UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 18, 2003
Better Minerals & Aggregates Company
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
333-32518 55-0749125
(Commission File Number) (IRS Employer Identification No.)
Route 522 North, P.O. Box 187
Berkeley Springs, West Virginia 25411
(Address of principal executive offices, including zip code)
(304) 258-2500
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Item 2. Acquisition or Dispostion of Assets
On April 10, 2003, Better Minerals & Aggregates Company signed an agreement
for the sale of its aggregates business, Better Materials Corporation, to a
subsidiary of Hanson Building Materials America, Inc. ("Hanson"), the proceeds
from which would be used to reduce outstanding indebtedness under its senior
secured credit agreement. On July 18, 2003, we completed the sale, receiving
total cash consideration of $158.3 million before fees and expenses. Proceeds
have not been reduced for the effect of a $2.0 million non-interest-bearing
contingent note payable to Hanson that will be forgiven when certain
post-closing zoning and permit objectives are achieved. We believe achievement
of these objectives will be reached within the five-year term of the note
payable. Proceeds from the sale are less than we originally anticipated due to a
$3.0 million purchase price reduction, reflecting an estimate of the damages and
losses caused by an incident that occurred on June 25, 2003 at one of the
operating sites included in the sale. While we believe that some portion of this
loss will be recoverable under our insurance policies, there is no guarantee
that we will receive any reimbursement from the claim. Attached to this Current
Report on Form 8-K as Exhibit 99 is the press release announcing completion of
the sale.
Net proceeds from the sale, after deducting $4.9 million in fees, expenses and
interest on our senior secured term loans, were $153.4 million and were used to
permanently reduce and eliminate our tranche A and tranche B term loans under
our senior secured credit agreement, totaling $107.9 million in the aggregate,
and $45.5 million of the $50.0 million available to us under the revolving
credit facility, including $5.5 million in cash collateral for outstanding
letters of credit, as required by the terms of our senior secured credit
agreement. After taking into effect the remaining letters of credit that reduces
the amount available to us under the revolving credit facility, we have $1.3
million available for our immediate use. Our outstanding letters of credit
include $3.4 million that still support surety requirements of Better Materials
Corporation, our divested subsidiary, that will be cancelled when Hanson
provides substitute collateral in place of our letters of credit. When that
substitution occurs, the full $4.5 million of the remaining working capital
revolver will be available for our use for general corporate purposes. After
taking into account these permanent reductions of debt under our senior secured
credit agreement, we currently have approximately $164 million of long-term debt
outstanding, consisting of approximately $14.5 million outstanding under our
tranche C term loan under the senior secured credit agreement and $150 million
of 13% senior subordinated notes due 2009.
Based on our current projections of the remaining industrial minerals business,
we believe that we will generate sufficient cash flow to meet our operating
requirements over the next 12 months. However, assuming our current revolving
credit facility continues to be our only source of external working capital, we
do not believe that we will have sufficient liquidity to make the $9.75 million
interest payment due on September 15, 2003 with respect to our senior
subordinated notes. We are currently in discussions with a financial institution
for a new asset based revolving credit facility that we believe will provide
working capital for our remaining business and sufficient proceeds to repay the
remaining $14.5 million of tranche C term debt under the existing senior secured
credit agreement, canceling that agreement (including the related revolving
credit facility), and to make the senior subordinated notes interest payment on
schedule. While we are reasonably confident that we will be able to obtain this
new source of financing, we cannot guarantee that we will be able to do so on
terms satisfactory to us, in a timely manner (including by the September 15,
2003 interest payment due date) or at all.
In addition to the above, as of June 30, 2003 we were not in compliance with the
financial covenants of the senior secured credit agreement as amended on April
17, 2003, and accordingly we are in default under the senior secured credit
agreement, and our lenders could declare all amounts borrowed under the senior
secured credit agreement together with accrued interest, immediately due and
payable. Even though after taking into account the proceeds from the sale of
Better Materials, we would have been in compliance with these financial
covenants if the sale had occurred as of June 30, 2003, that does not cure the
actual default as of that date. Accordingly, if we do not replace the senior
secured credit agreement with a new financing arrangement as previously noted,
even if we do generate sufficient cash flow to meet the $9.75 million interest
payment due on September 15, 2003, we could be a)required to repay all
outstanding borrowings and/or b) prevented from making the interest payment due
until we either amended the senior secured credit agreement, or received a
waiver from our senior secured lenders. While we have obtained amendments and
waivers under the senior secured credit agreement in the past, there is no
assurance that this amendment or waiver will be granted or that it would be
granted on terms satisfactory to us.
To assist us in evaluating all of our strategic options, including the current
liquidity issues, we have hired Jefferies & Company, Inc. to act as our
financial advisor.
This Current Report on Form 8-K includes "forward-looking statements." We have
based these forward-looking statements on our current expectations and
projections about future events. Although we believe that our plans, intentions
and expectations reflected in or suggested by those forward-looking statements
are reasonable, we can give no assurance that our plans, intentions or
expectations will be achieved. We believe that the 13 following factors, among
others, could affect our future performance and cause actual results to differ
materially from those expressed or implied by these forward-looking statements:
(1) general and regional economic conditions, including the economy in the
states in which we have production facilities and in which we sell our products;
(2) demand for residential and commercial construction; (3) demand for
automobiles and other vehicles; (4) the competitive nature of the industrial
minerals industry; (5) operating risks typical of the industrial minerals
industry; (6) fluctuations in prices for, and availability of, transportation,
power, petroleum based products and other energy products; (7) regulatory
compliance, including compliance with environmental and silica exposure
regulations, by us and our customers; (8) litigation affecting our customers;
(9) product liability litigation by our customers' employees affecting us,
including the adequacy of indemnity and insurance coverage and of the reserves
we have recorded relating to current and future litigation; (10) changes in the
demand for our products due to the availability of substitutes for products of
our customers; (11) labor unrest; (12) interest rate changes and changes in
financial markets generally; and (13) the ability to obtain new sources of
financing to serve the working capital needs of our remaining industrial
minerals business.
Item 5. Other Events and Required FD Disclosure.
Reeves Separation Agreement
On June 20, 2003, we announced that John A. Ulizio had replaced Roy D. Reeves as
our President and Chief Executive Officer. Upon his departure, our parent
company entered into a Separation Agreement and General Release with Mr. Reeves,
a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.
Item 12. Results of Operations and Financial Condition.
Silica Health Risks and Litigation
Our principal operating subsidiary, U.S. Silica Company, continues to be named
as defendant in product liability suits that claim that our silica products were
defective or that we acted negligently in selling our silica products without a
warning, or with an inadequate warning. Since we filed our last public
disclosure on this matter, we were named as a defendant in an estimated 1,530
new product liability claims served on U.S. Silica between May 1, 2003 and June
30, 2003 as compared with 196 similar new product liability claims served in the
same two month period in 2002.
For the six-month period between January 1, 2003 and June 30, 2003, U.S. Silica
was named as a defendant in an estimated 14,990 new product liability claims, as
compared to an estimated 1,235 claims between January 1, 2002 and June 30, 2002.
During the six month period ended June 30, 2003, new claims by state were 11,989
in Mississippi, 1,986 in Texas, 730 in Louisiana, 217 in Ohio, 67 in
Pennsylvania and 1 in Indiana. Total open claims as of June 30, 2003 were an
estimated 21,742 as compared to an estimated 7,141 open claims as of December
31, 2002 and an estimated 3,505 as of June 30, 2002.
In the six-month period ended June 30, 2003, we paid $6.3 million in defense and
settlement costs, and invoiced ITT Industries $4.2 million under the terms of
the indemnity agreement with them resulting in retained losses to us of $2.1
million in the period. For the comparable six-month period ended June 30, 2002,
we paid $0.9 million in defense and settlement costs, and invoiced ITT
Industries $0.7 million, resulting in retained losses to us of $0.2 million.
Please see our Annual Report on Form 10-K for the year ended December 31, 2002,
and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2003,
"Significant Factors Affecting Our Business - Silica Health Risks May Have a
Material Adverse Effect on Our Business" for more details on these matters.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Item 12. Results of Operations and Financial Condition.
(b) Pro forma financial information.
1. Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the Twelve Months Ended December 31, 2000.
2. Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the Twelve Months Ended December 31, 2001.
3. Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the Twelve Months Ended December 31, 2002.
4. Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the Three Months Ended March 31, 2002.
5. Unaudited Pro Forma Condensed Consolidated Statement of Operations for
the Three Months Ended March 31, 2003.
6. Notes to the Unaudited Pro Forma Condensed Consolidated Statements of
Operations.
7. Unaudited Pro Forma Condensed Consolidated Balance Sheet at March 31,
2003.
8. Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet.
The above-referenced unaudited pro forma consolidated financial statements,
which appear immediately after the signature page of this Current Report on Form
8-K, reflect the sale of our aggregates business, referred to in the unaudited
pro forma consolidated financial statements as Better Materials Corporation or
BMC, and the permanent reduction of a substantial portion of our borrowings
under our senior secured credit agreement as described in this Current Report on
Form 8-K, referred to in the unaudited pro forma consolidated financial
statements as Senior Debt. The unaudited pro forma consolidated financial
statements have been prepared by applying pro forma adjustments to our
consolidated financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2002, as amended (the "2002 Form 10-K"), and our
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003 (the
"First Quarter 2003 Form 10-Q") (the "Historical Financial Statements"). The
unaudited pro forma condensed consolidated statements of operations reflect the
sale of the aggregates business, and the related reduction in debt, assuming the
transactions had been consummated as of the beginning of the fiscal year
presented. The unaudited pro forma condensed consolidated balance sheet reflects
the sale of the aggregates business, and the related reduction in debt, assuming
the transactions had been consummated as of March 31, 2003.
The pro forma adjustments, as described in the notes to the unaudited pro forma
consolidated financial statements, are estimates based on currently available
information and certain adjustments that management believes are reasonable. The
unaudited pro forma consolidated financial statements are presented for
informational purposes only and is not necessarily indicative of the operating
results or financial position that would have occurred had the sale of the
aggregates business, or the related reduction in debt, been consummated on or as
of the dates indicated nor is it necessarily indicative of future operating
results or financial position. The unaudited pro forma consolidated financial
statements should be read in conjunction with the Historical Financial
Statements and the related management's discussion and analysis of financial
condition and results of operations, which are contained in our 2002 Form 10-K
and our First Quarter 2003 Form 10-Q.
(c) Exhibits.
10. Separation Agreement and General Release dated as of June 24, 2003
(effective June 30, 2003) between Roy D. Reeves and USS Holdings, Inc.
99. Press release dated July 21, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Better
Minerals & Aggregates Company has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Better Minerals & Aggregates Company
Date: July 31, 2003 By: /s/ Gary E. Bockrath
---------------------
Name: Gary E. Bockrath
Title: Vice President and
Chief Financial Officer
Better Minerals & Aggregates Company
Unaudited Proforma Condensed Consolidated Statements of Operations
For the Twelve Months Ended December 31, 2000
(Dollars in thousands)
Better
Materials Pro Forma
Historical Corporation Adjustments Pro Forma
---------- ----------- ----------- ---------
Sales $ 299,335 $(107,598) $ 853 (1) $ 192,590
Cost of goods sold 222,754 (82,185) 1,110 (2) 141,679
Depreciation, depletion and amortization 35,895 (11,754) 25 (3) 24,166
Selling, general and administrative 26,541 (9,141) 2,622 (4) 20,022
--------- --------- -------- ---------
Operating income 14,145 (4,518) (2,904) 6,723
Interest expense 36,359 (11,592) (3,154) (5) 21,613
Other income, net, including interest income (1,575) (577) - (2,152)
--------- --------- -------- ---------
Loss before income taxes (20,639) 7,651 250 (12,738)
Benefit for income taxes (11,091) (3,224) 4,216 (6) (10,099)
--------- --------- -------- ---------
Net loss before cumulative effect
of change in accounting for goodwill $ (9,548) $ 10,875 $ (3,966) $(2,639)
========= ========= ========= =========
Better Minerals & Aggregates Company
Unaudited Proforma Condensed Consolidated Statements of Operations
For the Twelve Months Ended December 31, 2001
(Dollars in thousands)
Better
Materials Pro Forma
Historical Corporation Adjustments Pro Forma
---------- ----------- ----------- ---------
Sales $ 307,947 $(120,833) $ 2,633 (1) $ 189,747
Cost of goods sold 229,193 (90,692) 3,612 (2) 142,113
Depreciation, depletion and amortization 32,670 (15,603) 52 (3) 17,119
Selling, general and administrative 23,905 (8,931) 2,691 (4) 17,665
--------- --------- -------- ---------
Operating income 22,179 (5,607) (3,722) 12,850
Interest expense 35,625 (9,142) (4,348) (5) 22,135
Other income, net, including interest income (1,103) (506) - (1,609)
--------- --------- -------- ---------
Loss before income taxes (12,343) 4,041 626 (7,676)
Benefit for income taxes (8,299) (3,121) 3,438 (6) (7,982)
--------- --------- -------- ---------
Net income (loss) before
cumulative effect of change in
accounting for goodwill $ (4,044) $ 7,162 $ (2,812) $ 306
========= ========= ========= =========
Better Minerals & Aggregates Company
Unaudited Proforma Condensed Consolidated Statements of Operations
For the Twelve Months Ended December 31, 2002
(Dollars in thousands)
Better
Materials Pro Forma
Historical Corporation Adjustments Pro Forma
---------- ----------- ----------- ---------
Sales $ 300,495 $(118,645) $ 2,897 (1) $ 184,747
Cost of goods sold 232,591 (94,823) 3,983 (2) 141,751
Depreciation, depletion and amortization 30,013 (14,173) 77 (3) 15,917
Selling, general and administrative 46,419 (8,784) 2,916 (4) 40,551
Asset impairment 107,882 (107,882) - -
--------- --------- -------- ---------
Operating income (116,410) 107,017 (4,079) (13,472)
Interest expense 32,089 (7,066) (3,433) (5) 21,590
Other income, net, including interest income (1,673) (1,223) - (2,896)
--------- --------- -------- ---------
Loss before income taxes (146,826) 115,306 (646) (32,166)
Benefit for income taxes (56,846) 46,853 2,200 (6) (7,793)
--------- --------- -------- ---------
Net loss before cumulative effect
of change in accounting for goodwill $ (89,980) $ 68,453 $ (2,846) $ (24,373)
========= ========= ========= =========
Better Minerals & Aggregates Company
Unaudited Proforma Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 2002
(Dollars in thousands)
Better
Materials Pro Forma
Historical Corporation Adjustments Pro Forma
---------- ----------- ----------- ---------
Sales $ 56,134 $ (13,477) $ 321 (1) $ 42,978
Cost of goods sold 48,228 (14,964) 602 (2) 33,866
Depreciation, depletion and amortization 6,643 (2,790) 19 (3) 3,872
Selling, general and administrative 6,104 (2,192) 755 4,667
--------- --------- -------- ---------
Operating income (4,841) 6,469 (1,055) 573
Interest expense 8,264 (1,759) (1,133) (5) 5,372
Other income, net, including interest income (420) (111) - (531)
--------- --------- -------- ---------
Loss before income taxes (12,685) 8,339 78 (4,268)
Benefit for income taxes (3,782) 1,865 636 (6) (1,281)
--------- --------- -------- ---------
Net loss before cumulative effect
of change in accounting for goodwill $ (8,903) $ 6,474 $ (558) $ (2,987)
========= ========= ========= =========
Better Minerals & Aggregates Company
Unaudited Proforma Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 2003
(Dollars in thousands)
Better
Materials Pro Forma
Historical Corporation Adjustments Pro Forma
---------- ----------- ----------- ---------
Sales $ 55,034 $ (11,401) $ 293 (1) $ 43,926
Cost of goods sold 50,130 (15,334) 530 (2) 35,326
Depreciation, depletion and amortization 6,452 (2,312) 17 (3) 4,157
Selling, general and administrative 5,232 (2,287) 620 (4) 3,565
--------- --------- -------- ---------
Operating income (6,780) 8,532 (874) 878
Interest expense 8,079 (1,631) (981) (5) 5,467
Other income, net, including interest income (230) 2 - (228)
--------- --------- -------- ---------
Loss before income taxes (14,629) 10,161 107 (4,694)
Benefit for income taxes (2,880) 218 600 (6) (2,062)
--------- --------- -------- ---------
Net loss before cumulative effect
of change in accounting for goodwill $ (11,749) $ 9,943 $ (493) $ (2,299)
========= ========= ========= =========
Better Minerals & Aggregates Company
Notes to the Unaudited Pro Forma Condensed Consolidated Statements of Operations
(1) The adjustment reflects intercompany sales between BMC and the Company.
(2) The adjustment reflects intercompany activities between BMC and the
Company as follows:
2000 2001 2002 Q1-2002 Q1-2003
---- ---- ---- ------- -------
Intercompany transactions 853 2,633 2,897 321 293
Reversal of corporate 257 979 1,086 281 237
allocations to BMC
----- ----- ----- ----- -----
1,110 3,612 3,983 602 530
===== ===== ===== ===== =====
(3) The adjustment reflects the reversal of intercompany corporate
allocations to BMC.
(4) The adjustment reflects intercompany activities between BMC and the
Company as follows:
2000 2001 2002 Q1-2002 Q1-2003
---- ---- ---- ------- -------
Reversal of corporate 2,622 3,254 3,495 903 743
allocations to BMC
Corporate employees - (563) (579) (148) (123)
transferred with the sale
----- ----- ----- ----- -----
2,622 2,691 2,916 755 620
===== ===== ===== ===== =====
(5) The adjustment reflects interest related to removing Senior Debt and
intercompany interest eliminations, as follows:
2000 2001 2002 Q1-2002 Q1-2003
---- ---- ---- ------- -------
Term A Facility 3,752 2,837 1,560 428 323
Term B Facility 9,549 7,600 5,472 1,288 1,333
Revolving Credit Facility 682 1,558 1,600 200 488
Senior Debt Fees 851 986 539 598 134
Derivatives for Senior Debt (220) 291 1,021 307 265
------ ------ ------ ------ ------
14,614 13,272 10,192 2,821 2,543
Intercompany elimination (11,460) (8,924) (6,759) (1,688) (1,562)
------ ------ ------ ------ ------
3,154 4,348 3,433 1,133 981
====== ====== ====== ====== ======
(6) The adjustment reflects the income tax benefit at an effective rate
of 36% for the aforementioned items.
Better Minerals & Aggregates Company
Unaudited Pro Forma Condensed Consolidated Balance Sheet
At March 31, 2003
(Dollars in thousands)
Better
Materials Pro Forma
Historical Corporation Adjustments Pro Forma
---------- ----------- ----------- ---------
Assets
Current:
Cash and cash equivalents $ 1,873 $ (250) $ 5,401 (1) $ 7,024
Accounts receivable:
Trade, less allowance for doubtful accounts 39,142 (11,429) - 27,713
Other 6,086 (440) - 5,646
Inventories 32,359 (14,888) - 17,471
Prepaid expenses and other current assets 5,836 (1,185) 5,542 (2) 10,193
Deferred income taxes 5,215 (2,311) - 2,904
------- ------- ------- -------
Total current assets 90,511 (30,503) 10,943 70,951
Property, plant and equipment:
Mining property 151,358 (131,096) - 20,262
Mine development 7,245 (2,839) - 4,406
Asset retirement cost 5,905 (1,296) - 4,609
Land 26,986 (11,076) - 15,910
Land improvements 6,624 (2,571) - 4,053
Buildings 36,627 (4,643) - 31,984
Machinery and equipment 179,774 (56,895) - 122,879
Furniture and fixtures 2,205 (1,537) - 668
Construction-in-progress 8,352 (6,712) - 1,640
------- ------- ------- -------
425,076 (218,665) - 206,411
Accumulated depletion, depreciation and
amortization (154,075) 49,848 - (104,227)
------- ------- ------- -------
Property, plant and equipment, net 271,001 (168,817) - 102,184
Other noncurrent:
Noncompete agreements 20 (20) - -
Debt issuance costs 9,869 - (3,259) (3) 6,610
Issuance for third-party products liability claims 45,574 - - 45,574
Other noncurrent assets 6,440 (2,639) - 3,801
------- ------- ------- -------
Total other noncurrent 61,903 (2,659) (3,259) 55,985
------- ------- ------- -------
Total assets $423,415 $(201,979) $ 7,684 $229,120
======== ========= ========= ========
Liabilities
Current:
Book overdraft $ 3,196 $ (766) $ 766 (4) $ 3,196
Accounts payable 15,269 (3,935) - 11,334
Accrued liabilities 12,888 (4,233) - 8,655
Due to parent 2,351 (35,005) 35,005 (5) 2,351
Accrued interest 2,393 - (1,574) (6) 819
Current portion of capital leases 1,049 (856) - 193
Current portion of long-term debt 13,169 (294) (10,600) (7) 2,275
Income taxes payable 463 (9) 2,458 (8) 2,912
------- ------- ------- -------
Total current liabilities 50,778 (45,098) 26,055 31,735
Noncurrent liabilities:
Deferred income taxes 25,561 (43,262) - (17,701)
Obligations under capital lease 2,136 (1,927) - 209
Long-term debt, net of current portion 294,802 (550) (130,700) (9) 163,552
Third-party products liability claims 73,434 - - 73,434
Other noncurrent liabilities 42,564 (103,184) 100,000 (10) 39,380
------- ------- ------- -------
Total noncurrent liabilities 438,497 (148,923) (30,700) 258,874
Commitments and contingencies
Stockholder's Equity
Common stock - - - -
Additional paid-in capital 81,377 (103,871) 103,871 (11) 81,377
Loan to related party (1,362) - - (1,362)
Retained deficit (140,621) 95,520 (91,149) (12) 36,250)
Accumulated other comprehensive loss (5,254) 393 (393) (11) (5,254)
------- ------- ------- -------
Total stockholder's equity (65,860) (7,958) 12,329 (61,489)
------- ------- ------- -------
Total liabilities and stockholder's equity $423,415 $(201,979) $ 7,684 $229,120
======== ========= ========= ========
Better Minerals & Aggregates Company
Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet
(1) The adjustment reflects the terms of the sale including sources and uses
and the exclusion of BMC's cash, as follows:
Total Sources 158,273
Total Uses (153,122)
BMC Cash Retained 250
--------
5,401
========
(2) The adjustment reflects cash deposited with the Senior Lending Agent as
collateral for outstanding letters of credit.
(3) The adjustment reflects the write-off of debt issuance costs associated
with the Senior Debt.
(4) The adjustment reflects the terms of the sale relating to the exclusion
of BMC's cash.
(5) The adjustment eliminates intercompany amounts due.
(6) The adjustment represents the payment of accrued interest on Senior
Debt.
(7) The adjustment reflects the payoff of the current portion of Senior
Debt.
(8) The adjustment reflects the tax effect at 36% of these pro forma
adjustments.
(9) The adjustment represents the payoff of long-term debt as follows:
Term A Facility 21,500
Term B Facility 89,000
Revolving Credit Facility 30,800
-------
141,300
Less Current Portion (10,600)
-------
130,700
(10) The adjustment eliminates intercompany notes.
(11) The adjustment represents the elimination entries required to reflect
the unconsolidation of BMC.
(12) The adjustment reflects the after-tax income effect of the sale, related
debt repayment, and elimination entries required to reflect the previous
consolidation of BMC, as follows:
Consolidation elimination (95,520)
Loss on Sale 2,285
Debt Issuance Cost Write-off 2,086
-------
(91,149)
EXHIBIT 10
SEPARATION AGREEMENT AND GENERAL RELEASE
THIS SEPARATION AGREEMENT AND GENERAL RELEASE is made as of the 24th day of
June, 2003 (this "Agreement"), by and between Roy D. Reeves, who resides at 304
Lake Circle Drive, Greenville, South Carolina 29602, ("Reeves") and USS
Holdings, Inc., a Delaware corporation (the "Company").
WHEREAS, Reeves has been employed by Better Minerals & Aggregates Company
("BMAC") as its Chief Executive Officer pursuant to an Employment Agreement
between Reeves and BMAC dated April 19, 2000 (the "BMAC Employment Agreement")
and by the Company as President and Chief Operating Officer of Stone Materials,
LLC, a wholly owned subsidiary of BMAC, ("Stone Materials") pursuant to an
Employment Agreement between Reeves and the Company dated April 19, 2000 (the
"USS Employment Agreement"); and
WHEREAS, BMAC has entered into a Purchase Agreement dated as of April 10,
2003 (the "Purchase Agreement") pursuant to which it has agreed to sell its
Membership Interests in Stone Materials to Hanson BMC Acquisition Corp.; and
WHEREAS, as a result of the sale, the Company and BMAC will allow Reeves to
resign his employment with BMAC and the Company for "Good Reason" as provided in
Section 4(e) of the BMAC Employment Agreement; and
WHEREAS, Reeves and the Company desire to settle fully and finally any
differences, rights and duties arising between them, including, but in no way
limited to, any and all differences, rights and duties that have arisen or might
arise out of or are in any way related to Reeves' employment with BMAC and the
Company, and the conclusion of that employment;
NOW, THEREFORE, in consideration of the payment, benefits and other
covenants contained in this Agreement, which Reeves acknowledges are in excess
of any benefits to which he would otherwise be entitled, the parties agree as
follows:
1. Resignation. Reeves resigns his employment with BMAC under the BMAC
Employment Agreement and his employment with the Company under the USS
Employment Agreement effective June 30, 2003 (the "Resignation Date").
2. Employment Agreements. Reeves and the Company agree that each of the USS
Employment Agreement and the BMAC Employment Agreement shall be terminated
effective as of the Resignation Date. Thereafter, neither the USS Employment
Agreement nor the BMAC Employment Agreement shall be of any further force or
effect, except as specifically preserved by the express written terms of this
Agreement.
3. Separation Payments. Subject to the terms and conditions of this
Agreement, the Company agrees as follows:
(a) The Company shall pay Reeves, or his estate, should Reeves pass away
before all payments are made pursuant to this Section 3(a), in the
aggregate two million five hundred sixty-six thousand two hundred
twenty-five dollars and ninety-two cents ($2,566,225.92), less all
applicable payroll deductions, as liquidated compensation for Reeves'
decision to resign his employment for "Good Reason" under Section 4(e)
of the BMAC Employment Agreement. This amount shall be payable
according to the following schedule:
(i) The Company shall pay Reeves four hundred forty-six thousand
two hundred ninety-eight dollars and ninety-eight cents
($446,299.98) less applicable payroll deductions, within ten
business days of the Resignation Date.
(ii) Commencing in July 2003 and continuing through March 31, 2006,
the Company shall pay Reeves each month sixty-four thousand two
hundred forty dollars and eighteen cents ($64,240.18), less
applicable payroll deductions. These payments will be made in
accordance with the Company's normal payroll payments (which
currently is semi-monthly).
(b) Within three business days of the date the sale of BMAC's Membership
Interests in Stone Materials to Hanson BMC Acquisition Corp. (or any
entity related thereto or otherwise affiliated with Hanson PLC) closes
pursuant to the Purchase Agreement, the Company shall pay Reeves one
million dollars ($1,000,000.00), less all applicable payroll
deductions, as a special separation payment. The Company had no
previous contractual obligation to pay Reeves this amount.
The Company will treat the payments as Supplemental Wages consistent with
Publication 15 of the Internal Revenue Service. Other than as specifically set
forth in this Agreement, Reeves is not due any compensation, including
compensation for unpaid salary, unpaid bonus, or accrued or unused vacation time
or vacation pay or sick time or sick pay.
4. Employee Benefits.
(a) Reeves' participation in the Company's employee benefit plans will end
on the last day of the month in which the Resignation Date falls.
Thereafter, Reeves shall be eligible to elect continued health coverage
with the Company for eighteen months pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), as
amended, and the requirements and limitations thereof. The Company
will provide Reeves with additional information concerning his right to
elect continued coverage under COBRA separately.
(b) The amounts payable to Reeves under Sections 3(a) and (b) of this
Agreement shall not be included in the calculation of any benefit
otherwise due to Reeves under the terms of the Supplemental Retirement
Plan that BMAC established for Reeves pursuant to Section 3(e) of the
BMAC Employment Agreement (the "Plan"). Attached to this Agreement as
Appendix A is a Summary of Benefit Calculation that calculates the
benefit due Reeves under the Plan. The Company and Reeves hereby agree
that Appendix A is an accurate calculation of the benefits due Reeves
under the Plan. The benefit shown in Appendix A shall be paid in the
form of a 100% joint and survivor annuity, such that Reeves will
receive a monthly annuity from the Company for the remainder of his
life and, if Reeves is survived by his current spouse, Barbara Roberts
Reeves, at the time of his death, she will then receive a monthly
annuity in an equal amount for the remainder of her life. Such monthly
payments shall begin in July 2003, and each such monthly payment shall
equal the annual benefit shown in Appendix A divided by 12.
5. Shares.
(a) Reeves shall retain all right, title and interest that Reeves has in
twenty-seven thousand five hundred (27,500) shares of the Company's
Class A common stock.
(b) On the Resignation Date, Reeves agrees to sell to the Company, and the
Company agrees to purchase from Reeves, thirty thousand (30,000) shares
of the Company's Class C common stock at a purchase price of $0.01 per
share.
6. Announcement of Resignation. The Company has issued a press release in a
form substantially similar to Appendix B. The Company represents that its
officers and directors will make no other statement concerning Reeves contrary
to such press release.
7. Release
(a) By Employee. Reeves, for himself and for his children, heirs,
administrators, representatives, executors, successors and assigns,
releases and gives up any and all claims and rights which he has, may
have or hereafter may have against the Company or against BMAC and
their respective owners, parents, subsidiaries, affiliates,
predecessors, successors, assigns, officers, directors, shareholders,
employees and agents and all of their predecessors, successors and
assigns (the "Releasees") from the beginning of the world until the
date of the execution of this Agreement, including, but not limited to,
any and all charges, complaints, claims, liabilities, obligations,
promises, agreements, controversies, damages, remedies, actions, causes
of action, suits, rights, demands, costs, losses, debts and expenses
(including attorneys' fees and costs) of any nature whatsoever, whether
known or unknown, whether in law or equity (collectively, "Claims"),
including, but not limited to, (i) any Claims arising out of or related
to the USS Employment Agreement; (ii) any Claims arising out of or
related to the BMAC Employment Agreement; (iii) any Claims arising out
of or related to Reeves' employment with the Company and BMAC; (iv) any
Claims arising out of or related to Reeves resignation from his
employment; (v) any Claims based on wrongful termination (vi) any
Claims based on contract whether express or implied, written or oral;
and (vii) any Claims arising under the United States and/or State
Constitutions, federal and/or common law, and/or rights arising out of
alleged violations of any federal, state or other government statutes,
regulations or ordinances including, without limitation, the National
Labor Relations Act, Title VII of the 1964 Civil Rights Act, the Age
Discrimination in Employment Act, the Older Workers' Benefit Protection
Act, the Americans with Disabilities Act, the Civil Rights Act of 1866
(42 U.S.C. Sec. 1981), the Civil Rights Act of 1991, the Equal Pay Act,
the Family and Medical Leave Act, the Fair Labor Standards Act and the
Employees Retirement Income Security Act of 1974, all as amended. This
release specifically includes, but is not limited to, the right to the
payment of wages, vacation, pension benefits or any other employee
benefits, and any other rights arising under federal, state or local
laws prohibiting discrimination and/or harassment on the basis of age,
race, color, religion, creed, sex, national origin, ancestry, mental or
physical disability, alienage or citizenship status, marital status, or
any other basis prohibited by law.
(b) By Company. The Company, BMAC and the Releasees hereby release and
give up any and all claims and rights which any of them has, may have
or hereafter may have against Reeves or any of his children, heirs,
administrators, representatives, executors, successors, and assigns,
from the beginning of the world until the date of the execution of this
Agreement, including, but not limited to, any and all Claims,
including, but not limited to, (i) any and all Claims arising out of or
related to Reeves' employment with any of the Releasees; (ii) any
Claims arising out of or related to Reeves resignation from his
employment; and (iii) any Claims based on contract whether express or
implied, written or oral, except that the Company, BMAC and the
Releasees do not release or give up any Claims that they may have
against Reeves that arise out of or are related to any unlawful or
criminal conduct or intentional wrongdoing committed by Reeves during
the term of his employment with the Company and BMAC.
8. Covenant Not To Sue. Reeves has not filed against the Company, BMAC or
any of the other Releasees, any complaints, charges or lawsuits with any
government agency, arbitral tribunal, self-regulatory body, or any court arising
out of the USS Employment Agreement, the BMAC Employment Agreement, Reeves'
employment by the Company and BMAC or any other matter arising on or prior to
the date hereof. Reeves will not, directly or indirectly, commence or prosecute,
or assist in the filing, commencement or prosecution in any court, arbitral
tribunal, self-regulatory body or local or state government agency, any claim or
charge against the Company, BMAC or any of the other Releasees arising out of
any of the matters set forth in this Agreement or based upon any common law or
statutory claim against the Company, BMAC or any of the other Releasees that can
be brought under federal, state or local law relating to any matter arising on
or before the date of this Agreement. Notwithstanding the foregoing, Reeves may
commence a proceeding under this Section 8 for the sole and limited purpose of
enforcing his rights under this Agreement.
9. No Admission of Liability. This Agreement does not constitute or imply
an admission of liability or wrongdoing by the Company, BMAC or any of the other
Releasees.
10. Non-disparagement. Reeves will neither make any negative or disparaging
statements about nor intentionally do anything that damages the Company, BMAC or
any of the other Releasees, their services, their reputation, their financial
status, their business relationships or any of their directors, officers or
employees. The Company and BMAC will not make any negative or disparaging
statements about Reeves nor intentionally do anything that damages Reeves, his
reputation, his financial status or his business relationships. Notwithstanding
the foregoing, the prohibitions described in this Section are not intended to
prevent one party from representing that particular business terms offered by
that party are more favorable than those offered by the other party in those
limited circumstances in which Reeves on the one hand and the Company, BMAC or
any of the Releasees are soliciting business from the same person, corporation
or other entity.
11. Confidentiality.
(a) The parties agree to keep the terms of this Agreement completely
confidential except that Reeves may disclose the terms of this
Agreement to his immediate family members, legal counsel or tax
accountants and that the Company and BMAC may disclose the terms of
this Agreement to their directors, officers, legal counsel, tax
accountants and as necessary to administer the Agreement. All of the
foregoing disclosures must be made on a confidential basis.
(b) The Company may disclose the terms of this Agreement if required to do
so by law.
(c) Either Reeves, the Company or BMAC may disclose the terms of this
Agreement to respond to a valid subpoena or other legal process to the
extent required by law, provided that the party receiving such notice
notify Reeves in the case of the Company or BMAC or the Company in the
case of Reeves within two (2) business days of receiving notice of the
subpoena or legal process.
12. Non-Competition. Reeves agrees that during the period commencing on the
Resignation Date and ending on March 31, 2006 he will not, directly or
indirectly, own, manage, operate, control or participate in the ownership,
management or control of, or be connected as an officer, executive, partner,
director, or otherwise with, or have any financial interest in, or aid or assist
anyone else in the conduct of, any entity or business which directly competes
with the business of US Silica Company, within the United States of America, or
within any other area in which US Silica Company conducts its business on the
date hereof. Notwithstanding the foregoing, Reeves' ownership of securities of a
public company engaged in competition with the business of US Silica Company not
in excess of five (5) percent of any class of such securities shall not be
considered a breach of the covenants set forth in this Section12.
13. No Reliance. Reeves represents that in executing this Agreement he does
not rely and has not relied upon any representation or statement not set forth
in this Agreement that the Company or any of its agents, representatives or
attorneys may have made with regard to the subject matter, basis or effect of
this Agreement.
14. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of New York without regard to any state's conflict of law
provisions.
15. Remedy for Breach. In the event of any breach of this Agreement, the
parties may only institute an action for specific enforcement of the terms of
this Agreement and seek damages resulting from such breach. Reeves may not
institute any proceeding based on any Claims arising out of or related to the
USS Employment Agreement, the BMAC Employment Agreement, Reeves' employment with
the Company and BMAC or the resignation of his employment because of a breach of
this Agreement by the Company. The prevailing party in any such action shall be
entitled to an award of attorneys' fees and costs in addition to any other legal
or equitable relief, except that the Company will not be entitled to its
attorneys' fees or other damages if Reeves challenges the validity or
enforceability of this Agreement.
16. Severability. If at any time, after the date of the execution of this
Agreement, any provision of this Agreement shall be held in any court or agency
of competent jurisdiction to be illegal, void or unenforceable, such provision
shall be of no force and effect. However, the illegality or unenforceability of
such provision shall have no effect upon, and shall not impair the
enforceability of any other provision of this Agreement.
17. Entire Agreement. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof. This Agreement
supersedes any and all prior understandings and agreements between the parties,
including the USS Employment Agreement and the BMAC Employment Agreement, except
Sections 6(a) (but as to (a)(iv), limited to US Silica Company ("US Silica")),
(b), (c) and (e) (but as to (e), limited to US Silica) and 7 of the BMAC
Employment Agreement shall survive the termination of the BMAC Agreement and the
execution of this Agreement. Reeves acknowledges that he remains bound by
Sections 6(a) (but as to (a)(iv), limited to US Silica), (b), (c) and (e) (but
as to (e), limited to US Silica) and 7 of the BMAC Employment Agreement.
Otherwise, neither party shall have any obligation to the other party except as
set forth in this Agreement.
18. Modifications. This Agreement may not be modified except in writing
signed by all parties.
19. Enforceability. The parties are bound by this Agreement. Anyone who
succeeds to the parties' rights and responsibilities, such as their heirs,
executors, successors or assigns, is also bound.
20. Headings. The headings contained in this Agreement are for the
convenience of reference only and are not intended to define, limit, expand or
describe the scope or intent of any provision of this Agreement.
21. Expenses. The Company shall reimburse Reeves for out-of-pocket expenses
incurred by Reeves in connection with negotiating, drafting and executing this
Agreement (including, but not limited to, attorneys' fees and accountants' fee),
provided that the amount to be so reimbursed shall not exceed $5,000.
22. Breach of this Agreement.
(a) If either Reeves or the Company breaches this Agreement, the non-breaching
party may institute and prosecute proceedings in any court of competent
jurisdiction, either in law or in equity, to obtain damages from the
non-breaching party (including without limitation, any attorneys' fees that
party may incur) for any material breach of this Agreement or to enforce
the specific performance of this Agreement.
(b) Further, if Reeves breaches his obligations under Section 12 of this
Agreement or Sections 6(a), (b), (c) or (e) or Section 7 of the BMAC
Employment Agreement (to the extent such sections survive pursuant to
Section 17 hereof), that breach would cause the Company irreparable harm
for which no adequate remedy at law would be available. In that event, the
Company will also be entitled to injunctive relief preventing or enjoining
any breach by Reeves of his obligations under Section 12 of this Agreement
or Sections 6(a), (b), (c) or (e) or Section 7 of the BMAC Employment
Agreement (to the extent such sections survive pursuant to Section 17
hereof) without the need to post any bond.
(c) Reeves and the Company specifically consent to the jurisdiction of the
United States District Court for the Southern District of New York, or if
that court is unable to exercise jurisdiction for any reason, to the
Supreme Court of the State of New York, New York County, and irrevocably
waive any objection either party may now have or hereafter may have as to
the venue of any action brought under this Section.
23. Acknowledgements. Reeves acknowledges that:
(a) Reeves has carefully read and understands this Agreement;
(b) Reeves has been given twenty-one (21) days to consider his rights and
obligations under this Agreement and to consult with an attorney;
(c) The Company advised Reeves to consult with an attorney and/or any other
advisors of his choice before signing this Agreement;
(d) Reeves understands that this Agreement is legally binding and by
signing it he gives up certain rights;
(e) Reeves has voluntarily chosen to enter into this Agreement and has not
been forced or pressured in any way to sign it;
(f) Reeves knowingly and voluntarily releases the Company and all of its
parents, subsidiaries, affiliates, officers, directors, agents and
employees from any and all claims Reeves may have, known or unknown, in
exchange for the benefits Reeves has obtained by signing, and that
these benefits are in addition to any benefit Reeves would have
otherwise received if he did not sign this Agreement;
(g) The General Release in this Agreement includes a waiver of all rights
and claims Reeves may have under the Age Discrimination In Employment
Act of 1967 (29 U.S.C. Sec. 621 et seq.); and
(h) Reeves has seven (7) days after he signs this Agreement to revoke it by
notifying the Company in writing. The Agreement will not become
effective or enforceable until the Company receives a copy of this
Agreement signed by Reeves and the seven (7) day revocation period has
expired.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ROY D. REEVES USS HOLDINGS, INC.
_____________________________ By: ___________________________
Name:
Title:
EXHIBIT 99
BETTER MINERALS & AGGREGATES COMPANY COMPLETES
SALE OF BETTER MATERIALS CORPORATION
BERKELEY SPRINGS, WV, July 21, 2003-Better Minerals & Aggregates Company
(BMAC), a leading U.S. producer of industrial minerals, announced it completed
the sale of Better Materials Corporation, its crushed stone and hot mixed
asphalt business, to a subsidiary of Hanson Building Materials America, Inc. on
July 18, 2003.
Total cash received at the closing, before fees and expenses, was
approximately $158 million, including an adjustment for changes in Better
Material's working capital since the terms of the stock purchase were first
announced April 16, 2003. BMAC intends to use the proceeds to reduce its
outstanding debt.
A portfolio company of J. P. Morgan Partners and D. George Harris &
Associates, BMAC is a leading supplier of high quality silica sand and aplite
for the glass, foundry, chemical, recreational and construction industries, and
fine ground silica and kaolin clay products for the paint, plastic and ceramic
industries. The company employs 760 people at its 16 facilities in the United
States.