220-2303 Telecopy: (214) 220-2323 Attn: Blake Wright CO-MANAGING AGENT/LENDER: ------------------------ THE BANK OF NOVA SCOTIA By:/s/ F. C. H. Ashby -------------------- Name: F. C. H. Ashby Title: Senior Manager Loan Operations ADDRESS FOR NOTICE: THE BANK OF NOVA SCOTIA Atlanta Agency 600 Peachtree Street N.A. Suite 2700 Atlanta, Georgia 30308 Telephone: (404) 877-1500 Telecopy: (404) 888-8998 Attn.: F.C.H. Ashby with a copy to: THE BANK OF NOVA SCOTIA 1100 Louisiana, Suite 3000 Houston, Texas 77002 Telephone: (713) 759-3430 Telecopy: (713) 752-2425 Attn.: Gregory E. George CO-MANAGING AGENT/LENDER: ------------------------ BRANCH BANKING & TRUST COMPANY By:/s/ Cory Boyte ------------------ Name: Cory Boyte Title: Vice President ADDRESS FOR NOTICE: BRANCH BANKING & TRUST COMPANY 110 South Stratford Rd., Suite 301 Winston Salem, NC 27104 Telephone: (336) 733-3259 Telecopy: (336) 733-3254 Attn: Cory Boyte LENDER: ------ COMERICA BANK By:/s/ Mark B. Grover ---------------------------- Mark B. Grover Vice President ADDRESS FOR NOTICE: COMERICA BANK 4100 Spring Valley, Suite 900 Dallas, Texas 75244 Telephone: (972) 361-2545 Telecopy: (972) 361-2550 Attn: Mark B. Grover EX-10.11 9 EMPLOYMENT AGREEMENT-DONALD WAYNE EXHIBIT 10.11 Donald C. Wayne EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of the Effective Date (as defined herein) by and between U.S. Concrete, Inc., a Delaware corporation (the "Company"), and Donald C. Wayne (the "Employee"). PRELIMINARY STATEMENT In entering into this Agreement, the Company desires to provide the Employee with substantial incentives to serve the Company without distraction or concern over minimum compensation, benefits or tenure, to develop and implement the Company's initial development plan and thereafter to assist in the management of the Company's future growth and development and the maximization of the returns to the Company's stockholders. NOW, THEREFORE, in consideration of the foregoing and the mutual provisions contained herein, and for other good and valuable consideration, the parties hereto agree with each other as follows: Section 1. Certain Defined Terms. (a) The following terms this Agreement uses have the respective meanings this Section 1(a) assigns to them: "Acquiring Person" means any Person who or which, together with all its Affiliates and Associates, is or are the Beneficial Owner of 50.1% or more of the shares of Common Stock then outstanding, but does not include any Exempt Person; provided, however, that a person will not be or become an Acquiring Person if that Person, together with its Affiliates and Associates, becomes the Beneficial Owner of 50.1% or more of the shares of Common Stock then outstanding solely as a result of a reduction in the number of shares of Common Stock outstanding which results from the Company's repurchase of Common Stock, unless and until such time as that Person or any Affiliate or Associate of that Person purchases or otherwise becomes the Beneficial Owner of additional shares of Common Stock constituting 1% or more of the then outstanding shares of Common Stock or any other Person (or Persons) who is (or collectively are) the Beneficial Owner of shares of Common Stock constituting 1% or more of the then outstanding shares of Common Stock becomes an Affiliate or Associate of that Person, unless, in either such case, that Person, together with all its Affiliates and Associates, is not then the Beneficial Owner of 50.1% or more of the shares of Common Stock then outstanding. 1 "Active Status" means the Employee's Employment status from the Effective Date to and including the first to occur of (i) the Part-time Employment Effective Date or (ii) the Termination Date. "Affiliate" has the meaning Exchange Act Rule 12b-2 specifies. "Annual Cash Compensation" of the Employee for any Compensation Year means the salary the Employee earns during that Compensation Year pursuant to this Agreement, including all amounts of salary the Employee earns during that Compensation Year and elects to (i) defer, whether pursuant to a Compensation Plan intended to qualify as a plan under Code Section 401(k) or otherwise, and (ii) forego pursuant to a Compensation Plan under which the Employee may receive Common Stock or any other form of noncash compensation in lieu of that salary. For purposes of this definition, any form of noncash compensation will be valued at its fair market value at the time that compensation is awarded, earned or paid, as the case may be. "Associate" means, with reference to any Person, (i) any corporation, firm, partnership, association, unincorporated organization or other entity (other than the Company or a subsidiary of the Company) of which that Person is an officer or general partner (or officer or general partner of a general partner) or is, directly or indirectly, the Beneficial Owner of 10% or more of any class of its equity securities, (ii) any trust or other estate in which that Person has a substantial beneficial interest or for or of which that Person serves as trustee or in a similar fiduciary capacity and (iii) any relative or spouse of that Person, or any relative of that spouse, who has the same home as that Person. "Average Annual Cash Compensation" of the Employee means, as of the Part-time Employment Effective Date, the average of (i) the Annual Cash Compensation the Employee has earned in each of the two Compensation Years next preceding that date or, if less than two Compensation Years have occurred prior to that date and since the Effective Date, (ii) the Annual Cash Compensation in each whole Compensation Year, if any, and, restated on an annualized basis, the Annual Cash Compensation in each partial Compensation Year (up to a maximum of two partial Compensation Years) next preceding the Part-time Employment Effective Date. "Base Salary" means: (i) prior to the Part-time Employment Effective Date, the guaranteed minimum annual salary payable by the Company to the Employee pursuant to Section 4(a); and (ii) on and after the Part-time Employment Effective Date, the guaranteed minimum annual salary payable by the Company to the Employee pursuant to Section 5(e). A specified Person is deemed the "Beneficial Owner" of, and is deemed to "beneficially own," any securities: 2 (i) of which that Person or any of its Affiliates or Associates, directly or indirectly, is the "beneficial owner" (as determined pursuant to Exchange Act Rule 13d-3) or otherwise has the right to vote or dispose of, including pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that a Person will not be deemed the "Beneficial Owner" of, or to "beneficially own," any security under this subparagraph (i) as a result of an agreement, arrangement or understanding to vote that security if that agreement, arrangement or understanding: (A) arises solely from a revocable proxy or consent given in response to a public (that is, not including a solicitation exempted by Exchange Act Rule 14a-2(b)(2)) proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the Exchange Act; and (B) is not then reportable by that Person on Exchange Act Schedule 13D (or any comparable or successor report); (ii) which that Person or any of its Affiliates or Associates, directly or indirectly, has the right or obligation to acquire (whether that right or obligation is exercisable or effective immediately or only after the passage of time or the occurrence of an event) pursuant to any agreement, arrangement or understanding (whether or not in writing) or on the exercise of conversion rights, exchange rights, other rights, warrants or options, or otherwise; provided, however, that a Person will not be deemed the "Beneficial Owner" of, or to "beneficially own," securities tendered pursuant to a tender or exchange offer made by that Person or any of its Affiliates or Associates until those tendered securities are accepted for purchase or exchange; or (iii) which are beneficially owned, directly or indirectly, by (A) any other Person (or any Affiliate or Associate thereof) with which the specified Person or any of its Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy or consent as described in the proviso to subparagraph (i) of this definition) or disposing of any voting securities of the Company or (B) any group (as Exchange Act Rule 13d- 5(b) uses that term) of which that specified Person is a member; provided, however, that nothing in this definition will cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of, or to "beneficially own," any securities that Person acquires through its participation in good faith in a firm commitment underwriting (including securities acquired pursuant to stabilizing transactions to facilitate a public offering in accordance with Exchange Act Regulation M or to cover overallotments created in connection with a public offering) until the expiration of 40 days after the date of that acquisition. For purposes of this definition, "voting" a security includes voting, granting a proxy, acting by consent, making a request or demand relating to corporate action 3 (including calling a stockholder meeting) or otherwise giving an authorization (within the meaning of Exchange Act Section 14(a)) in respect of that security. "Board" means the entire Board of Directors of the Company. "Business Reason" for the Company's termination of the Employee's Employment means any lawful reason other than Cause. "Cause" for the Company's termination of the Employee's Employment means: (i) the Employee's conviction of a felony crime (or the Employee's entering of a plea of nolo contendere to any charge against him of a felony crime) of any kind; or (ii) the Employee's continuing failure to substantially perform his duties and responsibilities hereunder (except by reason of the Employee's incapacity attributable to physical or mental illness or injury) for a period of 20 days after the Required Board Majority has delivered to the Employee a written demand for substantial performance hereunder which specifically identifies the bases for the Required Board Majority's determination that the Employee has not substantially performed his duties and responsibilities hereunder (that period being the "Grace Period"); provided, that for purposes of this clause (ii), the Company will not have Cause to terminate the Employee's Employment unless (A) at a meeting of the Board called and held following the Grace Period in the city in which the Company's principal executive offices are located of which the Employee was given not less than 10 days' prior written notice and at which the Employee was afforded the opportunity to be represented by counsel, appear and be heard, the Required Board Majority adopts a written resolution which (1) sets forth the Required Board Majority's determination that the failure of the Employee to substantially perform his duties and responsibilities hereunder has (except by reason of his incapacity attributable to physical or mental illness or injury) continued past the Grace Period and (2) specifically identifies the bases for that determination and (B) the Company, at the written direction of the Required Board Majority, delivers to the Employee a Notice of Termination for Cause to which a copy of that resolution, certified as being true and correct by the secretary or any assistant secretary of the Company, is attached. Cause of the type referred to in clause (i) of the preceding sentence is a "Type I Cause," while Cause of the type referred to in clause (ii) of the preceding sentence is a "Type II Cause." "Change of Control" means the occurrence of any of the following events that occurs after the IPO Closing Date: (i) any Person becomes an Acquiring Person; (ii) at any time the then Continuing Directors cease to constitute a majority of the members of the Board; (iii) a merger of the Company with or into, or a sale by the Company of its properties and assets substantially as an entirety to, another Person occurs and, immediately after that occurrence, any Person (other than an Exempt Person), together with all its Affiliates and Associates, is the Beneficial Owner of 50.1% or more of the total voting power of the then outstanding Voting Shares of the Person surviving that transaction (in the case of a merger or consolidation) or the Person acquiring those properties and assets substantially as an entirety. 4 "Change of Control Payment" means at any time as of which the Employee terminates his Employment by reason of a Change of Control, an amount equal to the product of (i) one-twelfth of the Base Salary that would be paid for the Compensation Year in which the Employee elects to terminate his Employment pursuant to the provisions of Section 5(b)(i)(B) multiplied by (ii) the greater of (A) the number of whole and partial calendar months in the period beginning on the date the Employee so terminates his Employment and ending on the last day of the Initial Term and (B) 12. "Code" means the Internal Revenue Code of 1986. "Common Stock" means the common stock of the Company. "Company" means (i) U.S. Concrete, Inc., a Delaware corporation, and, unless the context otherwise requires, (ii) any Person that assumes the obligations of "the Company" hereunder, by operation of law, pursuant to Section 9(c)(iii) or otherwise. "Compensation Plan" means any compensation arrangement, plan, policy, practice or program the Company or any subsidiary of the Company establishes, maintains or sponsors, or to which the Company or any subsidiary of the Company contributes, on behalf of two or more Executive Officers (including, for this purpose, any member of the family of any Executive Officer), (i) including (A) any "employee pension benefit plan" (as defined in ERISA Section 3(2)) or other "employee benefit plan" (as defined in ERISA Section 3(3)), (B) any other retirement or savings plan, including any supplemental benefit arrangement relating to any plan intended to be qualified under Code Section 401(a) or whose benefits the Code or ERISA limits, (C) any "employee welfare plan" (as defined in ERISA Section 3(1)), (D) any arrangement, plan, policy, practice or program providing for severance pay, deferred compensation or insurance benefit and (E) any Incentive Plan, but (ii) excluding any compensation arrangement, plan, policy, practice or program to the extent it provides for annual base salary. "Compensation Committee" means the committee of the Board to which the Board has delegated duties respecting the compensation of Executive Officers and the administration of Incentive Plans, if any, intended to qualify for the Rule 16b-3 exemption under the Exchange Act. "Compensation Year" means a calendar year. "Confidential Information" means, with respect to the Company or any subsidiary of the Company, all trade secrets and other confidential, nonpublic and/or proprietary information of that Person, including information derived from reports, investigations, research, work in progress, codes, marketing and sales programs, customer lists, records of customer service requirements, capital expenditure projects, cost summaries, pricing formulae, contract analyses, financial information, projections, present and future business 5 plans, confidential filings with any governmental authority and all other confidential, nonpublic concepts, methods of doing business, ideas, materials or information prepared or performed for, by or on behalf of that Person. "Continuing Director" means at any time any individual who then (i) is a member of the Board and was a member of the Board as of the IPO Closing Date or whose nomination for his first election, or that first election, to the Board following that date was recommended or approved by a majority of the then Continuing Directors (acting separately or as a part of any action taken by the Board of any committee thereof) and (ii) is not an Acquiring Person, an Affiliate or Associate of an Acquiring Person or a nominee or representative of an Acquiring Person or of any such Affiliate or Associate. "CPI" means for any period the Consumer Price Index for All Urban Consumers, All Items, 1982-84 = 100, U.S. City Average, as published by the United States Department of Labor, Bureau of Labor Statistics (or its successor) for that period. "Disability" of the Employee means the Employee has been determined (which determination will be final and binding on all Persons, absent manifest error), as a result of a physical or mental illness or personal injury he has incurred (including illness or injury resulting from any substance abuse), by a Qualified Physician (who may be the doctor treating or otherwise acting as the Employee's doctor in connection with the illness or injury in question) selected by the Employee, or by the Company at its expense, to be unable to perform, at the time of that determination and, in all reasonable medical likelihood, indefinitely thereafter, the normal duties then most recently assigned, under and in accordance with the terms hereof, to the Employee while on Active Status; provided that the determination whether the Employee has incurred a Disability will be made by a majority of three Qualified Physicians, (i) one of whom the Employee selects, (ii) one of whom the Company selects and (iii) the remaining one of whom the Qualified Physicians the Employee and the Company have selected pursuant to clauses (i) and (ii) of this proviso select and the fees and expenses of whom the Employee and the Company will share and pay in equal amounts, if: (A) the Employee has selected a Qualified Physician and the Company has selected another Qualified Physician, in each case to determine whether the Employee has incurred a Disability, and (B) those Qualified Physicians disagree as to whether the Employee has incurred a Disability. For purposes of this definition, if the Employee is unable by reason of illness or injury to give an informed consent to the performance of the treatment of that illness or injury, a Qualified Physician selected by any Person who is authorized by applicable law to give that consent will be deemed to have been selected by the Employee. Notwithstanding the foregoing, if the Company maintains a disability insurance policy that provides coverage for its Executive Officers generally, the term "Disability," as used in this Agreement, shall mean the events and/or circumstances under which the Employee will be entitled to receive disability benefits under that insurance policy. "Effective Date" has the meaning Section 9(l) specifies. 6 "Employment" means the salaried employment of the Employee by the Company or a subsidiary of the Company hereunder. "ERISA" means the Employee Retirement Income Security Act of 1974. "Exchange Act" means the Securities Exchange Act of 1934. "Executive Officer" means any of the chairman of the board, the chief executive officer, the chief operating officer, the chief financial officer, the president or any executive, regional or other group or senior vice president of the Company. "Exempt Person" means: (i) (A) the Company, any subsidiary of the Company, any employee benefit plan of the Company or of any subsidiary of the Company and (B) any Person organized, appointed or established by the Company for or pursuant to the terms of any such plan or for the purpose of funding any such plan or funding other employee benefits for employees of the Company or any subsidiary of the Company; (ii) the Employee, any Affiliate or Associate of the Employee or any group (as Exchange Act Rule 13d-5(b) uses that term) of which the Employee or any Affiliate or Associate of the Employee is a member; (iii) Main Street Merchant Partners II, L.P. or any of its controlling Affiliates; or (iv) any Person or group (as Exchange Act Rule 13d-5(b) uses that term) a majority of the Continuing Directors by resolution deems not to be an "Acquiring Person." "Good Reason" for the Employee's termination of his Employment means: (i) any violation hereof in any material respect by the Company; (ii) either (A) a failure of the Company to continue in effect any Compensation Plan in which the Employee was participating or (B) the taking of any action by the Company which would adversely affect the Employee's participation in or materially reduce the Employee's benefits under any such Compensation Plan, unless (1) in the case of either subclause (A) or (B) of this clause, there is substituted a comparable Compensation Plan that is at least economically equivalent, in terms of the benefit offered to the Employee, to the Compensation Plan being ended or in which the Employee's participation is being adversely affected or the Employee's benefits are being materially reduced or (2) in the case of that subclause (A), the failure, or in the case of that subclause (B), the taking of action, adversely affects Executive Officers generally or (iii) the assignment to the Employee without the Employee's written consent of duties inconsistent in any material respect with the Employee's then current positions, authority, duties or responsibilities or any other action by the Company which results in a material diminution in those positions, authority, duties or responsibilities. "Incentive Plan" means any compensation arrangement, plan, policy, practice or program the Company or any subsidiary of the Company establishes, maintains or sponsors, or to which the Company or any subsidiary of the Company contributes, on behalf of at least two Executive Officers and which provides for incentive, bonus or other performance-based awards of cash, securities or the phantom equivalent of securities, including any stock option, 7 stock appreciation right and restricted stock plan, but excluding any plan intended to qualify as a plan under any one or more of Code Sections 401(a), 401(k) or 423. "Initial Term" has the meaning Section 3 specifies. "IPO" means the first time a registration statement the Company has filed under the Securities Act of 1933 and respecting an underwritten primary offering by the Company of shares of Common Stock becomes effective under that act and the Company issues and sells any of the shares registered by that registration statement. "IPO Closing Date" means the date on which the Company first receives payment for the shares of Common Stock it sells in the IPO. "Nonterminating Party" means the Employee or the Company, as the case may be, to which the Terminating Party delivers a Notice of Termination. "Notice of Termination" to or from the Employee means a written notice that: (i) states that it is a "Notice of Termination" hereunder, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances the Terminating Party claims to provide a basis for termination of the Employee's Employment, and if the Termination Date is other than the date of receipt of the notice, (iii) sets forth that Termination Date. "Outside Director" means at any time a member of the Board at that time who is not then an employee of the Company or any subsidiary of the Company. "Part-time Employment Effective Date" means, (i) if the Company elects pursuant to any applicable provision hereof to terminate the Employee's Employment other than for Cause or (ii) if the Employee elects pursuant to the applicable provision hereof to terminate his Employment for Good Reason or by reason of his Disability, the date the Nonterminating Party receives the Terminating Party's Notice of Termination. "Part-time Employment Period" means the period of time which begins on the Part-time Employment Effective Date and ends on the first to occur of (i) the third anniversary of the Effective Date or, if later, the first anniversary of the Part-time Employment Effective Date, (ii) the termination by the Company of the Employee's Employment for Type I Cause or (iii) the death of the Employee. "Person" means any natural person, sole proprietorship, corporation, partnership of any kind having a separate legal status, limited liability company, business trust, unincorporated organization or association, mutual company, joint stock company, joint venture, estate, trust, union or employee organization or governmental authority. 8 "Qualified Physician" means, in the case of any determination whether the Employee has sustained a Disability, a physician (i) holding an M.D. degree from a medical school located in the United States, (ii) specializing and board-certified in the treatment of the injury or illness that has or may have caused that Disability and (iii) having admission privileges to one or more hospitals located in the state in which the Company then has its principal executive offices or in the state in which the Employee then is domiciled. "Required Board Majority" means at any time a majority of the members of the Board at that time. "Retirement" means termination of the Employee's Employment by reason of the Employee's giving a Notice of Termination on or following the date he has attained age 65, other than a Notice of Termination by reason of a Change of Control pursuant to the provisions of Section 5(b)(i)(B). "Terminating Party" means the Employee or the Company, as the case may be, who or which terminates the Employee's Employment by means of a Notice of Termination. "Termination Date" means: (i) if the Employee's Employment terminates by reason of the Employee's death, the date of that death; (ii) if the Employee's Employment terminates by reason of the Employee's giving a Notice of Termination following a Change of Control, the first date on which the Company pays to the Employee in full the amounts owed to the Employee pursuant to Section 5(b)(iii); (iii) if the Employee's Employment terminates by reason of the Employee's giving a Notice of Termination Without Good Reason or by reason of Retirement, the elapse of the 30th day after the Company receives that notice; (iv) if the Company terminates the Employee's Employment (A) at any time for Type I Cause or (B) at any time prior to the Part-time Employment Effective Date for Type II Cause, the date the Employee receives the Company's Notice of Termination for Cause; and (v) if the Employee's Employment terminates for any other reason, at the expiration of the Part-time Employment Period. "Type I Cause" means Cause of the type to which clause (i) of the first sentence of the definition of Cause herein refers. "Type II Cause" means Cause of the type to which clause (ii) of the first sentence of the definition of Cause herein refers. "Voting Shares" means: (i) in the case of any corporation, stock of that corporation of the class or classes having general voting power under ordinary circumstances to elect a majority of that corporation's board of directors; and (ii) in the case of any other entity, equity interests of the class or classes having general voting power under ordinary circumstances equivalent to the Voting Shares of a corporation. 9 "Without Good Reason" for the Employee's termination of his Employment means that, at the time the Company receives the Employee's Notice of Termination, the Employee was not entitled to terminate his Employment (i) for a Good Reason, (ii) following a Change of Control or (iii) by reason of his Disability or Retirement. (b) Other Definitional Provisions. (i) Except as this Agreement otherwise may specify, all references herein to any statute, including the Code, ERISA and the Exchange Act, are references to that statute or any successor statute, as the same may have been or be amended or supplemented from time to time, and any rules or regulations promulgated thereunder, and all references herein to any rule or regulation are references to that rule or regulation, or any successor rule or regulation, as the same may be amended or supplemented from time to time. (ii) This Agreement uses the words "herein," "hereof" and "hereunder" and words of similar import to refer to this Agreement as a whole and not to any provision of this Agreement, and the word "Section" refers to a Section of this Agreement unless otherwise specified. (iii) Whenever the context so requires, the singular number includes the plural and vice versa, and a reference to one gender includes the other gender and the neuter. (iv) The word "including" (and, with correlative meaning, the word "include") means including, without limiting the generality of any description preceding that word, and the words "shall" and "will" are used interchangeably and have the same meaning. Section 2. Employment. (a) On the terms and subject to the conditions hereinafter set forth, and beginning as of the Effective Date and continuing until the first to occur of the Part-time Employment Effective Date or the Termination Date, (i) the Company will employ the Employee as Vice President and General Counsel of the Company, (ii) the Employee will serve in the Company's employ in that position and (iii) the Employee will perform such duties, and have such powers, authority, functions, duties and responsibilities for the Company and entities affiliated with the Company as are commensurate and consistent with his employment in the position or positions to which clause (i) of this sentence refers. The Employee also will have such additional powers, authority, functions, duties and responsibilities as the chief executive officer of the Company or his delegate may assign to the Employee from time to time; provided that, without the Employee's written consent, those additional powers, authority, functions, duties and responsibilities must not be inconsistent or interfere with, or detract from, those herein vested in, or otherwise then being performed for the Company by, the Employee. (b) The Employee will not, at any time during his Employment, engage in any other activities unless those activities do not interfere materially with the Employee's duties and responsibilities to the Company at that time, except that the Employee will be entitled, subject to the provisions of Section 7, (i) to continue with such activities as the Employee has carried on prior to the Effective Date, including making and managing his personal investments and participating in 10 other business or civic activities and (ii) to serve on corporate or other business, civic or charitable boards or committees and trade association or similar boards or committees. Section 3. Term of Employment. Subject to the provisions of Section 5, the term of the Employee's Employment will be for an initial term of three years (the "Initial Term"), provided that, beginning on the second anniversary of the Effective Date, the term of the Employee's Employment will be for a continually renewing term of one year commencing on that anniversary date and renewing each day thereafter for an additional day without any further action by either the Company or the Employee until an event has occurred as described in, or one of the parties has made an appropriate election pursuant to, Section 5. After the Termination Date has occurred and the Company has paid to the Employee all the applicable amounts Section 5 provides the Company will pay as a result of the termination of the Employee's Employment, including all amounts accruing during the Part-time Employment Period, if any, this Agreement will terminate and have no further force or effect, except that Sections 8, 9 and 10 will survive that termination indefinitely and Section 7 will survive for the period of time it specifies. Section 4. Compensation. (a) Base Salary. A Base Salary will be payable to the Employee by the Company as a guaranteed minimum annual amount hereunder for each Compensation Year during the period from the Effective Date to the first to occur of the Part-time Employment Effective Date or the Termination Date. The Company will pay that Base Salary in the intervals consistent with its normal payroll schedules, and that Base Salary will be payable initially at the annual rate of $110,000 and will be increased (but not decreased or adjusted other than as Section 5 provides) as follows: (i) on the first and each subsequent anniversary of the Effective Date, by the amount equal to the product of (A) the annual rate of that Base Salary as in effect immediately prior to that anniversary multiplied by (B) the percentage increase (if any) in the CPI for the 12-month period immediately preceding that anniversary; and (ii) on the first and each subsequent anniversary of the Effective Date or at any other time, by such additional amount (if any) the Compensation Committee in its sole discretion may determine or approve, as evidenced by the written minutes or records of the Compensation Committee and its written notices of those determinations or approvals to the Employee. Effective as of the Part-time Employment Effective Date, the Base Salary theretofore in effect will be adjusted as Section 5(e) provides. (b) Other Compensation. The Employee will be entitled to participate in all Compensation Plans from time to time in effect while he remains on Active Status, regardless of whether the Employee is an Executive Officer. All awards to the Employee under all Incentive Plans will take into account the Employee's positions with and duties and responsibilities to the Company and its subsidiaries. 11 Section 5. Termination of Employment and Its Consequences. (a) Termination by the Company. (i) The Company will be entitled, if acting at the direction of the Required Board Majority, to terminate the Employee's Employment (A) at any time for Type I Cause or (B) at any time prior to the Part-time Employment Effective Date for (1) Type II Cause or (2) any Business Reason. The Company's termination of the Employee's Employment for Cause will be effective on the date the Company delivers a Notice of Termination for Cause to the Employee pursuant to this Section 5(a)(i) (together, in the case of a termination for Type II Cause, with the certified resolution to which clause (ii) of the definition herein of Cause refers), while the Company's termination of the Employee's Employment for a Business Reason will be effective on the later of (A) the third anniversary of the Effective Date and (B) first anniversary of the date the Company delivers a Notice of Termination for a Business Reason to the Employee pursuant to this Section 5(a)(i). (ii) If the Company terminates the Employee's Employment for Cause, the Company promptly thereafter, and in any event within five business days thereafter, will pay the Employee his Base Salary to and including the Termination Date and the amount of all compensation the Employee has previously deferred (together with any accrued interest or earnings thereon), in each case to the extent not theretofore paid, and, when that payment is made, the Company will, notwithstanding Section 3, have no further or other obligations hereunder to the Employee. (iii) If the Company terminates the Employee's Employment for a Business Reason, the respective rights and obligations of the Company and the Employee during the Part-time Employment Period will be as Section 5(e) sets forth. (b) Termination by the Employee. (i) The Employee will be entitled to terminate his Employment (A) for a Good Reason at any time within 180 days after the facts or circumstances constituting that Good Reason first exist and are known to the Employee, (B) by reason of a Change of Control at any time within 365 days after that Change of Control occurs (provided, however, that the Employee will not be entitled to terminate his Employment by reason of that Change of Control if it occurs (1) after the Company's receipt of the Employee's Notice of Termination Without Good Reason, (2) after (a) the receipt by the Nonterminating Party of the Terminating Party's Notice of Termination pursuant to Section 5(c) or (b) the Employee's receipt of the Company's Notice of Termination for a Business Reason (other than in connection with that Change of Control) or (3) more than 90 days after the Company's receipt of the Employee's Notice of Termination for Good Reason), (C) Without Good Reason at any time or (D) by reason of his Retirement. The Employee's termination of his Employment for Good Reason will be effective on the later of (A) the third anniversary of the Effective Date and (B) the first anniversary of the date the Employee delivers a Notice of Termination for Good Reason to the Company. The Employee's termination of his Employment by reason of a Change of Control will be effective on the first date on which the Change of Control Payment shall have been paid in full to the Employee. The Employee's termination of his Employment Without Good Reason or by reason of his Retirement will be 12 effective on the 30th day following the Employee's delivery of a Notice of Termination Without Good Reason or by reason of his Retirement. (ii) If the Employee terminates his Employment for Good Reason, the respective rights and obligations of the Company and the Employee during the Part-time Employment Period will be as Section 5(e) sets forth. (iii) If the Employee terminates his Employment by reason of a Change of Control, the Company will pay to the Employee in a cash lump sum within 10 business days after the date the Company receives the Employee's Notice of Termination by reason of that Change of Control the amount equal to the sum of (A) the portion of the Base Salary to and including the Termination Date which has not yet been paid, (B) all compensation the Employee has previously deferred (together with any accrued interest and earnings thereon) which has not yet been paid, (C) any accrued but unpaid vacation pay and (D) the Change of Control Payment. (iv) If the Employee terminates his Employment Without Good Reason or by reason of his Retirement, the Company will pay to the Employee, in a cash lump sum within 10 business days after the Termination Date, the amount equal to the sum of (A) the portion of the Base Salary to and including the Termination Date which has not yet been paid, (B) all compensation the Employee has previously deferred (together with any accrued interest and earnings thereon) which has not yet been paid and (C) any accrued but unpaid vacation pay. (c) Termination by Reason of Disability. If the Employee incurs any Disability while on Active Status, either the Employee or the Company may terminate the Employee's Employment effective on the first anniversary of the date the Nonterminating Party receives a Notice of Termination from the Terminating Party pursuant to this Section 5(c). If the Employee's Employment terminates by reason of the Employee's Disability, the respective rights and obligations of the Company and the Employee during the Part-time Employment Period will be as Section 5(e) sets forth. (d) Termination of Employment by Death. The Employee's Employment will terminate automatically at the time of his death. If the Employee's Employment terminates by reason of the Employee's death, the Company will pay to the Person the Employee has designated in a written notice delivered to the Company as his beneficiary entitled to that payment, if any, or to the Employee's estate, as applicable, in a cash lump sum within 30 days after the Termination Date, the amount equal to the sum of (i) the portion of the Base Salary through the end of the month in which the Termination Date occurs which has not yet been paid, (ii) all compensation the Employee has previously deferred (together with any accrued interest or earnings thereon) which has not yet been paid, (iii) any accrued but unpaid vacation pay (if the Employee dies while on Active Status) and (iv) (A) if the Employee dies while on Active Status or during the Part-time Employment Period (other than during the last 12 months of the Part-time Employment Period), an amount equal to the Base Salary being paid for the Compensation Year in which he dies or (B) if the Employee dies during the last 12 months of the Part-time Employment Period, the product of (1) one-twelfth 13 of the Base Salary being paid for the Compensation Year in which the Employee dies multiplied by (2) the number of whole and partial calendar months in the period beginning with the first calendar month after the calendar month in which he dies and ending with the last calendar month in which the Termination Date would have occurred if the Employee's Employment were to have continued to the end of the Part-time Employment Period. For purposes of this Section 5(d), if the anniversary of the Effective Date in the Compensation Year in which the Employee dies has not occurred on or before the Termination Date, the Base Salary for that Compensation Year will be calculated on the assumption that no increase in the amount thereof would be made effective as of that anniversary pursuant to Section 4(a) or 5(e)(i), as applicable. (e) Employee's Rights During the Part-time Employment Period. (i) The Company will pay the Employee a Base Salary, in the intervals consistent with its normal payroll schedules, during the Part-time Employment Period in the amounts determined from time to time as follows: Effective as of the Part-time Employment Effective Date, the Base Salary payable by the Company to the Employee for the Part-time Employment Period will be as follows: (A) (1) if the Part-time Employment Effective Date occurs as a result of the receipt by the Nonterminating Party of a Notice of Termination for a Business Reason or a Notice of Termination for Good Reason, the amount equal to the Average Annual Cash Compensation of the Employee determined as of the Part-time Employment Effective Date; and (2) if the Part-time Employment Effective Date occurs as a result of the receipt by the Nonterminating Party of a Notice of Termination for Disability, the amount equal to the amount by which (a) the Average Annual Cash Compensation of the Employee determined as of the Part-time Employment Effective Date exceeds (b) the aggregate amount of periodic payments the Employee receives during the 12 months beginning on that date under Compensation Plans then in effect and providing for those payments to the Employee solely as a result or on account of disability; and (B) on each anniversary of the Effective Date which occurs during the Part-time Employment Period, if any, the Base Salary payable pursuant to this Section 5(e) will be increased by the amount equal to the product of (1) the annual rate of that Base Salary as in effect immediately prior to that anniversary multiplied by (2) the percentage increase (if any) in the CPI for the 12-month period immediately preceding that anniversary. (ii) The Employee will continue to participate in all Compensation Plans from time to time in effect during the Part-time Employment Period, provided, however, that: (A) the Employee will not be entitled to receive any new award or grant under any Incentive Plan, and any such new award or grant will be at the sole discretion of the Compensation Committee or the Board, as applicable, with respect to that Incentive Plan; and (B) if (1) the terms of any such plan preclude the Employee's continued participation therein or (2) his continued participation in any such plan would or reasonably could be expected to disqualify that plan under the Code, the Employee will not be entitled to participate in that plan, but the Company instead will provide the Employee with the after-tax equivalent of the benefits that would have been provided to the Employee were he a 14 participant in that plan. For purposes of determining eligibility (including years of service) for retirement benefits payable under any Compensation Plan, the Employee will be deemed to have retired at the Termination Date. (iii) Subject to the provisions of Section 7, the Employee will not be (A) prevented from accepting other employment or engaging in (and devoting substantially all his time to) other business activities or (B) required to perform any regular duties for the Company (except to provide such services consistent with the Employee's educational background, experience and prior positions with the Company as may be acceptable to the Employee) or to seek or accept additional employment with any other Person during the Part-time Employment Period. If the Employee, at his discretion, accepts any such additional employment or engages in any such other business activity, there will be no offset, reduction or effect on any rights, benefits or payments to which the Employee is entitled pursuant to this Agreement. Furthermore, the Employee will have no obligation to account for, remit, rebate or pay over to the Company any compensation or other amounts he earns or derives in connection with such additional employment or business activity. The Employee will, however, make himself generally available for special projects or to consult with the Company and its employees at such times and at such places as the Company may reasonably request on terms that are reasonably satisfactory to the Employee and consistent with the Employee's regular duties and responsibilities in the course of his then new occupation or other employment, if any. (f) Return of Property. On termination of the Employee's Employment, however brought about, the Employee (or his representatives) will promptly deliver and return to the Company all the Company's property that is in the possession or under the control of the Employee (or those representatives). (g) Stock Options. Notwithstanding any other provision of this Agreement to the contrary: (i) except in the case of a termination of the Employee's Employment by the Company for Cause or by the Employee (A) Without Good Reason at any time while on Active Status or (B) by reason of a Change of Control pursuant to the provisions of Section 5(b)(i)(B), all stock options previously granted to the Employee under Incentive Plans that have not been exercised and are outstanding as of the time immediately prior to the Termination Date will, notwithstanding any contrary provision of any applicable Incentive Plan, remain outstanding (and continue to become exercisable pursuant to their respective terms) until exercised or the expiration of their term, whichever is earlier; (ii) in the case of a termination of the Employee's Employment by the Employee Without Good Reason at any time while on Active Status, all stock options previously granted to the Employee under Incentive Plans that have not been exercised and are outstanding and exercisable as of the time immediately prior to the Termination Date will, notwithstanding any contrary provision of any applicable Incentive Plan, remain outstanding and continue to be exercisable until exercised or the date that is 90 days after the Termination Date, whichever is earlier, whereupon, those options will expire; (iii) in the case of a termination of the Employee's Employment by the Employee by reason of a Change of Control pursuant to the provisions of Section 5(b)(i)(B), all stock options previously granted to the Employee under Incentive Plans that 15 have not been exercised and are outstanding as of the time immediately prior to the Termination Date will, not withstanding any contrary provision of any applicable Incentive Plan, be exercisable on and after the Termination Date (whether or not previously exercisable) and remain outstanding until exercised or the expiration of their term, whichever is earlier (provided, however, that if the Change of Control results from a transaction that the Company intends (as reflected in the definitive documentation relating to that transaction) to qualify for "pooling of interests" accounting treatment under generally accepted accounting principles as then in effect and the application of this clause (iii) would disqualify the transaction from that accounting treatment, then this clause (iii) will not be applicable and the provisions of clause (i) above instead will apply); and (iv) in the case of a termination of the Employee's Employment by the Company for Cause at any time while the Employee is on Active Status, all stock options previously granted to the Employee under Incentive Plans will expire on the Termination Date. No stock option previously granted to the Employee under any Incentive Plan will, notwithstanding any contrary provision of that Incentive Plan, expire or fail to become exercisable or, if exercisable, cease to be exercisable by reason of either (i) the occurrence of the Employee's Part-time Employment Effective Date or (ii) the Employee's service during the Part-time Employment Period being less than full-time. (h) No Constructive Termination. Except in the case of a termination of the Employee's Employment which results from the Employee's death, no termination of the Employee's Employment will be effective for any purpose hereunder unless the Terminating Party delivers a Notice of Termination to the Nonterminating Party. An offer by the Employee to resign from an office or the Board or otherwise to step aside will not, whether in writing or oral, constitute a Notice of Termination by the Employee. Section 6. Other Employee Rights (a) Paid Vacation and Holidays. The Employee will be entitled to not less than four weeks of annual vacation and all legal holidays during which times his applicable compensation will be paid in full. (b) Business Expenses. The Employee is authorized to incur, and will be entitled to receive prompt reimbursement for, all reasonable expenses the Employee incurs in performing his duties and carrying out his responsibilities hereunder, including (i) business meals and entertainment and travel expenses and (ii) mileage reimbursements in accordance with the Company's automobile expense reimbursement policy as in effect at the time those expenses are incurred, provided that the Employee complies with the applicable policies, practices and procedures of the Company relating to the submission of expense reports, receipts or similar documentation of those expenses. The Company will either pay directly or promptly reimburse the Employee for those expenses not more than 30 days after the submission to the Company by the Employee from time to time of an itemized accounting of those expenses for which direct payment or reimbursement is sought. Unpaid reimbursements after that 30-day period will accrue interest in accordance with Section 9(i). (c) No Forced Relocation. The Employee will not be required to move his principal place of residence from the metropolitan Houston area or to perform regular duties that 16 could reasonably be expected to require either such move against his wish or his spending amounts of time each week outside the metropolitan Houston area which are unreasonable in relation to the duties and responsibilities of the Employee hereunder, and the Company agrees that, if it requests the Employee to make such a move and the Employee declines that request, that declination will not constitute any basis for a determination that Type II Cause exists. Section 7. Covenant Not To Compete; Non-Solicitation. (a) The Employee recognizes that in each of the highly competitive businesses in which the Company will be engaged following the Effective Date, personal contact is of primary importance in securing new customers and in retaining the accounts and goodwill of present customers and protecting the business of the Company. The Employee, therefore, agrees that during the term of his Employment and for a period of three years after the Termination Date, he will not, within 75 miles of each geographic location in which he has devoted substantial attention at such location to the material business interests of the Company (the "Relevant Geographic Areas"): (i) accept employment or render service to any Person that is engaged in a business directly competitive with the business then engaged in by the Company or (ii) enter into or take part in or lend his name, counsel or assistance to any business, either as proprietor, principal, investor, partner, director, officer, employee, consultant, advisor, agent, independent contractor, or in any other capacity whatsoever, for any purpose that would be competitive with the business of the Company (all of the foregoing activities are collectively referred to as the "Prohibited Activity"). Notwithstanding the foregoing, the Employee may own and hold as a passive investment up to 5% of the outstanding shares of any class of capital stock (or other equity interest) in a competing corporation, limited liability company, limited partnership or other entity if that class of capital stock (or other equity interest) is listed on a national stock exchange or included in the Nasdaq National Market. (b) The Employee agrees that he will not, during the period beginning on the date hereof and ending on the third anniversary of the Termination Date, directly or indirectly, for any reason, for his own account or on behalf of or together with any other person, entity or organization: (i) call on or otherwise solicit any natural person who is at that time employed by the Company or any subsidiary of the Company in any capacity with the purpose or intent of attracting that person from the employ of the Company or any of its subsidiaries; (ii) call on, solicit or perform services for, either directly or indirectly, any person, entity or organization that at that time is, or at any time within two years prior to that time was, a customer of the Company or any of its subsidiaries, (A) for the purpose of soliciting business or selling any product or service in competition with the Company or any of its subsidiaries and (B) with the knowledge of that customer relationship; or (iii) call on or otherwise solicit any USC Acquisition Candidate or the owners of any USC Acquisition Candidate for the purpose of acquiring that USC Acquisition Candidate or arranging the acquisition of that USC Acquisition Candidate by any person, entity or organization other than the Company or any of its subsidiaries (for these purposes, 17 "USC Acquisition Candidate" means any prospective acquisition candidate engaged in the ready-mixed concrete industry (A) which the Company has called on in connection with the possible acquisition of that candidate or (B) of which the Company has made an acquisition analysis). (c) In addition to all other remedies at law or in equity which the Company may have for breach of a provision of this Section 7 by the Employee, it is agreed that in the event of any breach or attempted or threatened breach of any such provision, the Company will be entitled, on application to any court of proper jurisdiction, to a temporary restraining order or preliminary injunction (without the necessity of (i) proving irreparable harm, (ii) establishing that monetary damages are inadequate or (iii) posting any bond with respect thereto) against the Employee prohibiting such breach or attempted or threatened breach by proving only the existence of such breach or attempted or threatened breach. If the provisions of this Section 7 should ever be deemed to exceed the time, geographic or occupational limitations applicable law permits, the Employee and the Company agree that those provisions will be and are hereby reformed to the maximum time, geographic or occupational limitations applicable law permits. (d) The covenants of the Employee in this Section 7 are independent of and severable from every other provision of this Agreement; and the breach of any other provision of this Agreement by the Company or the breach by the Company of any other agreement between the Company and the Employee will not affect the validity of the provisions of this Section 7 or constitute a defense of the Employee in any suit or action brought by the Company to enforce any of the provisions of this Section 7 or seek any relief for the breach thereof by Employee. (e) The Employee acknowledges, agrees and stipulates that: (i) the terms and provisions of this Agreement are reasonable and constitute an otherwise enforceable agreement to or of which the terms and provisions of this Section 7 are ancillary or a part; (ii) the consideration provided by the Company under this Agreement is not illusory; and (iii) the consideration given by the Company under this Agreement, including the provision by the Company of Confidential Information to the Employee as Section 8 contemplates, gives rise to the Company's interest in restraining and prohibiting the Employee from engaging in the Prohibited Activity within the Relevant Geographic Areas as this Section 7 provides and the Employee's covenant not to engage in the Prohibited Activity within the Relevant Geographic Areas pursuant to this Section 7 is designed to enforce the Employee's consideration (or return promises) including the Employee's promise in Section 8 to not disclose Confidential Information. Section 8. Confidential Information. The Employee acknowledges that he has had and will continue to have access to various Confidential Information. The Employee agrees, therefore, that he will not at any time, either while employed by the Company or afterwards, make any independent use of, or disclose to any other person (except as authorized by the Company) any Confidential Information. Confidential Information will not include (a) information that becomes known to the public generally through no fault of the Employee, (b) information required to be disclosed by law or legal process or the order of any governmental authority under color of law, 18 provided, that prior to disclosing any information pursuant to this clause (b), the Employee will give prior written notice thereof to the Company and provide the Company with the opportunity to contest that requirement, or (c) the Employee reasonably believes that disclosure is required in connection with the defense of a lawsuit against the Employee. In the event of a breach or threatened breach by the Employee of the provisions of this Section 8 with respect to any Confidential Information, the Company will be entitled to a temporary restraining order and a preliminary and permanent injunction (without the necessity of posting any bond in connection therewith) restraining the Employee from disclosing, in whole or in part, that Confidential Information. Nothing herein will be construed as prohibiting the Company from pursuing any other available remedy for that breach or threatened breach, including the recovery of damages. Section 9. General Provisions. (a) Severability. If any one or more of the provisions of this Agreement shall, for any reason, be held or found by final judgment of a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, (i) that invalidity, illegality or unenforceability will not affect any other provisions of this Agreement and (ii) this Agreement will be construed as if that invalid, illegal or unenforceable provision had never been contained herein. (b) Nonexclusivity of Rights. Nothing herein will prevent or limit the Employee's continuing or future participation in any Compensation Plan or, subject to Section 9(k), limit or otherwise affect such rights as the Employee may have under any other contract or agreement with the Company. Vested benefits and other amounts to which the Employee is or becomes entitled to receive under any Compensation Plan on or after the Termination Date will be payable in accordance with that Compensation Plan, except as expressly modified hereby. (c) Successors. (i) This Agreement is personal to the Employee and, without the prior written consent of the Company, is not assignable by the Employee otherwise than by will or the laws of descent and distribution. This Agreement will inure to the benefit and be enforceable by the Employee's legal representatives (including any duly appointed guardian) acting in their capacities as such pursuant to applicable law. (ii) This Agreement will inure to the benefit of and be binding on the Company and its successors and assigns. If, at any time prior to the Termination Date, the Employee is not an Executive Officer, the Company will be entitled to assign all its obligations hereunder to a subsidiary of the Company and treat the Employee as an employee of that subsidiary for all purposes, but the Company will remain liable for the full, timely performance of all the obligations so assigned as if the assignment had not been made. (iii) The Company will require any successor (direct or indirect and whether by purchase, merger, consolidation, share exchange or otherwise) to the business, properties and assets of the Company substantially as an entirety expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Company would have been required to perform it had no such succession taken place. 19 (d) Amendments; Waivers. This Agreement may not be amended or modified except (i) by a written agreement executed and delivered by the parties hereto or their respective successors or legal representatives acting in their capacities as such pursuant to applicable law or (ii) pursuant to the provisions of Section 7(c) or 9(a). (e) Notices. All notices and other communications required or permitted under this Agreement must be in writing and will be deemed delivered and received (i) if personally delivered or if delivered by telex, telegram, facsimile or courier service, when actually received by the party to whom the notice or communication is sent or (ii) if delivered by mail (whether actually received or not), at the close of business on the third business day (in the location where the Company then has its principal executive offices) next following the day when placed in the mail, postage prepaid, certified or registered, addressed to the appropriate party or parties at the address of that party set forth below (or at such other address as that party may designate by written notice to the other party in accordance herewith): (A) if to the Employee, addressed as follows: Donald C. Wayne 1360 Post Oak Blvd., Suite 800 Houston, Texas 77065 (B) if to the Company, addressed as follows: U.S. Concrete, Inc. 1360 Post Oak Blvd., Suite 800 Houston, Texas 77065 Attn: Corporate Secretary Facsimile: (713) 350-6001 (f) No Waiver. The failure of the Company or the Employee to insist on strict compliance with any provision of, or to assert any right under, this Agreement (including the right of the Employee to terminate his Employment for Good Reason or by reason of a Change of Control) will not be deemed a waiver of that provision or of any other provision of or right under this Agreement. (G) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD CAUSE THE LAWS OF ANY OTHER JURISDICTION TO APPLY. (h) Headings. The headings of Sections and subsections hereof are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. 20 (i) Interest. If any amounts required to be paid or reimbursed to the Employee hereunder are not so paid or reimbursed at the times provided herein (including amounts required to be paid by the Company pursuant to Sections 6 and 10), those amounts will accrue interest compounded daily at the annual percentage rate equal to the interest rate shown as the Prime Rate in the Money Rates column in the then most recently published edition of The Wall Street Journal, or, if that rate is not then so published on at least a weekly basis, the interest rate announced by The Chase Manhattan Bank (or its successor), from time to time, as its Base Rate (or prime lending rate), from the date those amounts were required to have been paid or reimbursed to the Employee until those amounts are finally and fully paid or reimbursed; provided, however, that in no event will the amount of interest contracted for, charged or received hereunder exceed the maximum non-usurious amount of interest allowed by applicable law. (j) Tax Withholding. Notwithstanding any other provision hereof, the Company may withhold from amounts payable hereunder all Federal, state, local and foreign taxes that applicable laws or regulations require it to withhold. (k) Entire Agreement. The Company and the Employee agree that this Agreement supersedes all prior written and oral agreements between them with respect to the employment of the Employee by the Company, but has no effect on any Compensation Plan in which the Employee was participating prior to the Effective Date. (l) Effective Date. This Agreement will become effective on the IPO Closing Date (the "Effective Date"). Section 10. Payment of Expenses; Resolution of Disputes. (a) Payment of Expenses. If at any time during the term hereof or afterwards: (i) there should exist a dispute or conflict between the Employee and the Company or another Person as to the validity, interpretation or application of any term or condition hereof, or as to the Employee's entitlement to any benefit intended to be bestowed hereby, which is not resolved to the satisfaction of the Employee, (ii) the Employee must (A) defend the validity of this Agreement or (B) contest any determination by the Company concerning the amounts payable (or reimbursable) by the Company to the Employee or (iii) the Employee must prepare responses to an Internal Revenue Service ("IRS") audit of, or otherwise defend, his personal income tax return for any year the subject of any such audit, or an adverse determination, administrative proceedings or civil litigation arising therefrom that is occasioned by or related to an audit by the IRS of the Company's income tax returns, then the Company hereby unconditionally agrees: (1) on written demand of the Company by the Employee, to provide sums sufficient to advance and pay on a current basis (either by paying directly or by reimbursing the Employee) not less than 30 days after a written request therefor is submitted by the Employee, the Employee's reasonable out-of-pocket costs and expenses (including reasonable attorney's fees) the Employee incurs in connection with any such matter; (2) the Employee will be entitled, on application to any court of competent jurisdiction, to the entry of a mandatory injunction without the necessity of posting any bond with respect thereto which compels the Company to pay or advance such costs and expenses on a current basis; and (3) the Company's obligations under this 21 Section 10(a) will not be affected if the Employee is not the prevailing party in the final resolution of any such matter. (b) Resolution of Disputes. If a dispute of any type referred to in Section 10(a) arises between the Company and the Employee and they fail to resolve that dispute by direct negotiation, the Company and the Employee agree that the next step taken to resolve that dispute, prior to either party initiating any litigation to resolve that dispute (not including any litigation that may be required to enforce the Employee's rights to the payment or advancement of expenses and legal fees on a current basis pursuant to Section 10(a)) will be to submit the dispute to an agreed Alternative Dispute Resolution ("ADR") process, to which process the parties will strive diligently in good faith to agree within 10 business days after either party has given written notice to the other party that it is unable to concur in the other party's final proposed negotiated resolution of the dispute. If the Company and the Employee are unable to agree in writing to an acceptable ADR process within that 10- business day period, then the parties will submit to a mandatory ADR process by making joint application to the then Chief United States Federal District Judge in the federal district in which the Company then has its principal executive offices for the selection of an ADR process for the parties. The parties will diligently in good faith participate in the ADR process that judge chooses. If the parties are unable to resolve their dispute after diligent good faith participation in the ADR process, then either party will be free to initiate such litigation as that party deems appropriate under the circumstances. Under no circumstances will the Employee be obligated to pay for the cost of any ADR process or to pay or reimburse the Company for any attorneys' fees, costs or other expenses the Company incurs in connection with any process undertaken by the Employee to resolve disputes under this Agreement. This Section 10 uses the term "Employee" to include, if the Employee has died or become incompetent as a matter of applicable law, the Employee's legal representative acting in his capacity as such under applicable law. 22 IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and year indicated above. U.S. CONCRETE, INC. By: /s/ Eugene P. Martineau ------------------------------------- Eugene P. Martineau President and Chief Executive Officer EMPLOYEE /s/ Donald C. Wayne ----------------------------------------- Donald C. Wayne 23 EX-21 10 SUBSIDIARIES EXHIBIT 21 Subsidiaries of U.S. Concrete, Inc. AFTM Corporation Atlas Concrete, Inc. Atlas-Tuck Concrete, Inc. B.C.B.M. Transport, Inc. Baer Concrete, Inc. Bay Cities Building Materials Co., Inc. Beall Concrete Enterprises, Ltd. Beall Industries, Inc. Beall Investment Corporation, Inc. Beall Management Inc. Beall Trucking, Inc. Carrier Excavation and Foundation Company Central Concrete Supply Co., Inc. Corden, Inc. Cornillie Fuel & Supply, Inc. Cornillie Leasing, Inc. Dencor, Inc. DYNA, Inc. Fendt Transit Mix, Inc. Hunter Equipment Company Olive Branch Ready Mix, Inc. Opportunity Concrete Corporation R.G. Evans/Associates d/b/a Santa Rosa Cast Products Co. Ready Mix Concrete Company of Knoxville San Diego Precast Concrete, Inc. Stancon Concrete Enterprises, Ltd. Stancon Investment Corporation, Inc. Stancon Management, Inc. Stancon, Inc. d/b/a Butler Ready Mix Concrete Stokes Transit-Mix, Inc. USC GP, Inc. USC LP, Inc. USC Management Co., L.P. Walker's Concrete, Inc. Western Concrete Products, Inc. 1 EX-23 11 CONSENT EXHIBIT 23 As independent public accountants, we hereby consent to the incorporation by reference of our report dated March 10, 2000 included in this Form 10-K into U.S. Concrete's previously filed Registration Statement on Form S-8 (File No. 333-83273). /s/ ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP Houston, Texas March 29, 2000 EX-27.1 12 FINANCIAL DATA SCHEDULE
5 1,000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 627 0 45,581 730 4,351 52,317 53,949 11,908 212,734 37,739 57,235 0 0 19 110,774 212,734 167,912 167,912 135,195 135,195 0 118 1,708 15,848 7,658 8,190 0 0 0 8,190 0.70 0.70
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