Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

among

 

Continental Materials Corp.,

a Delaware corporation,

 

and

 

Castle Concrete Company,

a Colorado corporation,

 

and

 

Transit Mix Concrete Co.,

a Colorado corporation,

 

and

 

Transit Mix of Pueblo, Inc.,

a Colorado corporation,

 

and

 

Daniels Sand Company,

a Colorado corporation,

 

and

 

Aggregate Industries — WCR, Inc.,

a Colorado corporation

 

Dated as of February 1, 2019

 

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TABLE OF CONTENTS

 

ARTICLE I PURCHASE AND SALE

2

Section 1.01

Purchase and Sale of Assets

2

Section 1.02

Excluded Assets

3

Section 1.03

Assumed Liabilities

4

Section 1.04

Excluded Liabilities

5

Section 1.05

Purchase Price

6

Section 1.06

Purchase Price Adjustment

6

Section 1.07

Allocation of Purchase Price

8

Section 1.08

Withholding Tax

9

Section 1.09

Third Party Consents

9

Section 1.10

Prorations

9

 

 

 

ARTICLE II CLOSING

10

Section 2.01

Closing

10

Section 2.02

Closing Deliverables

10

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS

12

Section 3.01

Organization and Qualification of Sellers

12

Section 3.02

Authority of Sellers

13

Section 3.03

No Conflicts; Consents

13

Section 3.04

Financial Statements

13

Section 3.05

Undisclosed Liabilities

14

Section 3.06

Absence of Certain Changes, Events and Conditions

14

Section 3.07

Material Contracts

16

Section 3.08

Title to Purchased Assets

17

Section 3.09

Condition of Assets

18

Section 3.10

Real Property

18

Section 3.11

Intellectual Property

19

Section 3.12

Inventory

20

Section 3.13

Accounts Receivable

20

Section 3.14

Customers and Suppliers

20

Section 3.15

Insurance

21

Section 3.16

Legal Proceedings; Governmental Orders

21

Section 3.17

Compliance With Laws; Permits

22

Section 3.18

Environmental Matters

22

Section 3.19

Employee Benefit Matters

23

Section 3.20

Employment Matters

26

Section 3.21

Taxes

27

Section 3.22

Brokers

28

 

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER

28

Section 4.01

Organization of Buyer

28

Section 4.02

Authority of Buyer

28

Section 4.03

No Conflicts; Consents

28

Section 4.04

Brokers

29

Section 4.05

Sufficiency of Funds; Solvency

29

 

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Section 4.06

Legal Proceedings

29

Section 4.07

Reliance

29

 

 

 

ARTICLE V COVENANTS

29

Section 5.01

Name and Maintenance of Existence

29

Section 5.02

Employees and Employee Benefits

30

Section 5.03

Confidentiality

30

Section 5.04

Non-Competition; Non-Solicitation

31

Section 5.05

Books and Records

32

Section 5.06

Public Announcements

32

Section 5.07

Bulk Sales Laws

32

Section 5.08

Receivables

33

Section 5.09

Tax Matters

33

Section 5.10

Tax Clearance Certificates

34

Section 5.11

Title Insurance & Survey

34

Section 5.12

Insurance

34

Section 5.13

Vacating of the Transferred Real Property

35

Section 5.14

Costilla Real Property

35

Section 5.15

Daniels Sand Permit Transfer

37

Section 5.16

Release of Johnson Family Deed of Trust from Daniels Sand

37

Section 5.17

Assumed Liabilities

37

Section 5.18

Further Assurances

38

 

 

 

ARTICLE VI INDEMNIFICATION

38

Section 6.01

Survival

38

Section 6.02

Indemnification by Sellers

38

Section 6.03

Indemnification by Buyer

39

Section 6.04

Certain Limitations

39

Section 6.05

Mitigation of Losses

40

Section 6.06

Indemnification Procedures

41

Section 6.07

Payments

43

Section 6.08

Tax Treatment of Indemnification Payments

43

Section 6.09

Effect of Investigation

43

Section 6.10

Exclusive Remedies

43

 

 

 

ARTICLE VII MISCELLANEOUS

43

Section 7.01

Sellers Representative

43

Section 7.02

Expenses

44

Section 7.03

Notices

44

Section 7.04

Interpretation

45

Section 7.05

Headings

46

Section 7.06

Severability

46

Section 7.07

Entire Agreement

46

Section 7.08

Successors and Assigns

46

Section 7.09

No Third-party Beneficiaries

46

Section 7.10

Amendment and Modification; Waiver

46

 

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TABLE OF CONTENTS

 

Section 7.11

Governing Law and Submission to Jurisdiction

47

Section 7.12

Specific Performance

47

Section 7.13

Counterparts

47

 

ANNEX A

 

DEFINITIONS

ANNEX B

 

TRANSFERRED REAL PROPERTY

ANNEX C

 

EXCLUDED REAL PROPERTY

 

EXHIBITS

 

Exhibit A-1

 

Existing Costilla Property Legal Description

Exhibit A-2

 

“West Parcel” and “East Parcel” of the Existing Costilla Property

Exhibit B

 

Allocation Principles

 

DISCLOSURE SCHEDULES

 

Schedule 1.01(c)

 

Assigned Contracts

Schedule 1.02(f)

 

Excluded Tangible Personal Property

Schedule 1.02(k)

 

Excluded Mineral Rights, Water Rights and Intangible Assets

Schedule 1.02(q)

 

Excluded Benefit Plan Assets

Schedule 1.03(d)

 

Other Assumed Liabilities

Schedule 1.06

 

Closing Working Capital Example

Schedule 3.01

 

Jurisdiction of Sellers

Schedule 3.03

 

Conflicts, Consent

Schedule 3.06

 

Changes since December 31, 2017

Schedule 3.07(a)

 

Material Contracts

Schedule 3.08

 

Permitted Encumbrances

Schedule 3.09

 

Condition of Assets Exceptions

Schedule 3.10(a)(i)

 

Real Property Encumbrances

Schedule 3.10(a)(ii)

 

Leases of Transferred Real Property

Schedule 3.10(c)

 

Transferred Water Rights

Schedule 3.10(e)

 

Sufficiency of Transferred Real Property Exceptions

Schedule 3.10(f)

 

Reclamation Obligations

Schedule 3.11(a)

 

Intellectual Property Assets

Schedule 3.11(b)

 

Intellectual Property Agreements

Schedule 3.14(a)

 

Material Customers

Schedule 3.14(b)

 

Material Suppliers

Schedule 3.15

 

Insurance Policies and Claims

Schedule 3.16(a)

 

Pending Actions

Schedule 3.16(b)

 

Outstanding Governmental Orders

Schedule 3.17(a)

 

Compliance with Laws

Schedule 3.17(b)

 

Permits and Compliance with Permits

Schedule 3.17(c)

 

Reclamation Sureties

Schedule 3.18(b)

 

Environmental Permits

Schedule 3.18(e)

 

Storage Tanks

 

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TABLE OF CONTENTS

 

Schedule 3.18(g)

 

Environmental Reports

Schedule 3.19(a)

 

Benefit Plans

Schedule 3.19(b)

 

Benefit Plan Compliance

Schedule 3.19(k)

 

Parachute Payments

Schedule 3.20(a)

 

Employees

Schedule 3.21

 

Taxes

Schedule 5.02(a)

 

Continuing Employees

 

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ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (this “Agreement”), dated as of February 1, 2019,
is entered into by and among Continental Materials Corp., a Delaware corporation
(“Continental”), Transit Mix Concrete Co., a Colorado corporation (“TMC”),
Transit Mix of Pueblo, Inc., a Colorado corporation (“TMP”), Castle Concrete
Company, a Colorado corporation (“Castle”), Daniels Sand Company, a Colorado
corporation (“DSC”, and Continental, TMC, TMP, Castle and DSC, each, a “Seller”
and, collectively, the “Sellers”), and Aggregate Industries — WCR, Inc., a
Colorado corporation (“Buyer”).

 

RECITALS

 

WHEREAS, the Sellers are presently engaged in (i) the ready mix concrete
business at the ready mix concrete plants located in Colorado Springs, Colorado
and Pueblo, Colorado and described on Annex B (the “Ready Mix Business”); and
(ii) sand and gravel mining operations in Colorado Springs, Colorado and
described on Annex B (“Daniels Sand”; collectively, Ready Mix Business and
Daniels Sand, the “Purchased Business”);

 

WHEREAS, the Sellers are also presently (i) engaged in mining from their Pike
View quarry operation (the “Pike View Quarry Operation”) located Colorado
Springs, Colorado and described on Annex C; (ii) own an idle quarry at their
former Canon City operation (the “Canon City Limestone Operation”) located Canon
City, Colorado and described on Annex C; (iii) own and operate the retail
building materials business at sites located in Colorado Springs, Colorado and
Pueblo, Colorado and described on Annex C (the “Building Supply Business”);
(iv) own and operate sand and gravel mining operations in Fremont County,
Colorado and described on Annex C (the “Grisenti Pit”); (v) own and operate an
aggregates operation in Pueblo, Colorado and described on Annex C (the “Pueblo
Aggregate East Operation”); (vi) own the real property and potential quarry
known as the “Hitch Rack Ranch” in Colorado Springs, Colorado (“Hitch Rack
Ranch”) and described on Annex C; and (vii) own, or are pursuing opportunities
with respect to, the real property known as the “Blake Ranch” south of the City
of Pueblo and described on Annex C (“Blake Ranch” and, collectively, the Pike
View Quarry Operation, the Canon City Limestone Operation, the Building Supply
Business, the Grisenti Pit and the Pueblo Aggregate East Operation, Hitch Rack
Ranch and Blake Ranch are the “Non-Purchased Business”);

 

WHEREAS, Sellers wish to sell and assign to Buyer, and Buyer wishes to purchase
and assume from Sellers, substantially all the tangible personal property,
executory contracts and intangible assets, and certain specified liabilities, of
the Purchased Business (but not any tangible personal property, executory
contracts or intangible assets of the Non-Purchased Business), subject to the
terms and conditions set forth herein (the “Business Purchase and Sale”); and

 

WHEREAS, a portion of the purchase price payable by Buyer to Sellers shall be
placed in escrow by Buyer, the release of which shall be contingent upon certain
events and conditions, all as set forth in this Agreement and the Escrow
Agreement (as defined herein);

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

1

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ARTICLE I
PURCHASE AND SALE

 

Section 1.01                            Purchase and Sale of Assets. Subject to
the terms and conditions set forth herein, at the Closing, Sellers hereby sell,
assign, transfer, convey and deliver to Buyer, and Buyer hereby purchases from
Sellers, free and clear of any Encumbrances other than Permitted Encumbrances,
all of Sellers’ right, title and interest in, to and under all of the assets,
properties and rights of every kind and nature, whether real, personal or mixed,
tangible or intangible (including goodwill), wherever located and whether now
existing or hereafter acquired (other than the Excluded Assets), which relate
to, or are used or held for use in connection with, the Purchased Business
(collectively, the “Purchased Assets”), including, without limitation, the
following (but, in each case, not including any of the Excluded Assets):

 

(a)                                 all accounts or notes receivable held by
Sellers, regardless whether arising from the Purchased Business or the
Non-Purchased Business, and any security, claim, remedy or other right related
to any of the foregoing (“Accounts Receivable”); provided, that the “Accounts
Receivable” do not include any accounts or notes receivable held by or arising
from the business of any Excluded Subsidiary;

 

(b)                                 all inventory, finished goods, raw
materials, chemicals, aggregates, work in progress, packaging, supplies, parts
and other inventories held for sale or use in the Purchased Business
(“Inventory”);

 

(c)                                  all Contracts, including pending customer
purchase orders and including Intellectual Property Agreements, set forth on
Section 1.01(c) of the Disclosure Schedules (the “Assigned Contracts”);

 

(d)                                 all furniture, fixtures, equipment, mixing
plants, batch plants, tanks and containers, machinery, tools, vehicles
(including mixing trucks, hauling trucks and light vehicles (collectively, the
“Vehicles”)), office equipment, supplies, computers, telephones and other
tangible personal property, in each case, which is used in the Purchased
Business (the “Tangible Personal Property”);

 

(e)                                  all Transferred Real Property and the
Transferred Water Rights;

 

(f)                                   all Permits, including Environmental
Permits, which are transferrable to Buyer (if any) and which are held by Sellers
and required for the conduct of the Purchased Business as currently conducted or
for the ownership and use of the Purchased Assets;

 

(g)                                  all Intellectual Property Assets, including
all rights to the name “Transit Mix Concrete Company” and variations thereof and
the URL transitmix.com.

 

(h)                                 all rights to any Actions of any nature
available to or being pursued by Sellers to the extent related to the Purchased
Business, the Purchased Assets or the Assumed Liabilities, whether arising by
way of counterclaim or otherwise;

 

(i)                                     all prepaid expenses, credits, advance
payments, claims, security, refunds, rights of recovery, rights of set-off,
rights of recoupment, deposits, sand royalties, charges, sums and fees
(including any such item relating to the payment of Taxes), in each case,
arising from the Purchased Business;

 

2

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(j)                                    all of Sellers’ rights under warranties,
indemnities and all similar rights against third parties to the extent related
to any Purchased Assets;

 

(k)                                 originals, or where not available, copies,
of all books and records, including, but not limited to, books of account,
ledgers and general, financial and accounting records, machinery and equipment
maintenance files, customer lists, customer purchasing histories, price lists,
distribution lists, supplier lists, production data, quality control records and
procedures, customer complaints and inquiry files, research and development
files, records and data (including all correspondence with any Governmental
Authority), sales material and records (including pricing history, total sales,
terms and conditions of sale, sales and pricing policies and practices),
strategic plans, internal financial statements, marketing and promotional
surveys, material and research and files relating to the Intellectual Property
Assets and the Intellectual Property Agreements (“Books and Records”) relating
to the Purchased Business; and

 

(l)                                     all goodwill and the going concern value
of the Purchased Business.

 

Section 1.02                            Excluded Assets. Notwithstanding the
foregoing, the Purchased Assets shall not include the following assets
(collectively, the “Excluded Assets”):

 

(a)                                 Cash and cash equivalents;

 

(b)                                 All rebates, refunds and volume discounts
arising from the Purchased Business through and including the Closing Date;

 

(c)                                  all accounts or notes receivable held by or
arising from the business of any Excluded Subsidiary;

 

(d)                                 all inventory, raw materials, work in
progress, supplies, parts and other inventories held for sale or use in the
Non-Purchased Business;

 

(e)                                  the Excluded Real Property;

 

(f)                                   all furniture, fixtures, equipment,
machinery, tools, vehicles, office equipment, supplies, computers, telephones
and other tangible personal property, in each case, which is used or held for
use in the Non-Purchased Business, including any of the same listed on
Section 1.02(f) of the Disclosure Schedules;

 

(g)                                  Contracts, including Intellectual Property
Agreements, that are not Assigned Contracts (the “Excluded Contracts”);

 

(h)                                 all Permits, including Environmental
Permits, which are held by Sellers and required for the conduct of the
Non-Purchased Business as currently conducted or for the ownership and use of
the Excluded Assets;

 

(i)                                     all insurance benefits, including rights
and proceeds under Sellers’ insurance policies;

 

(j)                                    all rights and interest in, to or under
any Intellectual Property (whether as owner, licensee, sublicensee or otherwise)
which is used or held for use in the Non-Purchased Business (but excluding the
“Transit Mix” name and any marks relating thereto);

 

3

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(k)                                 all mineral rights, water rights, intangible
assets and rights to any Actions of any nature to the extent related to the
Non-Purchased Business, the Excluded Assets or the Excluded Liabilities,
including any of the same listed on Section 1.02(k) of the Disclosure Schedules;

 

(l)                                     all prepaid expenses, credits, advance
payments, claims, security, refunds, rights of recovery, rights of set-off,
rights of recoupment, deposits, charges, sums and fees (including any such item
relating to the payment of Taxes), in each case, arising from the Non-Purchased
Business;

 

(m)                             all of Sellers’ rights under warranties,
indemnities and all similar rights against third parties to the extent related
to any Excluded Assets;

 

(n)                                 all Books and Records relating to the
Non-Purchased Business;

 

(o)                                 all goodwill and the going concern value of
the Non-Purchased Business;

 

(p)                                 the corporate seals, organizational
documents, minute books, stock books, Tax Returns, books of account or other
records having to do with the corporate organization of each Seller;

 

(q)                                 all Benefit Plans and assets attributable
thereto; the assets, properties and rights specifically set forth on
Section 1.02(q) of the Disclosure Schedules; and

 

(r)                                    the rights which accrue or will accrue to
Sellers under this Agreement and the Ancillary Documents.

 

Section 1.03                            Assumed Liabilities. Subject to the
terms and conditions set forth herein, Buyer hereby assumes and agrees to pay,
perform and discharge only the following Liabilities of Sellers (collectively,
the “Assumed Liabilities”), and no other Liabilities:

 

(a)                                 all trade accounts payable of Sellers to
third parties in connection with the Purchased Business that remain unpaid and
are not delinquent as of the Closing Date and that either are reflected on the
Interim Balance Sheet Date or arose in the ordinary course of business
consistent with past practice since the Interim Balance Sheet Date;

 

(b)                                 all Liabilities in respect of the Assigned
Contracts but only to the extent that such Liabilities thereunder are required
to be performed after the Closing Date, were incurred in the ordinary course of
business and do not relate to any failure to perform, improper performance,
warranty or other breach, default or violation by Sellers on or prior to the
Closing; and

 

(c)                                  any reclamation-related Liabilities
existing, reclamation obligations to be performed, and reclamation activities
required, in each case, at any time and from time to time on or after the
Closing Date which arise from or relate to any exploration, mining or processing
activities occurring before or after the Closing Date conducted by or in
connection with Reclamation Permit No. M-1973-007SG, including any and all
reclamation activities required before, during and/or following final cessation
of sand mining and sand processing operations at the Daniels Sand property (the
“Reclamation Obligations”);

 

4

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(d)                                 those Liabilities of Sellers set forth on
Section 1.03(d) of the Disclosure Schedules.

 

Section 1.04                            Excluded Liabilities. Notwithstanding
the provisions of Section 1.03 or any other provision in this Agreement to the
contrary, Buyer shall not assume and shall not be responsible to pay, perform or
discharge any Liabilities of Sellers or any of their Affiliates of any kind or
nature whatsoever other than the Assumed Liabilities (the “Excluded
Liabilities”). Sellers shall, and shall cause each of their Affiliates to, pay
and satisfy in due course all Excluded Liabilities which they are obligated to
pay and satisfy. Without limiting the generality of the foregoing, the Excluded
Liabilities shall include, but not be limited to, the following:

 

(a)                                 any Liabilities of Sellers arising or
incurred in connection with the negotiation, preparation, investigation and
performance of this Agreement, the Ancillary Documents and the transactions
contemplated hereby and thereby, including, without limitation, fees and
expenses of counsel, accountants, consultants, advisers and others;

 

(b)                                 any Liability for (i) Taxes of a Seller (or
any owner or Affiliate of a Seller) or Taxes for any Pre-Closing Tax Period
relating to the Purchased Business, the Purchased Assets or the Assumed
Liabilities for any Pre-Closing Tax Period; (ii) Taxes that arise out of the
consummation of the transactions contemplated hereby or that are the
responsibility of Seller pursuant to Section 5.09; or (iii) other Taxes of a
Seller (or any owner or Affiliate of a Seller) of any kind or description
(including any Liability for Taxes of Seller (or any owner or Affiliate of
Seller) for any Pre-Closing Tax Period that become a Liability of Buyer under
any common law doctrine of de facto merger or transferee or successor liability
or otherwise by operation of contract or Law);

 

(c)                                  any Liabilities relating to or arising out
of the Excluded Assets;

 

(d)                                 any Liabilities in respect of any pending or
threatened Action arising out of, relating to or otherwise in respect of the
operation of the Purchased Business or the Purchased Assets to the extent such
Action relates to such operation on or prior to the Closing Date. Including for
the avoidance of doubt, all Actions relating to Continental Materials
Corporation v. Valco, Inc., Civil Action No. 2014-cv-2510, in the United States
District Court for the District of Colorado (the “Valco Litigation”);

 

(e)                                  any product Liability or similar claim for
injury to a Person or property which arises out of or is based upon any express
or implied representation, warranty, agreement or guaranty made by Sellers, or
by reason of the improper performance or malfunctioning of a product, improper
design or manufacture, failure to adequately package, label or warn of hazards
or other related product defects of any products at any time manufactured or
sold or any service performed by Seller;

 

(f)                                   any recall, design defect or similar
claims of any products manufactured or sold or any service performed by Sellers;

 

(g)                                  any Liabilities of Sellers arising under or
in connection with any Benefit Plan providing benefits to any present or former
employee of Sellers;

 

(h)                                 any Liabilities of Sellers for any present
or former employees, officers, directors, retirees, independent contractors or
consultants of a Seller, including, without

 

5

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limitation, any Liabilities associated with any claims for wages or other
benefits, bonuses, accrued vacation, workers’ compensation, severance,
retention, termination or other payments;

 

(i)                                     any Environmental Claims, or Liabilities
under Environmental Laws, to the extent arising out of or relating to facts,
circumstances or conditions existing on or prior to the Closing or otherwise to
the extent arising out of any actions or omissions of a Seller (other than the
Reclamation Obligations);

 

(j)                                    any trade accounts payable of a Seller
(i) to the extent not accounted for on the Interim Balance Sheet; (ii) which
constitute intercompany payables owing to Affiliates of a Seller; (iii) which
constitute debt, loans or credit facilities to financial institutions; or
(iv) which did not arise in the ordinary course of business;

 

(k)                                 any Liabilities of the Purchased Business
relating or arising from unfulfilled commitments, quotations, purchase orders,
customer orders or work orders that (i) do not constitute part of the Purchased
Assets issued by the Purchased Business’ customers to a Seller on or before the
Closing; (ii) did not arise in the ordinary course of business; or (iii) are not
validly and effectively assigned to Buyer pursuant to this Agreement;

 

(l)                                     any Liabilities to indemnify, reimburse
or advance amounts to any present or former officer, director, employee or agent
of a Seller (including with respect to any breach of fiduciary obligations by
same), except for indemnification of same pursuant to Section 6.03 as Seller
Indemnitees;

 

(m)                             any Liabilities under the Excluded Contracts or
any other Contracts, including Intellectual Property Agreements, (i) which are
not validly and effectively assigned to Buyer pursuant to this Agreement;
(ii) which do not conform to the representations and warranties with respect
thereto contained in this Agreement; or (iii) to the extent such Liabilities
arise out of or relate to a breach by a Seller of such Contracts prior to
Closing;

 

(n)                                 any Liabilities associated with debt, loans
or credit facilities of a Seller and/or the Purchased Business owing to
financial institutions;

 

(o)                                 any Liabilities arising out of, in respect
of or in connection with the failure by a Seller or any of its Affiliates to
comply with any Law or Governmental Order.

 

Section 1.05                            Purchase Price. The aggregate
consideration for the Purchased Assets shall be Twenty Seven Million One Hundred
Twenty-Nine Thousand Dollars ($27,129,000), subject to adjustment pursuant to
Section 1.06 and Section 1.10 hereof (the “Purchase Price”), plus the assumption
of the Assumed Liabilities. The Purchase Price shall be paid as provided in
Section 2.02.

 

Section 1.06                            Purchase Price Adjustment.

 

(a)                                 Post-Closing Adjustment.

 

(i)                                     Within seventy-five (75) days after the
Closing Date, Buyer shall prepare and deliver to Sellers Representative, on
behalf of Sellers, (A) a statement, in the form and consistent with the
methodology used to prepare the Interim Balance Sheet and the binding example in
Section 1.06 of the Disclosure Schedules, setting forth its calculation of
Closing

 

6

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Working Capital as of close of business on the Closing Date (the “Closing
Working Capital Statement”) true and correct in all material respects.

 

(ii)                                  The “Post-Closing Adjustment” shall be an
amount equal to the Closing Working Capital minus $8,496,243. If the
Post-Closing Adjustment is a positive number, Buyer shall pay to Sellers an
amount equal to the Post-Closing Adjustment. If the Post-Closing Adjustment is a
negative number, Sellers shall pay to Buyer an amount equal to the Post-Closing
Adjustment.

 

(b)                                 Examination and Review.

 

(i)                                     Examination. After receipt of the
Closing Working Capital Statement, Sellers Representative shall have sixty (60)
days (the “Review Period”) to review the Closing Working Capital Statement.
During the Review Period, Sellers Representative and its advisors shall have
full access to, and Buyer shall provide or cause to be provided (at Buyer’s
expense) electronic copies (in original, executable format where available) of,
the relevant books and records of Buyer, the personnel of, and work papers
prepared by, Buyer and Buyer’s accountants to the extent that they relate to the
Closing Working Capital Statement and to such historical financial information
(to the extent in Buyer’s possession) relating to the Closing Working Capital
Statement as Sellers Representative may reasonably request for the purpose of
reviewing the Closing Working Capital Statement and to prepare a Statement of
Objections (defined below), provided, that such access shall be in a manner that
does not interfere with the normal business operations of Buyer and provided,
further, that in the event of any delay in providing such access or copies which
exceeds five (5) Business Days in the aggregate, the Review Period shall be
extended by the number of Business Days of such delay.

 

(ii)                                  Objection. On or prior to the last day of
the Review Period, Sellers Representative may object to the Closing Working
Capital Statement by delivering to Buyer a written statement setting forth
Sellers Representative’s objections in reasonable detail, indicating each
disputed item or amount and the basis for Sellers Representative’s disagreement
therewith (the “Statement of Objections”). If Sellers Representative fails to
deliver the Statement of Objections before the expiration of the Review Period,
the Closing Working Capital Statement and the Post-Closing Adjustment, as the
case may be, reflected in the Closing Working Capital Statement shall be deemed
to have been accepted by Sellers Representative, on behalf of Sellers. If
Sellers Representative delivers the Statement of Objections before the
expiration of the Review Period, Buyer and Sellers Representative shall
negotiate in good faith to resolve such objections within thirty (30) days after
the delivery of the Statement of Objections (the “Resolution Period”), and, if
the same are so resolved within the Resolution Period, the Post-Closing
Adjustment and the Closing Working Capital Statement with such changes as may
have been previously agreed in writing by Buyer and Sellers Representative,
shall be final and binding.

 

(iii)                               Resolution of Disputes. If Sellers
Representative and Buyer fail to reach an agreement with respect to all of the
matters set forth in the Statement of Objections before expiration of the
Resolution Period, then any amounts remaining in dispute (“Disputed Amounts” and
any amounts not so disputed, the “Undisputed Amounts”) shall be submitted for
resolution to the Denver office of Crowe LLP or, if Crowe LLP is unable to
serve, Buyer and Sellers Representative shall appoint by mutual agreement the
office of an impartial nationally recognized firm of independent certified
public accountants (the “Independent Accountants”) who, acting as experts and
not arbitrators, shall resolve the Disputed Amounts

 

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only and make any adjustments to the Post-Closing Adjustment, as the case may
be, and the Closing Working Capital Statement. The parties hereto agree that all
adjustments shall be made without regard to materiality. The Independent
Accountants shall make its determinations in accordance with the definitions in
this Agreement and the methodology used in the binding example calculation of
set forth in Section 1.06 of the Disclosure Schedules.  The Independent
Accountants shall only decide the specific items under dispute by the parties
and their decision for each Disputed Amount must be within the range of values
assigned to each such item in the Closing Working Capital Statement and the
Statement of Objections, respectively.

 

(iv)                              Fees of the Independent Accountants. The fees
and expenses of the Independent Accountants shall be paid by Sellers, on the one
hand, and Buyer, on the other hand, based upon the percentage that the amount
actually contested but not awarded to Sellers or Buyer, respectively, bears to
the aggregate amount actually contested by Sellers and Buyer. For example, if a
Seller disputes items in the aggregate amount of $1,000,000, and the Independent
Accountant determines that a Seller is correct with respect to $600,000 of the
$1,000,000 in dispute, Buyer shall bear 60% of the fees, costs and disbursements
of the Independent Accountant and a Seller shall bear 40% of the fees, costs and
disbursements of the Independent Accountants.

 

(v)                                 Determination by Independent Accountants.
The Independent Accountants shall make a determination as soon as practicable
within thirty (30) days (or such other time as the parties hereto shall agree in
writing) after their engagement, and their resolution of the Disputed Amounts
and their adjustments to the Closing Working Capital Statement and/or the
Post-Closing Adjustment shall be conclusive and binding upon the parties hereto,
except in the case of fraud, undisclosed conflict of interest or manifest error.

 

(vi)                              Payments of Post-Closing Adjustment. Except as
otherwise provided herein, any payment of the Post-Closing Adjustment, together
with interest calculated as set forth below, shall (A) be due (x) within five
(5) Business Days of acceptance of the applicable Closing Working Capital
Statement or (y) if there are Disputed Amounts, then within five (5) Business
Days of the resolution described in clause (v) above; and (B) be paid by wire
transfer of immediately available funds to such account as is directed by Buyer
or Sellers Representative, as the case may be. The amount of any Post-Closing
Adjustment shall bear interest from and including the Closing Date to the date
of payment at a rate per annum equal to ten percent (10%).  Such interest shall
be calculated daily on the basis of a 365-day year and the actual number of days
elapsed, without compounding.

 

(c)                                  Adjustments for Tax Purposes. Any payments
made pursuant to Section 1.06 shall be treated as an adjustment to the Purchase
Price by the parties for Tax purposes, unless otherwise required by Law.

 

Section 1.07                            Allocation of Purchase Price. Sellers
and Buyer agree that the Purchase Price and the Assumed Liabilities (plus other
relevant items) shall be allocated among the Purchased Assets for all purposes
(including Tax and financial accounting) in accordance with Section 1060 of the
Code and applying the agreed methodology set forth in Exhibit B (collectively,
the “Allocation Principles”). A draft allocation schedule shall be prepared by
Buyer in accordance with the Allocation Principles and delivered to Sellers
Representative, on behalf of Sellers, within sixty (60) days following the
Closing Date. If Sellers Representative notifies Buyer in writing that Sellers
Representative objects to one or more items reflected in Buyer’s draft
allocation schedule, Sellers Representative and Buyer shall negotiate in good
faith

 

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to resolve such dispute in accordance with the Allocation Principles; provided,
however, that if Sellers Representative and Buyer are unable to resolve any
dispute with respect to the Allocation Schedule within ninety (90) days
following the Closing Date, such dispute shall be resolved by the Independent
Accountants applying the Allocation Principles. The fees and expenses of such
accounting firm shall be borne equally by Sellers and Buyer. Buyer and Sellers
shall file all Tax Returns (including amended returns and claims for refund) and
information reports in a manner consistent with the allocation schedule as
finally agreed among the parties or as determined by the Independent
Accountants. Any adjustments to the Purchase Price pursuant to Section 1.06
herein shall be allocated in a manner consistent with the Allocation Principles.

 

Section 1.08                            Withholding Tax. Buyer shall be entitled
to deduct and withhold from the Purchase Price all Taxes that Buyer may be
required to deduct and withhold under any provision of Tax Law. All such
withheld amounts shall be treated as delivered to Sellers hereunder.

 

Section 1.09                            Third Party Consents. To the extent that
Sellers’ rights under any Contract or Permit constituting a Purchased Asset, or
any other Purchased Asset, may not be assigned to Buyer without the consent of
another Person which has not been obtained, this Agreement shall not constitute
an agreement to assign the same if an attempted assignment would constitute a
breach thereof or be unlawful, and each Seller, at its expense, shall use its
reasonable best efforts to obtain any such required consent(s) as promptly as
possible. If any such consent shall not be obtained or if any attempted
assignment would be ineffective or would impair Buyer’s rights under the
Purchased Asset in question so that Buyer would not in effect acquire the
benefit of all such rights, each Seller, to the maximum extent permitted by law
and the Purchased Asset, shall act after the Closing as Buyer’s agent in order
to obtain for it the benefits thereunder and shall cooperate, to the maximum
extent permitted by Law and the Purchased Asset, with Buyer in any other
reasonable arrangement designed to provide such benefits to Buyer.

 

Section 1.10                            Prorations. At or prior to Closing,
Seller shall pay 100% of all 2018 real property taxes for the Real Property
payable in 2019.  With respect to the 2019 real property taxes payable in 2020,
Buyer shall receive a credit against the Purchase Price at Closing in an amount
equal to the total estimated 2019 real property taxes (payable in 2020) for the
Real Property which shall be calculated based on the most current assessed value
and mill levy for each Real Property (per the applicable county) multiplied by
Seller’s pro rata share of the total estimated 2019 real property taxes (payable
in 2030).  For purposes of this Section 1.10, Seller’s pro rata share shall be a
fraction, the numerator of which is the number of days from January 1, 2019,
through and including the date immediately preceding the Closing Date and the
denominator of which is 365. All personal property taxes assessed against any of
the Purchased Assets, if applicable, shall be handled in the same manner; i.e.,
Seller shall pay 100% of all 2018 personal property taxes (payable in 2019) at
or prior to Closing and Purchaser shall receive a credit against the Purchase
Price at Closing in an amount equal to the total 2019 personal property taxes
(payable in 2020) multiplied by Seller’s pro rata share of said taxes. Rents
under each Third Party Lease shall be prorated to the Closing Date and security
deposits, if any, paid by a tenant under any of the Third Party Leases shall be
assigned to Buyer and a like amount shall be credited to Sellers at Closing.

 

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ARTICLE II
CLOSING

 

Section 2.01                            Closing. Subject to the terms and
conditions of this Agreement, the consummation of the transactions contemplated
by this Agreement (the “Closing”) shall take place on the date hereof via
overnight courier, facsimile or other electronic means (including portable
document format (pdf)), as agreed to by the parties. The date on which the
Closing is to occur is herein referred to as the “Closing Date”. The
transactions shall be considered closed when the delivery of the documents and
funds as provided in Section 2.02 has occurred, and the parties agree to treat
the Closing as being effective as of 12:01 a.m. Mountain Time on the Closing
Date.

 

Section 2.02                            Closing Deliverables.

 

(a)                                             At the Closing, Sellers hereby
deliver to Buyer the following:

 

(i)                                     one or more UCC Financing Statement
amendments and other document necessary to evidence the release of all liens on
the Purchased Assets in favor of CIBC and all other secured lenders;

 

(ii)                                  The Costilla Lease Agreement, duly
executed by Sellers

 

(iii)                               The First American Title Company Escrow
Agreement, duly executed by Sellers;

 

(iv)                              The Escrow Agreement, duly executed by
Sellers;

 

(v)                                 a bill of sale (the “Non-Vehicles Bill of
Sale”) and duly executed by the applicable Sellers, transferring the Tangible
Personal Property (excluding the Vehicles) included in the Purchased Assets to
Buyer;

 

(vi)                              a bill of sale (the “Vehicles Bill of
Sale”) and duly executed by the applicable Sellers, transferring the Vehicles
included in the Purchased Assets to Buyer;

 

(vii)                           an assignment and assumption agreement (the
“Assignment and Assumption Agreement”) and duly executed by Sellers, effecting
the assignment to and assumption by Buyer of the Purchased Assets and the
Assumed Liabilities;

 

(viii)                        [intentionally omitted]

 

(ix)                              with respect to each parcel of Transferred
Real Property, a special warranty deed in form and substance satisfactory to
Buyer (each, a “Deed”) and duly executed and notarized by each Seller;

 

(x)                                 with respect to the Transferred Water
Rights, a special warranty deed in form and substance satisfactory to Buyer
(each, a “Water Rights Deed”) and duly executed and notarized by each Seller;

 

(xi)                              with respect to the Ground Lease by and among
Hourglass Sands, LLC, Continental and TMC dated April 13, 2018, (i) an
Assignment and Assumption of Third Party Lease in form and substance
satisfactory to Buyer (the “Assignment and Assumption of

 

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Hourglass Sands Lease”) and duly executed by Seller, and (ii) an estoppel
certificate with respect to such Third Party Lease;

 

(xii)                           all necessary certificates of titles duly
endorsed for transfer together with any required affidavits and other
documentation necessary for the transfer of title from the applicable Sellers to
Buyer of each Vehicle, including mixer trucks and haulers, included in the
Purchased Assets;

 

(xiii)                        the Water Lease, duly executed by TMC and Castle;

 

(xiv)                       the Assignment and Assumption of Augmentation Plan,
duly executed by Sellers;

 

(xv)                          a FIRPTA Certificate, executed by each Seller;

 

(xvi)                       such other customary instruments of transfer,
assumption, filings or documents, in form and substance reasonably satisfactory
to Buyer, as may be required to give effect to this Agreement;

 

(xvii)                    such owner’s or other affidavits regarding title to
the Transferred Real Property as reasonably requested by Buyer or reasonably
required to obtain owner title insurance policies and endorsements with respect
to the Transferred Real Property;

 

(xviii)                 documentation to confirm that each Seller that had
operations in Colorado, prior to Closing, filed Colorado Form DR 0096, Request
for Tax Status Letter, for all applicable taxes;

 

(xix)                       the Transition Services Agreement, duly executed by
Sellers;

 

(xx)                          the Colocation Services Agreement, duly executed
by the Sellers party thereto; and

 

(xxi)                       the FMIC Shares Agreement, duly executed by Sellers.

 

(b)                                                                                
At the Closing, Buyer hereby delivers to Sellers the following:

 

(i)                                     Buyer will pay to Sellers the amount the
Purchase Price less (x) the Indemnification Escrow Amount ($1,250,000), less
(y) $789,814 paid into escrow at First American Title as provided in
Section 5.14 with respect to the Costilla property, and less (z)  payoff amounts
to pay in full all secured lenders and lien holders (if any), in each case with
respect to the Purchased Assets other than CIBC (from whom an appropriate lien
release shall be obtained) by wire transfer of immediately available funds to an
account designated in writing by Sellers to Buyer (the sum of the foregoing
amounts is the Purchase Price for the Purchased Assets) provided that the
operating leases listed on Section 1.01(c) of the Disclosure Schedules are
assumed by Buyer and will not be paid off at Closing;

 

(ii)                                  the Escrow Agreement duly executed by
Buyer;

 

(iii)                               the Assignment and Assumption Agreement duly
executed by Buyer;

 

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(iv)                              the Assignment and Assumption of Hourglass
Sands Lease, duly executed by Buyer;

 

(v)                                 the Transition Services Agreement, duly
executed by Buyer;

 

(vi)                              the Costilla Lease Agreement duly executed by
Buyer;

 

(vii)                           the First American Title Company Escrow
Agreement duly executed by Buyer;

 

(viii)                        the Water Lease, duly executed by Buyer;

 

(ix)                              the Assignment and Assumption of Augmentation
Plan, duly executed by Buyer;

 

(x)                                 the Colocation Services Agreement, duly
executed by Buyer; and

 

(xi)                              the FMIC Shares Agreement, duly executed by
Buyer.

 

(c)                                                                                 
At the Closing, Buyer shall deliver to the Escrow Agent:

 

(i)                                     the Indemnification Escrow Amount (such
amount, including any interest or other amounts earned thereon and less any
disbursements therefrom in accordance with the Escrow Agreement, the
“Indemnification Escrow Fund”) by wire transfer of immediately available funds
to accounts designated by the Escrow Agent, to be held for the purpose of
securing the indemnification obligations of Seller set forth in Article VI and
the obligations of Sellers in Section 1.06(b)(vi); and

 

(ii)                                  the Escrow Agreement.

 

(d)                                                                                
At the Closing, Buyer shall pay, out of the Purchase Price, any payoff amounts
to pay in full all secured lenders, lien holders, and mortgage holders (if any)
with respect to the Purchased Assets other than CIBC, which payoff amounts shall
be paid directly to such lenders.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS

 

Except as set forth in the correspondingly numbered Section of the Disclosure
Schedules, each Seller, jointly and severally, represents and warrants to Buyer
that the statements contained in this Article III are true and correct as of the
date hereof.

 

Section 3.01                            Organization and Qualification of
Sellers. Each Seller is a corporation duly organized, validly existing and in
good standing under the Laws of the state of Colorado or Delaware, as
applicable, and has corporate power and authority to own, operate or lease the
properties and assets now owned, operated or leased by it and to carry on the
Purchased Business as currently conducted. Section 3.01 of the Disclosure
Schedules sets forth each jurisdiction in which any Seller is licensed or
qualified to do business in connection with the ownership of the Purchased
Assets or the conduct of the Purchased Business, and each Seller is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the ownership of

 

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the Purchased Assets or the operation of the Purchased Business as currently
conducted makes such licensing or qualification necessary.

 

Section 3.02                            Authority of Sellers. Each Seller has
full corporate company power and authority to enter into this Agreement and the
Ancillary Documents to which each such Seller is a party, to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by each Seller of
this Agreement and any Ancillary Document to which a Seller is a party, the
performance by each such Seller of its obligations hereunder and thereunder and
the consummation by each Seller of the transactions contemplated hereby and
thereby have been duly authorized by all requisite action on the part of each
Seller. This Agreement has been duly executed and delivered by each Seller, and
(assuming due authorization, execution and delivery by Buyer) this Agreement
constitutes a legal, valid and binding obligation of each Seller enforceable
against each Seller in accordance with its terms. When each Ancillary Document
to which a Seller is or will be a party has been duly executed and delivered by
a Seller (assuming due authorization, execution and delivery by each other party
thereto), such Ancillary Document will constitute a legal and binding obligation
of such Seller enforceable against it in accordance with its terms.

 

Section 3.03                            No Conflicts; Consents. The execution,
delivery and performance by a Seller of this Agreement and the Ancillary
Documents to which it is a party, and the consummation of the transactions
contemplated hereby and thereby, do not and will not: (a) conflict with or
result in a violation or breach of, or default under, any provision of the
articles of organization, limited liability company agreement or other
organizational documents of any Seller; (b) conflict with or result in a
violation or breach of any provision of any Law or Governmental Order applicable
to a Seller, the Purchased Business or the Purchased Assets; (c) except as set
forth in Section 3.03 of the Disclosure Schedules, require the consent, notice
or other action by any Person under, conflict with, result in a violation or
breach of, constitute a default or an event that, with or without notice or
lapse of time or both, would constitute a default under, result in the
acceleration of or create in any party the right to accelerate, terminate,
modify or cancel any Contract or Permit to which a Seller is a party or by which
a Seller or the Purchased Business is bound or to which any of the Purchased
Assets are subject (including any Assigned Contract); or (d) result in the
creation or imposition of any Encumbrance other than Permitted Encumbrances on
the Purchased Assets. No consent, approval, Permit, Governmental Order,
declaration or filing with, or notice to, any Governmental Authority is required
by or with respect to Sellers in connection with the execution and delivery of
this Agreement or any of the Ancillary Documents and the consummation of the
transactions contemplated hereby and thereby.

 

Section 3.04                            Financial Statements. Complete copies of
the internally prepared financial statements consisting of the balance sheet of
the Purchased Business as at December 31 in each of the years 2017 and 2016 and
the related statements of income and retained earnings, owners’ equity and cash
flow for the years then ended (the “Annual Financial Statements”), and
internally prepared financial statements consisting of the balance sheet of the
Purchased Business as at November 30, 2018 and the related statements of income
for the eleven (11) month period then ended (the “Interim Financial Statements”
and together with the Annual Financial Statements, the “Financial
Statements”) have been delivered to Buyer. The Financial Statements have been
prepared on a consistent basis throughout the respective periods involved,
subject, in the case of the Interim Financial Statements, to normal year-end
adjustments (that, if presented, would not differ materially from those
presented in the Annual Financial Statements).

 

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The Financial Statements are based on the books and records of the Purchased
Business, and fairly present in all material respects the financial condition of
the Purchased Business as of the respective dates they were prepared and the
results of the operations of the Purchased Business for the periods indicated.
The balance sheet of the Purchased Business as of December 31, 2017 is referred
to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet
Date” and the balance sheet of the Purchased Business as of November 30, 2018 is
referred to herein as the “Interim Balance Sheet” and the date thereof as the
“Interim Balance Sheet Date”. Each Seller maintains a standard system of
accounting for the Purchased Business established and administered in accordance
with GAAP.

 

Section 3.05                            Undisclosed Liabilities. Sellers have no
Liabilities with respect to the Purchased Business or the Owned Real Property of
the nature required to be disclosed in a Balance Sheet prepared in accordance
with GAAP, except (a) those which are adequately reflected or reserved against
in the Balance Sheet as of the Balance Sheet Date, and (b) those which have been
incurred in the ordinary course of business consistent with past practice since
the Balance Sheet Date and which are not, individually or in the aggregate,
material in amount.

 

Section 3.06                            Absence of Certain Changes, Events and
Conditions. Since December 31, 2017, and other than as described in Section 3.06
of the Disclosure Schedules or in the ordinary course of business consistent
with past practice, there has not been any:

 

(a)                                 event, occurrence or development that has
had, or could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect;

 

(b)                                 declaration or payment of any dividends or
distributions on or in respect of any of Sellers’ equity or redemption, purchase
or acquisition of Sellers’ outstanding equity;

 

(c)                                  material change in any method of accounting
or accounting practice for the Purchased Business, except as required by GAAP or
as disclosed in the notes to the Financial Statements;

 

(d)                                 material change in cash management practices
and policies, practices and procedures with respect to collection of Accounts
Receivable, establishment of reserves for uncollectible Accounts Receivable,
accrual of Accounts Receivable, inventory control, prepayment of expenses,
payment of trade accounts payable, accrual of other expenses, deferral of
revenue and acceptance of customer deposits;

 

(e)                                  entry into any Contract that would
constitute a Material Contract;

 

(f)                                   incurrence, assumption or guarantee of any
indebtedness for borrowed money in connection with the Purchased Business except
unsecured current obligations and Liabilities incurred in the ordinary course of
business consistent with past practice;

 

(g)                                  transfer, assignment, sale or other
disposition of any of the Purchased Assets shown or reflected in the Balance
Sheet, except for the sale of Inventory in the ordinary course of business;

 

(h)                                 cancellation of any debts or claims or
amendment, termination or waiver of any rights constituting Purchased Assets;

 

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(i)                                     transfer or assignment of or grant of
any license or sublicense under or with respect to any material Intellectual
Property Assets or Intellectual Property Agreements (except non-exclusive
licenses or sublicenses granted in the ordinary course of business consistent
with past practice);

 

(j)                                    abandonment or lapse of or failure to
maintain in full force and effect any material Intellectual Property
Registration, or failure to take or maintain reasonable measures to protect the
confidentiality or value of any material Trade Secrets included in the
Intellectual Property Assets;

 

(k)                                 material damage, destruction or loss, or any
material interruption in use, of any Purchased Assets, whether or not covered by
insurance;

 

(l)                                     acceleration, termination, material
modification to or cancellation of any Assigned Contract or Permit;

 

(m)                             material capital expenditures which would
constitute an Assumed Liability;

 

(n)                                 imposition of any Encumbrance upon any of
the Purchased Assets;

 

(o)                                 (i) grant of any bonuses, whether monetary
or otherwise, or increase in any wages, salary, severance, pension or other
compensation or benefits in respect of any current or former employees,
officers, directors, independent contractors or consultants of the Purchased
Business, other than as provided for in any written agreements or required by
applicable Law, (ii) change in the terms of employment for any employee of the
Purchased Business or any termination of any employees for which the aggregate
costs and expenses exceed $50,000 or (iii) action to accelerate the vesting or
payment of any compensation or benefit for any current or former employee,
officer, director, consultant or independent contractor of the Purchased
Business;

 

(p)                                 hiring or promoting any person as or to (as
the case may be)  an officer or manager position;

 

(q)                                 adoption, modification or termination of
any: (i) employment, severance, retention or other agreement with any current or
former employee, officer, director, independent contractor or consultant of the
Purchased Business, (ii) Benefit Plan, or (iii) collective bargaining or other
agreement with a Union, in each case whether written or oral;

 

(r)                                    any loan to (or forgiveness of any loan
to), or entry into any other transaction with, any current or former directors,
officers or employees of the Purchased Business;

 

(s)                                   adoption of any plan of merger,
consolidation, reorganization, liquidation or dissolution or filing of a
petition in bankruptcy under any provisions of federal or state bankruptcy Law
or consent to the filing of any bankruptcy petition against it under any similar
Law;

 

(t)                                    purchase, lease or other acquisition of
the right to own, use or lease any property or assets in connection with the
Purchased Business for an amount in excess of

 

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$25,000, individually (in the case of a lease, per annum) or $50,000 in the
aggregate (in the case of a lease, for the entire term of the lease, not
including any option term), except for purchases of Inventory or supplies in the
ordinary course of business consistent with past practice; or

 

(u)                                 any Contract to do any of the foregoing, or
any action or omission that would result in any of the foregoing.

 

Section 3.07                            Material Contracts.

 

(a)                                 Section 3.07(a) of the Disclosure Schedules
lists each of the following Contracts (x) by which any of the Purchased Assets
are bound or affected or (y) to which a Seller is a party or by which it is
bound in connection with the Purchased Business or the Purchased Assets (such
Contracts, together with all Contracts concerning the occupancy, management or
operation of any Transferred Real Property (including without limitation,
brokerage contracts) listed and all Intellectual Property Agreements set forth
in Section 3.11(b) of the Disclosure Schedules, being “Material Contracts”):

 

(i)                                     all Contracts involving aggregate
consideration in excess of $25,000 and which, in each case, cannot be cancelled
without penalty or without more than ninety (90) days’ notice;

 

(ii)                                  all Contracts that require Sellers to
purchase or sell a stated portion of the requirements or outputs of the
Purchased Business or that contain “take or pay” provisions;

 

(iii)                               all Contracts that provide for the
indemnification of any Person or the assumption of any Tax, environmental or
other Liability of any Person;

 

(iv)                              all Contracts that relate to the acquisition
or disposition of any business, a material amount of stock or assets of any
other Person or any real property or water rights (whether by merger, sale of
stock, sale of assets or otherwise);

 

(v)                                 all broker, distributor, dealer,
manufacturer’s representative, franchise, agency, sales promotion, market
research, marketing consulting and advertising Contracts;

 

(vi)                              all employment agreements and Contracts with
independent contractors or consultants (or similar arrangements) and which are
not cancellable without material penalty or without more than ninety (90) days’
notice;

 

(vii)                           except for Contracts relating to trade
receivables, all Contracts relating to indebtedness (including, without
limitation, guarantees);

 

(viii)                        all Contracts with any Governmental Authority
(“Government Contracts”);

 

(ix)                              all Contracts that limit or purport to limit
the ability of Sellers to compete in any line of business or with any Person or
in any geographic area or during any period of time;

 

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(x)                                 all joint venture, partnership or similar
Contracts;

 

(xi)                              all Contracts for the sale of any of the
Purchased Assets or for the grant to any Person of any option, right of first
refusal or preferential or similar right to purchase any of the Purchased
Assets; and

 

(xii)                           all powers of attorney with respect to the
Purchased Business or any Purchased Asset.

 

(xiii)                        all other Contracts that are material to the
Purchased Assets or the operation of the Purchased Business and not previously
disclosed pursuant to this Section 3.07.

 

(b)                                 Each Material Contract is valid and binding
on each Seller in accordance with its terms and is in full force and effect. No
applicable Seller or, to Sellers’ Knowledge, any other party thereto is in
breach of or default under (or is alleged to be in breach of or default
under) in any material respect, or has provided or received any notice of any
intention to terminate, any Material Contract. No event or circumstance has
occurred that, with notice or lapse of time or both, would reasonably be
expected to constitute an event of default under any Material Contract or result
in a termination thereof or to cause or permit the acceleration or other changes
of any right or obligation or the loss of any benefit thereunder. Complete and
correct copies of each Material Contract (including all modifications,
amendments and supplements thereto and waivers thereunder) have been made
available to Buyer. There are no material disputes pending or threatened under
any Contract included in the Purchased Assets.

 

(c)                                  No Seller is a party to or bound by any
long-term supply agreement obligating it to purchase aggregates, sand, cement or
other raw materials which cannot be cancelled without penalty or involving total
consideration of more than $100,000.

 

Section 3.08                            Title to Purchased Assets. One or more
of the Sellers have good and valid title to, or a valid leasehold interest in,
all of the Purchased Assets. All such Purchased Assets (including leasehold
interests) are free and clear of Encumbrances except for the following
(collectively referred to as “Permitted Encumbrances”):

 

(a)                                 those items set forth in Section 3.08 of the
Disclosure Schedules;

 

(b)                                 liens for Taxes not yet due and payable;

 

(c)                                  mechanics’, carriers’, workmen’s,
repairmen’s or other like liens arising or incurred in the ordinary course of
business consistent with past practice or amounts that are not delinquent and
which are not, individually or in the aggregate, material to the Purchased
Business or the Purchased Assets;

 

(d)                                 easements, rights of way, zoning ordinances
and other similar encumbrances affecting Transferred Real Property which are
not, individually or in the aggregate, material to the Purchased Business or the
Purchased Assets, which do not prohibit or interfere with the current operation
of any Transferred Real Property and which do not render title to any
Transferred Real Property unmarketable; or

 

(e)                                  other than with respect to Transferred Real
Property, liens arising under original purchase price conditional sales
contracts and equipment leases with third parties

 

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entered into in the ordinary course of business consistent with past practice
which are not, individually or in the aggregate, material to the Purchased
Business or the Purchased Assets.

 

Section 3.09                            Condition of Assets. Except as set forth
on Section 3.09 of the Disclosure Schedules, the buildings, plants, structures,
furniture, fixtures, mechanical systems, electrical and plumbing systems,
machinery, equipment, Vehicles and other items of tangible personal property
included in the Purchased Assets which are material for and currently used in
the conduct of the Purchased Business are in operable condition and repair
(subject to failures and interruptions in the ordinary course of the Purchased
Business, ordinary wear and tear, depreciation, obsolescence and requirements
for regular maintenance), and such buildings, plants, structures, furniture,
fixtures, mechanical systems, electrical and plumbing systems, machinery,
equipment, Vehicles and other items of tangible personal property do not
require, in the aggregate, extraordinary maintenance or repairs in order to
continue the conduct of the Purchased Business after the Closing in
substantially the same manner as conducted prior to the Closing, except for
cures or repairs of failures and interruptions that are not, in the aggregate,
material in nature or cost, replacement in the ordinary course of depreciated
assets, replacement of any obsolete assets, and ordinary service, maintenance
and repairs.

 

Section 3.10                            Real Property.

 

(a)                                 Annex B and Annex C set forth each parcel of
real property owned by a Seller and used in or necessary for the conduct of the
Purchased Business as currently conducted (together with all buildings,
fixtures, structures and improvements situated thereon and all easements,
rights-of-way and other rights and privileges appurtenant thereto, including,
with respect to each property, the address location and use.) With respect to
each parcel of Transferred Real Property:

 

(i)                                     Each Seller has good and marketable fee
simple title, free and clear of all Encumbrances, except (A) Permitted
Encumbrances and (B) those Encumbrances set forth on Section 3.10(a)(i) of the
Disclosure Schedules;

 

(ii)                                  except as set forth on
Section 3.10(a)(ii) of the Disclosure Schedules, each Seller has not leased or
otherwise granted to any Person the right to use or occupy such Transferred Real
Property or any portion thereof (a “Third Party Lease”); and

 

(iii)                               there are no unrecorded outstanding options,
rights of first offer or rights of first refusal to purchase such Transferred
Real Property or any portion thereof or interest therein.

 

(b)                                 Sellers do not lease any real property for
the conduct of the Purchased Business as currently.

 

(c)                                  Section 3.10(c) of the Disclosure Schedules
contains a true, correct and complete list of all deeds, Permits, and other
documents that evidence the title to the Transferred Water Rights, or which set
forth contractual rights and obligations of the Transferred Water Rights, and,
except as set forth in Section 3.10(c) of the Disclosure Schedules, each Seller
has provided or made available to Buyer a true and correct copy of all such
documents. Each of the Sellers have good and marketable title the Transferred
Water Rights, free and clear of all Liens, other than Permitted Encumbrances and
other than as listed on Section 3.10(c). The water supplies legally and
physically available to the Sellers under the

 

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Transferred Water Rights are, as such Transferred Water Rights have historically
been administered by the applicable Governmental Authorities and together with
the water leased pursuant to the Water Lease, sufficient for the commercial and
industrial activities of the Purchased Business as they are currently
conducted.  During the three (3) years prior to the date of this Agreement, none
of the Sellers have received any written notice of any pending or threatened
claim alleging abandonment, forfeiture, curtailment, or cancellation of, or
affecting title to, any of the Transferred Water Rights.

 

(d)                                 The Sellers have not received any written
notice of (i)  material violations of building codes and/or zoning ordinances or
other governmental or regulatory Laws affecting the Transferred Real Property or
Transferred Water Rights, (ii) existing, pending or threatened condemnation
proceedings affecting the Transferred Real Property or Transferred Water Rights,
or (iii) existing, pending or threatened zoning, building code or other
moratorium proceedings, or similar matters which could reasonably be expected to
materially and adversely affect the ability to operate the Transferred Real
Property as currently operated or Transferred Water Rights as they have
historically been administered by the applicable Governmental Authorities.

 

(e)                                  Except as set forth in Section 3.10(e) of
the Disclosure Schedules, the Transferred Real Property is sufficient for the
continued conduct of the Purchased Business after the Closing in substantially
the same manner as conducted prior to the Closing and constitutes all of the
real property to conduct the Purchased Business as currently conducted.

 

(f)                                   Section 3.10(f) of the Disclosure
Schedules lists (a) all reclamation permits, amendments, revisions, agreements,
orders or other contractual obligations that establish the reclamation
obligations with respect to the Daniels Sand property, and (b) all
correspondence, notices or other written communications received from the
Colorado Division of Reclamation, Mining & Safety regarding the Daniels Sand
property since January 1, 2008.

 

Section 3.11                            Intellectual Property.

 

(a)                                 Section 3.11(a) of the Disclosure Schedules
contains a correct, current and complete list of: (i) all Intellectual Property
Registrations, (ii) all unregistered Trademarks included in the Intellectual
Property Assets; and (iii) all other Intellectual Property Assets that are used
in the conduct of the Purchased Business as currently conducted.

 

(b)                                 Section 3.11(b) of the Disclosure Schedules
contains a correct, current and complete list of all Intellectual Property
Agreements other than ‘shrink wrap’ or ‘click wrap’ licenses for commercially
available software. Each Seller has provided Buyer with true and complete copies
(or in the case of any oral agreements, a complete and correct written
description) of all such Intellectual Property Agreements, including all
modifications, amendments and supplements thereto and waivers thereunder. Each
Intellectual Property Agreement is valid and binding on a Seller in accordance
with its terms and is in full force and effect. Sellers nor any other party
thereto is, or is alleged to be, in breach of or default under, or has provided
or received any notice of breach of, default under, or intention to terminate
(including by non-renewal), any Intellectual Property Agreement.

 

(c)                                  Each Seller is the sole and exclusive legal
and beneficial owner of all right, title and interest in and to the Intellectual
Property Assets, and has the valid and enforceable right to use all other
Intellectual Property used in or necessary for the conduct of

 

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the Purchased Business as currently conducted, in each case, free and clear of
Encumbrances other than Permitted Encumbrances.

 

(d)                                 Neither the execution, delivery or
performance of this Agreement, nor the consummation of the transactions
contemplated hereunder, will result in the loss or impairment of or payment of
any additional amounts with respect to, nor require the consent of any other
Person in respect of, the Buyer’s right to own or use any Intellectual Property
Assets or any Intellectual Property subject to any Intellectual Property
Agreement.

 

(e)                                  All of the Intellectual Property Assets are
valid and enforceable, and all Intellectual Property Registrations are
subsisting and in full force and effect. Each Seller has taken all reasonable
and necessary steps to maintain and enforce the Intellectual Property Assets and
to preserve the confidentiality of all Trade Secrets included in the
Intellectual Property Assets, including by requiring all Persons having access
thereto to execute binding, written non-disclosure agreements.

 

(f)                                   There are no Actions: (i) alleging any
infringement, misappropriation, or other violation of the Intellectual Property
of any Person by a Seller in the conduct of the Purchased Business;
(ii) challenging the validity, enforceability, registrability, patentability, or
ownership of any Intellectual Property Assets; or (iii) by a Seller or any other
Person alleging any infringement, misappropriation, or violation by any Person
of any Intellectual Property Assets. Sellers are not aware of any facts or
circumstances that could reasonably be expected to give rise to any such Action.

 

Section 3.12                            Inventory. All Inventory, whether or not
reflected in the Balance Sheet, consists of a quality and quantity usable and
salable in the ordinary course of business consistent with past practice, except
for obsolete, damaged, defective or slow-moving items that have been written off
or written down to fair market value or for which adequate reserves have been
established. All Inventory is owned by a Seller free and clear of all
Encumbrances, and no Inventory is held on a consignment basis. The quantities of
each item of Inventory (whether raw materials, work-in-process or finished
goods) are not excessive, but are reasonable in the present circumstances of a
Seller.

 

Section 3.13                            Accounts Receivable. The Accounts
Receivable reflected as outstanding on December 31, 2018 on Section 1.06 of the
Disclosure Schedules and the Accounts Receivable arising after the date thereof
(a) have arisen from bona fide transactions entered into by a Seller involving
the sale of goods or the rendering of services in the ordinary course of
business consistent with past practice; and (b) constitute only valid,
undisputed claims of a Seller not subject to claims of set-off or other defenses
or counterclaims other than normal cash discounts accrued in the ordinary course
of business consistent with past practice. The reserve for bad debts as of
December 31, 2018 reflected on Section 1.06  of the Disclosure Schedules or,
with respect to Accounts Receivable arising after the date thereof, on the
accounting records of the Sellers is reasonable, subject to normal year-end
adjustments.

 

Section 3.14                            Customers and Suppliers.

 

(a)                                 Section 3.14(a) of the Disclosure Schedules
sets forth with respect to the Purchased Business (i) the top ten (10) customers
during the eleven (11)-month period ending November 30, 2018, and the twelve
(12)-month period ending December 31, 2017 (collectively, the “Material
Customers”); and (ii) the amount of consideration paid by each

 

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Material Customer during such period. Except as set forth in Section 3.14(a) of
the Disclosure Schedules, Sellers have not received any notice, and has no
reason to believe, that any of the Material Customers has ceased, or intends to
cease after the Closing, to use the goods or services of the Purchased Business
or to otherwise terminate or materially reduce its relationship with the
Purchased Business.

 

(b)                                 Section 3.14(b) of the Disclosure Schedules
sets forth with respect to the Purchased Business (i) the top ten (10) suppliers
during the eleven (11)-month period ending November 30, 2018, and the twelve
(12)-month period ending December 31, 2017 (collectively, the “Material
Suppliers”); and (ii) the amount of purchases from each Material Supplier during
such periods. Except as set forth in Section 3.14(b) of the Disclosure
Schedules, Sellers have not received any notice, and has no reason to believe,
that any of the Material Suppliers has ceased, or intends to cease, to supply
goods or services to the Business or to otherwise terminate or materially reduce
its relationship with the Purchased Business.

 

Section 3.15                            Insurance. Section 3.15 of the
Disclosure Schedules sets forth (a) a true and complete list of all current
policies or binders of fire, liability, product liability, umbrella liability,
real and personal property, workers’ compensation, vehicular, fiduciary
liability and other casualty and property insurance maintained by a Seller or
its Affiliates and relating to the Purchased Business, the Purchased Assets or
the Assumed Liabilities (collectively, the “Insurance Policies”); and (b) with
respect to the Purchased Business, the Purchased Assets or the Assumed
Liabilities, a list of all pending claims and the claims history for each Seller
since September 1, 2015. Except as set forth on Section 3.15 of the Disclosure
Schedules, there are no claims related to the Purchased Business, the Purchased
Assets or the Assumed Liabilities pending under any such Insurance Policies as
to which coverage has been questioned, denied or disputed or in respect of which
there is an outstanding reservation of rights. Neither Sellers nor any of their
Affiliates has received any written notice of cancellation of, premium increase
with respect to, or alteration of coverage under, any of such Insurance
Policies. All premiums due on such Insurance Policies have either been paid or,
if not yet due, accrued. All such Insurance Policies (a) are in full force and
effect and enforceable in accordance with their terms; (b) are provided by
carriers who are financially solvent; and (c) have not been subject to any lapse
in coverage. None of Sellers or any of their Affiliates is in default under, or
has otherwise failed to comply with, in any material respect, any provision
contained in any such Insurance Policy. True and complete copies of the
Insurance Policies have been made available to Buyer.

 

Section 3.16                            Legal Proceedings; Governmental Orders.

 

(a)                                 Except as set forth in Section 3.16(a) of
the Disclosure Schedules, there are no Actions pending or, to a Seller’s
Knowledge, threatened against or by a Seller in excess of $30,000 (a) relating
to or affecting the Purchased Business, the Purchased Assets or the Assumed
Liabilities; or (b) that challenge or seek to prevent, enjoin or otherwise delay
the transactions contemplated by this Agreement. No event has occurred or
circumstances exist that may give rise to, or serve as a basis for, any such
Action.

 

(b)                                 Except as set forth in Section 3.16(b) of
the Disclosure Schedules, there are no outstanding Governmental Orders and no
unsatisfied judgments, penalties or awards against, relating to or affecting the
Purchased Business. Each Seller is in compliance, in all material respects, with
the terms of each Governmental Order set forth in Section 3.16(b) of the
Disclosure Schedules. No event has occurred or circumstances exist that may
constitute or result in (with or without notice or lapse of time) a violation of
any such Governmental Order.

 

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(c)                                  The Valco Litigation does not in any way
affect or encumber any of the Purchased Assets or the Purchased Business and
Valco and its affiliates have no contractual rights and no rights resulting from
any judicial action or decree with respect to the Purchased Assets or the
Purchased Business.

 

Section 3.17                            Compliance With Laws; Permits.

 

(a)                                 Except as set forth in Section 3.17(a) of
the Disclosure Schedules, each Seller has complied for the past three (3) years,
and is now complying, in all material respects with all Laws applicable to the
conduct of the Purchased Business as currently conducted or the ownership and
use of the Purchased Assets.

 

(b)                                 All material Permits required for each
Seller to conduct the Purchased Business as currently conducted or for the
ownership and use of the Purchased Assets have been obtained by a Seller and are
valid and in full force and effect. All fees and charges with respect to such
Permits as of the date hereof have been paid in full.  Section 3.17(b) of the
Disclosure Schedules lists all current material Permits issued to each Seller
which are related to the conduct of the Purchased Business as currently
conducted or the ownership and use of the Purchased Assets, including the names
of the Permits and their respective dates of issuance and expiration. Except for
the transactions contemplated by this Agreement or as set forth in
Section 3.17(b) of the Disclosure Schedules, no event has occurred that, with or
without notice or lapse of time or both, would reasonably be expected to result
in the revocation, suspension, lapse or limitation of any Permit set forth in
Section 3.17(b) of the Disclosure Schedules.

 

(c)                                  Schedule 3.17(c) of the Disclosure
Schedules describes the Surety Arrangements maintained by Sellers with respect
to the Purchased Business (“Sellers Reclamation Sureties”).  The Governmental
Authorities have not called on these Sellers Reclamation Sureties.

 

Section 3.18                            Environmental Matters.

 

(a)                                 The operations of each Seller with respect
to the Purchased Business and the Purchased Assets are currently and have been
in compliance in all material respects with all applicable Environmental Laws.
Sellers have not received from any Person, with respect to the Business or the
Purchased Assets, any: (i) Environmental Notice or Environmental Claim; or
(ii) written request for information pursuant to Environmental Law, which, in
each case, either remains pending or unresolved, or is the source of ongoing
obligations or requirements as of the Closing Date.

 

(b)                                 Each Seller has obtained and is in material
compliance with all applicable Environmental Permits (each of which is disclosed
in Section 3.18(b) of the Disclosure Schedules) necessary for the conduct of the
Purchased Business as currently conducted or the ownership, lease, operation or
use of the Purchased Assets and all such Environmental Permits are in full force
and effect and shall be maintained in full force and effect by a Seller through
the Closing Date in accordance with Environmental Law, and Sellers are not aware
of any condition, event or circumstance that might prevent or impede, after the
Closing Date, the conduct of the Purchased Business as currently conducted or
the ownership, lease, operation or use of the Purchased Assets. With respect to
any such Environmental Permits, each Seller has undertaken, or will undertake
prior to the Closing Date, all measures necessary to facilitate transferability
of the same, and Sellers are not aware of any condition,

 

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event or circumstance that might prevent or impede the transferability of the
same, and nor has received any Environmental Notice or written communication
regarding any material adverse change in the status or terms and conditions of
the same.

 

(c)                                  None of the Purchased Business or the
Purchased Assets or any real property currently or formerly owned, leased or
operated by Sellers in connection with the Purchased Business is listed on, or
has been proposed for listing on, the National Priorities List (or
CERCLIS) under CERCLA, or any similar state list.

 

(d)                                 There has been no Release of Hazardous
Materials with respect to the Purchased Business or the Purchased Assets or any
real property currently or formerly owned, leased or operated by a Seller in
connection with the Purchased Business, and none of the Sellers have received an
Environmental Notice that any of the Purchased Business or the Purchased Assets
(including soils, groundwater, surface water, Buildings and other structure
located thereon) has been contaminated with any Hazardous Material.

 

(e)                                  Section 3.18(e) of the Disclosure Schedules
contains a complete and accurate list of all active or abandoned aboveground or
underground storage tanks owned or operated by a Seller in connection with the
Purchased Business or the Purchased Assets.

 

(f)                                   Sellers have not retained or assumed, by
contract or operation of Law, any liabilities or obligations of third parties
under Environmental Law.

 

(g)                                  Each Seller has provided or otherwise made
available to Buyer and listed in Section 3.18(g) of the Disclosure Schedules:
(i) any and all environmental reports, studies, audits, records, sampling data,
site assessments, risk assessments, economic models and other similar documents
with respect to the Purchased Business or the Purchased Assets which are in the
possession or control of a Seller related to compliance with Environmental Laws,
Environmental Claims or an Environmental Notice or the Release of Hazardous
Materials; and (ii) any and all material documents concerning planned or
anticipated capital expenditures required to reduce, offset, limit or otherwise
control pollution and/or emissions, manage waste or otherwise ensure compliance
with current or future Environmental Laws (including, without limitation, costs
of remediation, pollution control equipment and operational changes).

 

(h)                                 Seller are not aware of, as of the Closing
Date, any condition, event or circumstance concerning the Release or regulation
of Hazardous Materials that might, after the Closing Date, prevent, impede or
materially increase the costs associated with the ownership, lease, operation,
performance or use of the Purchased Business or the Purchased Assets as
currently carried out.

 

Section 3.19                            Employee Benefit Matters.

 

(a)                                 Section 3.19(a) of the Disclosure Schedules
contains a list of each “employee benefit plan” (as defined in Section 3(3) of
ERISA, whether or not subject to ERISA), and each plan, program, policy,
practice, contract or arrangement, whether or not subject to ERISA, providing
for compensation or benefits of any kind, which is established, maintained,
administered, contributed to or required to be contributed to by a Seller for
the benefit of any current or former owner, director, officer, employee,
contractor or consultant of a Seller or any dependent or beneficiary of such
individual or for which a Seller has any

 

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liability or obligation, or under which a Seller or any of its ERISA Affiliates
has or may have any Liability, or with respect to which Buyer or any of its
Affiliates would reasonably be expected to have any Liability, contingent or
otherwise (as listed on Section 3.19(a) of the Disclosure Schedules, each, a
“Benefit Plan”).

 

(b)                                 With respect to each Benefit Plan, each
Seller has made available to Buyer accurate, current and complete copies of each
of the following: (i) where the Benefit Plan has been reduced to writing, the
plan document together with all amendments; (ii) where the Benefit Plan has not
been reduced to writing, a written summary of all material plan terms;
(iii) where applicable, copies of any trust agreements or other funding
arrangements, custodial agreements, insurance policies and contracts,
administration agreements and similar agreements, and investment management or
investment advisory agreements, now in effect or required in the future as a
result of the transactions contemplated by this Agreement or otherwise;
(iv) copies of any summary plan descriptions, summaries of material
modifications, summaries of benefits and coverage, COBRA communications,
employee handbooks and any other written communications (or a description of any
oral communications) relating to any Benefit Plan; (v) in the case of any
Benefit Plan that is intended to be qualified under Section 401(a) of the Code,
a copy of the most recent determination, opinion or advisory letter from the
Internal Revenue Service and any legal opinions issued thereafter with respect
to such Benefit Plan’s continued qualification; (vi) in the case of any Benefit
Plan for which a Form 5500 must be filed, a copy of the two (2) most recently
filed Forms 5500, with all corresponding schedules and financial statements
attached; (vii) actuarial valuations and reports related to any Benefit Plan
with respect to the most recently completed plan years; (viii) the most recent
nondiscrimination tests performed under the Code; and (ix) copies of material
notices, letters or other correspondence from the Internal Revenue Service,
Department of Labor, Department of Health and Human Services, Pension Benefit
Guaranty Corporation or other Governmental Authority relating to the Benefit
Plans.

 

(c)                                  Except as set forth in Section 3.19(b) of
the Disclosure Schedules, each Benefit Plan and any related trust has been
established, administered and maintained in accordance with its terms and in
compliance with all applicable Laws (including ERISA, the Code and any
applicable local Laws). Each Benefit Plan that is intended to be qualified
within the meaning of Section 401(a) of the Code (a “Qualified Benefit Plan”) is
so qualified and has received a current favorable determination letter from the
Internal Revenue Service, or with respect to a prototype or volume submitter
plan, can rely on an opinion letter from the Internal Revenue Service to the
prototype plan or volume submitter plan sponsor, to the effect that such
Qualified Benefit Plan is so qualified and that the plan and the trust related
thereto are exempt from federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, and nothing has occurred that could reasonably be
expected to adversely affect the qualified status of any Qualified Benefit Plan.
Nothing has occurred with respect to any Benefit Plan that has subjected or
could reasonably be expected to subject a Seller or any of its ERISA Affiliates
or, with respect to any period on or after the Closing Date, Buyer or any of its
Affiliates, to a penalty under Section 502 of ERISA or to tax or penalty under
Sections 4975 or 4980H of the Code.

 

(d)                                 No pension plan which is subject to minimum
funding requirements, including any multiple employer plan in which employees of
the Purchased Business or any ERISA Affiliate participate or have participated
has an “accumulated funding deficiency,” whether or not waived, or is subject to
a lien for unpaid contributions under Section 303(k) of

 

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ERISA or Section 430(k) of the Code. All benefits, contributions and premiums
relating to each Benefit Plan have been timely paid in accordance with the terms
of such Benefit Plan and all applicable Laws and accounting principles, and all
benefits accrued under any unfunded Benefit Plan have been paid, accrued or
otherwise adequately reserved.

 

(e)                                  Neither Sellers nor any of their ERISA
Affiliates has (i) incurred or reasonably expects to incur, either directly or
indirectly, any material Liability under Title I or Title IV of ERISA or related
provisions of the Code or applicable local Law relating to employee benefit
plans; (ii) failed to timely pay premiums to the Pension Benefit Guaranty
Corporation; (iii) withdrawn from any Benefit Plan; (iv) engaged in any
transaction which would give rise to liability under Section 4069 or
Section 4212(c) of ERISA; (v) incurred taxes under Section 4971 of the Code with
respect to any Single Employer Plan; or (vi) participated in a multiple employer
welfare arrangements (MEWA).

 

(f)                                   Neither Sellers nor any ERISA Affiliate
has at any time contributed to or has any obligation to contribute to or has
incurred any liability with respect to any Benefit Plan that is a multiemployer
plan within the meaning of Section 3(37) of ERISA (each a “Multiemployer Plan”),
and no fact or event exists that would reasonably be expected to result in any
such liability.

 

(g)                                  Other than as required under Sections 601
to 608 of ERISA or other applicable Law, no Benefit Plan or other arrangement
provides post-termination or retiree health benefits to any individual for any
reason.

 

(h)                                 There is no pending or, to a Seller’s
Knowledge, threatened Action relating to a Benefit Plan (other than routine
claims for benefits), and no Benefit Plan has within the three (3) years prior
to the date hereof been the subject of an examination or audit by a Governmental
Authority or the subject of an application or filing under, or is a participant
in, an amnesty, voluntary compliance, self-correction or similar program
sponsored by any Governmental Authority.

 

(i)                                     There has been no amendment to,
announcement by a Seller or any of its Affiliates relating to, or change in
employee participation or coverage under, any Benefit Plan or collective
bargaining agreement that would increase the annual expense of maintaining such
plan above the level of the expense incurred for the most recently completed
fiscal year (other than on a de minimis basis) with respect to any director,
officer, employee, consultant or independent contractor of the Purchased
Business, as applicable. Neither Sellers nor any of their Affiliates has any
commitment or obligation or has made any representations to any director,
officer, employee, consultant or independent contractor of the Purchased
Business, whether or not legally binding, to adopt, amend, modify or terminate
any Benefit Plan or any collective bargaining agreement.

 

(j)                                    Each Benefit Plan that is subject to
Section 409A of the Code has been administered in compliance in all material
respects with its terms and the operational and documentary requirements of
Section 409A of the Code and all applicable regulatory guidance (including,
notices, rulings and proposed and final regulations) thereunder. Sellers do not
have any obligation to gross up, indemnify or otherwise reimburse any individual
for any excise taxes, interest or penalties incurred pursuant to Section 409A of
the Code.

 

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(k)                                 Except as set forth in Section 3.19(k) of
the Disclosure Schedules, neither the execution of this Agreement nor any of the
transactions contemplated by this Agreement will (either alone or upon the
occurrence of any additional or subsequent events): (i) entitle any current or
former director, officer, employee, independent contractor or consultant of the
Purchased Business to severance pay or any other payment; (ii) accelerate the
time of payment, funding or vesting, or increase the amount of compensation
(including stock-based compensation) due to any such individual; (iii) increase
the amount payable under or result in any other material obligation pursuant to
any Benefit Plan; (iv) result in “excess parachute payments” within the meaning
of Section 280G(b) of the Code; or (v) require a “gross-up” or other payment to
any “disqualified individual” within the meaning of Section 280G(c) of the Code.
Each Seller has made available to Buyer true and complete copies of any
Section 280G calculations prepared (whether or not final) with respect to any
disqualified individual in connection with the transactions.

 

Section 3.20                            Employment Matters.

 

(a)                                 Section 3.20(a) of the Disclosure Schedules
contains a list of all persons who are employees, independent contractors or
consultants of the Purchased Business as of the date hereof, including any
employee who is on a leave of absence of any nature, paid or unpaid, authorized
or unauthorized, and sets forth for each such individual the following:
(i) name; (ii) title or position (including whether full-time or part-time);
(iii) hire or retention date; (iv) current annual base compensation rate or
contract fee; (v) commission, bonus or other incentive-based compensation; and
(vi) a description of the fringe benefits provided to each such individual as of
the date hereof. Except as set forth in Section 3.20(a) of the Disclosure
Schedules, as of the date hereof, all compensation, including wages,
commissions, bonuses, fees and other compensation payable to all employees,
independent contractors or consultants of the Purchased Business for services
performed on or prior to the date hereof have been paid in full and there are no
outstanding agreements, understandings or commitments of a Seller with respect
to any compensation, commissions, bonuses or fees.

 

(b)                                 No Seller is, and has not been for the past
ten (10) years, a party to, bound by, or negotiating any collective bargaining
agreement or other Contract with a union, works council or labor organization
(collectively, “Union”), and there is not, and has not been for the past ten
(10) years, any Union representing or purporting to represent any employee of a
Seller, and, to each Seller’s Knowledge, no Union or group of employees is
seeking or has sought to organize employees for the purpose of collective
bargaining. There has never been, nor has there been any threat of, any strike,
slowdown, work stoppage, lockout, concerted refusal to work overtime or other
similar labor disruption or dispute affecting a Seller or any employees of the
Purchased Business. Sellers have no duty to bargain with any Union.

 

(c)                                  Each Seller is and has been in compliance
in all material respects with all applicable Laws pertaining to employment and
employment practices to the extent they relate to employees, consultants and
independent contractors of the Purchased Business, including all Laws relating
to labor relations, equal employment opportunities, fair employment practices,
employment discrimination, harassment, retaliation, reasonable accommodation,
disability rights or benefits, immigration, wages, hours, overtime compensation,
child labor, hiring, promotion and termination of employees, working conditions,
meal and break periods, privacy, health and safety, workers’ compensation,
leaves of absence, paid sick leave and unemployment insurance. All individuals
characterized and treated by a Seller as consultants or independent contractors
of the Purchased Business are

 

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properly treated as independent contractors under all applicable Laws. All
employees of the Purchased Business classified as exempt under the Fair Labor
Standards Act and state and local wage and hour laws are properly classified in
all material respects. Each Seller is in compliance with and has complied with
all immigration laws, including Form I-9 requirements and any applicable
mandatory E-Verify obligations. Except as set forth in Section 3.20(c), there
are no Actions against a Seller pending, or to each Seller’s Knowledge,
threatened to be brought or filed, by or with any Governmental Authority or
arbitrator in connection with the employment of any current or former applicant,
employee, consultant, or independent contractor of the Purchased Business,
including, without limitation, any charge, investigation or claim relating to
unfair labor practices, equal employment opportunities, fair employment
practices, employment discrimination, harassment, retaliation, reasonable
accommodation, disability rights or benefits, immigration, wages, hours,
overtime compensation, employee classification, child labor, hiring, promotion
and termination of employees, working conditions, meal and break periods,
privacy, health and safety, workers’ compensation, leaves of absence, paid sick
leave, unemployment insurance or any other employment related matter arising
under applicable Laws.

 

(d)                                 Each Seller has complied with the WARN Act,
and each Seller has no plans to undertake any action in the future that would
trigger the WARN Act.

 

Section 3.21                            Taxes.  Except as set forth in
Section 3.21 of the Disclosure Schedules:

 

(a)                                 All Tax Returns required to be filed by a
Seller for any Pre-Closing Tax Period have been, or will be, timely filed. Such
Tax Returns are, or will be, true, complete and correct in all material
respects. All Taxes due and owing by a Seller (whether or not shown on any Tax
Return) have been, or will be, timely paid.

 

(b)                                 Each Seller has withheld and paid each Tax
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, customer, shareholder or
other party, and complied with all information reporting and backup withholding
provisions of applicable Law.

 

(c)                                  No extensions or waivers of statutes of
limitations have been given or requested with respect to any Taxes of a Seller.

 

(d)                                 All deficiencies asserted, or assessments
made, against a Seller as a result of any examinations by any taxing authority
have been fully paid.

 

(e)                                  No Seller is a party to any Action by any
taxing authority. There are no pending or threatened Actions by any taxing
authority.

 

(f)                                   There are no Encumbrances for Taxes upon
any of the Purchased Assets and no taxing authority in the process of imposing
any Encumbrances for Taxes on any of the Purchased Assets (other than for
current Taxes not yet due and payable).

 

(a)                                 No Seller is a “foreign person” as that term
is used in Treasury Regulations Section 1.1445-2.

 

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(g)                                  No Seller is, and has not been, a party to,
or a promoter of, a “reportable transaction” within the meaning of
Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011 4(b).

 

(h)                                 None of the Purchased Assets is (i) required
to be treated as being owned by another person pursuant to the so-called “safe
harbor lease” provisions of former Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended, (ii) subject to Section 168(g)(1)(A) of the Code, or
(iii) subject to a disqualified leaseback or long-term agreement as defined in
Section 467 of the Code.

 

(i)                                     None of the Purchased Assets is
tax-exempt use property within the meaning of Section 168(h) of the Code.

 

Section 3.22                            Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated by this Agreement or any Ancillary
Document based upon arrangements made by or on behalf of a Seller, except for
fees payable to Greystone.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER

 

Except as set forth in the correspondingly numbered Section of the Disclosure
Schedules, Buyer represents and warrants to Sellers that the statements
contained in this Article IV are true and correct as of the date hereof.

 

Section 4.01                            Organization of Buyer. Buyer is a
corporation duly organized, validly existing and in good standing under the Laws
of the state of Colorado.

 

Section 4.02                            Authority of Buyer. Buyer has full
corporate power and authority to enter into this Agreement and the Ancillary
Documents to which Buyer is a party, to carry out its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by Buyer of this Agreement and any Ancillary Document
to which Buyer is a party, the performance by Buyer of its obligations hereunder
and thereunder and the consummation by Buyer of the transactions contemplated
hereby and thereby have been duly authorized by all requisite corporate action
on the part of Buyer. This Agreement has been duly executed and delivered by
Buyer, and (assuming due authorization, execution and delivery by each
Seller) this Agreement constitutes a legal, valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms. When each
Ancillary Document to which Buyer is or will be a party has been duly executed
and delivered by Buyer (assuming due authorization, execution and delivery by
each other party thereto), such Ancillary Document will constitute a legal and
binding obligation of Buyer enforceable against it in accordance with its terms.

 

Section 4.03                            No Conflicts; Consents. The execution,
delivery and performance by Buyer of this Agreement and the Ancillary Documents
to which it is a party, and the consummation of the transactions contemplated
hereby and thereby, do not and will not: (a) conflict with or result in a
violation or breach of, or default under, any provision of the certificate of
incorporation, by-laws or other organizational documents of Buyer; (b) conflict
with or result in a violation or breach of any provision of any Law or
Governmental Order applicable to Buyer; or (c) require the consent, notice or
other action by any Person under any

 

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Contract to which Buyer is a party. No consent, approval, Permit, Governmental
Order, declaration or filing with, or notice to, any Governmental Authority is
required by or with respect to Buyer in connection with the execution and
delivery of this Agreement and the Ancillary Documents and the consummation of
the transactions contemplated hereby and thereby, except for such consents,
approvals, Permits, Governmental Orders, declarations, filings or notices which,
in the aggregate, would not have a Material Adverse Effect.

 

Section 4.04                            Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated by this Agreement or any Ancillary
Document based upon arrangements made by or on behalf of Buyer.

 

Section 4.05                            Sufficiency of Funds; Solvency. Buyer
has sufficient cash on hand or other sources of immediately available funds to
enable it to make payment of the Purchase Price and consummate the transactions
contemplated by this Agreement.  Immediately after giving effect to the
transactions contemplated by this Agreement, Buyer shall be able to pay its
debts as they become due and shall own property having a fair saleable value (if
sold as an entirety with reasonable promptness in an arm’s-length transaction
under present conditions) in excess of its liabilities (whether liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, unsecured or otherwise).  Immediately after giving effect to the
transactions contemplated by this Agreement, Buyer shall have adequate capital
to carry on its respective businesses, including the Purchased Business.  No
transfer of property is being made and no obligation is being incurred in
connection with the transactions contemplated by this Agreement with the intent
to hinder, delay or defraud either present or future creditors of Buyer.

 

Section 4.06                            Legal Proceedings. There are no Actions
pending or, to Buyer’s knowledge, threatened against or by Buyer or any
Affiliate of Buyer that challenge or seek to prevent, enjoin or otherwise delay
the transactions contemplated by this Agreement.

 

Section 4.07                            Reliance. Buyer acknowledges and agrees
that Sellers and their Affiliates, and their respective Representatives,  have
not made and are not making any representations or warranties whatsoever
regarding the subject matter of this Agreement, express or implied, except as
provided in Article III, and that it is not relying and has not relied on any
representations or warranties whatsoever regarding the subject matter of this
Agreement, express or implied, except for the representations and warranties
provided in Article III.

 

ARTICLE V
COVENANTS

 

Section 5.01                            Name and Maintenance of Existence.
Within two (2) Business Days after Closing, the applicable Sellers shall amend
their Articles of Organization to change their name to a name that does not
include “Transit Mix”. Buyer agrees that Sellers may use the name “Transit Mix”
for the Non-Purchased Business for a thirty (30) day transition period after the
Closing Date. after For a period of thirty six (36) months following the Closing
Date, (a) no Seller (other than Continental Materials) shall wind up its affairs
or dissolve or liquidate its corporate company existence or merge into another
entity, and (b) each Seller shall maintain sufficient assets to satisfy its
respective liabilities.

 

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Section 5.02                            Employees and Employee Benefits.

 

(a)                                 Commencing on the Closing Date, each Seller
shall terminate all employees of the Purchased Business who are actively at work
on the Closing Date, except for the employees listed on Section 5.02(a) of the
Disclosure Schedules. Buyer will offer employment, on an “at will” basis, to
substantially all of such terminated employees who are eligible individuals
pursuant to Buyer’s employment practices and policies (the “Continuing
Employees”).

 

(b)                                 Sellers shall be solely responsible, and
Buyer shall have no obligations whatsoever for, any compensation or other
amounts payable to any current or former employee, officer, director,
independent contractor or consultant of the Purchased Business, including,
without limitation, hourly pay, commission, bonus, salary, fringe, pension or
profit sharing benefits or severance pay for any period relating to the service
with a Seller at any time on or prior to the Closing Date and each Seller shall
pay all such amounts  to all entitled persons on or prior to the Closing Date.

 

(c)                                  Each Seller shall remain solely responsible
for the satisfaction of all claims for medical, dental, life insurance, health
accident or disability benefits brought by or in respect of current or former
employees, officers, directors, independent contractors or consultants of the
Purchased Business or the spouses, dependents or beneficiaries thereof, which
claims relate to events occurring on or prior to the Closing Date. Each Seller
also shall remain solely responsible for all worker’s compensation claims of any
current or former employees, officers, directors, independent contractors or
consultants of the Purchased Business which relate to events occurring on or
prior to the Closing Date. Each Seller shall pay, or cause to be paid, all such
amounts to the appropriate persons as and when due.

 

(d)                                 For purposes of determining the Continuing
Employees eligibility to participate and for vesting purposes in the Buyer’s
401(k) plan, health plan and for vacation and/or PTO policies, service with each
Seller shall be treated as service with Buyer, except to the extent such service
credit would result in any duplication of benefits. Any such credit shall be
given pursuant to payroll or plan records, at the election of Buyer, in its sole
and absolute discretion. For the purposes of Buyer’s employee severance plans
and practices, no service credit will be given to the Continuing Employees for
prior service with Sellers.

 

(e)                                  With respect to each Continuing Employee,
Buyer agrees to comply with all immigration laws, including Form I-9
requirements and any applicable mandatory E-Verify obligations.

 

Section 5.03                            Confidentiality. From and after the
Closing, each Seller shall, and shall cause its Affiliates to, hold, and shall
use its reasonable best efforts to cause its or their respective Representatives
to hold, in confidence any and all information, whether written or oral,
concerning the Purchased Business, except to the extent that a Seller can show
that such information (a) is generally available to and known by the public
through no fault of such Seller, any of its Affiliates or their respective
Representatives; or (b) is lawfully acquired by such Seller, any of its
Affiliates or their respective Representatives from and after the Closing from
sources which are not prohibited from disclosing such information by a legal,
contractual or fiduciary obligation. If a Seller or any of its Affiliates or
their respective Representatives are compelled to disclose any information by
judicial or administrative process or by other requirements of Law, such Seller
shall promptly notify Buyer in writing and shall disclose only that portion of
such

 

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information which such Seller is advised by its counsel in writing is legally
required to be disclosed, provided that such Seller shall use reasonable best
efforts to obtain an appropriate protective order or other reasonable assurance
that confidential treatment will be accorded such information.

 

Section 5.04                            Non-Competition; Non-Solicitation.

 

(a)                                 For a period of five (5) years commencing on
the Closing Date (the “Restricted Period”), each Seller shall not, and shall not
permit any of its Affiliates to, directly or indirectly, (i) engage in or assist
others in engaging in the Restricted Business in the Territory; (ii) have an
interest in any Person that engages directly or indirectly in the Restricted
Business in the Territory in any capacity, including as a partner, shareholder,
member, employee, principal, agent, trustee or consultant; or (iii) cause,
induce or encourage any material actual or prospective client, customer,
supplier or licensor of the Purchased Business (including any existing or former
client or customer of a Seller and any Person that becomes a client or customer
of the Purchased Business after the Closing), or any other Person who has a
material business relationship with the Purchased Business, to terminate or
modify any such actual or prospective relationship. Notwithstanding the
foregoing, (a) Sellers may freely own, operate and dispose of the Non-Purchased
Business and the Excluded Real Property, and (b) a Seller may own, directly or
indirectly, solely as an investment, securities of any Person traded on any
national securities exchange if a Seller is not a controlling Person of, or a
member of a group which controls, such Person and does not, directly or
indirectly, own five percent (5%) or more of any class of securities of such
Person.

 

(b)                                 During the Restricted Period, each Seller
shall not, and shall not permit any of its Affiliates to, directly or
indirectly, solicit any person who is offered employment by Buyer pursuant to
Section 5.02(a) or is or was employed in the Purchased Business during the
Restricted Period, or encourage any such employee to leave such employment,
except pursuant to a general solicitation which is not directed specifically to
any such employees.

 

(c)                                  Each Seller acknowledges that a breach or
threatened breach of this Section 5.04 would give rise to irreparable harm to
Buyer, for which monetary damages would not be an adequate remedy, and hereby
agrees that in the event of a breach or a threatened breach by a Seller of any
such obligations, Buyer shall, in addition to any and all other rights and
remedies that may be available to it in respect of such breach, be entitled to
equitable relief, including a temporary restraining order, an injunction,
specific performance and any other relief that may be available from a court of
competent jurisdiction (without any requirement to post bond).

 

(d)                                 Each Seller acknowledges that the
restrictions contained in this Section 5.04 are reasonable and necessary to
protect the legitimate interests of Buyer and constitute a material inducement
to Buyer to enter into this Agreement and consummate the transactions
contemplated by this Agreement. In the event that any covenant contained in this
Section 5.04 should ever be adjudicated to exceed the time, geographic, product
or service or other limitations permitted by applicable Law in any jurisdiction,
then any court is expressly empowered to reform such covenant, and such covenant
shall be deemed reformed, in such jurisdiction to the maximum time, geographic,
product or service or other limitations permitted by applicable Law. The
covenants contained in this Section 5.04 and each provision hereof are severable
and distinct covenants and provisions. The invalidity or unenforceability of any
such covenant or provision as written shall not invalidate or render
unenforceable the remaining

 

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covenants or provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such covenant or
provision in any other jurisdiction.

 

Section 5.05                            Books and Records.

 

(a)                                 In order to facilitate the resolution of any
claims made against or incurred by a Seller prior to the Closing, or for any
other reasonable purpose, for a period of seven (7) years after the Closing,
Buyer shall:

 

(i)                                     retain the Books and Records (including
personnel files) relating to periods prior to the Closing in a manner reasonably
consistent with the prior practices of each Seller; and

 

(ii)                                  upon reasonable notice, afford each
Seller’s Representatives reasonable access (including the right to make, at a
Seller’s expense, photocopies), during normal business hours, to such Books and
Records.

 

(b)                                 In order to facilitate the resolution of any
claims made by or against or incurred by Buyer after the Closing, or for any
other reasonable purpose, for a period of seven (7) years following the Closing,
each Seller shall:

 

(i)                                     retain the books and records (including
personnel files) of Seller which relate to the Purchased Business and its
operations for periods prior to the Closing; and

 

(ii)                                  upon reasonable notice, afford the Buyer’s
Representatives reasonable access (including the right to make, at Buyer’s
expense, photocopies), during normal business hours, to such books and records.

 

(c)                                  Neither Buyer nor a Seller shall be
obligated to provide the other party with access to any books or records
(including personnel files) pursuant to this Section 5.05 where such access
would violate any Law.

 

Section 5.06                            Public Announcements. Neither party nor
any of its Affiliates or Representatives shall (orally or in writing) publicly
disclose, issue any press release or make any other public statement, or
otherwise communicate with the media, concerning the existence of this Agreement
or the subject matter hereof, without the prior written approval of the other
party (which shall not be unreasonably withheld, conditioned or delayed), except
if and to the extent that such party is required to make any public disclosure
or filing (“Required Disclosure”) regarding the subject matter of this Agreement
(i) by applicable Law, (ii) pursuant to any rules or regulations of any
securities exchange of which the securities of such party or any of its
Affiliates are listed or traded or (iii) in connection with enforcing its rights
under this Agreement. Without limitation of the foregoing, the Parties shall
issue a joint press release in form and substance reasonably acceptable to each
party within four (4) days following the Closing Date. Each party shall be
liable for any failure of its Affiliates or Representatives to comply with the
restrictions set forth under this Section 5.06.

 

Section 5.07                            Bulk Sales Laws. The parties hereby
waive compliance with the provisions of any bulk sales, bulk transfer or similar
Laws of any jurisdiction that may otherwise be applicable with respect to the
sale of any or all of the Purchased Assets to Buyer; it being

 

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understood that any Liabilities arising out of the failure of a Seller to comply
with the requirements and provisions of any bulk sales, bulk transfer or similar
Laws of any jurisdiction which would not otherwise constitute Assumed
Liabilities shall be treated as Excluded Liabilities.

 

Section 5.08                            Receivables. From and after the Closing,
if a Seller or any of its Affiliates receives or collects any funds relating to
any Accounts Receivable or any other Purchased Asset, such Seller or any of its
Affiliates shall remit such funds to Buyer within five (5) Business Days after
its receipt thereof. From and after the Closing, if Buyer or any of its
Affiliates receives or collects any funds relating to any Excluded Asset, Buyer
or such Affiliate shall remit any such funds to a Seller within five
(5) Business Days after its receipt thereof. If one or more Accounts Receivable
purchased by Buyer and arising out of the Non-Purchased Business has not been
collected within 120 days after the Closing Date, then, upon Buyer’s written
demand, Sellers agree to purchase such Account Receivable(s) for cash in an
amount equal to the full dollar amount of such Accounts Receivable(s) arising
out of the Non-Purchased Business; provided, for the avoidance of doubt, that
such repurchase obligation shall not apply to Accounts Receivable arising out of
the Purchased Business. After Closing, Seller shall provide an employee or
representative, at Seller’s sole cost and expense, to quantify the Accounts
Receivable and accounts payable related to the Non-Purchased Business
(“Non-Business A/R” or “Non-Business A/P”, as applicable).  After Buyer has paid
all Non-Business A/P, Buyer shall remit an amount equal to the amount by which
collected Non-Business A/R exceeds the amount of Non-Business A/P.  Seller
agrees to allow Buyer to review any calculations or reports created by Seller
related to the amount and identity of all Non-Business A/R and Non-Business
A/P.  Buyer agrees to (i) provide Seller’s employee or representative access to
the necessary books and records to determine the amount of Non-Business A/R and
Non-Business A/P; and (ii) to  allow Seller to review Buyer’s  books and records
related to the payment of Non-Business A/P and the collection of Non-Business
A/R. Any amounts required to be remitted by Buyer to Seller hereunder shall
occur within five (5) days after the end of each calendar month.

 

Section 5.09                            Tax Matters.

 

(a)                                 All transfer, documentary, sales, use,
stamp, registration, value added and other such Taxes and fees (including any
penalties and interest) incurred in connection with this Agreement and the
Ancillary Documents (including any vehicle sales, any real property transfer Tax
and any other similar Tax) shall be borne and paid by Buyer when due. Each
Seller shall, at Seller’s expense, timely file any Tax Return or other document
with respect to such Taxes or fees which are imposed on such Seller (and Buyer
shall cooperate with respect thereto as necessary).  Seller and Buyer shall
cooperate fully to minimize sales and use taxes applicable to the transactions
contemplated by this Agreement and provide all documentary support, including
written EPA certifications, Colorado Forms DR 1369, and vehicle gross weight
evidence for all Vehicles acquired.

 

(b)                                 Seller and the Shareholders (jointly and
severally), on the one hand, or Buyer, on the other hand, shall provide
reimbursement for any Taxes paid by one party all or a portion of which is the
responsibility of the other party in accordance with the terms of this
Section 5.09.  Within a reasonable time prior to the payment of any such Taxes,
the party paying such Taxes shall give notice to the other party of the Taxes
payable and the portion which is the liability of each party, although failure
to give such notice will not relieve the other party from its liability
hereunder.

 

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(c)                                  After the Closing Date, each of Seller and
Buyer shall (and shall cause their respective Affiliates to):

 

(i)                                     provide reasonable assistance to the
other party upon request in connection with any Tax Returns which such other
party is responsible for preparing and filing;

 

(ii)                                  provide reasonable cooperation in
preparing for any audits of, or disputes with Governmental Authorities
regarding, any Tax Returns of the Business or the Purchased Assets;

 

(iii)                               provide timely notice to the other in
writing of any pending or threatened Tax audits or assessments relating to Taxes
of the Business or the Purchased Assets for taxable periods for which the other
may have a liability under this Agreement; and

 

(iv)                              furnish the other with copies of all
correspondence received from any Governmental Authorities in connection with any
Tax audit or information request with respect to any such taxable period.

 

For the avoidance of doubt, such assistance and cooperation shall not require
the assisting or cooperating party to undertake undue or extraordinary efforts
and shall not require the payment of any out of pocket expenditures.

 

Section 5.10                            Tax Clearance Certificates. Each Seller
has filed Colorado Forms DR 0096, Request For Tax Status Letter, for all
applicable Taxes in Colorado, prior to closing and shall otherwise notify all of
the taxing authorities in the jurisdictions that impose Taxes on a Seller or
where a Seller has a duty to file Tax Returns of the transactions contemplated
by this Agreement in the form and manner required by such taxing authorities, if
the failure to make such notifications or receive any available Tax Status
Letter or tax clearance certificate (collectively, a “Tax Clearance
Certificate”) could subject the Buyer to any Taxes of a Seller. If any taxing
authority asserts that a Seller is liable for any Tax, a Seller shall promptly
pay any and all such amounts and shall provide evidence to the Buyer that such
liabilities have been paid in full or otherwise satisfied.

 

Section 5.11                            Title Insurance & Survey.  Buyer shall
have received (at Seller’s expense) an owner’s title insurance policy with
respect to each Transferred Real Property, issued by a nationally recognized
title insurance company acceptable to Buyer, written as of the Closing Date,
insuring Buyer in such amounts, and otherwise in such form, as Buyer shall
reasonably require. Such title insurance policy shall insure fee simple title to
each Transferred Real Property, free and clear of all Encumbrances other than
Permitted Encumbrances. At its option and expense, Buyer may obtain a survey of
the Real Property (“Survey”).  Buyer shall deliver to Sellers a copy of any
Survey which it obtains.

 

Section 5.12                            Insurance. For at least three (3) years
after the Closing Date, Sellers will maintain product liability insurance and
employment practices insurance on a ‘claims made’ basis at not less than the
amount of coverage in effect as of the Closing in order to cover claims arising
out of products sold or delivered by Sellers and Seller’s employment practices,
respectively, before the Closing Date.

 

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Section 5.13                            Vacating of the Transferred Real
Property. For six (6) months after the Closing Date, Buyer and Sellers will
reasonably cooperate, in a manner consistent with the Transition Services
Agreement and the Colocation Services Agreement, in the orderly vacating of any
Excluded Assets from the Transferred Real Property and the orderly transition of
the Purchased Assets and the Purchased Business to Buyer.

 

Section 5.14                            Costilla Real Property. The parties
acknowledge and agree that less than all of the Existing Costilla Property
(defined below) shall be conveyed to Buyer pursuant to this Agreement. 
Specifically, only the West Parcel (defined below) shall be conveyed to Buyer
and TMC shall retain the remainder of the Existing Costilla Property.  The
parties further acknowledge and agree that the West Parcel is not able to be
conveyed by TMC to Buyer at the Closing because of the requirement that TMC
first obtain the Land Division Approvals (defined below).  Therefore, the
parties agree as follows:

 

(a)                                 Definitions.

 

(i)                                     “Existing Costilla Property” means TMC’s
entire real property and improvements commonly known as 444 East Costilla
Street, Colorado Springs, Colorado 80903, and legally described on attached
Exhibit A-1.

 

(ii)                                  “West Parcel” means the portion of the
Existing Costilla Property generally located to the south and west of Shook’s
Run and as generally depicted on attached Exhibit A-2.

 

(iii)                               “East Parcel” means the portion of the
Existing Costilla Property generally located to the north and east of Shook’s
Run and as generally depicted on attached Exhibit A-2.

 

(iv)                              “Land Division Approvals” means all final
governmental approvals necessary for the division of the Existing Costilla
Property and the conveyance of the West Parcel, including the consent of
Vertical Bridge Development, LLC.

 

(b)                                 Land Division Approvals.  TMC, at its cost
and expense, shall use its best efforts to obtain the Land Division Approvals;
provided, that Buyer has engaged a surveyor licensed in the State of Colorado to
survey and prepare a plat of survey for the Existing Costilla Property, which
plat of survey shall separately demarcate and legally describe the West Parcel
and the remainder of the Existing Costilla Property (such plat of survey, the
“Costilla Division Survey”).   Upon Sellers’ receipt of the Costilla Division
Survey, TMC shall begin promptly and proceed diligently to procure the Land
Division Approvals, including completion of any necessary real estate survey
work (in addition to the Costilla Division Survey), drainage study and plans for
separate stormwater permits following the West Parcel Closing (defined below). 
TMC shall keep Buyer apprised of the status of its efforts. If TMC is unable to
procure the Land Division Approvals within one hundred eighty (180) days after
TMC receives the Costilla Division Survey, then Buyer, at its discretion, may
seek to procure the Land Division Approvals for up to an additional one hundred
eighty (180) days, in which case TMC shall authorize Buyer to act on its
behalf.  All reasonable out-of-pocket costs incurred by Buyer in connection
therewith shall be reimbursed by TMC.  TMC and Buyer agree to act reasonably and
in good faith and cooperate with each other in procuring the Land Division
Approvals.

 

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(c)                                  Lease.  From and after the Closing Date
until the West Parcel Closing, Buyer shall lease the West Parcel from TMC
pursuant to the Costilla Lease Agreement.

 

(d)                                 Sale/Purchase:  Upon TMC’s or Buyer’s
receipt of the Land Division Approvals, TMC shall be required to sell the West
Parcel to Buyer and Buyer shall be required to purchase the West Parcel from
TMC.  The closing of said sale and purchase (the “West Parcel Closing”) shall
occur as soon as is reasonably possible but in no event later than twenty (20)
days after TMC has delivered written verification of Land Division Approvals to
Buyer or Buyer has procured the Land Division Approvals on behalf of TMC.

 

(e)                                  Purchase Price:  The parties agree that the
portion of the Purchase Price allocated to the West Parcel is $789,814 and that
such portion of the Purchase Price shall, instead of being paid to Sellers at
the Closing pursuant, be deposited by Buyer at the Closing into an escrow
account with First American Title Company pursuant to a mutually satisfactory
escrow agreement.  Said escrowed funds shall be released to TMC or to its
designee at the West Parcel Closing.

 

(f)                                   West Parcel Closing:  All costs and
expenses related to the West Parcel Closing, all closing documents, and all
closing costs and related expenses, including, without limitation, proration of
real estate taxes for the West Parcel shall be handled in a manner consistent
with the provisions in this Agreement with respect to the sale and purchase of
the other parcels from Sellers.  Rent paid under the Costilla Lease Agreement
shall be prorated.

 

(g)                                  Failsafe Sale/Purchase Obligation.   If the
Land Division Approvals have not been obtained within one calendar year after
the date when Sellers receive the Costilla Division Survey, then TMC shall sell
the entire Existing Costilla Property to Buyer and Buyer shall purchase the
entire Existing Costilla Property from TMC at an additional closing to be
consummated by representatives of Buyer and TMC at the Colorado Springs,
Colorado, offices of First American Title Company within twenty (20) days after
such calendar anniversary (the “Failsafe Closing”).  At the Failsafe Closing (if
the Failsafe Closing shall be required), TMC and Buyer shall execute reasonable
and customary documentation necessary to effect the conveyance to Buyer of the
entire Existing Costilla Property in consideration of the following: (i) release
to TMC of the $789,814 (plus interest, if any) escrowed with First American
Title pursuant to Section 5.14(e); (ii) a real property lease of the East
Parcel, with a term commencing on the date of the Failsafe Closing and
continuing thereafter for ten (10) years unless earlier terminated at lessee’s
option on 180 days’ notice at any time after the first five (5) years, by Buyer,
as lessor, to TMC and its successors, as lessee, for zero ($0) base rent and
otherwise on a triple-net basis (with property tax liability for the Existing
Costilla Property to be allocated between landlord and tenant based on the
relative contribution of the West Parcel and East Parcel, respectively, to the
assessed value of the entire Existing Costilla Property) (such lease, the
“Failsafe Leaseback”); and (iii) the agreement by Buyer to pay, upon expiration
of the ten-year term or tenant’s early termination of the Failsafe Lease,
deferred purchase price for the East Parcel in an amount equal to the average of
the appraised values of the East Parcel, determined using customary methodology,
at the time of such expiration or early termination as then reported in the
final written reports, in customary form, of three (3) independent real property
appraisers familiar with the Colorado Springs, Colorado, commercial property
market and which are each reasonably acceptable to Buyer and TMC.

 

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(h)                                 Specific Performance.  The parties agree
that Buyer and TMC shall each be entitled to pursue specific performance of all
covenants and agreements contained or referred to in this Section 5.14.

 

Section 5.15                            Daniels Sand Permit Transfer.

 

(a)                                 Actions Before Closing.  Prior to Closing
representatives of the Sellers and Buyer had a conference call with the Colorado
Division of Reclamation, Mining and Safety with respect to replacement of the
Sellers Reclamation Sureties described in Schedule 3.17(c).  Prior to Closing
Buyer has delivered to Sellers evidence that Buyer has obtained, subject only to
Closing and transfer of the Reclamation Permit to Buyer.

 

(b)                                 Replacement Sureties.  Within forty-five
(45) days after the Closing Date, Buyer shall deliver to the Colorado Division
of Reclamation, Mining and Safety the duly executed, substitute Surety
Arrangements, in each case acceptable to the Colorado Division of Reclamation,
Mining and Safety in replacement of the Sellers Reclamation Sureties (the
“Replacement Sureties”).  If the Sellers Reclamation Sureties are not replaced
within forty-five (45) days after the Closing Date, the Buyer will provide to
the Sellers cash, guarantees, letters of credit, bonds, security deposits, or
other surety obligations reasonably acceptable to the Buyer, which Buyer shall
hold until the Sellers Reclamation Sureties are fully and unconditionally
released and Seller shall be able to call upon such obligations of the Buyer in
the event the Sellers Reclamation Sureties are called upon by the relevant
Governmental Authorities.  For the avoidance of doubt, nothing in this
Section shall limit Buyer’s obligations pursuant to Section 1.03(c).

 

(c)                                  Permit Transfers. “Reclamation Permit”
means Reclamation Permit No. M-1973-007SG, as amended.  Within ten (10) Business
Days following Closing, Buyer will  submit to the appropriate Governmental
Authorities a request in the required form to transfer the Seller’s existing
Reclamation Permit to Buyer.  If the Reclamation Permit is not transferrable,
Buyer shall, within ten (10) Business Days following Closing, submit an
application to the appropriate Governmental Authority for a new Permit to
replace the existing Permit.  Buyer shall use good faith efforts to promptly
complete such transfer or obtain such replacement Reclamation Permit.  Sellers
will cooperate with Buyer’s efforts to transfer the existing Reclamation Permit
and obtain a replacement Reclamation Permit, including executing any transfer
application or related documents.

 

Section 5.16                            Release of Johnson Family Deed of Trust
from Daniels Sand.  Seller, at its cost and expense, shall obtain a partial
discharge of the Deed of Trust dated April 22, 2004, granted by The Johnson
Family Trust dated December 18, 1992, Carl F. Johnson and Virginia E. Tucker
Johnson, Trustor(s) and/or Trustee(s), to the Public Trustee of El Paso County,
 recorded April 23, 2004, at Reception No. 204065854 (the “Deed of Trust”) so
that the Deed of Trust is fully and absolutely released, canceled and forever
discharged as to the Daniels Sand property.   Seller shall keep Buyer apprised
of the status of its efforts.  If Seller is unable to procure the partial
discharge of the Deed of Trust within ninety (90) days of the date of Closing,
then Buyer, at its discretion, may seek to procure the partial discharge of the
Deed of Trust, in which case Seller shall authorize Buyer to act on its behalf
and all costs incurred by Buyer in connection therewith shall be reimbursed by
Seller.

 

Section 5.17                            Assumed Liabilities.  Buyer will give
notice to Sellers promptly after Buyer receives notice of any Action, and
otherwise reasonably before initiating any other non-

 

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routine communication with any Governmental Authorities¸ in connection with the
Assumed Liabilities set forth on Section 1.03(d) of the Disclosure Schedules,
and Buyer does not object to Sellers participation in any such communications
with Governmental Authorities.  Following the Closing, Buyer will not initiate
or respond to any Action or apply for, amend or modify any Permit, or seek
relief from or the interpretation of or otherwise communicate with any
Governmental Authority, in each case, in connection with the Assumed Liabilities
set forth on Section 1.03(d) of the Disclosure Schedules without first notifying
Sellers if such action would or could reasonably be expected to result in an
indemnification claim against Sellers pursuant to this Agreement.

 

Section 5.18                            Further Assurances. Following the
Closing, each of the parties hereto shall, and shall cause their respective
Affiliates to, execute and deliver such additional documents, instruments,
conveyances and assurances and take such further actions as may be reasonably
required to carry out the provisions hereof and give effect to the transactions
contemplated by this Agreement and the Ancillary Documents.

 

ARTICLE VI
INDEMNIFICATION

 

Section 6.01                            Survival. Subject to the limitations and
other provisions of this Agreement, the representations and warranties contained
herein shall survive the Closing and shall remain in full force and effect until
August 1, 2020; provided, that the representations and warranties in:

 

(a)                                 Section 3.01 (Organization and Qualification
of Sellers), Section 3.02 (Authority of Sellers), Section 3.08 (Title to
Purchased Assets), Section 3.22 (Brokers), Section 4.01 (Organization of Buyer),
Section 4.02 (Authority of Buyer), Section 4.04 (Brokers) and Section 4.05
(Sufficiency of Funds; Solvency) shall survive indefinitely,

 

(b)                                 Section 3.18 (Environmental Matters) shall
survive for a period of thirty-six (36) months after the Closing, and

 

(c)                                  Section 3.19 (Employee Benefit Matters) and
Section 3.21 (Taxes) shall survive for the full period of all applicable
statutes of limitations (giving effect to any waiver, mitigation or extension
thereof) plus sixty (60) days.

 

All covenants and agreements of the parties contained herein shall survive the
Closing for the full period of all applicable statutes of limitations (giving
effect to any waiver, mitigation or extension thereof) plus sixty (60) days or
for the survival period or period for performance explicitly specified therein.

 

Notwithstanding the foregoing, any claims asserted in good faith with reasonable
specificity (to the extent known at such time) and in writing by notice from the
non-breaching party to the breaching party prior to the expiration date of the
applicable survival period shall not thereafter be barred by the expiration of
the relevant representation or warranty and such claims shall survive until
finally resolved.

 

Section 6.02                            Indemnification by Sellers. Subject to
the other terms and conditions of this Article VI, Sellers shall, jointly and
severally, indemnify and defend each of Buyer and its Affiliates and their
respective Representatives (collectively, the “Buyer Indemnitees”) against,

 

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and shall hold each of them harmless from and against, and shall pay and
reimburse each of them for, any and all Losses incurred or sustained by, or
imposed upon, the Buyer Indemnitees based upon, arising out of, with respect to
or by reason of:

 

(a)                                 any inaccuracy in or breach of any of the
representations or warranties of a Seller contained in this Agreement, the
Ancillary Documents or in any certificate or instrument delivered by or on
behalf of a Seller pursuant to this Agreement, as of the date such
representation or warranty was made or as if such representation or warranty was
made on and as of the Closing Date (except for representations and warranties
that expressly relate to a specified date, the inaccuracy in or breach of which
will be determined with reference to such specified date);

 

(b)                                 any breach or non-fulfillment of any
covenant, agreement or obligation to be performed by a Seller pursuant to this
Agreement, the Ancillary Documents or any certificate or instrument delivered by
or on behalf of a Seller pursuant to this Agreement;

 

(c)                                  any Excluded Asset or any Excluded
Liability; or

 

(d)                                 any Third Party Claim based upon, resulting
from or arising out of the business, operations, properties, assets or
obligations of a Seller or any of its Affiliates (other than the Purchased
Assets or Assumed Liabilities) conducted, existing or arising on or prior to the
Closing Date.

 

Section 6.03                            Indemnification by Buyer. Subject to the
other terms and conditions of this Article VI, Buyer shall indemnify and defend
each Seller and its Affiliates and their respective Representatives
(collectively, the “Sellers Indemnitees”) against, and shall hold each of them
harmless from and against, and shall pay and reimburse each of them for, any and
all Losses incurred or sustained by, or imposed upon, the Sellers Indemnitees
based upon, arising out of, with respect to or by reason of:

 

(a)                                 any inaccuracy in or breach of any of the
representations or warranties of Buyer contained in this Agreement or in any
certificate or instrument delivered by or on behalf of Buyer pursuant to this
Agreement, as of the date such representation or warranty was made or as if such
representation or warranty was made on and as of the Closing Date (except for
representations and warranties that expressly relate to a specified date, the
inaccuracy in or breach of which will be determined with reference to such
specified date);

 

(b)                                 any breach or non-fulfillment of any
covenant, agreement or obligation to be performed by Buyer pursuant to this
Agreement; or

 

(c)                                  any Assumed Liability.

 

Section 6.04                            Certain Limitations. The indemnification
provided for in Section 6.02 and Section 6.03 shall be subject to the following
limitations:

 

(a)                                 A Seller shall not be liable to the Buyer
Indemnitees for indemnification under Section 6.02(a) until the aggregate amount
of all Losses which are indemnified under Section 6.02(a) exceeds $100,000.00
(the “Deductible”), in which event the Sellers shall, collectively, be required
to pay or be liable for all such Losses exceeding the Deductible. The

 

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aggregate amount of all Losses for which the Sellers shall be liable pursuant to
Section 6.02(a) shall not exceed twenty percent (20%) of the Purchase Price (the
“Cap”).

 

(b)                                 Notwithstanding the foregoing, the
limitations set forth in Section 6.04 shall not apply to Losses to inaccuracies
in or breaches of the representations and warranties contained in Section 3.01
(Organization and Qualification of Sellers), Section 3.02 (Authority of
Sellers), Section 3.08 (Title to Purchased Assets), Section 3.21 (Taxes),
Section 3.22 (Brokers), Section 4.01 (Organization of Buyer), Section 4.02
(Authority of Buyer) and Section 4.04 (Brokers).

 

(c)                                  Regardless of the amount of Losses which
have been indemnified under Section 6.02, the aggregate obligations and
liability of Sellers under this Article VI shall not exceed the Purchase Price.

 

(d)                                 For the sole purpose of determining the
amount of Losses which have been indemnified under Section 6.02(a) or
Section 6.03(a) (and not for determining whether any representations or
warranties in this Agreement were inaccurate at the time when made or otherwise
have been breached) the amount of Losses incurred, sustained, imposed, based
upon, arising out of, with respect to or by reason of any inaccuracy in or
breach of any representation or warranty shall be determined without regard to
any materiality, Material Adverse Effect or other similar qualification
contained in or otherwise applicable to such representation or warranty;
provided, however, that Section 6.04(d) shall not apply to Section 3.04,
Section 3.05 or Section 3.06 (i.e., such Sections shall be applied under this
Article VI with all the materiality qualifiers therein stated).

 

(e)                                  Payments by an Indemnifying Party pursuant
to Section 6.02 or Section 6.03 in respect of any Loss shall be limited to the
amount of any liability or damage that remains after deducting therefrom any
insurance proceeds and any indemnity, contribution or other similar payment
actually received by the Indemnified Party in respect of any such claim, less
any related costs and expenses, including the aggregate cost of pursuing any
related insurance claims and any related increases in insurance premiums or
other chargebacks (it being agreed that neither party shall have any obligation
to seek to recover any insurance proceeds in connection with making a claim
under this Article VI and that, promptly after the realization of any insurance
proceeds, indemnity, contribution or other similar payment, the Indemnified
Party shall reimburse the Indemnifying Party for such reduction in Losses for
which the Indemnified Party was indemnified prior to the realization of
reduction of such Losses).

 

Section 6.05                            Mitigation of Losses.  Buyer Indemnitees
and Seller Indemnitees shall use commercially reasonable efforts to mitigate any
Losses that are indemnified hereunder, whether by asserting claims against third
parties, by qualifying for a benefit that may reduce or eliminate an indemnified
matter, by taking action or omitting to take actions which give rise or
contribute to indemnified Losses, or otherwise.  In the event that Buyer
Indemnitees or Seller Indemnitees fail to use commercially reasonable efforts to
mitigate any such Losses, then, notwithstanding anything else to the contrary
contained herein, the Sellers or Buyer shall not be required to indemnify a
Buyer Indemnitee or a Seller Indemnitee, respectively, for any Losses that could
reasonably be expected to have been avoided or reduced if Buyer Indemnitees or
Seller Indemnitees had made such efforts.

 

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Section 6.06                            Indemnification Procedures. The party
making a claim under this Article VI is referred to as the “Indemnified Party”,
and the party against whom such claims are asserted under this Article VI is
referred to as the “Indemnifying Party”.

 

(a)                                 Third Party Claims. If any Indemnified Party
receives notice of the assertion or commencement of any Action made or brought
by any Person who is not a party to this Agreement or an Affiliate of a party to
this Agreement or a Representative of the foregoing (a “Third Party
Claim”) against such Indemnified Party with respect to which the Indemnifying
Party is obligated to provide indemnification under this Agreement, the
Indemnified Party shall give the Indemnifying Party reasonably prompt written
notice thereof, but in any event not later than thirty (30) calendar days after
receipt of such notice of such Third Party Claim. The failure to give such
prompt written notice shall not, however, relieve the Indemnifying Party of its
indemnification obligations, except and only to the extent that the Indemnifying
Party forfeits rights or defenses by reason of such failure. Such notice by the
Indemnified Party shall describe the Third Party Claim in reasonable detail,
shall include copies of all material written evidence thereof and shall indicate
the estimated amount, if reasonably practicable, of the Loss that has been or
may be sustained by the Indemnified Party. The Indemnifying Party shall have the
right to participate in, or by giving written notice to the Indemnified Party,
to assume the defense of any Third Party Claim at the Indemnifying Party’s
expense and by the Indemnifying Party’s own counsel, and the Indemnified Party
shall cooperate in good faith in such defense; provided, however, that if the
Indemnifying Party is a Seller, such Indemnifying Party shall not have the right
to defend or direct the defense of any such Third Party Claim that (x) is
asserted directly by or on behalf of a Person that is a supplier or customer of
the Purchased Business, or (y) seeks an injunction or other equitable relief
against the Indemnified Party. In the event that the Indemnifying Party assumes
the defense of any Third Party Claim, subject to Section 6.06(b), it shall have
the right to take such action as it deems necessary to avoid, dispute, defend,
appeal or make counterclaims pertaining to any such Third Party Claim in the
name and on behalf of the Indemnified Party. The Indemnified Party shall have
the right to participate in the defense of any Third Party Claim with counsel
selected by it subject to the Indemnifying Party’s right to control the defense
thereof. The fees and disbursements of such counsel shall be at the expense of
the Indemnified Party, provided, that if in the reasonable opinion of counsel to
the Indemnified Party, (A) there are legal defenses available to an Indemnified
Party that are different from or additional to those available to the
Indemnifying Party; or (B) there exists a conflict of interest between the
Indemnifying Party and the Indemnified Party that cannot be waived, the
Indemnifying Party shall be liable for the reasonable fees and expenses of
counsel to the Indemnified Party in each jurisdiction for which the Indemnified
Party determines counsel is required. If the Indemnifying Party elects not to
compromise or defend such Third Party Claim, fails to promptly notify the
Indemnified Party in writing of its election to defend as provided in this
Agreement, or fails to diligently prosecute the defense of such Third Party
Claim, the Indemnified Party may, subject to Section 6.06(b), pay, compromise,
defend such Third Party Claim and seek indemnification for any and all Losses
based upon, arising from or relating to such Third Party Claim. Each Seller and
Buyer shall cooperate with each other in all reasonable respects in connection
with the defense of any Third Party Claim, including making available (subject
to the provisions of Section 5.03) records relating to such Third Party Claim
and furnishing, without expense (other than reimbursement of actual
out-of-pocket expenses) to the defending party, management employees of the
non-defending party as may be reasonably necessary for the preparation of the
defense of such Third Party Claim.

 

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(b)                                 Settlement of Third Party Claims.
Notwithstanding any other provision of this Agreement, the Indemnifying Party
shall not enter into settlement of any Third Party Claim without the prior
written consent of the Indemnified Party, except as provided in this
Section 6.06(b). If a firm offer is made to settle a Third Party Claim without
leading to liability or the creation of a financial or other obligation on the
part of the Indemnified Party and provides, in customary form, for the
unconditional release of each Indemnified Party from all liabilities and
obligations in connection with such Third Party Claim and the Indemnifying Party
desires to accept and agree to such offer, the Indemnifying Party shall give
written notice to that effect to the Indemnified Party. If the Indemnified Party
fails to consent to such firm offer within fifteen (15) days after its receipt
of such notice, the Indemnified Party may continue to contest or defend such
Third Party Claim and in such event, the maximum liability of the Indemnifying
Party as to such Third Party Claim shall not exceed the amount of such
settlement offer. If the Indemnified Party fails to consent to such firm offer
and also fails to assume defense of such Third Party Claim, the Indemnifying
Party may settle the Third Party Claim upon the terms set forth in such firm
offer to settle such Third Party Claim. If the Indemnified Party has assumed the
defense pursuant to Section 6.06(a), it shall not agree to any settlement
without the written consent of the Indemnifying Party (which consent shall not
be unreasonably withheld or delayed). No consent shall be required if the
Indemnified Party’s Losses related to the Third Party Claim are covered in full
under an insurance policy which allows the insurance provider to resolve claims
in its discretion and the insurance provider actually pays the Indemnified Party
for the full amount of the Losses incurred by the Indemnified Party.

 

(c)                                  Direct Claims. Any Action by an Indemnified
Party on account of a Loss which does not result from a Third Party Claim (a
“Direct Claim”) shall be asserted by the Indemnified Party giving the
Indemnifying Party reasonably prompt written notice thereof, but in any event
not later than thirty (30) days after the Indemnified Party becomes aware of
such Direct Claim. The failure to give such prompt written notice shall not,
however, relieve the Indemnifying Party of its indemnification obligations,
except and only to the extent that the Indemnifying Party forfeits rights or
defenses by reason of such failure. Such notice by the Indemnified Party shall
describe the Direct Claim in reasonable detail, shall include copies of all
material written evidence thereof and shall indicate the estimated amount, if
reasonably practicable, of the Loss that has been or may be sustained by the
Indemnified Party. The Indemnifying Party shall have thirty (30) days after its
receipt of such notice to respond in writing to such Direct Claim. The
Indemnified Party shall allow the Indemnifying Party and its professional
advisors to investigate the matter or circumstance alleged to give rise to the
Direct Claim, and whether and to what extent any amount is payable in respect of
the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s
investigation by giving such information and assistance (including access to the
Indemnified Party’s premises and personnel and the right to examine and copy any
accounts, documents or records) as the Indemnifying Party or any of its
professional advisors may reasonably request. If the Indemnifying Party does not
so respond within such thirty (30) day period, the Indemnifying Party shall be
deemed to have rejected such claim, in which case the Indemnified Party shall be
free to pursue such remedies as may be available to the Indemnified Party on the
terms and subject to the provisions of this Agreement.

 

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Section 6.07                            Payments; Indemnification Escrow Fund.

 

(a)                                 Once a Loss is agreed to by the Indemnifying
Party or finally adjudicated to be payable pursuant to this Article VI, the
Indemnifying Party shall satisfy its obligations within fifteen (15) Business
Days of such final, non-appealable adjudication by wire transfer of immediately
available funds. The parties hereto agree that should an Indemnifying Party not
make full payment of any such obligations within such fifteen (15) Business Day
period, any amount payable shall accrue interest from and including the date of
agreement of the Indemnifying Party or final, non-appealable adjudication to but
excluding the date such payment has been made at a rate per annum equal to ten
percent (10%). Such interest shall be calculated daily on the basis of a 365 day
year and the actual number of days elapsed.

 

(b)                                 Any Losses payable to a Buyer Indemnitee
pursuant to this Article VI shall be satisfied: (i) first from the
Indemnification Escrow Fund; and (ii) second from a Seller to the extent the
amount of Losses exceeds the amounts available to the Buyer Indemnitee from the
Indemnification Escrow Fund.

 

Section 6.08                            Tax Treatment of Indemnification
Payments. All indemnification payments made under this Agreement shall be
treated by the parties as an adjustment to the Purchase Price for Tax purposes,
unless otherwise required by Law.

 

Section 6.09                            Effect of Investigation. The
representations, warranties and covenants of the Indemnifying Party, and the
Indemnified Party’s right to indemnification with respect thereto, shall not be
affected or deemed waived by reason of any investigation made by or on behalf of
the Indemnified Party (including by any of its Representatives) or by reason of
the fact that the Indemnified Party or any of its Representatives knew or should
have known that any such representation or warranty is, was or might be
inaccurate, as the case may be.

 

Section 6.10                            Exclusive Remedies. Subject to
Section 1.06, Section 5.04 and Section 7.12, the parties acknowledge and agree
that their sole and exclusive remedy with respect to any and all claims (other
than claims arising from Actual Fraud on the part of a party hereto in
connection with the transactions contemplated by this Agreement) for any breach
of any representation, warranty, covenant, agreement or obligation set forth
herein or otherwise relating to the subject matter of this Agreement, shall be
pursuant to the indemnification provisions set forth in this Article VI. In
furtherance of the foregoing, each party hereby waives, to the fullest extent
permitted under Law, any and all rights, claims and causes of action for any
breach of any representation, warranty, covenant, agreement or obligation set
forth herein or otherwise relating to the subject matter of this Agreement it
may have against the other parties hereto and their Affiliates and each of their
respective Representatives arising under or based upon any Law, except pursuant
to the indemnification provisions set forth in this Article VI.  Nothing in this
Section 6.10 shall limit any Person’s right to seek and obtain any equitable
relief to which any Person shall be entitled or to seek any remedy on account of
any party’s Actual Fraud.

 

ARTICLE VII
MISCELLANEOUS

 

Section 7.01                            Sellers Representative.  Each Seller
hereby appoints Continental Materials Corp. as the “Sellers Representative” to
act as the agent of the Sellers with the full power (i) to resolve all
questions, disputes, conflicts and controversies concerning Losses, the

 

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Purchase Price Adjustment and the allocation of the Purchase Price as provided
in this Agreement, (ii) to execute and enter into, on behalf of the Sellers, the
Escrow Agreement, and to take all actions thereunder for and on their behalf,
including but not limited the authorization of payments of amounts held under
the Escrow Agreement in connection with Losses as provided herein and therein,
(iii) to negotiate and/or settle all claims under this Agreement or the Escrow
Agreement, (iii) to receive from the Buyer monies payable to the Sellers in
accordance with the provisions of this Agreement and the Escrow Agreement,
(v) to otherwise take such actions (or refrain from taking actions) and execute
such documents on the Sellers’ behalf in connection with this Agreement and the
Escrow Agreement, as the Sellers Representative, in its sole discretion, deems
proper and (vi) to perform all of the functions of the Sellers Representative
under this Agreement and the Escrow Agreement. The Buyer and the Escrow Agent
are  entitled to rely on the acts and agreements of the Sellers Representative
as the acts and agreements of the Sellers. The Sellers Representative shall be
entitled to retain counsel and to incur such reasonable expenses (including
court costs and reasonable attorney’s fees and expenses) as the Sellers
Representative deems to be reasonably necessary or appropriate in connection
with its performance of its obligations under this Agreement and the Escrow
Agreement, and all such fees and expenses incurred by the Sellers Representative
shall be borne by each Seller. Subject to and in accordance with the provisions
of the Escrow Agreement, the fees and expenses incurred by the Sellers
Representative pursuant to this Section 7.01 shall be paid by the Sellers
directly to the Sellers Representative and shall not be paid from the Escrow
Fund.

 

Section 7.02                            Expenses. Except as otherwise expressly
provided herein, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with the negotiation, preparation and execution of this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs and expenses.

 

Section 7.03                            Notices. All notices, requests,
consents, claims, demands, waivers and other communications hereunder shall be
in writing and shall be deemed to have been given (a) when delivered by hand
(with written confirmation of receipt); (b) when received by the addressee if
sent by a nationally recognized overnight courier (receipt requested); (c) on
the date sent by facsimile or e-mail of a PDF document (with confirmation of
transmission) if sent during normal business hours of the recipient, and on the
next Business Day if sent after normal business hours of the recipient or (d) on
the fourth (4th) day after the date mailed, by certified or registered mail,
return receipt requested, postage prepaid. Such communications must be sent to
the respective parties at the following addresses (or at such other address for
a party as shall be specified in a notice given in accordance with this
Section 7.03):

 

If to Sellers:

Continental Materials Corp.,
440 S LaSalle St #3100,
Chicago, IL 60605
Attention:     Ryan M. Sullivan
E-Mail:         ryan_sullivan@contmtl.com

 

44

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And

 

 

 

 

 

Continental Materials Corp.,
440 S LaSalle St #3100,
Chicago, IL 60605
Attention:     Paul Ainsworth
E-Mail:         paul_ainsworth@contmtl.com

 

 

 

 

 

With a copy to:

 

 

 

 

 

Taft Stettinius & Hollister LLP
111 E. Wacker Drive, Suite 2800
Chicago, IL 60601-3713
Attention:     Michael C. Jurasek
E-Mail:         mjurasek@taftlaw.com

 

 

 

If to Buyer:

Aggregate Industries —WCR, Inc.
8700 West Bryn Mawr Avenue, #300
Chicago, IL 60631
Attention:     Guy Edwards
E-Mail:         guy.edwards@lafargeholcim.com

 

 

 

 

 

And

 

 

 

 

 

Aggregate Industries —WCR, Inc.
8700 West Bryn Mawr Avenue, #300
Chicago, IL 60631
Attention:     Craig A. Knot
E-Mail:         craig.knot@lafargeholcim.com

 

 

 

 

 

With a copy to (which shall not constitute notice):

 

 

 

 

 

Varnum LLP
Bridgewater Place, Suite 1700
333 Bridge Street NW
Grand Rapids, MI 49504
Attention:     Harvey Koning
E-Mail:         hkoning@varnumlaw.com

 

Section 7.04                            Interpretation. For purposes of this
Agreement, (a) the words “include,” “includes” and “including” shall be deemed
to be followed by the words “without limitation”; (b) the word “or” is not
exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and
“hereunder” refer to this Agreement as a whole. Unless the context otherwise
requires, references herein: (x) to Articles, Sections, Disclosure Schedules and
Exhibits mean the Articles and Sections of, and Disclosure Schedules and
Exhibits attached to, this Agreement; (y) to an agreement, instrument or other
document means such agreement, instrument or other document as amended,
supplemented and modified from time to time to the extent permitted by the
provisions thereof and (z) to a statute means such statute as amended from time
to time and includes any successor legislation thereto and any regulations
promulgated thereunder. This

 

45

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Agreement shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting an instrument or
causing any instrument to be drafted. The Disclosure Schedules and Exhibits
referred to herein shall be construed with, and as an integral part of, this
Agreement to the same extent as if they were set forth verbatim herein.

 

Section 7.05                            Headings. The headings in this Agreement
are for reference only and shall not affect the interpretation of this
Agreement.

 

Section 7.06                            Severability. If any term or provision
of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other term or
provision of this Agreement or invalidate or render unenforceable such term or
provision in any other jurisdiction. Except as provided in Section 5.04(d), upon
such determination that any term or other provision is invalid, illegal or
unenforceable, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the greatest
extent possible.

 

Section 7.07                            Entire Agreement. This Agreement and the
Ancillary Documents constitute the sole and entire agreement of the parties to
this Agreement with respect to the subject matter contained herein and therein,
and supersede all prior and contemporaneous understandings and agreements, both
written and oral, with respect to such subject matter. In the event of any
inconsistency between the statements in the body of this Agreement and those in
the Ancillary Documents, the Exhibits and Disclosure Schedules (other than an
exception expressly set forth as such in the Disclosure Schedules), the
statements in the body of this Agreement will control.

 

Section 7.08                            Successors and Assigns. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Neither party may assign its
rights or obligations hereunder without the prior written consent of the other
party, which consent shall not be unreasonably withheld or delayed; provided,
however, that prior to the Closing Date, Buyer may, without the prior written
consent of Sellers, assign all or any portion of its rights under this Agreement
to one or more of its direct or indirect wholly-owned subsidiaries. No
assignment shall relieve the assigning party of any of its obligations
hereunder.

 

Section 7.09                            No Third-party Beneficiaries. Except as
provided in Article VI, this Agreement is for the sole benefit of the parties
hereto and their respective successors and permitted assigns and nothing herein,
express or implied, is intended to or shall confer upon any other Person or
entity any legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.

 

Section 7.10                            Amendment and Modification; Waiver. This
Agreement may only be amended, modified or supplemented by an agreement in
writing signed by each party hereto. No waiver by any party of any of the
provisions hereof shall be effective unless explicitly set forth in writing and
signed by the party so waiving. No waiver by any party shall operate or be
construed as a waiver in respect of any failure, breach or default not expressly
identified by such written waiver, whether of a similar or different character,
and whether occurring before or after that waiver. No failure to exercise, or
delay in exercising, any right, remedy, power or privilege arising from this
Agreement shall operate or be construed as a waiver thereof; nor shall any

 

46

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single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.

 

Section 7.11                            Governing Law and Submission to
Jurisdiction.

 

(a)                                 This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Colorado without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Colorado or any other jurisdiction).

 

(b)                                 ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR BASED UPON THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE
UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF COLORADO IN EACH CASE
LOCATED IN THE CITY OF DENVER AND COUNTY OF DENVER, AND EACH PARTY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR
PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO
SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR
ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF
ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND
AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

Section 7.12                            Specific Performance. The parties agree
that irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy to which they are entitled at law or in equity.

 

Section 7.13                            Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which together shall be deemed to be one and the same agreement. A signed copy
of this Agreement delivered by facsimile, e-mail or other means of electronic
transmission shall be deemed to have the same legal effect as delivery of an
original signed copy of this Agreement.

 

[SIGNATURE PAGE FOLLOWS.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly
authorized.

 

 

CONTINENTAL MATERIALS CORP.

 

 

 

 

By:

/S/ RYAN SULLIVAN

 

Name:

Ryan Sullivan

 

Title:

Chief Operating Officer

 

 

 

 

 

 

 

TRANSMIT MIX OF PUEBLO, INC.

 

 

 

 

By:

/S/ RYAN SULLIVAN

 

Name:

Ryan Sullivan

 

Title:

Vice President

 

 

 

 

 

 

TRANSMIT MIX CONCRETE CO.

 

 

 

 

By:

/S/RYAN SULLIVAN

 

Name:

Ryan Sullivan

 

Title:

Vice President

 

 

 

 

 

 

 

CASTLE CONCRETE COMPANY

 

 

 

 

By:

/S/ RYAN SULLIVAN

 

Name:

Ryan Sullivan

 

Title:

Vice President

 

 

 

 

 

 

 

DANIELS SAND COMPANY

 

 

 

 

By:

/S/RYAN SULLIVAN

 

Name:

Ryan Sullivan

 

Title:

Vice President

 

 

 

 

 

 

 

AGGREGATE INDUSTRIES — WCR, INC.

 

 

 

 

By:

/S/IAN JOHNSTON

 

Name:

Ian Johnston

 

Title:

Chief Financial Officer

 

[Signature Page to Asset Purchase Agreement]

 

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ANNEX A

DEFINITIONS

 

For the purposes of this Agreement, the following terms shall have the meanings
specified or referred to below whether or not capitalized when used in this
Agreement.

 

The following terms have the meanings specified or referred to in this Annex A:

 

“Accounts Receivable” has the meaning set forth in Section 1.01(a).

 

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration,
inquiry, audit, notice of violation, proceeding, litigation, citation, summons,
subpoena or investigation of any nature, civil, criminal, administrative,
regulatory or otherwise, whether at law or in equity.

 

“Actual Fraud”  means that a court of competent jurisdiction has determined
pursuant to a final, written order from which no appeal has or can be taken
that:

 

(a)                                 with respect to any representation and
warranty made by a Seller in Article III, (i) such representation and warranty
was inaccurate or untrue in any material respect when made (i.e., on the date of
this Agreement), (ii) such Seller had Knowledge that such representation and
warranty was inaccurate or untrue in such material respect when so made,
(iii) such Seller intended that Buyer rely on the accuracy of such
representation and warranty in entering into this Agreement and consummating the
transaction contemplated hereby, (iv) Buyer actually, reasonably and justifiably
relied on the accuracy of such representation and warranty in entering into this
Agreement and consummating the transactions contemplated hereby, (v) Buyer
actually has suffered a material Loss in so relying on the accuracy of such
representation in warranty, and (vi) that the material inaccuracy or
untruthfulness of such representation and warranty was the proximate cause of
Buyer’s material Loss (i.e., ‘loss causation’);

 

(b)                                 with respect to any representation and
warranty made by a Buyer in Article IV, (i) such representation and warranty was
inaccurate or untrue in any material respect when made (i.e., on the date of
this Agreement), (ii) Buyer had knowledge that such representation and warranty
was inaccurate or untrue in such material respect when so made, (iii) Buyer
intended that Sellers rely on the accuracy of such representation and warranty
in entering into this Agreement and consummating the transactions contemplated
hereby, (iv) Sellers actually, reasonably and justifiably relied on the accuracy
of such representation and warranty in entering into this Agreement and
consummating the transactions contemplated hereby, (v) Sellers actually have
suffered a material Loss in so relying on the accuracy of such representation in
warranty, and (vi) that the material inaccuracy or untruthfulness of such
representation and warranty was the proximate cause of Sellers’ material Loss
(i.e., ‘loss causation’); and

 

(c)                                  in all other cases shall mean common law
fraud with the specific intent to deceive.

 

A-1

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“Affiliate” of a Person means any other Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person. The term “control” (including the terms
“controlled by” and “under common control with”) means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

 

“Agreement” has the meaning set forth in the preamble.

 

“Allocation Principles” has the meaning set forth in Section 1.07.

 

“Ancillary Documents” means the Costilla Lease Agreement, the First American
Title Company Escrow Agreement, the Escrow Agreement, the Non-Vehicles Bill of
Sale, the Vehicles Bill of Sale the Assignment and Assumption Agreement, the
Deeds, the Water Rights Deed, the Water Lease, the Assignment and Assumption of
Augmentation Plan, the Assignment and Assumption of Hourglass Sands Lease, the
Transition Services Agreement, the Colocation Services Agreement, the FMIC
Shares Agreement and the other agreements, instruments and documents required to
be delivered at the Closing.

 

“Annual Financial Statements” has the meaning set forth in Section 3.04.

 

“Assigned Contracts” has the meaning set forth in Section 1.01(c).

 

“Assignment and Assumption Agreement” has the meaning set forth in
Section 2.02(a)(vii).

 

“Assignment and Assumption of Augmentation Plan” means an assignment and
assumption agreement, in form and substance acceptable to Buyer and Sellers, for
the Assumed Liabilities set forth in Section 1.03(d) of the Disclosure
Schedules.

 

“Assignment and Assumption of Hourglass Sands Lease” has the meaning set forth
in Section 2.02(a)(xi).

 

“Assumed Liabilities” has the meaning set forth in Section 1.03.

 

“Balance Sheet” has the meaning set forth in Section 3.04.

 

“Balance Sheet Date” has the meaning set forth in Section 3.04.

 

“Benefit Plan” has the meaning set forth in Section 3.19(a).

 

“Books and Records” has the meaning set forth in Section 1.01(k).

 

“Business Day” means any day except Saturday, Sunday or any other day on which
commercial banks located in Chicago, Illinois or Colorado Springs, Colorado are
authorized or required by Law to be closed for business.

 

“Buyer” has the meaning set forth in the preamble.

 

A-2

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“Buyer Indemnitees” has the meaning set forth in Section 6.02.

 

“Cap” has the meaning set forth in Section 6.04(a).

 

“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.

 

“CIBC” means CIBC USA Bank.

 

“Closing” has the meaning set forth in Section 2.01.

 

“Closing Date” has the meaning set forth in Section 2.01.

 

“Closing Working Capital” means: (a) Current Assets, less (b) Current
Liabilities, determined as of the close of business on the Closing Date and
consistent with the methodology set forth in the binding example in Section 1.06
of the Disclosure Schedules.

 

“Closing Working Capital Statement” has the meaning set forth in
Section 1.06(a)(i).

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Colocation Services Agreement” means the Master Services Agreement, of even
date with this Agreement, among Buyer and one or more Sellers, together with the
accompanying Colocation Service Order Schedule which is a part thereof.

 

“Contracts” means all contracts, leases, deeds, mortgages, licenses,
instruments, notes, commitments, undertakings, indentures, joint ventures and
all other agreements, commitments and legally binding arrangements, whether
written or oral.

 

“Costilla Lease Agreement” means the real property lease, of even date with this
Agreement, of the West Parcel between TMC, as lessor, and Buyer, as lessee.

 

“Current Assets” means the following current assets: the Accounts Receivable
(net of 2.5% bad debt reserve), the Inventory, any work in process related to
the Purchased Business and any pre-paid expenses related to Assigned Contracts
(to the extent acquired pursuant to the terms of this Agreement); provided,
however, that “Current Assets” does not include any accounts and notes
receivable of the Purchased Business payable by any of the Sellers or their
corporate parent(s) or any cash or cash equivalents.

 

“Current Liabilities” means the following current liabilities of the Purchased
Business: trade accounts payable, and accrued liabilities under the Assigned
Contracts and assumed payroll obligations (if any); provided, however, that
“Current Liabilities” does included any accrued reclamation liabilities.

 

“Deductible” has the meaning set forth in Section 6.04(a).

 

“Deed” has the meaning set forth in Section 2.02(a)(ix).

 

A-3

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“Direct Claim” has the meaning set forth in Section 6.06(c).

 

“Disclosure Schedules” means the Disclosure Schedules delivered by Seller and
Buyer concurrently with the execution and delivery of this Agreement.

 

“Disputed Amounts” has the meaning set forth in Section 1.06(b)(iii).

 

“Dollars” or “$” means the lawful currency of the United States.

 

“East Parcel” has the meaning set forth in Section 5.14(a)(iii).

 

“Encumbrance” means any charge, claim, community property interest, pledge,
condition, equitable interest, lien (statutory or other), option, security
interest, mortgage, easement, encroachment, right of way, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of ownership.

 

“Environmental Attributes” means any emissions and renewable energy credits,
energy conservation credits, benefits, offsets and allowances, emission
reduction credits or words of similar import or regulatory effect (including
emissions reduction credits or allowances under all applicable emission trading,
compliance or budget programs, or any other federal, state or regional emission,
renewable energy or energy conservation trading or budget program) that have
been held, allocated to or acquired for the development, construction,
ownership, lease, operation, use or maintenance of the Purchased Business or the
Purchased Assets or as of: (a) the date of this Agreement; and (b) future years
for which allocations have been established and are in effect as of the date of
this Agreement.

 

“Environmental Claim” means any Action, Governmental Order, lien, fine, penalty,
or, as to each, any settlement or judgment arising therefrom, by or from any
Person alleging liability of whatever kind or nature (including liability or
responsibility for the costs of enforcement proceedings, investigations,
cleanup, governmental response, removal or remediation, natural resources
damages, property damages, personal injuries, medical monitoring, penalties,
contribution, indemnification and injunctive relief) arising out of, based on or
resulting from: (a) the presence, Release of, or exposure to, any Hazardous
Materials; or (b) any actual or alleged non-compliance with any Environmental
Law or term or condition of any Environmental Permit.

 

“Environmental Law” means any applicable Law, and any Governmental Order or
binding agreement with any Governmental Authority: (a) relating to pollution (or
the cleanup thereof) or the protection of natural resources, endangered or
threatened species, human health or safety, or the environment (including
ambient air, soil, surface water or groundwater, or subsurface strata); or
(b) concerning the presence of, exposure to, or the management, manufacture,
use, containment, storage, recycling, reclamation, reuse, treatment, generation,
discharge, transportation, processing, production, disposal or remediation of
any Hazardous Materials. The term “Environmental Law” includes, without
limitation, the following (including their implementing regulations and any
state analogs): the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal
Act, as

 

A-4

--------------------------------------------------------------------------------

 

amended by the Resource Conservation and Recovery Act of 1976, as amended by the
Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the
Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act
of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as
amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of
1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et
seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C.
§§ 651 et seq.

 

“Environmental Notice” means any written directive, notice of violation or
infraction, or notice respecting any Environmental Claim relating to actual or
alleged non-compliance with any Environmental Law or any term or condition of
any Environmental Permit.

 

“Environmental Permit” means any Permit, letter, clearance, consent, waiver,
closure, exemption, decision or other action required under or issued, granted,
given, authorized by or made pursuant to Environmental Law.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder.

 

“ERISA Affiliate” means all employers (whether or not incorporated) that would
be treated together with the Seller or any of its Affiliates as a “single
employer” within the meaning of Section 414 of the Code or Section 4001 of
ERISA.

 

“Escrow Agent” means CitiBank N.A.

 

“Escrow Agreement” means the Escrow Agreement, of even date with this Agreement,
among Buyer, Continental and the Escrow Agent at the Closing.

 

“Excluded Assets” has the meaning set forth in Section 1.02.

 

“Excluded Contracts” has the meaning set forth in Section 1.02(a).

 

“Excluded Liabilities” has the meaning set forth in Section 1.04.

 

“Excluded Real Property” is those properties listed on Annex C.

 

“Excluded Subsidiary” means each subsidiary of Continental which is not a
Seller, including McKinney Door and Hardware, Inc., a Colorado corporation,
Phoenix Manufacturing, Inc., an Arizona corporation, and Williams Furnace
Company, a Delaware corporation.

 

“Existing Costilla Property” has the meaning set forth in Section 5.14(a)(i).

 

“Failsafe Closing” has the meaning set forth in Section 5.14(e).

 

“Failsafe Lease” has the meaning set forth in Section 5.14(e).

 

“Financial Statements” has the meaning set forth in Section 3.04.

 

A-5

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“FIRPTA Certificate” has the meaning set forth in Section 2.02(a)(xv).

 

“First American Title Company Escrow Agreement” means the Escrow Agreement, of
even date with this Agreement, among Buyer, Sellers and First American Title
Company.

 

“FMIC Shares Agreement” means the Agreement for Assignment and Reissuance of
Shares of Stock in Fountain Mutual Irrigation Company, of even date with this
Agreement, among Sellers and Buyer.

 

“GAAP” means United States generally accepted accounting principles in effect
from time to time.

 

“Government Contracts” has the meaning set forth in Section 3.07(a)(viii).

 

“Governmental Authority” means any federal, state, local or foreign government
or political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated organization or other
non-governmental regulatory authority or quasi-governmental authority (to the
extent that the rules, regulations or orders of such organization or authority
have the force of Law), or any arbitrator, court or tribunal of competent
jurisdiction.

 

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.

 

“Hazardous Materials” means: (a) any material, substance, chemical, waste,
product, derivative, compound, mixture, solid, liquid, mineral or gas, in each
case, whether naturally occurring or manmade, that is hazardous, acutely
hazardous, toxic, or words of similar import or regulatory effect under
Environmental Laws; and (b) any petroleum or petroleum-derived products, radon,
radioactive materials or wastes, asbestos in any form, lead or lead-containing
materials, urea formaldehyde foam insulation and polychlorinated biphenyls.

 

“Indemnification Escrow Amount” means $1,250,000.

 

“Indemnification Escrow Fund” has the meaning set forth in Section 2.02(c)(i).

 

“Indemnified Party” has the meaning set forth in Section 6.06.

 

“Indemnifying Party” has the meaning set forth in Section 6.06.

 

“Independent Accountants” has the meaning set forth in Section 1.06(b)(iii).

 

“Insurance Policies” has the meaning set forth in Section 3.15.

 

“Intellectual Property” means any and all rights in, arising out of, or
associated with any of the following in any jurisdiction throughout the world:
(a) issued patents and patent applications (whether provisional or
non-provisional), including divisionals, continuations, continuations-in-part,
substitutions, reissues, reexaminations, extensions, or restorations of any of
the foregoing, and other Governmental Authority-issued indicia of invention
ownership

 

A-6

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(including certificates of invention, petty patents, and patent utility
models) (“Patents”); (b) trademarks, service marks, brands, certification marks,
logos, trade dress, trade names, and other similar indicia of source or origin,
together with the goodwill connected with the use of and symbolized by, and all
registrations, applications for registration, and renewals of, any of the
foregoing (“Trademarks”); (c) copyrights and works of authorship, whether or not
copyrightable, and all registrations, applications for registration, and
renewals of any of the foregoing (“Copyrights”); (d) internet domain names and
social media account or user names (including “handles”), whether or not
Trademarks, all associated web addresses, URLs, websites and web pages, social
media accounts and pages, and all content and data thereon or relating thereto,
whether or not Copyrights; (e) trade secrets, know-how, inventions (whether or
not patentable), discoveries, improvements, technology, business and technical
information, databases, data compilations and collections, tools, methods,
processes, techniques, and other confidential and proprietary information and
all rights therein (“Trade Secrets”); (f) computer programs, operating systems,
applications, firmware and other code, including all source code, object code,
application programming interfaces, data files, databases, protocols,
specifications, and other documentation thereof (“Software”); and (g) all other
intellectual or industrial property and proprietary rights.

 

“Intellectual Property Agreements” means all licenses, sublicenses, consent to
use agreements, settlements, coexistence agreements, covenants not to sue,
waivers, releases, permissions and other Contracts, whether written or oral,
relating to any Intellectual Property that is used or held for use in the
conduct of the Purchased Business as currently conducted or proposed to be
conducted to which Seller is a party, beneficiary or otherwise bound but, in
each case, excluding any of the same which are used or held for use in the
conduct of the Non-Purchased Business.

 

“Intellectual Property Assets” means all Intellectual Property that is owned by
Seller and used or held for use in the conduct of the Purchased Business as
currently conducted, together with all (i) royalties, fees, income, payments,
and other proceeds now or hereafter due or payable to Seller with respect to
such Intellectual Property; and (ii) claims and causes of action with respect to
such Intellectual Property, including all rights to and claims for damages,
restitution, and injunctive and other legal or equitable relief for past,
present, or future infringement, misappropriation, or other violation thereof,
but, in each case, excluding any of the same which are used or held for use in
the conduct of the Non-Purchased Business.

 

“Intellectual Property Assignments” has the meaning set forth in
Section 2.02(a)(ix).

 

“Intellectual Property Registrations” means all Intellectual Property Assets
that are subject to any issuance, registration, or application by or with any
Governmental Authority or authorized private registrar in any jurisdiction,
including issued Patents, registered Trademarks, domain names and Copyrights,
and pending applications for any of the foregoing.

 

“Interim Balance Sheet” has the meaning set forth in Section 3.04.

 

“Interim Balance Sheet Date” has the meaning set forth in Section 3.04.

 

“Interim Financial Statements” has the meaning set forth in Section 3.04.

 

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“Inventory” has the meaning set forth in Section 1.01(b).

 

“Knowledge of Seller or Seller’s Knowledge” or any other similar knowledge
qualification, means the actual or constructive knowledge of Ryan M. Sullivan,
Paul Ainsworth, Jerald Schnabel, Jerry Schmitz, John Crowley and Jason Gordon,
after due inquiry.

 

“Land Division Approvals” has the meaning set forth in Section 5.14(a)(iv).

 

“Law” means any statute, law, ordinance, regulation, rule, code, order,
constitution, treaty, common law, judgment, decree, other requirement or rule of
law of any Governmental Authority.

 

“Liabilities” means liabilities, obligations or commitments of any nature
whatsoever, asserted or unasserted, known or unknown, absolute or contingent,
accrued or unaccrued, matured or unmatured or otherwise.

 

“Losses” means losses, damages, liabilities, deficiencies, Actions, judgments,
interest, awards, penalties, fines, costs or expenses, including reasonable
attorneys’ fees and including the cost of enforcing any right to indemnification
hereunder and the cost of pursuing any insurance providers; provided, however,
that “Losses” shall not include punitive damages, except to the extent actually
awarded to a Governmental Authority or other third party, or any indirect,
consequential, remote or speculative damages, lost profits or revenues,
diminution in value, harm to reputation, foregone or lost business opportunities
or any damages measured by any multiple (including any multiple of revenue,
profits, earnings, assets or any other financial measure).

 

“Material Adverse Effect” means any event, occurrence, fact, condition or change
that is, or could reasonably be expected to become, individually or in the
aggregate, materially adverse to (a) the business, results of operations,
condition (financial or otherwise) or assets of the Purchased Business, (b) the
value of the Purchased Assets, or (c) the ability of Seller to consummate the
transactions contemplated hereby on a timely basis; provided, however, that
“Material Adverse Effect” shall not include any event, occurrence, fact,
condition or change, directly or indirectly, arising out of or attributable to:
(i) general economic or political conditions; (ii) conditions generally
affecting the industries in which the Purchased Business operates; (iii) any
changes in financial or securities markets in general; (iv) acts of war (whether
or not declared), armed hostilities or terrorism, or the escalation or worsening
thereof; (v) any action required or permitted by this Agreement, except pursuant
to Section 3.03; or (vi) any changes in applicable Laws or accounting rules,
including GAAP; provided further, however, that any event, occurrence, fact,
condition or change referred to in clauses (i) through (iv) immediately above
shall be taken into account in determining whether a Material Adverse Effect has
occurred or could reasonably be expected to occur to the extent that such event,
occurrence, fact, condition or change has a disproportionate effect on the
Purchased Business compared to other participants in the industries in which the
Purchased Business operates.

 

“Material Contracts” has the meaning set forth in Section 3.07(a).

 

“Material Customers” has the meaning set forth in Section 3.14(a).

 

“Material Suppliers” has the meaning set forth in Section 3.14(b).

 

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“Multiemployer Plan” has the meaning set forth in Section 3.19(f).

 

“Non-Purchased Business” has the meaning set forth in the Recitals.

 

“Non-Vehicles Bill of Sale” has the meaning set forth in Section 2.02(a)(v).

 

“Permits” means all permits, licenses, franchises, approvals, authorizations,
registrations, certificates, variances and similar rights obtained, or required
to be obtained, from Governmental Authorities.

 

“Permitted Encumbrances” has the meaning set forth in Section 3.08(a).

 

“Person” means an individual, corporation, partnership, joint venture, limited
liability company, Governmental Authority, unincorporated organization, trust,
association or other entity.

 

“Post-Closing Adjustment” has the meaning set forth in Section 1.06(a)(ii).

 

“Post-Closing Tax Period” means any taxable period beginning after the Closing
Date and, with respect to any taxable period beginning before and ending after
the Closing Date, the portion of such taxable period beginning after the Closing
Date.

 

“Pre-Closing Tax Period” means any taxable period ending on or before the
Closing Date and, with respect to any taxable period beginning before and ending
after the Closing Date, the portion of such taxable period ending on and
including the Closing Date.

 

“Purchase Price” has the meaning set forth in Section 1.05.

 

“Purchased Assets” has the meaning set forth in Section 1.01.

 

“Purchased Business” has the meaning set forth in the Recitals.

 

“Qualified Benefit Plan” has the meaning set forth in Section 3.19(b).

 

“Real Property” means, collectively, the Owned Real Property and the Leased Real
Property.

 

“Release” means any actual or threatened release, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, abandonment, disposing or allowing to escape or migrate into or through
the environment (including, without limitation, ambient air (indoor or outdoor),
surface water, groundwater, land surface or subsurface strata or within any
Building, structure, facility or fixture).

 

“Representative” means, with respect to any Person, any and all directors,
officers, employees, consultants, financial advisors, counsel, accountants and
other agents of such Person.

 

“Resolution Period” has the meaning set forth in Section 1.06(b)(ii).

 

A-9

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“Restricted Business” means the manufacture, sale, distribution and/or supply of
ready mix concrete or similar products or services.

 

“Restricted Period” has the meaning set forth in Section 5.04(a).

 

“Review Period” has the meaning set forth in Section 1.06(b)(i).

 

“Sellers” has the meaning set forth in the preamble.

 

“Sellers Indemnitees” has the meaning set forth in Section 6.03.

 

“Statement of Objections” has the meaning set forth in Section 1.06(b)(ii).

 

“Surety Arrangements” means any bonds, letters of credit, cash, guarantees and
other instruments or arrangements securing or guarantying performance of
obligations.

 

“Tangible Personal Property” has the meaning set forth in Section 1.01(d).

 

“Taxes” means all federal, state, local, foreign and other income, gross
receipts, sales, use, production, ad valorem, transfer, documentary, franchise,
registration, profits, license, lease, service, service use, withholding,
payroll, employment, unemployment, estimated, excise, severance, environmental,
stamp, occupation, premium, property (real or personal), real property gains,
windfall profits, customs, duties or other taxes, fees, assessments or charges
of any kind whatsoever, together with any interest, additions or penalties with
respect thereto, whether disputed or not, and any interest in respect of such
additions or penalties.

 

“Tax Return” means any return, declaration, report, claim for refund,
information return or statement or other document relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.

 

“Territory” means Colorado Springs, Colorado and Pueblo, Colorado and the area
within a 150-mile radius from the city limits of Colorado Springs, Colorado and
Pueblo, Colorado, respectively.

 

“Third Party Claim” has the meaning set forth in Section 6.06(a).

 

“Third Party Lease” has the meaning set forth in Section 3.10(a)(ii).

 

“Transferred Real Property” means the real property described on Annex B.

 

“Transferred Water Rights” means the water rights conveyed under the Water
Rights Deed.

 

“Transition Services Agreement” “ means the Transition Services Agreement, of
even date with this Agreement, among Buyer and Sellers.

 

“Vehicles Bill of Sale” has the meaning set forth in Section 2.02(a)(vii).

 

A-10

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“Water Lease” means the Water Lease and Right of First Refusal Agreement, of
even date with this Agreement, among Buyer, TMC and Castle.

 

“Water Rights Deed” has the meaning set forth in Section 2.02(a)(x).

 

“Undisputed Amounts” has the meaning set forth in Section 1.06(b)(iii).

 

“Union” has the meaning set forth in Section 3.20(b).

 

“WARN Act” means the federal Worker Adjustment and Retraining Notification Act
of 1988, and similar state, local and foreign laws related to plant closings,
relocations, mass layoffs and employment losses.

 

“West Parcel” has the meaning set forth in Section 5.14(a)(ii).

 

A-11

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ANNEX B

 

TRANSFERRED REAL PROPERTY

 

Location

 

Operations

 

Address

Costilla (to be transferred after Closing pursuant to Section 5.14)

 

Ready Mix

 

444 E Costilla St
Colorado Springs, CO 80903

Nevada

 

Ready Mix

 

3749 N Nevada Ave
Colorado Springs, CO 80907

Marksheffel

 

Ready Mix

 

3555 Marksheffel Rd
Colorado Springs, CO 80922

Daniels

 

Ready Mix and Quarry

 

3710 Bradley Rd
Colorado Springs, CO 80911

Pueblo West

 

Ready Mix

 

684 E Industrial Blvd
Pueblo, CO 81007

Pueblo East

 

Ready Mix

 

2596 Colorado 96
Pueblo, CO 81001

 

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ANNEX C

 

EXCLUDED REAL PROPERTY

 

Location

 

Operations

 

Address

Pike View

 

Quarry

 

7250 Allegheny Rd
Colorado Springs, CO 80919

Grisenti Pit

 

Sand & Gravel

 

Hwy 115, 1.5 miles south of Hwy 50
Penrose, CO 81240

Canon City

 

Limestone Reserves

 

W Hwy 50
Canon City, CO 81212

Colorado Springs Building Supplies

 

Building Supplies

 

549 E Cucharras St
Colorado Springs, CO 80903

Pueblo Building Supplies

 

Building Supplies

 

2700 N Freeway
Pueblo, CO 81003

Hitch Rack Ranch

 

Potential Quarry

 

City of Colorado Springs

Blake Ranch

 

Development Opportunity

 

South of the City of Pueblo

 

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EXHIBIT A-1

 

EXISTING COSTILLA PROPERTY LEGAL DESCRIPTION

 

[See attached]

 

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EXHIBIT A-2

 

“WEST PARCEL” AND “EAST PARCEL”
OF THE EXISTING COSTILLA PROPERTY

 

[See attached]

 

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EXHIBIT B

 

ALLOCATION PRINCIPLES

 

Assets

 

Asset Class

 

Amount to be Allocated

Accounts Receivable

 

III

 

Net amount accrued by the Sellers

Inventory

 

IV

 

Net book value on the books of the Sellers

Machinery, Furniture, Property and Equipment

 

V

 

$15,077,829

Covenants Not to Compete

 

VI

 

$0

Goodwill

 

VII

 

Balance of amounts to be allocated under Section 1.07

 

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