Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported) August 31, 2010
U.S.
CONCRETE, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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000-26025
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76-0586680
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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2925
Briarpark, Suite 1050, Houston, Texas 77042
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code (713) 499-6200
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
EXPLANATORY
NOTE
As
previously reported, on April 29, 2010 (the “Petition Date”), U.S.
Concrete, Inc. (the “Company”), and
certain of its subsidiaries (collectively, the “Debtors”) filed
voluntary petitions in the United States Bankruptcy Court for the District of
Delaware (the “Bankruptcy Court”)
seeking relief under the provisions of Chapter 11 of Title 11 of the United
States Code (the “Bankruptcy
Code”).
On July
29, 2010 (the “Confirmation Date”),
the Bankruptcy Court entered an order (the “Confirmation Order”)
confirming the Debtors’ Joint Plan of Reorganization, pursuant to Chapter 11 of
the Bankruptcy Code, which was originally filed with the Bankruptcy Court on the
Petition Date and supplemented by the Supplement to Debtors’ Joint Plan of
Reorganization pursuant to Chapter 11 of the Bankruptcy Code filed with the
Bankruptcy Court on July 19, 2010 and July 22, 2010, and amended on July 27,
2010 (as so amended and supplemented, the “Plan”).
On August
31, 2010 (the “Effective Date”), the
Debtors consummated their reorganization under the Bankruptcy Code and the Plan
became effective. The distributions of securities under the Plan of
the Debtors described in this Current Report on Form 8-K were made on the
Effective Date. Capitalized terms used but not defined in this Form 8-K have the
meanings set forth in the Plan.
ITEM
1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Revolving
Credit Facility
On the
Effective Date, the Company entered into a new credit agreement, dated as of
August 31, 2010 (the “Credit Agreement”),
by and among the Company, certain of the Company’s domestic subsidiaries as
guarantors, the lenders party thereto and JPMorgan Chase Bank, N.A., as
administrative agent (the “Administrative Agent”), which provides
for a $75.0 million asset-based revolving credit facility (the “Revolving
Facility”).
The following is a description of certain material terms of the
Revolving Facility.
Up to $30
million of the Revolving Facility is available for the issuance of letters of
credit, and any such issuance of letters of credit will reduce the amount
available for loans under the Revolving Facility. Advances under the
Revolving Facility are limited by a borrowing base of (a) 85% of the face amount
of eligible accounts receivable plus (b) the lesser of (i) 85% of the net
orderly liquidation value (as determined by the most recent appraisal) of
eligible inventory and (ii) the sum of (A) 50% of the eligible inventory (other
than eligible aggregates inventory) and (B) 65% of the eligible aggregates
inventory plus (c) the lesser of (i) $15.0 million and (ii) the sum of (A) 85%
of the net orderly liquidation value (as determined by the most recent
appraisal) of eligible trucks plus (B) 80% of the cost of newly acquired
eligible trucks since the date of the latest appraisal of eligible trucks minus
(C) the depreciation amount applicable to eligible trucks since the date of the
latest appraisal of eligible trucks minus (d) such reserves as the
Administrative Agent may establish from time to time in its permitted
discretion. The Administrative Agent may, in its permitted
discretion, reduce the advance rates set forth above, adjust reserves or reduce
one or more of the other elements used in computing the borrowing
base. In addition, prior to the delivery of the Company’s financial
statements for the fiscal quarter ended September 30, 2011, there will be an
availability block (the “Availability Block”)
of $15.0 million and after such date, unless the fixed charge coverage ratio for
any trailing twelve month period is greater than or equal to 1.00:1.00, there
will be an Availability Block of $15.0 million, to be increased monthly by $1.0
million up to a maximum of $20.0 million. Beginning with the fiscal
month in which the Availability Block is eliminated and with respect to each
fiscal month thereafter, at any time that availability under the Revolving
Facility is less than $15.0 million, the Company must maintain a fixed charge
coverage ratio of at least 1.00:1.00 until availability is greater than or equal
to $15.0 million for a period of 30 consecutive days.
At the
Company’s option, loans may be maintained from time to time at an interest rate
equal to the Eurodollar-based rate (“LIBOR”) or the
applicable domestic rate (“CB Floating
Rate”). The CB Floating Rate shall be the greater of (x) the
interest rate per annum publicly announced from time to time by JPMorgan Chase
Bank, N.A. as its prime rate and (y) the interest rate per annum equal to the
sum of 1.0% per annum plus the adjusted LIBOR rate for a one month interest
period, in each case plus the applicable margin. The applicable margin on loans
is 2.75% in the case of loans bearing interest at the CB Floating Rate and 3.75%
in the case of loans bearing interest at the LIBOR rate. Issued and outstanding
letters of credit are subject to a fee equal to the applicable margin then in
effect for LIBOR loans, a fronting fee equal to 0.20% per annum on the stated
amount of such letter of credit, and customary charges associated with the
issuance and administration of letters of credit. Protective advances
and overadvances shall bear interest at the CB Floating Rate plus 2.75% to plus
2.00%. The Company also will pay a commitment fee on undrawn amounts
under the Revolving Facility in an amount equal to 0.75% per
annum. Upon any event of default, at the direction of the required
lenders under the Revolving Facility, all outstanding loans and the amount of
all other obligations owing under the Revolving Facility will bear interest at a
rate per annum equal to 2.0% plus the rate otherwise applicable to such loans or
other obligations.
The
Revolving Facility will mature four years after the Effective Date (the “Revolving Facility Maturity
Date”). Loans are due and payable in full on the Revolving
Facility Maturity Date. Outstanding borrowings under the Revolving
Facility are prepayable, and the commitments under the Revolving Facility may be
permanently reduced, without penalty. There are mandatory prepayments of
principal in connection with (i) the incurrence of certain indebtedness, (ii)
certain equity issuances and (iii) certain asset sales or other dispositions
(including as a result of casualty or condemnation). Mandatory
prepayments are applied to repay outstanding loans without a corresponding
permanent reduction in commitments under the Revolving Facility and are subject
to the terms of the Intercreditor Agreement (as defined below).
The
Revolving Facility requires the Company and its subsidiaries to comply with
customary affirmative and negative covenants, and contains customary events of
default.
All
obligations under the Revolving Facility and obligations in respect of banking
services and swap agreements with the lenders and their affiliates will
be unconditionally guaranteed by all of the Company’s existing and future
U.S. subsidiaries (other than Superior Materials Holdings, LLC, the Company’s
joint venture, and its direct and indirect subsidiaries). In connection
with the Credit Agreement, on the Effective Date the Company and certain of its
subsidaries entered into a Pledge and Security Agreement (the “Security Agreement”) with the
Administrative Agent. Pursuant to the Security Agreement, all obligations under
the Revolving Facility and obligations in respect of banking services and swap
agreements with lenders and their affiliates will be, subject
to the terms of the Intercreditor Agreement (as defined below), secured by (i) a
first-priority perfected lien (subject to certain exceptions) in substantially
all of the Company’s and such guarantors’ present and after acquired inventory
(including as-extracted collateral), accounts, certain specified mixer trucks,
chattel paper, deposit accounts, securities accounts, commodities accounts,
letter of credit rights, cash and cash equivalents, general intangibles (other
than intellectual property and equity in subsidiaries), instruments, documents,
supporting obligations and related books and records and all proceeds and
products of the foregoing and (ii) a perfected second-priority
lien (subject to certain exceptions) on substantially all other
present and after acquired property (including, without limitation, material
owned real estate).
The
foregoing description of the Credit Agreement and the Security Agreement does
not purport to be complete and is qualified in its entirety by reference to the
full text of the Credit Agreement and the Security Agreement, which are attached
as Exhibits 10.1 and 10.2 and are incorporated herein by
reference.
Convertible
Secured Notes
On the
Effective Date, the Company issued $55.0 million aggregate principal amount of
9.5% Convertible Secured Notes due 2015 (the “Convertible Notes”)
pursuant to a subscription offering contemplated by the Plan. The
Convertible Notes are governed by an indenture (the “Indenture”), dated as
of August 31, 2010, among the Company, certain subsidiaries of the Company,
as guarantors, and U.S. Bank National Association, as trustee and noteholder
collateral agent. Under the terms of the Indenture, the Convertible
Notes bear interest at a rate of 9.5% per annum and will mature on August 31,
2015. Interest payments will be payable quarterly in cash in
arrears.
The
Convertible Notes will be convertible, at the option of the holder, at any time
on or prior to maturity, into shares of the Company’s new common stock, par
value $0.001 per share (the “Common Stock”), at an
initial conversion rate of 95.23809524 shares of Common Stock per $1,000
principal amount of Convertible Notes (the “Conversion
Rate”). The conversion rate is subject to adjustment to
prevent dilution resulting from stock splits, stock dividends, combinations or
similar events. In connection with any such conversion, holders of
the Convertible Notes to be converted shall also have the right to receive
accrued and unpaid interest on such Convertible Notes to the date of conversion
(the “Accrued
Interest”). The Company may elect to pay the Accrued Interest
in cash or in shares of Common Stock. If the Company elects to pay
the Accrued Interest in shares, the number of shares issuable shall be
determined by dividing the Accrued Interest by 95% of the trailing 10-day
volume-weighted average price of the Common Stock.
In
addition, if a “Fundamental Change of Control” (as defined in the Indenture)
occurs prior to the maturity date, in addition to any conversion rights the
holders of Convertible Notes may have, each holder of Convertible Notes will
have (i) a make-whole provision calculated as provided in the Indenture pursuant
to which each holder may be entitled to additional shares of Common Stock upon
conversion (the “Make
Whole Premium”), and (ii) an amount equal to the interest on such
Convertible Notes that would have been payable from the date of the occurrence
of such Fundamental Change of Control (the “Fundamental Change of
Control Date”) through the third anniversary of the Effective Date, plus
any accrued and unpaid interest from the Effective Date to the Fundamental
Change of Control Date (the amount in this clause (ii), the “Make Whole
Payment”). The Company may elect to pay the Make Whole
Payment in cash or in shares of Common Stock.
If the
closing price of the Common Stock exceeds 150% of the Conversion Price (defined
as $1,000 divided by the Conversion Rate) then in effect for at least 20 trading
days during any consecutive 30-day trading period (the “Conversion Event”),
the Company may provide, at its option, a written notice (the “Conversion Event
Notice”) of the occurrence of the Conversion Event to each holder of
Convertible Notes in accordance with the Indenture. Except as set
forth in an Election Notice (as defined below), the right to convert Convertible
Notes with respect to the occurrence of the Conversion Event shall terminate on
the date that is 46 days following the date of the Conversion Event Notice (the
“Conversion
Termination Date”), such that the holder shall have a 45-day period in
which to convert its Convertible Notes up to the amount of the Conversion Cap
(as defined below). Any Convertible Notes not converted prior to the
Conversion Termination Date as a result of the Conversion Cap shall be, at the
holder’s election and upon written notice to the Company (the “Election Notice”),
converted into shares of Common Stock on a date or dates prior to the date that
is 180 days following the Conversion Termination Date (such date or dates to be
specified in the holder’s Election Notice). As used herein, “Conversion Cap” means
the number of shares of Common Stock into which the Convertible Notes are
convertible and that would cause the related holder to “beneficially own” (as
such term is used in the Exchange Act) more than 9.9% of the Common Stock at any
time outstanding.
Any
Convertible Notes not otherwise converted prior to the Conversion Termination
Date or specified for conversion in an Election Notice shall be redeemable, in
whole or in part, at the Company’s election at any time prior to maturity at par
plus accrued and unpaid interest thereon to the Conversion Termination
Date.
The
Indenture contains certain covenants that restrict the Company and guarantors’
ability to, among other things,
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incur
additional indebtedness or issue disqualified stock or preferred
stock;
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pay
dividends or make other distributions or repurchase or redeem the
Company’s stock or subordinated indebtedness or make
investments;
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sell
assets and issue capital stock of the Company’s restricted
subsidiaries;
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enter
into agreements restricting the Company’s restricted subsidiaries’ ability
to pay dividends;
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enter
into transactions with affiliates;
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consolidate,
merge or sell all or substantially all of the Company’s assets;
and
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designate
the Company’s subsidiaries as unrestricted
subsidiaries.
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The
Convertible Notes will be guaranteed by each of the Company’s existing and
future direct or indirect domestic restricted subsidiaries (other than Superior
Materials Holdings LLC and its subsidiaries). In
connection with the Indenture, on August 31, 2010, the Company and certain of
its subsidiaries entered into a Pledge and Security Agreement (the “Pledge and Security
Agreement”) with U.S. Bank National Association, as noteholder collateral
agent. Pursuant to the Pledge and Security Agreement, the Convertible
Notes and related guarantees will be secured by first-priority liens on certain
of the property and assets directly owned by the Company and each of the
guarantors, including material owned real property, fixtures, intellectual
property, capital stock of subsidiaries and certain equipment, subject to
permitted liens (including a second-priority lien in favor of the Administrative
Agent) with certain exceptions. Obligations under the Revolving
Facility and those in respect of hedging and cash management obligations owed to
the lenders (and their affiliates) that are a party to the Revolving Facility
(collectively, the “Revolving Facility
Obligations”) will be secured by a second-priority lien on such
collateral.
The
Convertible Notes and related guarantees will also be secured by a
second-priority lien on the assets of the Company and the guarantors securing
the Revolving Facility Obligations on a first-priority basis, including,
inventory (including as extracted collateral), accounts, certain specified
mixture trucks, chattel paper, general intangibles (other than collateral
securing the Convertible Notes on a first-priority basis), instruments,
documents, cash, deposit accounts, securities accounts, commodities accounts,
letter of credit rights and all supporting obligations and related books and
records and all proceeds and products of the foregoing, subject to permitted
liens and certain exceptions.
The
foregoing description of the Indenture and the Pledge and
Security Agreement does not purport to be complete and is qualified in its
entirety by reference to the full text of the Indenture and the Pledge and
Security Agreement, which are attached as Exhibits 4.2 and 4.4 hereto and are
incorporated herein by reference.
Registration
Rights Agreement
In
connection with the issuance of the Convertible Notes, the Company entered into
a registration rights agreement, dated August 31, 2010 (the “Registration Rights
Agreement”), under which it agreed, pursuant to the terms and conditions
set forth therein, to register the Convertible Notes and the Common Stock into
which the Convertible Notes convert. Under the Registration
Rights Agreement, the Company is required to use commercially reasonable efforts
to file a shelf registration statement covering the resale by the Electing
Holders (as defined in the Registration Rights Agreement) of Convertible Notes
that are Registrable Securities (as defined in the Registration Rights
Agreement) by the first business day following the date that is 366 days
following the Effective Date, and to file a shelf registration statement
covering the resale of shares of Common Stock that constitute Registrable
Securities by the Electing Holders, on a delayed or continuous basis, within 180
days of the Issue Date. The Company is required to pay special
interest if it fails to file either shelf registration statement by the
applicable deadline or if any registration statement required by the
Registration Rights Agreement ceases to be effective for more than 45 days, with
respect to any Registrable Securities that are Convertible Notes and are
Restricted Securities (as defined in the Indenture).
The
foregoing description of the Registration Rights Agreement does not purport to
be complete and is qualified in its entirety by reference to the full text of
the Registration Rights Agreement, which is attached as Exhibit 4.3 hereto and
is incorporated herein by reference.
Intercreditor
Agreement
In
connection with the issuance of the Convertible Notes, the Company entered into
an intercreditor agreement with the noteholder collateral agent and the
Administrative Agent (the “Intercreditor
Agreement”). The Intercreditor Agreement sets forth the terms
on which the Administrative Agent and the noteholder collateral agent are
permitted to receive, hold, administer, maintain, enforce and distribute the
proceeds of their respective liens upon the collateral. The
Intercreditor Agreement grants (i) to the Administrative Agent, the exclusive
right to enforce rights, exercise remedies (including setoff) and make
determinations regarding the release, disposition, or restrictions of the
collateral which secures the Revolving Facility Obligations on a first-priority
basis and (ii) to the noteholder collateral agent, the exclusive right to
enforce rights, exercise remedies (including setoff) and make determinations
regarding the release, disposition, or restrictions of the collateral which
secures the Convertible Notes on a first-priority basis, in each case subject to
limitations described therein, which limitations shall include an access right
of the Administrative Agent to exercise remedies in respect of its assets
located on real property in which the noteholder collateral agent has a
first-priority lien under the security documents for the Convertible
Notes. In addition, the Intercreditor Agreement sets forth the
distribution of proceeds in respect of the collateral between Revolving Facility
lenders and noteholders. The Intercreditor Agreement expressly
requires that proceeds received from (or are otherwise attributable to the value
of) the sale or disposition of all or substantially all of the capital stock of
any subsidiary of the Company which is a guarantor or all or substantially all
of the assets of any such subsidiary be treated as collateral securing the
Revolving Facility Obligations (on a first priority basis) in an amount equal to
the face amount of the accounts and the net book value of all other collateral
owned by such subsidiary, and to the extent of any excess, collateral securing
the convertible notes (on a first priority basis).
The
foregoing description of the Intercreditor Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Intercreditor Agreement, which is attached as Exhibit 10.3 hereto and is
incorporated herein by reference.
Warrant
Agreements
As of the
Effective Date, the Company issued warrants to acquire Common Stock (the “New Warrants”) in two
tranches: Class A Warrants to purchase an aggregate of approximately 1.5 million
shares of Common Stock (the “Class A Warrants”)
and Class B Warrants to purchase an aggregate of approximately 1.5 million
shares of Common Stock (the “Class B
Warrants”). The New Warrants were issued to holders of shares
of U.S. Concrete common stock outstanding prior to the Effective Date (the
“Old Common
Stock”) pro rata based on a holder’s stock ownership as of the
Effective Date.
In
connection with the issuance of the Class A Warrants,
the Company entered into a Class A Warrant Agreement (the “Class A Warrant
Agreement”) with American Stock Transfer & Trust Company, LLC,
as warrant agent. Subject to the terms of the Class A Warrant
Agreement, holders of Class A Warrants are entitled to purchase shares of Common
Stock at an exercise price of $22.69 per share. In connection with
the issuance of the Class B Warrants, the Company entered into a
Class B Warrant Agreement (the “Class B Warrant
Agreement” and, together with the Class A Warrant Agreement, the “Warrant Agreements”)
with American Stock Transfer & Trust Company, as warrant
agent. Subject to the terms of the Class B Warrant Agreement, holders
of Class B Warrants are entitled to purchase shares of Common Stock at an
exercise price of $26.68 per share. Subject to the terms of the
Warrant Agreements, both classes of New Warrants will have a seven−year term and
will expire at 5:00 p.m., New York City time, on the seventh anniversary of the
Effective Date. The New Warrants may be exercised for cash or on a
net issuance basis.
If, at
any time before the expiration date of the New Warrants, the Company pays or
declares a dividend or makes a distribution on the Common Stock payable in
shares of its capital stock, subdivides or combines its outstanding shares
of Common Stock into a greater or lesser number of shares or issues any shares
of its capital stock by reclassification of Common Stock, then the exercise
price and number of shares issuable upon exercise of the New Warrants will be
adjusted so that the holders of the New Warrants will be entitled to receive the
aggregate number and kind of shares that they would have received as a result of
the event if their New Warrants had been exercised immediately before the
event. In addition, if the Company distributes to holders of the
Common Stock in an Extraordinary Distribution (defined in each Warrant Agreement
to include assets, securities or warrants to purchase securities), then the
exercise price of the New Warrants will be decreased by the amount of cash
and/or the fair market value of any securities or assets paid or distributed on
each share of Common Stock; however, no adjustment to the exercise price will be
made if, at the time of an Extraordinary Distribution, the Company makes the
same distribution to holders of New Warrants as it makes to holders of Common
Stock pro rata based on the number of shares of Common Stock for which the New
Warrants are exercisable.
In the
event of a Fundamental Change (defined in each Warrant Agreement to include
transactions such as mergers, consolidations, sales of assets, tender offers,
exchange officers, reorganizations, reclassifications, compulsory share
exchanges or liquidations in which all or substantially all of the outstanding
Common Stock is converted into or exchanged for stock, other securities, cash or
assets), if the consideration paid consists 90% or more of publicly traded
securities, each holder of a New Warrant will have the right upon any subsequent
exercise to receive the kind and amount of stock, other securities, cash and
assets that such holder would have received if the New Warrant had been
exercised immediately prior to such Fundamental Change. If a
Fundamental Change occurs (other than a Fundamental Change in which the
consideration paid consists at least 90% of publicly traded securities), then
each holder of a New Warrant will be entitled to receive an amount equal to the
Fair Market Value (as defined in each of the Warrant Agreements) of their New
Warrant on the date the Fundamental Change is consummated. For
purposes of a Fundamental Change, Fair Market Value of a New Warrant shall be
determined based on such factors as the person making the determination shall
consider relevant, including but not limited to the factors set forth in the
applicable Warrant Agreement, but if the consideration per share of Common Stock
exceeds the exercise price of a New Warrant, the fair market value of the New
Warrant shall be deemed to equal the greater of (a) the excess of such
consideration per share over the exercise price or (b) an amount equal to the
fair market value of the New Warrant as determined in accordance with the first
clause of this sentence and calculated as of the consummation of the Fundamental
Change.
No
adjustment in the exercise price of New Warrants shall be required unless such
adjustment would require an increase or decrease of at least $0.05 in the
exercise price; provided that any adjustments that are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.
Indemnification
Agreement
The
Company entered or will enter into indemnification agreements (the “Indemnification
Agreements”) with each of its directors and executive officers (an “Indemnitee”) as of
the Effective Date. Each Indemnification Agreement provides for the
indemnification of and the advancement of expenses to the Indemnitee to the
fullest extent permitted by Delaware law. Each Indemnitee will be
indemnified and held harmless in any threatened, pending or completed
proceeding, other than a proceeding by or in the right of the Company, in which
the Indemnitee is or was threatened to be made a party by reason of his
corporate status, if Indemnitee acted in good faith in a manner reasonably
believed to be in or not opposed to the best interests of the Company and, with
respect to any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful. With respect to proceedings brought by or in
the right of the Company, Indemnitee will be indemnified and held harmless from
all expenses actually and reasonably incurred by him, if Indemnitee acted in
good faith in a manner reasonably believed to be in or not opposed to the best
interests of the Company, but indemnification against those expenses will not be
made with respect to any claim, issue, or matter in which Indemnittee was found
liable to the Company, unless the court determines that Indemnitee is fairly and
reasonably entitled to indemnification.
Each
Indemnification Agreement provides (i) that an Indemnitee is automatically
entitled to indemnification for expenses to the extent an Indemnitee is
successful in defending any indemnifiable claim whether on the merits or
otherwise, (ii) that an Indemnitee is entitled to the advancement of expenses
during the pendency of a proceeding, (iii) that the Company has the burden of
proving that an Indemnitee is not entitled to indemnification and negates
certain presumptions that may otherwise be drawn against an Indemnitee, (iv)
that an Indemnitee, in his discretion, may request either the Disinterested
Directors (as defined in the Indemnification Agreements) make the determination
of entitlement to indemnification or request that Independent Counsel (as
defined in the Indemnification Agreements) make such a determination, (v) that
an Indemnitee may choose a mechanism through which an Indemnitee may seek court
relief or arbitration in the event it is determined that the Indemnitee would
not be entitled to be indemnified and (vi) that an Indemnitee is entitled to
indemnification against all expenses (including attorneys’ fees) incurred in a
proceeding seeking to collect an indemnity claim or advancement of expenses from
the Company, but only if Indemnitee prevails in such proceeding.
The
Indemnitees’ rights under the Indemnification Agreements are not exclusive of
any other rights they may have under Delaware law, directors’ and officers’
liability insurance, the Company’s bylaws or otherwise. However, the
Indemnification Agreements do prevent double payment. The
Indemnification Agreements require that the Company maintain an insurance policy
providing liability insurance for director and officers in effect during the
entire period for which the Company is obligated to indemnify the Indemnitee
under the Indemnification Agreements.
The
foregoing description of the indemnification agreements does not purport to be
complete and is qualified in its entirety by reference to the full text of the
indemnification agreements, the form of which is attached as Exhibit 10.7 hereto
and is incorporated herein by reference.
ITEM
1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
Indenture
Governing Existing Notes
On the
Effective Date, pursuant to the Plan, all outstanding obligations under the
Company’s 8.375% senior subordinated notes due 2014 (the “Old Notes”) were
cancelled and the indenture governing the Old Notes was cancelled.
Debtor-in-possession
Credit Agreement
On the
Effective Date, pursuant to the Plan, all amounts outstanding under the
Revolving Credit, Term Loan and Guarantee Agreement among the Company, as
borrower, certain of its subsidiaries, as guarantors, JPMorgan Chase Bank, N,A,
as administrative agent, and the lenders party thereto from time to time, (the
“DIP Facility”)
were paid and such agreement was terminated in accordance with its
terms.
Equity
Interests
On the
Effective Date, pursuant to the Plan, all of the Company’s existing equity
securities, including its existing common stock (the “Old Common Stock”),
all options to purchase the Old Common Stock and all rights to purchase the
Company’s Series A Junior Participating Preferred Stock (the “Preferred Stock Purchase
Rights”) pursuant to a Rights Agreement, dated as of November 5, 2009,
were cancelled. Accordingly, upon the Effective Date, certain of the
Company’s equity incentive plans in place prior to the Effective Date, and all
awards granted under such plans, were terminated. The following
equity incentive plans were terminated on the Effective Date:
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1999
Incentive Plan of U.S. Concrete,
Inc.
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U.S.
Concrete, Inc. 2000 Employee Stock Purchase
Plan
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2001
Employee Incentive Plan of U.S. Concrete,
Inc.
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U.S.
Concrete, Inc. 2008 Incentive Plan
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ITEM
2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
The
information set forth under “Item 1.01. Entry into a Material Definitive
Agreement-Revolving Credit Facility” and “Item 1.01. Entry into a Material
Definitive Agreement-Convertible Secured Notes” is incorporated by reference
into this Item 2.03.
ITEM
3.02 UNREGISTERED SALE OF EQUITY SECURITIES
On the
Effective Date, the Company issued (i) approximately 11.9 million of Common
Stock to holders of the Old Notes, (ii) approximately 1.5 million Class A
Warrants to holders of Old Common Stock and (iii) approximately 1.5 million
Class B Warrants to holders of Old Common Stock pursuant to the
Plan. In addition, as described in Item 1.01, on the Effective Date,
the Company also issued Convertible Notes pursuant to the subscription
offering.
Based on
the Plan and the Confirmation Order from the Bankruptcy Court, the issuance of
the Common Stock and the New Warrants (including shares of Common Stock issuable
upon exercise) described in the preceding sentence is exempt from registration
requirements of the Securities Act of 1933, as amended (the “Securities Act”), in
reliance on Section 1145 of the Bankruptcy Code. The issuance of the
Convertible Notes is exempt from registration requirements of the Securities Act
reliance on Section 4(2) and Regulation D promulgated thereunder.
ITEM
3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS
The
information set forth under “Item 5.03. Amendments to Articles of Incorporation
or Bylaws; Change in Fiscal Year” is incorporated by reference into this Item
3.03.
ITEM
5.01 CHANGES IN CONTROL OF REGISTRANT
On the
Effective Date, all of the Company’s existing equity securities, including Old
Common Stock, options to purchase Old Common Stock and Preferred Stock Purchase
Rights, were cancelled. As a result of the distributions of the New
Common Stock and New Warrants pursuant to the Plan, holders of Old Notes held
100% of the outstanding Common Stock and holders of the Old Common Stock held
100% of the New Warrants when the Plan became effective. The
consummation of the reorganization pursuant to the Plan may be deemed to result
in a change in control of the Company. The information set forth
under “Item 1.02. Termination of Material Definitive Agreement-Equity Interests”
and the information set forth under “Item 3.02. Unregistered Sale of Equity
Securities” is incorporated by reference into this Item 5.01.
ITEM
5.02 DEPARTURE OF DIRECTORS; CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
OFFICERS.
Departure
of Directors
On the
Effective Date, the following directors have departed the Company’s board of
directors (the “Board”) in connection
with the Company’s emergence from Chapter 11 proceedings and pursuant to the
Plan: John M. Piecuch, Vincent D. Foster, T. William Porter III, Mary
P. Ricciardello, William T. Albanese and Ray C. Dillon.
New
Board of Directors
On the
Effective Date, pursuant to the Plan, the Company’s board of directors was
reconstituted to consist of Michael W. Harlan, the Chief Executive Officer of
the reorganized Company, and the following five directors who were selected by
the Informal Noteholders Committee (as defined in the Plan) and disclosed to the
Bankruptcy Court in advance of the hearing to consider confirmation of the Plan:
Michael D. Lundin, Robert M. Rayner, Colin M. Sutherland, Eugene I. Davis and
Kurt M. Cellar.
Mr. Davis
was appointed the Chairman of the Board. Messrs. Rayner, Davis and
Sutherland were appointed to the Audit Committee of the Board, and Mr. Rayner
will serve as the Chairman of the Audit Committee. Messrs. Cellar,
Lundin and Sutherland were appointed to the Compensation Committee of the Board,
and Mr. Cellar will serve as the Chairman of the Compensation
Committee. The Audit Committee will assume the corporate governance
responsibilities of the Nominating and Corporate Governance Committee, and the
Board will assume the nomination responsibilities.
Other
than as set forth above, there are no arrangements or understandings between any
of Messrs. Lundin, Rayner, Sutherland, Davis and Cellar and any other person
pursuant to which such individual was selected to serve on the Board, and there
are no relationships between any of Messrs. Lundin, Rayner, Sutherland, Davis
and Cellar and the Company that would require disclosure under Item 404(a) of
Regulation S-K. Messrs. Lundin, Rayner, Sutherland, Davis and Cellar
will be entitled to receive any standard non-employee director cash compensation
as may be determined, and will participate in the management equity incentive
plan described under “-Management Equity Incentive Plan.” Each of the
directors has entered into or will enter into the Company’s form of
Indemnification Agreement for directors. The information set forth
under “Item 1.01. Entry into a Material Definitive
Agreement-Indemnification Agreements” is incorporated by reference into this
Item 5.02.
Management
Equity Incentive Plan
The
Company adopted a management equity incentive plan (the “Incentive Plan”) via
approval of the Bankruptcy Court, effective as of August 31, 2010, under which
9.5% of the equity of the reorganized Company authorized pursuant to the Plan,
on a fully-diluted basis, is reserved for issuance as equity-based awards to
management and employees, and 0.5% of such equity, on a fully-diluted basis, is
reserved for issuance to directors of the reorganized Company.
The
following is a summary of the material terms of the Incentive Plan.
Administration
The
Compensation Committee of the Board or any other Board committee the Board
designates by a written resolution (the “Committee”) will
administer the Incentive Plan.
Subject
to the provisions of the Incentive Plan, the Committee will have full and
exclusive power and authority to administer the Incentive Plan and to take all
actions that the Incentive Plan specifically contemplates or that are necessary
or appropriate in connection with the administration and operation of the
Incentive Plan, including, without limitation, the authority and discretion to
designate participants in the Incentive Plan, determine the type or types of
awards to be granted to a participant, determine the terms and conditions of any
award under the Incentive Plan, including, without limitation, and as
applicable, the exercise price, vesting schedules, conditions relating to
exercise and termination of the right to exercise and review any decisions or
actions made or taken by any Committee in connection with any award or the
operation, administration or interpretation of the Incentive
Plan. The Committee may, in its discretion, extend the exercisability
of any award, accelerate the vesting or exercisability of any award, eliminate
or make less restrictive any restrictions any award contains, waive any
restriction or other provision of the Incentive Plan or any award or otherwise
amend or modify any award in any manner that is either not adverse to the
participant to whom that award was granted or consented to in writing by that
participant.
The
Committee may delegate to the Company’s chief executive officer and other senior
officers its duties under the Incentive Plan.
Participation
and Eligibility
Employees
eligible for awards to employees under the Incentive Plan are employees assigned
or to be assigned positions of responsibility with the Company or any of its
subsidiaries and whose performance, in the judgment of the Committee, can have a
significant effect on the success of the Company and its
subsidiaries. Each director of the Board is eligible for awards to
directors under the Incentive Plan.
Shares
Subject to the Incentive Plan
The
Company has reserved 2,243,933 shares of Common Stock for use in connection with
the Incentive Plan. By no later than the fifth anniversary of the
Effective Date, all shares of Common Stock reserved for issuance under the
Incentive Plan are required to be subject to an outstanding award or to have
been delivered pursuant to the settlement of an award. Within thirty
(30) days following the Effective Date, thirty-five percent (35%) of the shares
of Common Stock available for delivery pursuant to Awards are required to be
allocated to employee awards in a form to be determined by the
Committee. No more than five percent (5%) of the shares of Common
Stock available for delivery pursuant to awards shall be allocated to director
awards. Each participant who receives an award in the form of
restricted stock units will also concurrently receive an award for an equal
amount of incentive restricted stock units (which represent the right to receive
0.35020 of a share of Common Stock upon satisfaction of applicable vesting
restrictions or upon such other basis as determined by the Committee in its sole
discretion).
Terms,
Conditions and Limitations of Awards
Generally,
the Committee will determine the type or types of awards and will designate the
participants who will receive such awards. An award will be embodied
in an agreement, which will contain such terms, conditions and limitations as
the Committee determines. Awards may be granted singly or in
combination or in tandem with other awards. Awards also may be made
in combination or in tandem with, in replacement of or as alternatives to grants
or rights under the Incentive Plan or any other employee plan of the Company or
any of its subsidiaries, including the plan of any acquired entity.
No stock
options or stock appreciation rights may be repriced, replaced, regranted though
cancellation or modified without stockholder approval (except in connection with
a change in the Company’s capitalization) if the effect would be to reduce the
exercise price for the shares underlying such award. All or part of
an award may be subject to such conditions as the Committee may establish, which
may include, but are not limited to, continuous service with U.S. Concrete and
its subsidiaries, achievement of specific business objectives, increases in
specified indices, attainment of specified growth rates and other comparable
measurements of performance. If a participant holding an employee
award ceases to be an employee, any unexercised, deferred, unexercisable,
unvested or unpaid portion of that employee award will be treated as the
applicable award agreement sets forth.
With the
approval of the Committee, payments in respect of awards may be deferred and
paid, either in the form of installments or as a lump-sum
payment. Any deferred payment of an award, whether elected by the
Participant or specified by the applicable award agreement or by the Committee,
may be forfeited if and to the extent that the applicable award agreement so
provides.
The
Committee may grant an employee award to any individual who has agreed in
writing to become an employee within six months after the date of that
agreement, provided that the effectiveness of that award is subject to the
condition that the individual actually becomes an employee within that time
period.
Options. Options
are rights to purchase a specified number of shares of Common Stock at a
specified price. An option awarded under the Incentive Plan may
consist of either an incentive stock option, if so designated by the Committee,
that complies with the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended (the “Code”), or a
non-qualified stock option that does not comply with those
requirements. Director awards will not include incentive stock
options. Options must have an exercise price per share which is not
less than the fair market value of the Common Stock on the date of
grant.
The
exercise price of any option must be paid in full at the time the option is
exercised in cash or, if the optionee so elects according to methods the
Committee establishes, by means of tendering shares of Common Stock valued at
their fair market value per share on the date of exercise, the withholding of
shares issuable upon exercise of such option, through a broker-assisted
“cashless exercise” procedure, or any combination thereof. The
Committee will determine acceptable methods for participants to tender Common
Stock or other awards to exercise an option. The Committee may
provide for procedures to permit the exercise or purchase of any award by use of
the proceeds to be received from the sale of Common Stock issuable pursuant to
such award. No option may be exercised after the expiration of 10
years from the date such option is granted.
Stock Appreciation
Rights. A stock appreciation right is a right to receive a
payment, in cash or Common Stock, equal to the excess of the fair market value
or other specified valuation of a specified number of shares of Common Stock on
the date the right is exercised over a specified strike price. The
strike price for any stock appreciation right shall not be less than the fair
market value of the Common Stock on the date on which the stock appreciation
right is granted and will be subject to such other terms and conditions as
determined by the Committee in its discretion.
Stock
Awards. Stock Awards consist of restricted and non-restricted
grants of Common Stock or units denominated in shares of Common
Stock. The Committee will determine the terms, conditions and
limitations applicable to stock awards in its sole discretion and provided for
in an award agreement, which may make reference to the provisions of any
applicable employment or similar agreement. Rights to dividends or
dividend equivalents may be extended to and made part of any stock award in the
discretion of the Committee.
Cash Awards. Cash
awards consist of grants denominated in cash. The terms, conditions
and limitations applicable to cash awards will be determined by the Committee
and provided for in an award agreement, which may make reference to the
provisions of any applicable employment or similar agreement.
Performance
Awards. Performance awards consist of grants made to a
participant the earning of which is subject to the attainment of one or more
performance goals. The Committee will determine the performance
goals, terms, conditions and limitations applicable to performance awards in its
sole discretion and provided for in an award agreement, which may make reference
to the provisions of any applicable employment or similar
agreement. Performance awards may be in the form of qualified
performance awards or nonqualified performance awards.
The
following limitations will apply to each employee award that is intended to
qualify as performance-based compensation under Section 162(m) of the
Code: (i) no participant may be granted, during any one-year period,
employee awards consisting of options or stock appreciation rights that are
exercisable for more than 500,000 shares of Common Stock; (ii) no participant
may be granted, during any one-year period, stock awards covering or relating to
more than 500,000 shares of Common Stock; and (iii) no participant may be
granted employee awards consisting of cash or that are in any other form the
Incentive Plan permits (other than employee awards consisting of options or
stock appreciation rights, or otherwise consisting of Common Stock or units
denominated in Common Stock) in respect of any one-year period having a value
determined on the date of grant in excess of $2,000,000.
Adjustments
In the
event of any extraordinary distribution (whether in the form of cash, Common
Stock, securities or other property), stock dividend, extraordinary cash
dividend, recapitalization, reclassification stock split, reverse stock split,
reorganization, merger, consolidation, spin-off, combination, repurchase, Common
Stock exchange or other similar transaction or event, then outstanding awards
under the Incentive Plan shall be appropriately and equitably adjusted by the
Board to reflect such transaction. In the event of a corporate
merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the Board may (i) issue or assume awards by means
of substitution of new awards for previously issued awards or to assume
previously issued awards as part of such adjustment, (ii) make provision, prior
to the transaction, for the acceleration of the vesting and exercisability of,
or lapse of restrictions with respect to the award and, if the transaction is a
cash merger, provide for the termination of any portion of the award that
remains unexercised at the time of such transaction, or (iii) cancel any such
awards and deliver to the participants cash in an amount that the Board
determines in its sole discretion is equal to the fair market value of such
awards on the date of such event. In the case of options or SARs,
this amount shall be the excess (if any) of the fair market value of Common
Stock on such date over the grant price of such award.
Amendment,
Modification and Termination
The Board
may, subject to stockholder approval in certain circumstances, amend, modify,
suspend or terminate the Incentive Plan for the purpose of meeting or addressing
any changes in legal requirements or for any other purpose applicable law
permits, except that no amendment or alteration that would adversely affect the
rights of any participant under any award previously granted to that participant
will be made without the written consent of that participant. The
Incentive Plan shall terminate on the tenth anniversary of the date of its
adoption by the Board, unless it is terminated sooner by the Board.
The above
summary of the Incentive Plan does not purport to be complete and is qualified
in its entirety by reference to the full text of the Incentive Plan, which is
attached as Exhibit 10.4 hereto and is incorporated herein by
reference.
ITEM
5.03. AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN
FISCAL YEAR.
In
accordance with the Plan, the Company’s certificate of incorporation and bylaws
were amended and restated in their entirety. The Company’s Amended and Restated
Certificate of Incorporation (the “Amended Certificate of
Incorporation”) and Third Amended and Restated By-Laws (the “Amended By-Laws”)
became effective on the Effective Date.
A
description of the key provisions of the Amended Certificate of Incorporation
and the Amended By-Laws is included in Amendment No. 1 to the Company’s
registration statement on Form 8-A filed with the Securities and Exchange
Commission on August 31, 2010, which description is incorporated herein by
reference. This description is qualified in its entirety by reference to the
full text of these documents, which are attached as Exhibit 3.1 and 3.2 hereto
and incorporated herein by reference.
ITEM
8.01. OTHER EVENTS.
On August
31, 2010, the Company announced that it had consummated the Plan. A
copy of the press release announcing the effectiveness of the Plan and the
Company’s emergence from Chapter 11 of the Bankruptcy Code is attached hereto as
Exhibit 99.1 and is incorporated herein by reference.
ITEM
9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
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Exhibit
No.
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Exhibit
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3.1
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Amended
and Restated Certificate of Incorporation of U.S. Concrete, Inc.
(incorporated by reference to Exhibit 1 to U.S. Concrete’s Form 8-A filed
August 31, 2010).
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3.2
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Third
Amended and Restated By-Laws of U.S. Concrete, Inc. (incorporated by
reference to Exhibit 2 to U.S. Concrete’s Form 8-A filed August 31,
2010).
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4.1
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Form
of New Common Stock Certificate (incorporated by reference to Exhibit 3 to
U.S. Concrete’s Form 8-A filed August 31, 2010).
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4.2
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Indenture,
dated as of August 31, 2010, by and among U.S. Concrete, Inc., the
Guarantors named therein, and U.S. Bank National Association, as Trustee
and Noteholder Collateral Agent.
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4.3
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Registration
Rights Agreement, dated as of August 31, 2010, by and among U.S. Concrete,
Inc., the Guarantors named therein and the Holders party
thereto.
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4.4
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Pledge
and Security Agreement, dated as of August 31, 2010, by and among U.S.
Concrete, Inc., subsidiaries named therein, and U.S. Bank National
Association, as noteholder collateral agent.
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4.5
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Form
of Convertible Secured Note, included in Exhibit
4.2.
|
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10.1
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Credit
Agreement, dated as of August 31, 2010, by and among U.S. Concrete, Inc.,
certain of U.S. Concrete’s domestic subsidiaries as guarantors, the
lenders party thereto and JPMorgan Chase Bank, N.A., as administrative
agent.
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10.2
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Pledge
and Security Agreement, dated as of August 31, 2010, by and among U.S.
Concrete, Inc., subsidiaries named therein and JPMorgan Chase Bank, N.A.,
as administrative agent.
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10.3
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Intercreditor
Agreement, dated as of August 31, 2010, by and among JPMorgan Chase Bank,
N.A., as administrative agent, U.S. Bank National Association, as
Trustee and noteholder collateral agent and each of the loan parties party
thereto.
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10.4
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U.S.
Concrete, Inc. Management Equity Incentive Plan.
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10.5
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U.S.
Concrete, Inc. Non-Qualified Stock Option Award
Agreement.
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10.6
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U.S.
Concrete, Inc. Restricted Stock Unit Award Agreement.
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10.7
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Form
of Indemnification Agreement.
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99.1
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Press
Release dated August 31,
2010.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, U.S. Concrete, Inc.
has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
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U.S.
CONCRETE, INC.
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/s/ Michael
W. Harlan |
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| Date:
August 31, 2010 |
Name:
Michael W. Harlan |
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Title
President and Chief Executive Officer |
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