Delaware | 4731 | 20-2454942 | ||
(State or Other Jurisdiction
of
Incorporation or Organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
Michael L. Kaplan, Esq.
Brandon F. Lombardi, Esq. Greenberg Traurig, LLP 2375 East Camelback Road Phoenix, Arizona 85016 (602) 445-8000 |
Jay O. Rothman, Esq.
Foley & Lardner LLP 777 East Wisconsin Ave. Milwaukee, Wisconsin 53202 (414) 271-2400 |
Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer þ | Smaller Reporting Company o |
The
information in this preliminary prospectus is not complete and
may be changed. These securities may not be sold until the
registration statement filed with the Securities and Exchange
Commission is effective. This preliminary prospectus is not an
offer to sell nor does it seek an offer to buy these securities
in any jurisdiction where the offer or sale is not permitted.
|
Per Share | Total | |||||||
Initial public offering price
|
$ | $ | ||||||
Underwriting discount
|
$ | $ | ||||||
Proceeds, before expenses, to us
|
$ | $ | ||||||
Proceeds, before expenses, to selling stockholders
|
$ | $ |
Robert W. Baird & Co. | BB&T Capital Markets |
Flexible and Responsive Supply-Chain Solutions Third-Party Logistics (3PL) / Transportation Management Solutions (TMS) Customized / Expedited Less-than-Truckload (LTL) Truckload (TL) Brokerage Parcel Intermodal Domestic / International Air Non-Asset Based Services We provide transportation and logistics services throughout the contiguous United States, Hawaii, Alaska, Mexico, Puerto Rico, and Canada LTL Delivery Agent TL Brokerage Location LTL Service Center North American Network |
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1
n | Leading Non-Asset Based, Customized LTL Services. We believe we are the largest non-asset based provider of customized LTL services in North America, based on revenue. We believe our point-to-point LTL model allows us to offer faster transit times with lower incidence of damage and reduced fuel consumption, providing us with a distinct competitive advantage over asset-based LTL carriers employing the traditional hub and spoke model. In addition, we believe our variable cost structure and the utilization of our dedicated IC base positions us to maintain consistent operating margins, even during periods of economic decline. |
n | Leading TL Freight Brokerage Services. We believe we are among the 15 largest TL brokerage operations in North America, based on revenue, offering temperature-controlled, dry van, and flatbed services. While we serve a diverse customer base and provide a comprehensive TL solution, we specialize in the transport of refrigerated foods, poultry, and beverages. We believe this specialization provides consistent shipping volume year-over-year. Similar to our LTL services, we utilize our dedicated IC base in an effort to maintain consistent operating margins, even during periods of economic decline. |
n | Comprehensive Outsourced Transportation Management Solutions. Our TMS offering includes pricing, contract management, carrier selection, freight tracking, freight bill payment and audit, cost reporting and analysis, and dispatch. With a flexible operating model, scalable technology system, and access to a dynamic multi-modal carrier network, we believe we can tailor our services to each customers individual needs and desired level of outsourcing. |
2
n | enhancing our real-time metrics to reduce operating expenses, | |
n | increasing utilization of our flexible IC base, | |
n | reducing per-mile costs, | |
n | reducing dock handling costs, | |
n | aggressively recouping increased fuel costs, and | |
n | improving routing efficiency throughout our network. |
3
n | the competitive nature of the transportation industry; |
n | fluctuations in the price or availability of fuel; |
n | our ability to maintain the level of service that we currently provide to our customers; |
n | the ability of our carriers to meet our needs and expectations, and those of our customers; |
n | our reliance on ICs to provide transportation services to our customers; |
n | general economic, political, and other risks that are out of our control, including any prolonged delay in a recovery of the U.S. over-the-road freight sector; |
n | the limited experience of our senior management in managing a public company; |
n | seasonal fluctuations in our business; and |
n | our ability to maintain, enhance, or protect our proprietary technology systems. |
4
By us
shares
By the selling stockholders
shares
Total common stock offered
shares
Common stock to be outstanding after this offering
shares
Use of proceeds
We estimate that our net proceeds from this offering will be
approximately $ million,
assuming an initial public offering price of
$ per share of common stock, the
midpoint of the range set forth on the cover page of this
prospectus, and after deducting the underwriting discounts and
estimated offering expenses. We intend to use approximately
$ million of such net
proceeds to prepay approximately
$ under the RRTS credit
facility, approximately $ of RRTS
senior subordinated notes, and approximately
$ under the GTS credit facility.
In addition, we intend to use approximately
(i) $4.1 million to pay a termination fee to
affiliates of our two largest stockholders in connection with
this offering and the termination of the management services
agreement with these affiliates, (ii) $5.1 million to
redeem our Series A preferred stock, including accrued and
unpaid dividends, and
(iii) $ million of
remaining net proceeds for general corporate purposes, including
to finance our working capital needs and for the potential
acquisition of complementary businesses. See Use of
Proceeds. We will not receive any proceeds from sales by
the selling stockholders in this offering.
Nasdaq Global Market Symbol
RRTS
n
shares
of common stock issuable upon the exercise of options
outstanding
at ,
2008 with a weighted average exercise price of
$ per share; and
n
shares
of common stock issuable upon the exercise of warrants
outstanding
at ,
2008 with an exercise price of $
per share.
5
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Consolidated Financial and Other Data
6
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(In thousands, except per share data)
RRTS
Pro Forma
RRTS
Pro Forma
Years Ended
Year Ended
Six Months
Six Months
Feb. 22, 2005 -
Dec. 31,
Dec. 31,
Ended June 30,
Ended June 30,
Dec. 31, 2005
2006
2007
2007
2007
2008
2008
(unaudited)
(unaudited)
(unaudited)
(unaudited)
$
250,950
$
399,441
$
538,007
$
$
261,168
$
276,802
$
13,410
13,324
17,934
7,918
8,750
(a)
1,452
683
935
(302
)
1,334
(a)
$
17.22
$
7.73
$
9.24
$
(b)
$
(2.98
)
$
13.18
$
(b)
17.22
7.73
9.23
(b)
(2.98
)
13.08
(b)
84,315
88,437
101,220
(b)
101,220
101,220
(b)
84,315
88,437
101,354
(b)
101,220
101,993
(b)
$
1,531
$
1,052
$
1,867
$
1,943
$
429
$
289
$
369
0.6
%
0.3
%
0.3
%
%
0.2
%
0.1
%
%
As of June 30, 2008
Pro Forma
(In thousands)
Actual
as Adjusted
(unaudited)
$
580
65,557
5,040
258,954
48,278
5,250
101,225
17,279
1,765
105,556
(a) Includes a transaction bonus
paid to GTS personnel as a result of the GTS acquisition in the
amount of $3.6 million, which is a one-time, non-recurring
charge.
(b) Pro forma earnings (loss) per
share available to common stockholders and weighted average
common stock outstanding reflect (i) the reclassification
of all outstanding classes of common stock into one class of
common stock in a -for-one stock split; and
(ii) the redemption of approximately $5.1 million of
our Series A preferred stock, including accrued and unpaid
dividends. Earnings (loss) per share available to common
stockholders for all periods was computed in accordance with
Statement of Financial Accounting Standards (SFAS) No. 128,
Earnings Per Share
(SFAS 128). See Unaudited
Pro Forma Consolidated Financial Data beginning on
page 19.
(c) Our management uses capital
expenditures as a percentage of revenues to evaluate our
operating performance and measure the effectiveness of our
non-asset based structure. We believe this financial measure is
useful in evaluating the efficiency of our operating model
compared to other companies in our industry.
7
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n | competition with other transportation services companies, some of which have a broader coverage network, a wider range of services, and greater capital resources than we do; | |
n | reduction by our competitors of their freight rates to gain business, especially during times of declining growth rates in the economy, which reductions may limit our ability to maintain or increase freight rates, maintain our operating margins, or maintain significant growth in our business; | |
n | solicitation by shippers of bids from multiple carriers for their shipping needs and the resulting depression of freight rates or loss of business to competitors; | |
n | development of a technology system similar to ours by a competitor with sufficient financial resources and comparable experience in the transportation services industry; and | |
n | establishment by our competitors of cooperative relationships to increase their ability to address shipper needs. |
8
n | failure of the acquired company to achieve anticipated revenues, earnings, or cash flows; | |
n | assumption of liabilities that were not disclosed to us or that exceed our estimates; | |
n | problems integrating the purchased operations with our own, which could result in substantial costs and delays or other operational, technical, or financial problems; | |
n | potential compliance issues with regard to acquired companies that did not have adequate internal controls; | |
n | diversion of managements attention or other resources from our existing business; |
9
n | risks associated with entering markets in which we have limited prior experience; and | |
n | potential loss of key employees and customers of the acquired company. |
10
11
12
n | the gain or loss of customers; | |
n | introductions of new pricing policies by us or by our competitors; | |
n | variations in our quarterly results; | |
n | announcements of technological innovations by us or by our competitors; | |
n | acquisitions or strategic alliances by us or by our competitors; | |
n | recruitment or departure of key personnel; | |
n | changes in the estimates of our operating performance or changes in recommendations by any securities analysts that follow our stock; and | |
n | market conditions in our industry, the industries our customers serve, and the economy as a whole. |
13
14
n
the competitive nature of the transportation industry;
n
fluctuations in the price or availability of fuel;
n
our ability to maintain the level of service that we currently
provide to our customers;
n
the ability of our carriers to meet our needs and expectations,
and those of our customers;
n
our reliance on ICs to provide transportation services to our
customers;
n
fluctuations in the levels of capacity in the over-the-road
freight sector;
n
our ability to attract and retain sales representatives and
brokerage agents;
n
our ability to successfully execute our acquisition strategy;
n
the effects of auto liability, general liability, and
workers compensation claims;
n
general economic, political, and other risks that are out of our
control, including any prolonged delay in a recovery of the U.S.
over-the-road freight sector;
n
our reliance on our executive officers and key personnel;
n
seasonal fluctuations in our business;
n
the costs associated with being a public company and our ability
to comply with the internal control and financial reporting
obligations of the SEC and Sarbanes-Oxley;
n
the effects of governmental and environmental regulations; and
n
our ability to maintain, enhance, or protect our proprietary
technology systems.
15
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16
(unaudited, in thousands)
As of June 30, 2008
Actual
As Adjusted
$
63,150
$
38,075
101,225
5,000
Class A common stock $.01 par value; 1,765 shares issued and
outstanding
1,765
1
101,151
4,404
105,556
$
213,546
$
(a)
The number of shares of common
stock
excludes shares
issuable upon exercise of options outstanding at June 30,
2008 with a weighted average exercise price of
$ per share,
and shares
issuable upon exercise of warrants outstanding at June 30,
2008 with an exercise price of $
per share.
17
Table of Contents
$
$
$
Shares Purchased
Total Consideration
Average Price
Number
Percent
Amount
Percent
Per Share
%
$
%
$
%
%
100.0
%
100.0
%
$
18
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19
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20
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(In thousands, except per share data)
Merger
Offering
GTS
Pro Forma
Pro Forma
Pro Forma
RRTS
Pre-acquisition
Adjustments
Adjustments
Consolidated
$
538,007
$
27,473
$
(518
)
(a)
$
$
425,568
20,959
(518
)
(a)
55,354
3,031
37,311
1,157
(e)
1,840
304
440
(f)
17,934
2,022
(440
)
13,937
181
736
(g)
(h)
1,608
2,389
1,841
(1,176
)
1,294
(470
)
(i)
(i)
1,095
1,841
(706
)
160
(d)
$
935
$
1,841
$
(706
)
$
$
$
$
(j)
(j)
21
Table of Contents
(In thousands, except per share data)
Merger
Offering
GTS
Pro Forma
Pro Forma
Pro Forma
RRTS
Pre-acquisition
Post-acquisition
Adjustments
Adjustments
Consolidated
$
276,802
$
4,302
$
10,442
$
(224
)
(a)
$
$
222,011
3,249
8,049
(224
)
(a)
27,588
4,093
(k)
1,220
17,469
295
501
(e
)
984
45
208
73
(f)
8,750
(3,380
)
464
(73
)
6,298
29
241
144
(g)
(h
)
2,452
(3,409
)
223
(217
)
1,018
79
(87
)
(i)
(i)
1,434
(3,409
)
144
(130
)
100
(d
)
$
1,334
$
(3,409
)
$
144
$
(130
)
$
$
$
$
(j)
(j)
22
Table of Contents
(a)
Reflects an adjustment for intercompany eliminations.
(b)
Reflects an adjustment to apply assumed net proceeds of
approximately $ million from
this offering for the purposes of this pro forma data.
(c)
Reflects the repayment of obligations under the RRTS credit
facility, the repayment of obligations under the GTS credit
facility, and the redemption of RRTS senior subordinated
notes.
(d)
Reflects an adjustment associated with the redemption of
5,000 shares of Series A preferred stock and the
payment of accrued dividends thereon which, for pro forma
purposes, is conditioned solely upon the consummation of this
offering.
(e)
Reflects an adjustment to eliminate the historical management
fee paid by RRTS. The management agreement will be terminated
upon consummation of this offering and no management fees will
be paid thereafter. In connection with this offering, we will
pay an aggregate of $4.1 million to Thayer | Hidden
Creek Management and Eos Management related to the termination
of the management and consulting agreement. This amount is a
one-time,
non-recurring
charge that is not reflected in the Unaudited Pro Forma
Consolidated Financial Data. For more information, see
Certain Relationships and Related Transactions
Management and Consulting Agreements.
(f)
Reflects the increase in depreciation and amortization expense
as a result of the GTS acquisition due to the preliminary
February 29, 2008 GTS purchase price allocation which
resulted in (1) an increase in depreciation expense
resulting from the step up of a technology system depreciated on
a straight-line basis over a five-year period, and (2) the
amortization of identifiable intangibles using the straight-line
method over an estimated useful life of five years, as follows:
Six Months
Year Ended
Ended
December 31,
June 30,
2007
2008
$
300
$
150
140
70
(147
)
$
440
$
73
(g)
GTS had no debt outstanding prior to the GTS acquisition. The
purchase price of the GTS acquisition was $24.1 million,
which was financed with proceeds from the sale of common stock
by GTS of $13.4 million, a $3.2 million non-cash
issuance of stock, and borrowings under the GTS credit facility
of $8.0 million. This pro forma adjustment reflects an
adjustment to record interest expense on the incremental debt of
$8.0 million, assuming the debt was issued under the RRTS
credit facility, at an interest rate of 9.2% for the year ended
December 31, 2007 and 7.9% for the six months ended
June 30, 2008, as if the GTS merger had occurred on
January 1, 2007, as follows:
Six Months
Year Ended
Ended
December 31,
June 30,
2007
2008
$
736
$
314
(170
)
$
736
$
144
(h)
Reflects an adjustment to record a reduction in interest expense
from a reduction in net borrowings at a weighted average
interest rate of 9.2%, the rate in effect at December 31,
2007.
(i)
Reflects an adjustment to record income tax expense at the
estimated statutory tax rate of 40%.
(j)
Number of shares include only those shares of common stock whose
proceeds are sufficient to execute the transactions as described
in Use of Proceeds.
(k)
Includes a transaction bonus paid to GTS personnel in connection
with the GTS acquisition in the amount of $3.6 million,
which is a one-time, non-recurring charge.
23
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24
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(In thousands, except per share data)
Predecessor
Successor
Six Months
Years Ended Dec. 31,
Jan. 1, 2005 -
Feb. 22, 2005 -
Years Ended Dec. 31,
Ended June 30,
2003
2004
Mar. 31, 2005
Dec. 31, 2005
2006
2007
2007
2008
(unaudited)
$
158,496
$
181,544
$
43,428
$
250,950
$
399,441
$
538,007
$
261,168
$
276,802
108,685
126,366
30,225
180,920
302,296
425,568
206,592
222,011
25,226
27,549
12,197
33,138
49,716
55,354
26,871
27,588
17,163
18,507
4,957
22,280
33,033
37,311
18,915
17,469
703
697
145
556
1,072
1,840
872
984
646
6,719
8,425
(4,096
)
13,410
13,324
17,934
7,918
8,750
935
1,009
288
7,529
11,457
13,937
6,835
6,298
3,239
1,608
1,608
5,784
7,416
(4,384
)
2,642
1,867
2,389
(525
)
2,452
174
263
1,190
1,184
1,294
(283
)
1,018
5,610
7,153
(4,384
)
1,452
683
1,095
(242
)
1,434
160
60
100
$
5,610
$
7,153
$
(4,384
)
$
1,452
$
683
$
935
$
(302
)
$
1,334
$
1,051.89
$
1,341.49
$
(822.05
)
$
17.22
$
7.73
$
9.24
$
(2.98
)
$
13.18
1,051.89
1,341.49
(822.05
)
17.22
7.73
9.23
(2.98
)
13.08
5,333
5,333
5,333
84,315
88,437
101,220
101,220
101,220
5,333
5,333
5,333
84,315
88,437
101,354
101,220
101,993
$
(7,234
)
$
(11,811
)
$
(19,220
)
$
7,171
$
19,946
$
15,539
$
22,393
$
17,279
35,370
38,438
34,738
206,066
259,711
255,880
260,134
258,954
7,334
2,628
10,993
93,122
116,306
102,420
111,046
101,225
2,150
1,865
1,765
1,765
1,765
1,261
1,384
(3,321
)
84,036
102,317
103,870
102,002
105,556
$
7,422
$
9,122
$
(3,951
)
$
10,727
$
14,396
$
18,166
$
7,182
$
9,734
496
710
144
1,531
1,052
1,867
429
289
7,951
9,196
(6,820
)
9,119
9,516
12,470
2,210
2,368
(787
)
(904
)
(159
)
(179,638
)
(41,857
)
(3,187
)
(1,778
)
(738
)
(7,773
)
(8,210
)
7,030
171,627
34,285
(11,535
)
(2,155
)
(1,850
)
(a)
EBITDA represents earnings before
interest, taxes, depreciation, and amortization. Our management
uses EBITDA as a supplemental measure in evaluating our
operating performance and when determining executive incentive
compensation. Our management believes that EBITDA is useful to
investors in evaluating our operating performance compared to
other companies in our industry because it assists in analyzing
and benchmarking the performance and value of our business. The
calculation of EBITDA eliminates the effects of financing,
income taxes, and the accounting effects of capital spending.
These items may vary for different companies for reasons
unrelated to the overall operating performance of a
companys business. EBITDA is not a financial measure
presented in accordance with U.S. generally accepted accounting
principles, or GAAP. Although our management uses EBITDA as a
financial measure to assess the performance of our business
compared to that of others in our industry, EBITDA has
limitations as an analytical tool, and you should not consider
it in isolation, or as a substitute for analysis of our results
as reported under GAAP. Some of these limitations are:
n
EBITDA does not reflect our cash expenditures, future
requirements for capital expenditures, or contractual
commitments;
n
EBITDA does not reflect changes in, or cash requirements for,
our working capital needs;
n
EBITDA does not reflect the significant interest expense or the
cash requirements necessary to service interest or principal
payments on our debts;
n
although depreciation and amortization are noncash charges, the
assets being depreciated and amortized will often have to be
replaced in the future, and EBITDA does not reflect any cash
requirements for such replacements; and
n
other companies in our industry may calculate EBITDA differently
than we do, limiting its usefulness as a comparative measure.
25
Table of Contents
(b)
We have corrected the presentation
of Class A common stock that may be subject to redemption
by reclassifying these shares from permanent equity to mezzanine
equity. See Note 14 to the RRTS 2007 Consolidated
Financial Statements for more information.
26
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27
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28
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(In thousands)
Predecessor
Successor
Six Months Ended
Jan. 1, 2005 -
Feb. 22, 2005 -
Years Ended Dec. 31,
June 30,
Mar. 31, 2005
Dec. 31, 2005
2006
2007
2007
2008
(unaudited)
$
43,428
$
250,950
$
399,441
$
538,007
$
261,168
$
276,802
30,225
180,920
302,296
425,568
206,592
222,011
12,197
33,138
49,716
55,354
26,871
27,588
4,957
22,280
33,033
37,311
18,915
17,469
145
556
1,072
1,840
872
984
646
(4,096
)
13,410
13,324
17,934
7,918
8,750
288
7,529
11,457
13,937
6,835
6,298
3,239
1,608
1,608
(4,384
)
2,642
1,867
2,389
(525
)
2,452
1,190
1,184
1,294
(283
)
1,018
(4,384
)
1,452
683
1,095
(242
)
1,434
160
60
100
$
(4,384
)
$
1,452
$
683
$
935
$
(302
)
$
1,334
29
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30
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31
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32
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33
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34
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(In thousands)
Payments Due by Period
Less
than 1
1-3
3-5
More than
Total
Year
Years
Years
5 Years
$
154,679
$
15,456
$
31,481
$
107,742
$
32,860
6,168
9,404
6,760
10,528
5,000
5,000
$
192,539
$
21,624
$
40,885
$
114,502
$
15,528
35
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36
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37
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38
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39
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40
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n
Complexity of Supply Chains.
Companies are facing
increasingly complex supply chains. Rapidly changing freight
patterns, the proliferation of outsourced manufacturing and
just-in-time
inventory systems, increasingly demanding shipper fulfillment
requirements, and pressures to reduce costs continue to support
the demand for third-party transportation management.
n
Demand for More Frequent, Smaller
Deliveries.
Companies are increasingly employing lean
inventory management practices to reduce inventory carrying
costs. As a result, they are demanding more frequent, smaller
deliveries. We believe that by outsourcing transportation
management to a specialized 3PL provider, companies are better
positioned to maximize efficiency under a lean inventory system.
n
Demand for Improved Customer Service.
Shippers and
end users are increasingly demanding total supply chain
visibility and real-time transaction processing. By providing
information regarding the status and location of goods in
transit and verifying safe delivery, successful
technology-enabled transportation and logistics providers allow
clients to improve customer service.
41
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42
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versus Non-Asset Based National Point-to-Point LTL
Model
national hub and spoke LTL model
national point-to-point LTL model
n
Pickup.
In order to stay as close as possible to our
customers, we prefer to handle customer
pick-ups
whenever cost-effective. We generally pick up freight within
150 miles of one of our service centers, utilizing
primarily city ICs. In 2007, we picked up approximately 87% of
our customers LTL shipments, the remainder of which was
handled by agents with whom we generally have long-standing
relationships.
n
Consolidation at Service Centers.
Key to our model
is a network of 18 service centers, as illustrated by the map
below, that we lease in strategic markets throughout the United
States. At these service centers, numerous smaller LTL shipments
are unloaded, consolidated into truckload shipments, and loaded
onto a linehaul unit scheduled for a
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destination city. In order to continually emphasize optimal load
building and enhance operating margins, dock managers review
nearly every load before it is dispatched from one of our
service centers.
n
Linehaul.
Linehaul is the longest leg of the LTL
shipment process. In dispatching a load, a linehaul coordinator
at one of our service centers uses our proprietary technology to
optimize cost-efficiency and service by assigning the load to
the appropriate third-party transportation provider, either an
IC or purchased power provider. In 2007, ICs handled
approximately 44% of our linehaul volume, up from 36% in 2005.
As industry-wide freight capacity tightens with an anticipated
market rebound, we believe our recruitment and retention efforts
will allow us to increase IC utilization in order to maintain
service and cost stability.
n
De-consolidation and Delivery.
Within our unique
model, linehaul shipments are transported to service centers,
delivery agents, or direct to end users without stopping at a
break-bulk hub, as is often necessary under the traditional,
asset-based hub and spoke LTL model. This generally reduces
physical handling and damage claims, and reduces delivery times
by one to three days on average. In 2007, we delivered
approximately 19% of LTL shipments through our service centers,
78% through our delivery agents, and 2% direct to end users.
n
Benefits of a Delivery Agent Network.
While many
national asset-based LTL providers are encumbered by the fixed
overhead associated with owning or leasing most or all of their
de-consolidation and delivery facilities, we maintain our
variable cost structure through the extensive use of delivery
agents. As illustrated on the map below, we use over 215
delivery agents to complement our service center footprint and
to provide cost-effective full state, national, and North
American delivery coverage. Delivery agents also enhance our
ability to handle special needs of the final consignee, such as
scheduled deliveries and specialized delivery equipment.
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n
Procurement.
After an in-depth consultation and
analysis with our customer to identify cost savings
opportunities, we develop an estimate of our customers
potential savings and cultivate a plan for implementation. If
necessary, we manage a targeted bid process based on a
customers traffic lanes, shipment volumes, and product
characteristics, and negotiate rates with reputable carriers. In
addition to a cost-efficient rate, the customer receives a
summary of projected savings as well as our carrier
recommendation.
n
Shipment Planning.
Utilizing our proprietary
technology systems and an expansive multi-modal network of
third-party transportation providers, we determine the
appropriate mode of transportation and select the ideal
provider. In addition, we provide load optimization services
based on freight patterns and consolidation opportunities. We
also provide rating and routing services, either
on-site
with
one of our transportation specialists, off-site through our
centralized call center, or online at our website. Finally, we
offer
merge-in-transit
coordination to synchronize the arrival and pre-consolidation of
high-value components integral to a customers production
process, enabling them to achieve reduced cycle times, lower
inventory holding costs, and improved supply chain visibility.
n
Shipment Execution.
Our transportation specialists
are adept at managing time-critical shipments. Our proprietary
technology system prompts our specialist to hold less
time-sensitive shipments until other complementary freight can
be found to complete the shipping process in the most
cost-effective manner. We maintain constant communication with
third-party transportation providers from dispatch through final
delivery. As a result, our expedited services can meet virtually
any customer transit or delivery requirement. Finally, we
provide the ability to track and trace shipments either online
or by phone through one of our transportation specialists.
n
Audit and Payment Services.
We capture and
consolidate our customers entire shipping activity and
offer weekly electronic billing. We also provide freight bill
audit and payment services designed to eliminate excessive or
incorrect charges from our customers bills.
n
Performance Reporting and Improvement
Analysis.
Customers utilizing our web reporting system
can query freight bills, develop customized reports online, and
access data to assist in financial and operational reporting and
planning. Our specialists are also actively driving process
improvement, continually using our proprietary technology to
identify incremental savings opportunities and efficiencies for
our customers.
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n
Less-than-Truckload.
Our
110-person
LTL sales force consists of corporate account executives,
account executives, sales managers, inside sales
representatives, and commission sales representatives. In March
2007, we hired a vice president of sales and marketing to lead
the implementation of a detailed strategy to drive positive new
business trends with significant growth in new account shipments
and revenue. Under his leadership, we significantly upgraded a
large portion of our sales force by replacing underperforming
personnel. Since the beginning of 2007, over 1,400 new target
accounts have begun shipping with us.
n
Truckload Brokerage.
We have 46 dispatchers and 24
independent brokerage agents located throughout the Eastern
United States and Canada. We believe that this decentralized
structure enables our salespeople to better serve our customers
by developing an understanding of local and regional market
conditions, as well as the specific transportation and logistics
issues facing individual customers. Our dispatchers and
brokerage agents seek additional business from existing
customers and pursue new customers based on this knowledge and
an understanding of the value proposition we can provide.
n
Transportation Management Solutions.
In addition to
a recently added vice president of sales, our TMS sales force
currently consists of two directors of corporate sales, three
regional sales representatives, and four inside sales
representatives. While our TMS operation generated revenue
growth at a CAGR of 24.8% from 2005 through 2007 with a small
Midwest-based sales force, we began actively expanding our sales
team in February 2008. In addition, we are utilizing our
110-person
LTL sales force to enhance the market reach and penetration of
our TMS offering and to capitalize on the opportunity to
cross-sell a broader menu of services to new and existing
customers.
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n
global asset-based integrated logistics companies such as FedEx
Corporation and United Parcel Service, Inc., against whom we
compete in all of our service lines;
n
asset-based freight haulers such as YRC Worldwide, Inc. and
Con-Way, Inc., against whom we compete in our core LTL and TL
service offerings;
n
non-asset based freight brokerage companies such as C.H.
Robinson Worldwide, Inc., Landstar System, Inc., and Total
Quality Logistics, Inc., against whom we compete in our core LTL
and TL service offerings;
n
third-party logistics providers that offer comprehensive
transportation management solutions such as Transplace, Inc.,
Echo Global Logistics, Inc., and Schneider Logistics, Inc.,
against whom we compete in our TMS offering; and
n
smaller, niche transportation and logistics companies that
provide services within a specific geographic region or end
market.
n
our comprehensive suite of transportation and logistics
services, which allows us to offer a one-stop value
proposition to shippers of varying sizes and accommodate their
diverse needs and preferred means of processing and
communication;
n
our non-asset based, variable cost business model, which allows
us to focus greater attention on providing optimal customer
service than on maintaining high levels of asset utilization;
n
our focus on an expansive market of small to mid-size shippers
who often lack the internal resources necessary to manage
complex transportation and logistics requirements and whose
freight volumes may not garner the same level of attention and
customer service from many of our larger competitors;
n
our proprietary technology systems, which allow us to provide
scalable capacity and high levels of customer service across a
variety of transportation modes; and
n
our knowledgeable management team with experience leading
high-growth logistics companies
and/or
business units, which allows us to benefit from a collective
entrepreneurial culture focused on growth.
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51
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II-3
Age
52
President, Chief Executive Officer, and Director
49
Vice President Finance, Chief Financial
Officer, Treasurer, and Secretary
40
Vice President Operations
45
Vice President Sales and Marketing
66
Chairman of the Board
51
Director
42
Director
72
Director
41
Director
53
Director
37
Director
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n
base compensation or salary;
n
annual cash bonuses under our management incentive plan; and
n
option awards granted under our key employee equity plan.
55
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n
EBITDA 90% of the maximum annual incentive
compensation payable to our executive officers (100% in the case
of our chief executive officer) was based on achieving specific
EBITDA goals. In order for any bonus to be paid based on the
individual performance criterion discussed below, the minimum
EBITDA goal of approximately $17.5 million within the LTL
business had to be achieved. If the minimum EBITDA threshold was
met, an executive officer was eligible to receive a bonus equal
to 30% (38% in the case of our chief executive officer) of his
base salary. If the minimum EBITDA goal was exceeded by 25%, an
executive officer was eligible to receive a bonus equal to 55%
(75% in the case of our chief executive officer) of his base
salary. If the minimum EBITDA goal was exceeded by 40%, an
executive officer was eligible to receive a bonus equal to 75%
(100% in the case of our chief executive officer) of his base
salary. Our performance did not meet the minimum threshold and
therefore no bonuses were paid.
n
Individual Performance Ten percent of the maximum
annual incentive compensation payable to our executive officers
(other than our chief executive officer) was based on individual
performance. Our chief executive officer makes this
determination based on performance metrics designed for each of
our other executive officers position and level of
responsibility. If the minimum EBITDA threshold above is met,
and an executive officers individual performance meets the
standards for a bonus, then that executive will receive up to
10% of the maximum bonus he was eligible to receive under the
EBITDA criterion above. For example, in the case of an executive
officer (other than our chief executive officer), if the minimum
EBITDA threshold was met, that executive officer would be
entitled to receive up to 30% of his base salary. However, 10%
of such 30% is comprised of the individual performance
criterion. Therefore, if the EBITDA threshold was met, but the
individual performance criterion was not, the executive officer
would receive 27% of his base salary as a bonus. Since the
minimum EBITDA criterion discussed above was not met, no bonuses
were paid. Our chief executive officer is not eligible to
receive a bonus based on individual performance criteria.
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Name and
Option
All Other
Year
Salary
Awards
(1)
Compensation
(2)
Total
2007
$
275,000
$
183,292
$
29,290
$
487,582
2007
$
175,100
$
81,193
$
28,901
$
285,194
2007
$
124,231
$
51,921
$
63,995
(4)
$
240,147
2007
$
230,769
$
69,070
$
93,984
(6)
$
393,823
(1)
The amount reflects the dollar
amount recognized for financial reporting purposes in accordance
with SFAS 123(R). Assumptions used in the calculation of
the amounts for the fiscal years ended December 31, 2007
are included in footnote 7 of our consolidated financial
statements for the fiscal year ended December 31, 2007,
included in this prospectus.
(2)
Amounts represent matching
contributions to our 401(k) plan of $6,770, $2,308, $7,004, and
$0 on behalf of Messrs. DiBlasi, Dobak, Armbruster, and van
Helden, respectively. We also paid premiums on term life
insurance policies on behalf of the executive officers. The
taxable portion of the premiums paid for the term life insurance
policies is computed based on Internal Revenue Service
guidelines and totaled $708, $522, $708, and $336 on behalf of
Messrs. DiBlasi, Dobak, Armbruster, and van Helden,
respectively. In addition, each of our executive officers also
receives the benefit of the use of a company issued automobile,
the taxable value of which did not exceed $10,000, except for
Messrs. DiBlasi and Armbruster, who received a value of
$11,270 and $10,747 of company issued automobile use,
respectively. In addition, the amounts also include medical and
disability insurance benefits paid on behalf of our executive
officers.
(3)
Mr. van Helden became our Vice
President Operations in April 2007.
(4)
Includes $56,141 paid by us in
connection with Mr. van Heldens relocation.
(5)
Mr. Dobak became our Vice
President Sales and Marketing in January 2007.
(6)
Includes $71,591 paid by us in
connection with Mr. Dobaks relocation.
All Other
Option Awards:
Number of
Exercise or
Securities
Base Price of
Grant Date Fair Value
Underlying
Option Awards
of Stock and Option
Grant Date
Options
(1)
($/Sh)
(1)
Awards
(1)
All share numbers and exercise
prices reflect the conversion of our Class A common stock into
our new common stock on
a -for-one
basis, as described in Description of Capital Stock.
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Number of
Number of
Securities
Securities
Underlying
Underlying
Unexercised
Unexercised
Option
Options (#)
Options (#)
Exercise
Option
Exercisable
(1)
Unexercisable
(1)
Price ($)
(1)
Expiration Date
(1)
All share numbers and exercise
prices reflect the conversion of our Class A common stock into
our new common stock on
a -for-one
basis, as described in Description of Capital Stock.
Salary
$
206,250
$
175,100
$
127,500
$
187,500
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Salary
$
206,250
$
127,500
$
187,500
60
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63
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n
each person known by us to own more than 5% of our common stock;
n
each stockholder selling shares in this offering;
n
each of our directors and executive officers; and
n
all of our directors and executive officers as a group.
*
Less than one percent.
(1)
Represents shares held by Thayer
Equity Investors V, L.P., TC Roadrunner-Dawes Holdings,
L.L.C., TC Sargent Holdings, L.L.C., Thayer | Hidden
Creek Partners II, L.P., and THC Co-investors II,
L.P., all of which are affiliates and referred to collectively
as the Thayer | Hidden Creek Entities.
Includes shares
issuable upon exercise of outstanding warrants. Mr. Scott
Rued exercises shared voting and dispositive power over all
shares held by the Thayer | Hidden Creek Entities. The
address of each of the Thayer | Hidden Creek Entities
is 1455 Pennsylvania Avenue, N.W., Suite 350,
Washington, D.C. 20004.
(2)
Represents shares held by Eos
Capital Partners III, L.P. and Eos Partners, L.P., which are
affiliates and referred to as the Eos Funds. As a General
Partner of Eos Partners, L.P., Mr. Young has voting and
investment control over and may be considered the beneficial
owner of stock owned by the Eos Funds. As a Managing Director of
Eos Management, L.P., Mr. Levine has voting and investment
control over and may be considered the
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beneficial owner of stock owned by
the Eos Funds. Mr. Levine disclaims any beneficial
ownership of the stock owned by the Eos Funds. The address of
each of the Eos Funds is 320 Park Avenue, New York, NY 10022.
(3)
Represents shares held by American
Capital, Ltd. and American Capital Equity I, LLC.
Mr.
exercises sole voting and dispositive power over all shares held
by the American Capital Entities. The address of each of the
American Capital Entities is 2 Bethesda Metro Center, 14th
Floor, Bethesda, MD 20814.
(4)
Represents shares held by the
Thayer | Hidden Creek Entities, as described in
note 1. Mr. Rued is an officer of certain of the
Thayer | Hidden Creek Entities or their affiliates.
Accordingly, Mr. Rued may be deemed to beneficially own the
shares owned by the Thayer | Hidden Creek Entities.
Mr. Rued disclaims beneficial ownership of any such shares
in which he does not have a pecuniary interest. The address of
Mr. Rued is
c/o Thayer | Hidden
Creek, 80 South 8th Street, Suite 4508, Minneapolis,
Minnesota 55402.
(5)
Represents shares held by the Eos
Funds, as described in note 2. As a General Partner of Eos
Partners, L.P., Mr. Young has voting and investment control over
and may be considered the beneficial owner of stock owned by the
Eos Funds. As a Managing Director of Eos Management, L.P.,
Mr. Levine has voting and investment control over and may
be considered the beneficial owner of stock owned by the Eos
Funds. Mr. Levine disclaims any beneficial ownership of the
shares of stock owned by the Eos Funds. We expect that Messrs.
Young and Levine will resign from our board of directors prior
to effectiveness of the registration statement of which this
prospectus forms a part. The address of Messrs. Young and
Levine is
c/o
Eos, 320
Park Avenue, New York, NY 10022.
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n
term loan facility of $40.0 million, of which approximately
$33.5 million was outstanding as of June 30,
2008; and
n
a
5-year
revolving credit facility of up to $50.0 million in
revolving credit loans, letters of credit, and swingline loans,
of which approximately $29.7 million was outstanding as of
June 30, 2008.
n
jointly and severally guaranteed by each of RRTS
subsidiaries;
n
secured by a first priority lien on substantially all of our and
each of RRTS subsidiaries tangible and intangible
personal property; and
n
secured by a pledge of all of the capital stock of RRTS and
RRTS subsidiaries
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n
100% of the net proceeds of any sale or other disposition of any
assets by RRTS or any of RRTS subsidiaries, subject to
exceptions for (i) assets replaced within 180 days after
such disposition with another asset that is usual in the
business of RRTS and (ii) other dispositions in any fiscal year
where the net proceeds of which do not in the aggregate exceed
$200,000;
n
100% of the net proceeds of any issuance of indebtedness after
the closing date by RRTS or any of RRTS subsidiaries,
subject to exceptions for permitted debt;
n
100% of the net proceeds from the issuance of equity securities
by RRTS or RRTS subsidiaries, subject to
exceptions; and
n
if RRTS consolidated total leverage ratio is over 2.50,
50% of consolidated excess cash flows, for any fiscal year.
n
a term loan facility of $8.0 million, of which
approximately $7.8 million was outstanding as of
June 30, 2008; and
n
a five-year revolving credit facility of up to
$3.0 million, none of which was outstanding as of
June 30, 2008.
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n
jointly and severally guaranteed by each of GTS
subsidiaries;
n
secured by a first priority lien on substantially all of
GTS subsidiaries tangible and intangible personal
property; and
n
secured by a pledge of all of the capital stock and membership
interests of GTS its subsidiaries.
n
100% of the net proceeds of any sale or other disposition of
assets, subject to certain exceptions, by GTS or any of its
subsidiaries, subject to exceptions if the asset is replaced
within 180 days after such disposition with another asset
that is useful in the business of GTS or any of its subsidiaries
and such net proceeds do not exceed $250,000 in the aggregate;
n
100% of the net proceeds of casualty or other insured damage to,
or any taking under power of eminent domain or by condemnation
or similar proceeding of, any property or asset of GTS or its
subsidiaries, subject to exceptions if the net proceeds
therefrom have not been applied to (i) repair, restore, or
replace such property or asset, or (ii) purchase assets
useful in the business of GTS or its subsidiaries, within
180 days after such event and such net proceeds exceed
$250,000 in the aggregate; and
n
100% of the net proceeds from the issuance of equity securities,
or the receipt by GTS or its subsidiaries of any capital
contribution, subject to exceptions described in the GTS credit
facility.
75
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n
approximately
million additional shares held by affiliates will be eligible
for sale subject to volume, manner of sale, and other
limitations under Rule 144; and
n
approximately
additional shares held by non-affiliates will be eligible for
sale subject to volume, manner of sale, and other limitations
under Rule 144.
n
during the last 17 days of the
180-day
restricted period we issue an earnings release or announce
material news or a material event; or
n
prior to the expiration of the
180-day
restricted period, we announce that we will release earnings
results during the
16-day
period beginning on the last day of the
180-day
period,
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n
1% of the number of shares of common stock then outstanding; or
n
the average weekly trading volume of the common stock during the
four calendar weeks preceding the filing of a notice on
Form 144 with respect to such sale.
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n
an individual who is a citizen or resident of the United States;
n
a corporation or partnership (or other entity treated as a
corporation or a partnership for U.S. federal income tax
purposes) created or organized under the laws of the United
States, any state thereof or the District of Columbia;
n
an estate the income of which is subject to U.S. federal
income tax regardless of its source; or
n
a trust that (1) is subject to the primary supervision of a
U.S. court and the control of one or more U.S. persons
or (2) has validly elected to be treated as a
U.S. person for U.S. federal income tax purposes.
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n
the gain is effectively connected with the
non-U.S. holders
conduct of a trade or business in the United States, or if
required by an applicable tax treaty, attributable to a
permanent establishment maintained by the
non-U.S. holder
in the United States;
n
the
non-U.S. holder
is a nonresident alien individual present in the United States
for 183 days or more during the taxable year of the
disposition and certain other requirements are met; or
n
our common stock constitutes a U.S. real property interest
by reason of our status as a United States real property
holding corporation for U.S. federal income tax
purposes (referred to as a USRPHC) at any time
within the shorter of the five-year period preceding the
disposition or your holding period for our common stock.
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Number of
Shares
Per Share
Total
Without Over-
With Over-
Without Over-
With Over-
Allotment
Allotment
Allotment
Allotment
$
$
$
$
$
$
$
$
n
during the
last
days of the
180-day
restricted period, we issue an earnings release or announce
material news or a material event; or
n
prior to the expiration of the
180-day
restricted period, we announce that we will release earnings
results during
the -day
period beginning on the last day of the
180-day
period,
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82
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n
to any legal entity that is authorized or regulated to operate
in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
n
to any legal entity that has two or more of (1) an average
of at least 250 employees during the last financial year;
(2) a total balance sheet of more than 43,000,000 and
(3) an annual net turnover of more than 50,000,000,
as shown in its last annual or consolidated accounts; or
n
in any other circumstances that do not require the publication
of a prospectus pursuant to Article 3 of the Prospectus
Directive.
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Page
F-2
F-3
F-4
F-5
F-6
F-7
F-23
F-24
F-25
F-26
F-31
F-32
F-33
F-34
F-35
F-36
F-41
F-42
F-43
F-44
F-48
F-49
F-50
F-51
F-52
F-53
F-57
F-58
F-59
F-60
F-61
F-62
F-1
Table of Contents
F-2
Table of Contents
F-3
Table of Contents
Successor
Predecessor
Period from
February 22,
Period from
(date of inception)
January 1
through
through
Year Ended December 31,
December 31,
March 31,
2007
2006
2005
2005
$
538,007
$
399,441
$
250,950
$
43,428
425,568
302,296
180,920
30,225
55,354
49,716
33,138
12,197
37,311
33,033
22,280
4,957
1,840
1,072
556
145
646
520,073
386,117
237,540
47,524
17,934
13,324
13,410
(4,096
)
13,937
11,457
7,529
288
1,608
3,239
2,389
1,867
2,642
(4,384
)
1,294
1,184
1,190
1,095
683
1,452
(4,384
)
160
$
935
$
683
$
1,452
$
(4,384
)
$
9.24
$
7.73
$
17.22
$
(822.05
)
$
9.23
$
7.73
$
17.22
$
(822.05
)
101,220
88,437
84,315
5,333
101,354
88,437
84,315
5,333
F-4
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Retained
Total
Class A
Class B
Additional
Earnings/
Stockholders
Common Stock
Common Stock
Paid-In
(Accumulated
Investment
PREDECESSOR
Shares
Amount
Shares
Amount
Capital
Deficit)
(Deficit)
100
$
14
5,233
$
$
788
$
263
$
1,065
(4,384
)
(4,384
)
100
$
14
5,233
$
$
788
$
(4,121
)
$
(3,319
)
Accumulated
Class A
Class B
Additional
Other
Total
Common Stock
Common Stock
Paid-In
Retained
Comprehensive
Stockholders
SUCCESSOR
Shares
Amount
Shares
Amount
Capital
Earnings
Income
Investment
$
$
$
$
$
$
80,658
1
1,892
82,549
82,550
34
34
1,452
1,452
1,486
80,658
$
1
1,892
$
$
82,549
$
1,452
$
34
$
84,036
714
714
16,905
16,905
16,905
(21
)
(21
)
683
683
662
97,563
$
1
1,892
$
$
100,168
$
2,135
$
13
$
102,317
655
655
(25
)
(25
)
(12
)
(12
)
1,095
1,095
1,083
(160
)
(160
)
97,563
$
1
1,892
$
$
100,798
$
3,070
$
1
$
103,870
F-5
Table of Contents
Successor
Predecessor
Period from
February 22,
Period from
(date of inception)
January 1
Year Ended
through
through
December 31,
December 31,
March 31,
2007
2006
2005
2005
$
1,095
$
683
$
1,452
$
(4,384
)
provided by (used in) operating activities:
2,290
1,565
995
145
1,608
3,239
1,261
717
402
246
165
23
655
714
349
807
1,216
81
1,054
1,184
1,190
1,090
(2,591
)
(1,287
)
1,422
530
2,079
1,766
437
1,810
5,051
(533
)
(2,896
)
1,747
(374
)
562
345
(1,184
)
(342
)
117
(2,216
)
12,470
9,516
9,119
(6,820
)
(41,190
)
(178,107
)
(1,349
)
(15
)
(1,867
)
(1,052
)
(1,531
)
(144
)
29
385
(3,187
)
(41,857
)
(179,638
)
(159
)
17,120
84,700
(125
)
(500
)
16,325
1,175
8,510
40,000
27,904
184,374
(66,490
)
(10,522
)
(91,654
)
(145
)
(1,245
)
(892
)
(5,793
)
(1,335
)
(11,535
)
34,285
171,627
7,030
(2,252
)
1,944
1,108
51
3,052
1,108
130
$
800
$
3,052
$
1,108
$
181
$
9,964
$
9,947
$
6,616
$
86
$
118
$
(1,841
)
$
$
$
5,000
$
$
$
$
$
5,000
$
$
F-6
Table of Contents
1.
Significant Accounting Policies
F-7
Table of Contents
Successor
Predecessor
Period from
February 22, (date
Period from
of inception)
January 1
Year Ended
through
through
December 31,
December 31,
March 31,
2007
2006
2005
2005
$
1,703
$
1,714
$
$
413
349
807
1,216
81
(615
)
(957
)
(522
)
(31
)
139
1,020
$
1,437
$
1,703
$
1,714
$
463
5 - 15 years
5 years
5 years
F-8
Table of Contents
F-9
Table of Contents
F-10
Table of Contents
2.
Acquisitions
Dawes
Roadrunner
$
16,101
$
12,596
3,150
5,976
1,666
2,162
75,439
83,900
1,291
2,671
(12,091
)
(14,754
)
$
85,556
$
92,551
F-11
Table of Contents
$
23,779
1,442
900
22,080
1,800
988
(4,799
)
$
46,190
3.
Property and Equipment
2007
2006
$
47
$
47
1,099
1,018
3,897
2,882
3,357
2,922
8,400
6,869
(2,842
)
(1,594
)
$
5,558
$
5,275
4.
Goodwill
F-12
Table of Contents
LTL
TL
$
159,256
$
22,080
83
2,995
159,339
25,075
432
$
159,339
$
25,507
5.
Long-Term Debt and Interest Rate Caps
2007
2006
$
29,000
$
12,675
36,000
62,490
37,420
36,141
5,000
102,420
116,306
(5,000
)
(6,826
)
$
97,420
$
109,480
F-13
Table of Contents
$
5,000
5,500
6,000
7,000
78,920
$
102,420
6.
Stockholders Investment
F-14
Table of Contents
7.
Stock-Based Compensation
F-15
Table of Contents
Period from
February 22 (date of
inception) through
December 31,
2005
$
1,452
(281
)
$
1,171
$
17.22
$
13.89
Period from
February 22 (date
of inception)
through
Year Ended December 31,
December 31,
2007
2006
2005
4.5% - 4.9%
4.3% - 5.0%
3.8% - 4.5%
32.5% - 33.4%
34.5% - 35.1%
35.4% - 36.9%
6
6
6
$245
$268
$314
Weighted-
Weighted-
Average
Average
Remaining
Aggregate
Exercise
Contractual
Intrinsic
Shares
Price
Term (Years)
Value
11,524
$
1,600
9.5
$
0
2,350
1,800
(4,490
)
1,800
9,384
$
1,600
8.6
$
0
3,341
1,900
(1,921
)
1,800
10,804
$
1,700
8.1
$
0
F-16
Table of Contents
8.
Earnings Per Share
Successor
Predecessor
Period from
February 22, (date
Period from
of inception)
January 1
through
through
Year Ended December 31,
December 31,
March 31,
2007
2006
2005
2005
101,220
88,437
84,315
5,333
134
101,354
88,437
84,315
5,333
9.
Income Taxes
Period from
February 22 (date
of inception)
Year Ended
through
December 31,
December 31,
2007
2006
2005
$
$
$
240
780
653
966
16
314
83
258
217
141
$
1,294
$
1,184
$
1,190
F-17
Table of Contents
Period from
February 22 (date
of inception)
Year Ended
through
December 31,
December 31,
2007
2006
2005
$
780
$
653
$
924
173
181
130
127
283
90
76
53
56
82
14
46
$
1,294
$
1,184
$
1,190
2007
2006
$
567
$
577
1,514
1,579
204
460
$
2,285
$
2,616
$
6,515
$
4,941
(7,020
)
(4,049
)
496
(178
)
$
(9
)
$
714
F-18
Table of Contents
Amount
$
6,168
5,439
3,965
3,750
3,010
10,528
F-19
Table of Contents
F-20
Table of Contents
Principal owed as
Interest expense for the
Fees paid for the
of December 31,
year ended
year ended
2007
December 31, 2007
December 31, 2007
$
18,684
$
2,830
$
0
18,547
2,843
0
189
29
0
Principal owed as
Interest expense for the
Fees paid for the
of December 31,
year ended
year ended
2006
December 31, 2006
December 31, 2006
$
18,057
$
2,497
$
0
17,902
2,511
0
182
25
0
Interest expense for the
Fees paid for the
Principal owed as
period February 22, 2005
period February 22, 2005
of December 31,
(date of inception) to
(date of inception) to
2005
December 31, 2005
December 31, 2005
$
17,700
$
1,401
$
800
17,530
1,743
3
179
12
192
F-21
Table of Contents
Successor
Predecessor
Period from
February 22, 2005
(date of
Period from
inception)
January 1
Years Ended
through
through
December 31,
December 31,
March 31,
2007
2006
2005
2005
$
361,821
$
352,008
$
250,950
$
43,428
176,315
47,433
(129
)
$
538,007
$
399,441
$
250,950
$
43,428
$
10,184
$
10,472
$
13,410
$
(4,096
)
7,750
2,852
$
17,934
$
13,324
$
13,410
$
(4,096
)
$
1,201
$
1,032
$
556
$
145
639
40
$
1,840
$
1,072
$
556
$
145
$
1,592
$
908
$
1,531
$
144
275
144
$
1,867
$
1,052
$
1,531
$
144
$
219,720
$
206,589
49,823
53,122
(13,663
)
$
255,880
$
259,711
13.
Subsequent
Event
14.
Redeemable Common
Stock
F-22
Table of Contents
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars
in thousands, except share amounts)
F-23
Table of Contents
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars
in thousands, except per share amounts)
Six Months Ended
June 30,
2008
2007
$
276,802
$
261,168
222,011
206,592
27,588
26,871
17,469
18,915
984
872
268,052
253,250
8,750
7,918
6,298
6,835
1,608
2,452
(525
)
1,018
(283
)
1,434
(242
)
100
60
$
1,334
$
(302
)
$
13.18
$
(2.98
)
$
13.08
$
(2.98
)
101,220
101,220
101,993
101,220
F-24
Table of Contents
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars
in thousands)
Six Months Ended
June 30,
2008
2007
$
1,434
$
(242
)
1,210
1,105
1,608
3
8
645
516
353
290
254
260
1,018
(283
)
(3,896
)
(3,082
)
665
(79
)
2,981
(3,316
)
(1,948
)
4,696
(351
)
729
2,368
2,210
(449
)
(1,349
)
(289
)
(429
)
(738
)
(1,778
)
(125
)
650
21,955
40,000
(2,500
)
(62,740
)
(1,245
)
(1,850
)
(2,155
)
(220
)
(1,723
)
800
3,052
$
580
$
1,329
$
6,981
$
3,319
$
99
$
84
F-25
Table of Contents
Notes to
Unaudited Condensed Consolidated Financial Statements
1.
Significant
Accounting Policies
F-26
Table of Contents
2.
Goodwill
Less than
Truck
Truckload
Brokerage
$
159,339
$
25,507
250
$
159,339
$
25,757
3.
Long-Term
Debt
June 30,
December 31,
2008
2007
$
29,650
$
29,000
33,500
36,000
38,075
37,420
101,225
102,420
(5,250
)
(5,000
)
$
95,975
$
97,420
F-27
Table of Contents
4.
Earnings Per
Share
Six Months Ended
June 30,
2008
2007
101,220
101,220
773
101,993
101,220
5.
Income
Taxes
6.
Commitments and
Contingencies
F-28
Table of Contents
7.
Related Party
Transactions
Principal Owed as
Interest Expense for the
of June 30,
Six Months Ended
2008
June 30, 2008
$
19,021
$
1,458
18,862
1,434
192
14
8.
Segment
Reporting
F-29
Table of Contents
Six Months Ended
June 30,
2008
2007
$
188,470
$
174,996
88,663
86,172
(331
)
$
276,802
$
261,168
$
5,356
$
4,514
3,394
3,404
$
8,750
$
7,918
$
699
$
552
285
320
$
984
$
872
$
266
$
283
23
146
$
289
$
429
June 30,
December 31,
2008
2007
$
219,269
$
219,720
49,340
49,823
(9,655
)
(13,663
)
$
258,954
$
255,880
9.
GTS
Transaction
F-30
Table of Contents
To the Member of GTS Direct, LLC:
F-31
Table of Contents
COMBINED BALANCE SHEETS
F-32
Table of Contents
COMBINED STATEMENTS OF OPERATIONS
December 31,
2007
2006
2005
$
27,473
$
24,672
$
17,626
20,959
19,073
13,299
3,031
2,819
2,263
1,157
1,214
1,137
304
284
216
25,451
23,390
16,915
2,022
1,282
711
181
202
94
$
1,841
$
1,080
$
617
F-33
Table of Contents
COMBINED STATEMENTS OF INVESTED EQUITY
For the years ended December 31, 2007, 2006 and
2005
Group Transportation Services, Inc.
Additional
GTS Direct, LLC
Total
Common Stock
Paid-In
Retained
Treasury
Members
Invested
Shares
Amount
Capital
Earnings
Stock
Equity
Equity
46,241,953
$
46
$
150
$
244
$
(220
)
$
15
$
235
(50
)
(158
)
(208
)
33
33
463
154
617
46,241,953
46
150
690
(220
)
11
677
(1,141
)
(43
)
(1,184
)
45
45
851
229
1,080
46,241,953
46
195
400
(220
)
197
618
(1,575
)
(340
)
(1,915
)
60
60
1,590
251
1,841
46,241,953
$
46
$
255
$
415
$
(220
)
$
108
$
604
F-34
Table of Contents
COMBINED STATEMENTS OF CASH FLOWS
December 31,
2007
2006
2005
$
1,841
$
1,080
$
617
304
284
216
60
45
1
13
36
(645
)
(256
)
(418
)
(40
)
30
(89
)
516
681
217
74
41
55
44
(186
)
242
2,155
1,732
876
(76
)
(448
)
(312
)
167
20
91
(428
)
(312
)
(26
)
(52
)
(1,915
)
(1,184
)
(208
)
10
14
(12
)
(1,905
)
(1,196
)
(272
)
341
108
292
731
623
331
$
1,072
$
731
$
623
$
235
$
232
$
96
$
$
$
1,152
$
$
$
33
F-35
Table of Contents
Notes to
Combined Financial Statements
1.
Significant Accounting Policies
3 - 10 years
3 - 5 years
15 years
F-36
Table of Contents
F-37
Table of Contents
2.
Property and Equipment
2007
2006
$
867
$
820
341
555
1,185
1,185
2,393
2,560
(1,009
)
(781
)
$
1,384
$
1,779
3.
Line of Credit Arrangement
4.
Invested Equity
F-38
Table of Contents
2007
2006
4.8
%
4.3
%
0.0
%
0.0
%
38.6
%
41.8
%
7
7
$
0.09
$
0.09
Weighted-
Weighted-
Average
Aggregate
Average
Remaining
Intrinsic
Exercise Price
Contractual
Value
Shares
(in dollars)
Term (Years)
(000s)
2,608,617
$
0.15
5.3
$
113
750,000
0.18
3,358,617
$
0.16
5.3
$
182
416,777
0.18
3,775,394
$
0.16
4.9
$
219
5.
Commitments and Contingencies
2007
2006
$
1,185
$
1,185
(197
)
(118
)
$
988
$
1,067
F-39
Table of Contents
Amount
$
231
238
246
253
261
2,218
3,447
(2,283
)
$
1,164
(1)
Reflected in the combined balance sheets as current other
liabilities and noncurrent capital lease obligations of $5,000
and $1.2 million, respectively.
Amount
$
130
134
138
142
147
1,249
6.
Related Party Transactions
7.
Subsequent Event
F-40
Table of Contents
F-41
Table of Contents
Successor
Predecessor
Period from
February 12
Period from
Period from
(date of inception)
January 1
January 1
through
through
through
June 30,
February 29,
June 30,
2008
2008
2007
$
10,442
$
4,302
$
13,006
8,049
3,249
10,045
1,220
4,093
1,499
501
295
573
208
45
156
9,978
7,682
12,273
464
(3,380
)
733
241
29
92
223
(3,409
)
641
79
$
144
$
(3,409
)
$
641
F-42
Table of Contents
Successor
Predecessor
Period from
February 12
Period from
Period from
(date of inception)
January 1
January 1
through
through
through
June 30,
February 29,
June 30,
2008
2008
2007
$
144
$
(3,409
)
$
641
208
45
156
46
31
2,235
(3,115
)
(668
)
13
25
(23
)
(2,206
)
6,246
333
440
(208
)
470
(44
)
(36
)
(39
)
(20,911
)
(20,955
)
(36
)
(39
)
(830
)
(516
)
2
9
8,000
(173
)
(200
)
13,430
21,057
(828
)
(507
)
542
(1,072
)
(76
)
1,072
731
$
542
$
$
655
$
250
$
39
$
117
$
3,200
$
$
F-43
Table of Contents
1.
Basis of Presentation
F-44
Table of Contents
2.
Acquisition
F-45
Table of Contents
$
1,988
3,617
2,875
23,248
700
58
(2,047
)
(5,166
)
(1,166
)
$
24,107
3.
Long-Term Debt
$
7,800
7,800
(820
)
$
6,980
4.
Stock-Based Compensation
F-46
Table of Contents
2.7%-3.2%
33.7%-33.8%
6
$321
Weighted-
Weighted-
Average
Aggregate
Average
Remaining
Intrinsic
Exercise Price
Contractual
Value
Shares
(in dollars)
Term Years
(000s)
2,541
$
1,222
2,541
$
1,222
9.8
$
0
5.
Related Party Transaction
6.
Subsequent Event
F-47
Table of Contents
July 22, 2008
F-48
Table of Contents
COMBINED BALANCE SHEETS
F-49
Table of Contents
Period from
January 1,
2006
Year
through
Ended
October 3,
December 31,
2006
2005
$
148,821
$
184,293
133,046
163,474
8,757
11,574
184
473
141,987
175,521
6,834
8,772
196
128
2
140
7,028
8,760
102
120
$
6,926
$
8,640
F-50
Table of Contents
Additional
Total
Common Stock
Paid-In
Retained
Stockholders
Shares
Amount
Capital
Earnings
Investment
1,000
$
40
$
26
$
21,221
$
21,287
(4,298
)
(4,298
)
8,640
8,640
1,000
40
26
25,563
25,629
(2,164
)
(2,164
)
6,926
6,926
1,000
$
40
$
26
$
30,325
$
30,391
F-51
Table of Contents
Period from
January 1,
2006
Year
through
Ended
October 3,
December 31,
2006
2005
$
6,926
$
8,640
184
473
807
(4,076
)
719
(1,164
)
1,523
(216
)
130
404
10,289
4,061
(294
)
(349
)
(294
)
(349
)
(1,500
)
200
(1,000
)
(253
)
(2,164
)
(4,298
)
(4,664
)
(4,351
)
5,331
(639
)
3,503
4,142
$
8,834
$
3,503
$
2
$
$
30
$
259
F-52
Table of Contents
Notes to
Combined Financial Statements
1.
Significant Accounting Policies
5 - 15 years
3 - 7 years
F-53
Table of Contents
2.
Property and Equipment
2006
2005
$
233
$
209
2,144
1,906
2,377
2,115
(1,566
)
(1,414
)
$
811
$
701
F-54
Table of Contents
3.
Long-Term Debt
4.
Income Taxes
5.
Stockholders Investment
Shares
Shares
Par Value
Authorized
Issued
$
100 per share
1,000
400
No par value
1,000
100
No par value
1,000
100
No par value
3,000
200
No par value
3,000
200
6.
Commitments and Contingencies
7.
Related Party Transactions
F-55
Table of Contents
8.
Subsequent Event
F-56
Table of Contents
Roadrunner Freight Systems, Inc.
July 22, 2008
F-57
Table of Contents
BALANCE SHEET
April 29, 2005
(Dollars
in thousands, except share amounts)
$
1,503
12,731
1,273
1,610
17,117
2,180
48,642
2,233
50,875
$
70,172
$
2,000
9,121
4,419
15,540
31,677
7,243
54,460
344,366 shares issued and outstanding
19,631
(3,919
)
15,712
$
70,172
F-58
Table of Contents
STATEMENT OF OPERATIONS
Period from January 1, 2005 through April 29,
2005
(Dollars
in thousands)
$
48,755
34,858
7,365
6,880
357
49,460
(705
)
2,316
1,094
(4,115
)
(675
)
$
(3,440
)
F-59
Table of Contents
STATEMENT OF STOCKHOLDERS INVESTMENT
Period from January 1, 2005 through April 29,
2005
(Dollars
in thousands, except share amounts)
Class A
Additional
Total
Common Stock
Paid-In
Accumulated
Stockholders
Shares
Amount
Capital
Deficit
Investment
344,366
$
$
17,011
$
(479
)
$
16,532
2,620
2,620
(3,440
)
(3,440
)
344,366
$
$
19,631
$
(3,919
)
$
15,712
F-60
Table of Contents
STATEMENT OF CASH FLOWS
Period from January 1, 2005 through April 29,
2005
(Dollars
in thousands)
$
(3,440
)
2,316
2,620
357
24
51
17
(675
)
(64
)
(487
)
775
(419
)
1,075
(54
)
(54
)
(1,000
)
(1,000
)
21
1,482
$
1,503
$
791
F-61
Table of Contents
1.
Significant Accounting Policies
5 - 15 years
5 years
F-62
Table of Contents
2.
Property and Equipment
$
600
10,504
11,104
(8,924
)
$
2,180
F-63
Table of Contents
3.
Long-Term Debt
Line of credit
$
9,000
Bank term note
, payable in monthly installments of $250
through December 31, 2005 increasing to $500 through
December 31, 2009 maturity date. Interest is payable
monthly at LIBOR plus an applicable margin or, at the
Companys option, prime plus an applicable margin. At
April 29, 2005, the interest rate was LIBOR (3.1% at
April 29, 2005) plus 3%.
20,000
Senior subordinated note
, payable to American Capital,
Ltd. (ACAS), principal at issuance date of $15,200.
As of April 29, 2005, balance includes deferred interest of
$61 and is net of $101 of unamortized debt discount. Interest
accrues at 15.5% of which 12.5% is payable monthly and 3% is
deferred until maturity of debt. The effective interest rate on
the note is 19.1%. Principal and deferred interest is due with a
final payment due on July 25, 2009
760
Junior subordinated note A,
payable to ACAS,
principal at issuance date of $875. As of April 29, 2005,
balance includes deferred interest of $8 and is net of $104 of
unamortized debt discount. Interest accrues at 16% of which 13%
is payable monthly and 3% is deferred until maturity of debt.
The effective interest rate on the note is 21.5%. Principal and
deferred interest is due with a final payment due on
July 25, 2010.
788
Junior subordinated note B,
payable to ACAS,
principal at issuance date of $3,475. As of April 29, 2005,
balance includes deferred interest of $35 and is net of $416 of
unamortized debt discount. Interest accrues at 15.4% of which
12.4% is payable monthly and 3% is deferred until maturity of
debt. The effective interest rate on the note is 20.8%.
Principal and deferred interest is due with a final payment due
on July 25, 2010.
3,129
$
33,677
(2,000
)
$
31,677
$
2,000
3,500
4,000
5,033
15,475
4,290
34,298
(621
)
$
33,677
F-64
Table of Contents
4.
Income Taxes
$
(675
)
$
(675
)
$
(1,440
)
(53
)
810
8
$
(675
)
5.
Stockholders Investment
F-65
Table of Contents
Number
Range
Weighted
of
of
Average
Shares
Exercise Price
Exercise Price
106,928
$
12.28 43.38
$
23.99
39,261
43.38
43.38
146,189
$
12.28 43.38
$
29.19
146,189
$
12.28 43.38
$
29.19
6.
Commitments and Contingencies
Operating
Operating
Lease with
Leases with
Related Party
Third Parties
Total
$
144
$
1,367
$
1,511
216
1,287
1,503
216
1,016
1,232
216
803
1,019
216
584
800
2,196
581
2,777
F-66
Table of Contents
7.
Related Party Transactions
Interest expense
Principal owed
for the period from
as of
January 1, 2005
$4,677
$375
8.
Subsequent Event
F-67
Table of Contents
Table of Contents
Item 13.
Other Expenses
of Issuance and Distribution.
$
5,895
15,500
*
*
*
*
*
*
*
$
*
*
To be filed by amendment.
Item 14.
Indemnification
of Directors and Officers.
II-1
Table of Contents
Item 15.
Recent Sales
of Unregistered Securities.
Item 16.
Exhibits and
Financial Statement Schedules.
Exhibit
Number
*1
Form of Underwriting Agreement
3
.1
Form of Amended and Restated Certificate of Incorporation
3
.2
Form of Second Amended and Restated Bylaws
*4
.1
Form of Common Stock Certificate
4
.2
Second Amended and Restated Stockholders Agreement, dated
as of March 14, 2007, by and among the Registrant and the
stockholders named therein
5
Form of Opinion of Greenberg Traurig, LLP
II-2
Table of Contents
Exhibit
Number
10
.1
Second Amended and Restated Credit Agreement, dated as of
March 14, 2007, by and among the Registrant; the Lenders
(as defined therein); LaSalle Bank National Association, as
Administrative Agent; and U.S. Bank National Association, as
Syndication Agent
10
.2
Amended and Restated Notes Purchase Agreement, dated as of
March 14, 2007, by and among the Registrant; the Guarantors
(as defined therein); and the Purchasers (as defined therein)
10
.3
Stock Purchase Agreement, dated as of October 4, 2006, by
and among Sargent Transportation Group, Inc.; the Acquired
Entities (as defined therein); and the Sellers (as defined
therein)
10
.4
Purchase Agreement, dated as of February 29, 2008, by and
among Michael P. Valentine, Group Transportation Services, Inc.,
GTS Direct, LLC, and GTS Acquisition Sub, Inc.
10
.5
Lease Agreement, dated as of July 1, 2005, by and between
GTS Services LLC and Group Transportation Services, Inc.
10
.6
First Amendment to Lease Agreement, dated as of
February 29, 2008, by and between GTS Services LLC and
Group Transportation Services, Inc.
*10
.7
Form of Stock Option Agreement
*10
.8
2008 Incentive Compensation Plan
*10
.9
Form of Indemnification Agreement
*10
.10
Agreement and Plan of Merger, dated as
of ,
2008, by and among the Registrant; GTS Transportation Logistics,
Inc.; and Group Transportation Services Holdings, Inc.
10
.11
Amended and Restated Management and Consulting Agreement, dated
as of March 14, 2007, by and among the Registrant,
ThayerHidden Creek Management, L.P.; Eos Management, Inc.; and
the Companies (as defined therein)
**21
List of Subsidiaries
23
.1
Consent of Deloitte & Touche LLP relating to the
consolidated financial statements of Roadrunner Transportation
Services Holdings, Inc. and subsidiaries (the Successor) and the
financial statements of Dawes Transport, Inc. (the Predecessor)
23
.2
Consent of Deloitte & Touche LLP relating to the combined
financial statements of Group Transportation Services, Inc. and
GTS Direct, LLC
23
.3
Consent of Deloitte & Touche LLP relating to the combined
financial statements of Sargent Trucking, Inc.; Big Rock
Transportation, Inc.; B&J Transportation, Inc.; Midwest
Carriers, Inc.; and Smith Truck Brokers, Inc.
23
.4
Consent of Deloitte & Touche LLP relating to the financial
statements of Roadrunner Freight Systems, Inc.
*23
.5
Consent of Greenberg Traurig, LLP (included in Exhibit 5)
**24
Power of Attorney of Directors and Executive Officers (included
on the signature page of this registration statement)
*
To be filed by amendment.
**
Previously filed.
Item 17.
Undertakings.
Table of Contents
II-4
Table of Contents
HOLDINGS, INC.
By:
President, Chief Executive Officer, and Director (Principal
Executive Officer)
September 11, 2008
Vice President, Chief Financial Officer, Secretary, and
Treasurer (Principal Accounting and Financial Officer)
September 11, 2008
Chairman of the Board
September 11, 2008
Director
September 11, 2008
Director
September 11, 2008
Director
September 11, 2008
Director
September 11, 2008
Director
September 11, 2008
Director
September 11, 2008
Attorney-in-Fact
II-5
2
3
4
Mark A. DiBlasi, President | ||||
5
2
3
4
5
6
7
8
9
10
11
12
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
ROADRUNNER-DAWES, INC.
|
||||
By: | /s/ Scott Rued | |||
Scott Rued, | ||||
Co-Chairman of the Board | ||||
THAYER EQUITY INVESTORS V, L.P. | ||||
By: |
TC Equity Partners V, L.L.C.,
its general partner |
|||
By: |
Thayer Management Partners, L.L.C.,
its Managing Member |
|||
By: | /s/ Scott Rued | |||
Scott Rued, | ||||
Managing Member |
SANKATY CREDIT OPPORTUNITIES, L.P.
|
||||
By: | /s/ Stuart Davies | |||
Stuart Davies, | ||||
Senior Vice President | ||||
Address for Notices:
c/o Sankaty Advisors 111 Huntington Avenue Boston, MA 02199 Attn: Robert Weiss |
||||
SANKATY CREDIT OPPORTUNITIES II, L.P.
|
||||
By: | /s/ Stuart Davies | |||
Stuart Davies, | ||||
Senior Vice President | ||||
Address for Notices:
c/o Sankaty Advisors 111 Huntington Avenue Boston, MA 02199 Attn: Robert Weiss |
20
RGIP, LLC
|
||||
By: | /s/ Alfred O. Rose | |||
Alfred O. Rose | ||||
Authorized Signatory | ||||
Address for Notices:
c/o Ropes & Gray LLO One International Place Boston, MA 02110 Attn: David McKay |
||||
AMERICAN CAPITAL STRATEGIES, LTD.
|
||||
By: | /s/ Jon Isaacson | |||
Jon Isaacson, | ||||
Vice President | ||||
Address for Notices:
2 Bethesda Metro Center 14th Floor Bethesda, MD 20814 |
||||
and to:
|
||||
Weil, Gotshal & Manges LLP
767 Fifth Avenue New York, NY 10153 Attn: Christopher Aidun, Esq. Facsimile: (212) 310-8127 |
EOS CAPITAL PARTNERS III, L.P. | ||||
By: |
ECP General III, L.P.,
its general partner |
|||
By: |
ECP III, LLC ,
its general partner |
|||
By: | /s/ Brian Young | |||
Brian Young | ||||
Address for Notices:
c/o Eos Partners 320 Park Avenue New York, NY 10022 Attn: Sam Levine |
21
With a copy to:
|
||||
Nixon Peabody LLP
437 Madison Avenue New York, NY 10022 Attn: Dominick P. DeChiara, Esq. |
||||
EOS PARTNERS, L.P.
|
||||
By: | /s/ Brian Young | |||
Brian Young | ||||
Address for Notices:
320 Park Avenue New York, NY 10022 Attn: Sam Levine |
||||
With a copy to:
|
||||
Nixon Peabody LLP
437 Madison Avenue New York, NY 10022 Attn: Dominick P. DeChiara, Esq. |
||||
AMERICAN CAPITAL EQUITY I, LLC
|
||||
By: |
American Capital Equity Management, LLC,
its Manager |
|||
By: | /s/ Cydonii Fairfax | |||
Cydonii Fairfax, | ||||
Vice President | ||||
Address for Notices:
2 Bethesda Metro Center 14th Floor Bethesda, MD 20814 |
||||
and to:
|
||||
Weil, Gotshal & Manges LLP
767 Fifth Avenue New York, NY 10153 Attn: Christopher Aidun, Esq. Facsimile: (212) 310-8127 |
22
23
Page | ||||||||
|
||||||||
SECTION 1. | DEFINITIONS | 3 | ||||||
|
||||||||
1.1. | Definitions | 3 | ||||||
1.2. | Other Interpretive Provisions | 26 | ||||||
|
||||||||
SECTION 2. | COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES | 27 | ||||||
|
||||||||
2.1. | Commitments | 27 | ||||||
|
2.1.1. | Revolving Commitment | 27 | |||||
|
2.1.2. | Term Loan Commitment | 27 | |||||
|
2.1.3. | L/C Commitment | 27 | |||||
2.2. | Loan Procedures | 28 | ||||||
|
2.2.1. | Various Types of Loans | 28 | |||||
|
2.2.2. | Borrowing Procedures | 28 | |||||
|
2.2.3. | Conversion and Continuation Procedures | 28 | |||||
|
2.2.4. | Swing Line Facility | 29 | |||||
2.3. | Letter of Credit Procedures | 32 | ||||||
|
2.3.1. | L/C Applications | 32 | |||||
|
2.3.2. | Participations in Letters of Credit | 32 | |||||
|
2.3.3. | Reimbursement Obligations | 33 | |||||
|
2.3.4. | Funding by Lenders to Issuing Lender | 34 | |||||
2.4. | Commitments Several | 34 | ||||||
2.5. | Certain Conditions | 34 | ||||||
2.6. | Effect of Amendment and Restatement | 35 | ||||||
2.7. | Joint and Several Liability | 35 | ||||||
2.8. | Borrower Representative | 37 | ||||||
|
||||||||
SECTION 3. | EVIDENCING OF LOANS | 37 | ||||||
|
||||||||
3.1. | Notes | 37 | ||||||
3.2. | Recordkeeping | 38 | ||||||
|
||||||||
SECTION 4. | INTEREST | 38 | ||||||
|
||||||||
4.1. | Interest Rates | 38 | ||||||
4.2. | Interest Payment Dates | 38 | ||||||
4.3. | Setting and Notice of LIBOR Rates | 39 | ||||||
4.4. | Computation of Interest | 39 | ||||||
|
||||||||
SECTION 5. | FEES | 39 | ||||||
|
||||||||
5.1. | Non Use Fee | 39 | ||||||
5.2. | Letter of Credit Fees | 39 | ||||||
5.3. | Administrative Agents Fees | 40 |
-i-
Page | ||||||||
|
||||||||
SECTION 6. | REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT; PREPAYMENTS | 40 | ||||||
|
||||||||
6.1. | Reduction or Termination of the Revolving Commitment | 40 | ||||||
|
6.1.1. | Voluntary Reduction or Termination of the Revolving Commitment | 40 | |||||
|
6.1.2. | No Mandatory Reductions of Revolving Commitment | 40 | |||||
|
6.1.3. | All Reductions of the Revolving Commitment | 40 | |||||
6.2. | Prepayments | 41 | ||||||
|
6.2.1. | Voluntary Prepayments | 41 | |||||
|
6.2.2. | Mandatory Prepayments | 41 | |||||
6.3. | Manner of Prepayments | 42 | ||||||
|
6.3.1. | All Prepayments | 42 | |||||
6.4. | Repayments | 42 | ||||||
|
6.4.1. | Revolving Loans | 42 | |||||
|
6.4.2. | Term Loan | 42 | |||||
|
||||||||
SECTION 7. | MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES | 43 | ||||||
|
||||||||
7.1. | Making of Payments | 43 | ||||||
7.2. | Application of Certain Payments | 43 | ||||||
7.3. | Due Date Extension | 43 | ||||||
7.4. | Setoff | 44 | ||||||
7.5. | Proration of Payments | 44 | ||||||
7.6. | Taxes | 44 | ||||||
|
||||||||
SECTION 8. | INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS | 46 | ||||||
|
||||||||
8.1. | Increased Costs | 46 | ||||||
8.2. | Basis for Determining Interest Rate Inadequate or Unfair | 47 | ||||||
8.3. | Changes in Law Rendering LIBOR Loans Unlawful | 48 | ||||||
8.4. | Funding Losses | 48 | ||||||
8.5. | Right of Lenders to Fund through Other Offices | 48 | ||||||
8.6. | Discretion of Lenders as to Manner of Funding | 49 | ||||||
8.7. | Mitigation of Circumstances; Replacement of Lenders | 49 | ||||||
8.8. | Conclusiveness of Statements; Survival of Provisions | 49 | ||||||
|
||||||||
SECTION 9. | REPRESENTATIONS AND WARRANTIES | 50 | ||||||
|
||||||||
9.1. | Organization | 50 | ||||||
9.2. | Authorization; No Conflict | 50 | ||||||
9.3. | Validity and Binding Nature | 50 | ||||||
9.4. | Financial Condition | 51 | ||||||
9.5. | No Material Adverse Change | 51 | ||||||
9.6. | Litigation and Contingent Liabilities | 51 | ||||||
9.7. | Ownership of Properties; Liens | 51 | ||||||
9.8. | Equity Ownership; Subsidiaries | 52 | ||||||
9.9. | Pension Plans | 52 | ||||||
9.10. | Investment Company Act | 53 | ||||||
9.11. | [ Intentionally Omitted ] | 53 | ||||||
9.12. | Regulation U | 53 |
-ii-
Page | ||||||||
9.13. | Taxes | 53 | ||||||
9.14. | Solvency | 53 | ||||||
9.15. | Environmental Matters | 54 | ||||||
9.16. | Insurance | 54 | ||||||
9.17. | Real Property | 54 | ||||||
9.18. | Information | 55 | ||||||
9.19. | Intellectual Property | 55 | ||||||
9.20. | Burdensome Obligations | 55 | ||||||
9.21. | Labor Matters | 55 | ||||||
9.22. | No Default | 55 | ||||||
9.23. | Related Agreements | 56 | ||||||
|
||||||||
SECTION 10. | AFFIRMATIVE COVENANTS | 56 | ||||||
|
||||||||
10.1. | Reports, Certificates and Other Information | 57 | ||||||
|
10.1.1. | Annual Report | 57 | |||||
|
10.1.2. | Interim Reports | 57 | |||||
|
10.1.3. | Compliance Certificates | 58 | |||||
|
10.1.4. | Excess Cash Flow Certificates | 58 | |||||
|
10.1.5. | Reports to the SEC and to Shareholders | 58 | |||||
|
10.1.6. | Notice of Default, Litigation and ERISA Matters | 58 | |||||
|
10.1.7. | Borrowing Base Certificates | 59 | |||||
|
10.1.8. | Management Reports | 59 | |||||
|
10.1.9. | Projections | 59 | |||||
|
10.1.10. | Subordinated Debt Notices | 60 | |||||
|
10.1.11. | Appraisal Reports | 60 | |||||
|
10.1.12. | Other Information | 60 | |||||
10.2. | Books, Records and Inspections | 60 | ||||||
10.3. | Maintenance of Property; Insurance | 61 | ||||||
10.4. | Compliance with Laws; Payment of Taxes and Liabilities | 62 | ||||||
10.5. | Maintenance of Existence, etc. | 62 | ||||||
10.6. | Use of Proceeds | 63 | ||||||
10.7. | Employee Benefit Plans | 63 | ||||||
10.8. | Environmental Matters | 63 | ||||||
10.9. | Further Assurances | 64 | ||||||
10.10. | Deposit Accounts | 64 | ||||||
10.11. | Interest Rate Protection | 64 | ||||||
|
||||||||
SECTION 11. | NEGATIVE COVENANTS | 64 | ||||||
|
||||||||
11.1. | Debt | 65 | ||||||
11.2. | Liens | 66 | ||||||
11.3. | Restricted Payments | 67 | ||||||
11.4. | Mergers, Consolidations, Sales | 69 | ||||||
11.5. | Modification of Organizational Documents | 69 | ||||||
11.6. | Transactions with Affiliates | 69 | ||||||
11.7. | Unconditional Purchase Obligations | 70 | ||||||
11.8. | Inconsistent Agreements | 70 |
-iii-
Page | ||||||||
11.9. | Business Activities; Issuance of Equity; Subsidiaries | 70 | ||||||
11.10. | Investments | 70 | ||||||
11.11. | Restriction of Amendments to Certain Documents | 71 | ||||||
11.12. | Fiscal Year; Accounting Changes | 72 | ||||||
11.13. | Financial Covenants | 72 | ||||||
|
11.13.1. | Fixed Charge Coverage Ratio | 72 | |||||
|
11.13.2. | Senior Debt to EBITDA Ratio | 72 | |||||
|
11.13.3. | Total Debt to EBITDA Ratio | 73 | |||||
11.14. | Cancellation of Debt | 74 | ||||||
11.15. | Additional Covenants | 74 | ||||||
|
||||||||
SECTION 12. | EFFECTIVENESS; CONDITIONS OF LENDING, ETC. | 74 | ||||||
|
||||||||
12.1. | Initial Credit Extension | 74 | ||||||
|
12.1.1. | Notes | 75 | |||||
|
12.1.2. | Authorization Documents | 75 | |||||
|
12.1.3. | Consents, etc. | 75 | |||||
|
12.1.4. | Letter of Direction | 75 | |||||
|
12.1.5. | Guaranty and Collateral Agreement | 75 | |||||
|
12.1.6. | Subordination Agreements | 75 | |||||
|
12.1.7. | Opinions of Counsel | 75 | |||||
|
12.1.8. | Insurance | 76 | |||||
|
12.1.9. | Copies of Documents | 76 | |||||
|
12.1.10. | Payment of Fees | 76 | |||||
|
12.1.11. | Pro Formas | 76 | |||||
|
12.1.12. | Search Results; Lien Terminations | 76 | |||||
|
12.1.13. | Filings, Registrations and Recordings | 77 | |||||
|
12.1.14. | Borrowing Base Certificate | 77 | |||||
|
12.1.15. | Maximum Revolving Loans | 77 | |||||
|
12.1.16. | Closing Certificate, Consents and Permits | 77 | |||||
|
12.1.17. | Real Estate Documents | 77 | |||||
|
12.1.18. | Collateral Access Agreement | 78 | |||||
|
12.1.19. | EBITDA | 78 | |||||
|
12.1.20. | Projections | 78 | |||||
|
12.1.21. | Other | 78 | |||||
12.2. | Conditions | 78 | ||||||
|
12.2.1. | Compliance with Warranties, No Default, etc. | 78 | |||||
|
12.2.2. | Confirmatory Certificate | 78 | |||||
|
||||||||
SECTION 13. | EVENTS OF DEFAULT AND THEIR EFFECT | 79 | ||||||
|
||||||||
13.1. | Events of Default | 79 | ||||||
|
13.1.1. | Non Payment of the Loans, etc. | 79 | |||||
|
13.1.2. | Non Payment of Other Debt | 79 | |||||
|
13.1.3. | Other Material Obligations | 79 | |||||
|
13.1.4. | Bankruptcy, Insolvency, etc. | 79 | |||||
|
13.1.5. | Non Compliance with Loan Documents | 80 | |||||
|
13.1.6. | Representations; Warranties | 80 |
-iv-
Page | ||||||||
|
13.1.7. | Pension Plans | 80 | |||||
|
13.1.8. | Judgments | 81 | |||||
|
13.1.9. | Invalidity of Collateral Documents, etc. | 81 | |||||
|
13.1.10. | Invalidity of Subordination Provisions, etc. | 81 | |||||
|
13.1.11. | Change of Control | 81 | |||||
|
13.1.12. | Material Adverse Effect | 81 | |||||
|
13.1.13. | Default Under Sponsor Make Whole Agreement | 81 | |||||
13.2. | Effect of Event of Default | 81 | ||||||
|
||||||||
SECTION 14. | THE AGENT | 82 | ||||||
|
||||||||
14.1. | Appointment and Authorization | 82 | ||||||
14.2. | Issuing Lender | 83 | ||||||
14.3. | Delegation of Duties | 83 | ||||||
14.4. | Exculpation of Administrative Agent | 83 | ||||||
14.5. | Reliance by Administrative Agent | 84 | ||||||
14.6. | Notice of Default | 84 | ||||||
14.7. | Credit Decision | 84 | ||||||
14.8. | Indemnification | 85 | ||||||
14.9. | Administrative Agent in Individual Capacity | 86 | ||||||
14.10. | Successor Administrative Agent | 86 | ||||||
14.11. | Collateral Matters | 86 | ||||||
14.12. | Administrative Agent May File Proofs of Claim | 87 | ||||||
14.13. | Other Agents; Arrangers and Managers | 88 | ||||||
|
||||||||
SECTION 15. | GENERAL | 88 | ||||||
|
||||||||
15.1. | Waiver; Amendments | 88 | ||||||
15.2. | Confirmations | 89 | ||||||
15.3. | Notices | 89 | ||||||
15.4. | Computations | 89 | ||||||
15.5. | Costs, Expenses and Taxes | 90 | ||||||
15.6. | Assignments; Participations | 91 | ||||||
|
15.6.1. | Assignments | 91 | |||||
|
15.6.2. | Participations | 92 | |||||
15.7. | Register | 92 | ||||||
15.8. | GOVERNING LAW | 93 | ||||||
15.9. | Confidentiality | 93 | ||||||
15.10. | Severability | 94 | ||||||
15.11. | Nature of Remedies | 94 | ||||||
15.12. | Entire Agreement | 94 | ||||||
15.13. | Counterparts | 94 | ||||||
15.14. | Successors and Assigns | 94 | ||||||
15.15. | Captions | 95 | ||||||
15.16. | Customer Identification USA Patriot Act Notice | 95 | ||||||
15.17. | INDEMNIFICATION BY BORROWERS | 95 | ||||||
15.18. | Nonliability of Lenders | 96 | ||||||
15.19. | FORUM SELECTION AND CONSENT TO JURISDICTION | 97 |
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15.20. | WAIVER OF JURY TRIAL | 97 |
-vi-
ANNEXES
|
||
|
||
ANNEX A
|
Lenders and Pro Rata Shares | |
ANNEX B
|
Addresses for Notices | |
|
||
SCHEDULES
|
||
|
||
SCHEDULE 9.6
|
Litigation and Contingent Liabilities | |
SCHEDULE 9.8
|
Capital Securities | |
SCHEDULE 9.15
|
Environmental Matters | |
SCHEDULE 9.16
|
Insurance | |
SCHEDULE 9.17
|
Real Property | |
SCHEDULE 9.21
|
Labor Matters | |
SCHEDULE 11.1
|
Existing Debt | |
SCHEDULE 11.2
|
Existing Liens | |
SCHEDULE 11.10
|
Investments | |
SCHEDULE 12.1
|
Debt to be Repaid | |
|
||
EXHIBITS
|
||
|
||
EXHIBIT A
|
Form of Note (Section 3.1) | |
EXHIBIT B
|
Form of Compliance Certificate (Section 10.1.3) | |
EXHIBIT C
|
Form of Borrowing Base Certificate (Section 1.1) | |
EXHIBIT D
|
Form of Assignment Agreement (Section 15.6.1) | |
EXHIBIT E
|
Form of Notice of Borrowing (Section 2.2.2) | |
EXHIBIT F
|
Form of Notice of Conversion/Continuation (Section 2.2.3) | |
EXHIBIT G
|
Form of Excess Cash Flow Certificate (Section 10.1.4) |
-vii-
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Total Debt to | ||||||||||||||||||||
Level | EBITDA Ratio | LIBOR Margin | Base Rate Margin | Non-Use Fee Rate | L/C Fee Rate | |||||||||||||||
I
|
≥ 4.75 to 1.0 | 4.00 | % | 2.50 | % | 0.50 | % | 4.00 | % | |||||||||||
II
|
≥ 4.25 to 1.0 but | |||||||||||||||||||
|
<4.75 to 1.0 | 3.75 | % | 2.25 | % | 0.50 | % | 3.75 | % |
-4-
Total Debt to | ||||||||||||||||||||
Level | EBITDA Ratio | LIBOR Margin | Base Rate Margin | Non-Use Fee Rate | L/C Fee Rate | |||||||||||||||
III
|
≥ 3.75 to 1.0 but | |||||||||||||||||||
|
<4.25 to 1.0 | 3.50 | % | 2.00 | % | 0.50 | % | 3.50 | % | |||||||||||
IV
|
≥ 3.25 to 1.0 but | |||||||||||||||||||
|
<3.75 to 1.0 | 3.25 | % | 1.75 | % | 0.50 | % | 3.25 | % | |||||||||||
V
|
≥ 2.75 to 1.0 but | |||||||||||||||||||
|
<3.25 to 1.0 | 2.75 | % | 1.25 | % | 0.30 | % | 2.75 | % | |||||||||||
VI
|
<2.75 to 1.0 | 2.50 | % | 1.00 | % | 0.30 | % | 2.50 | % |
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-8-
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Month | Amount | |||
April 1, 2006 through and including
June 30, 2006
|
$ | 8,301,000 | ||
July 1, 2006 through and including
September 30, 2006
|
$ | 7,612,000 |
-10-
Month | Amount | |||
October 1, 2006 through and
including December 31, 2006
|
$ | 2,576,000 | ||
January 1, 2007 through and
including January 31, 2007 and
February 1, 2007 through and
including February 28, 2007
|
Actual reported EBITDA of Borrowers for such months, subject to adjustments that are reasonably acceptable to Administrative Agent and are consistent with the adjustments reflected in the EBITDA amounts specified above by dollar amounts. |
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-13-
Rental | Cash Income | Unfinanced Capital | ||||||||||
Period | Expense | Taxes | Expenditures | |||||||||
April 1, 2006 through
and including June
30, 2006
|
$ | 2,489,000 | ($1,747,000 | ) | $ | 360,000 | ||||||
July 1, 2006 through
and including
September 30, 2006
|
$ | 2,582,000 | $ | 148,000 | $ | 236,000 | ||||||
October 1, 2006
through and including
December 31, 2006
|
$ | 2,430,000 | $ | 84,000 | $ | 174,000 |
Cash Interest | Regularly Scheduled | |||||||
Period | Expense | Payments of Principal | ||||||
April 1, 2006 through and
including June 30, 2006
|
$ | 2,406,000 | $ | 0 | ||||
July 1, 2006 through and
including September 30, 2006
|
$ | 2,363,000 | $ | 0 | ||||
October 1, 2006 through and
including December 31, 2006
|
$ | 2,731,000 | $ | 0 |
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SECTION 2 | COMMITMENTS OF THE LENDERS; BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES. |
-27-
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Payment Date | Amount | |||
|
||||
March 31, 2007
|
$ | 250,000 | ||
June 30, 2007
|
$ | 250,000 | ||
September 30, 2007
|
$ | 250,000 | ||
December 31, 2007
|
$ | 3,250,000 | ||
March 31, 2008
|
$ | 1,250,000 | ||
June 30, 2008
|
$ | 1,250,000 | ||
September 30, 2008
|
$ | 1,250,000 | ||
December 31, 2008
|
$ | 1,250,000 | ||
March 31, 2009
|
$ | 1,375,000 | ||
June 30, 2009
|
$ | 1,375,000 | ||
September 30, 2009
|
$ | 1,375,000 | ||
December 31, 2009
|
$ | 1,375,000 | ||
March 31, 2010
|
$ | 1,500,000 | ||
June 30, 2010
|
$ | 1,500,000 | ||
September 30, 2010
|
$ | 1,500,000 | ||
December 31, 2010
|
$ | 1,500,000 |
-42-
Payment Date | Amount | |||
|
||||
March 31, 2011
|
$ | 1,750,000 | ||
June 30, 2011
|
$ | 1,750,000 | ||
September 30, 2011
|
$ | 1,750,000 | ||
December 31, 2011
|
$ | 1,750,000 |
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Computation | Senior Debt to | |||
Period Ending | EBITDA Ratio | |||
|
||||
March 31, 2007
|
4.00 to 1.0 | |||
June 30, 2007
|
4.00 to 1.0 | |||
September 30, 2007
|
4.00 to 1.0 | |||
December 31, 2007
|
3.00 to 1.0 | |||
March 31, 2008
|
2.75 to 1.0 | |||
June 30, 2008
|
2.75 to 1.0 | |||
Each September 30, December 31, March 31 and June 30
thereafter
|
2.50 to 1.0 |
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ROADRUNNER DAWES FREIGHT SYSTEMS, INC.
|
||||
By: | /s/ Daniel Moorse | |||
Title: VP | ||||
SARGENT TRUCKING, INC.
|
||||
By: | /s/ Daniel Moorse | |||
Title: VP | ||||
BIG ROCK TRANSPORTATION, INC.
|
||||
By: | /s/ Daniel Moorse | |||
Title: VP | ||||
MIDWEST CARRIERS, INC.
|
||||
By: | /s/ Daniel Moorse | |||
Title: VP | ||||
SMITH TRUCK BROKERS, INC.
|
||||
By: | /s/ Daniel Moorse | |||
Title: VP | ||||
B&J TRANSPORTATION, INC.
|
||||
By: | /s/ Daniel Moorse | |||
Title: VP | ||||
ARTICLE 1 DEFINITIONS
|
2 | |||||||
|
1.1. | Certain Defined Terms | 2 | |||||
|
1.2. | Accounting Terms | 2 | |||||
|
||||||||
ARTICLE 2 PURCHASE AND SALE OF THE NOTES
|
3 | |||||||
|
2.1. | Purchase and Sale of the Notes | 3 | |||||
|
2.2. | Purchase Price for Notes; Allocation of Purchase Price | 3 | |||||
|
2.3. | The Closing | 3 | |||||
|
2.4. | Payment of Purchase Price | 3 | |||||
|
2.5. | Payment of Fee | 3 | |||||
|
2.6. | Use of Proceeds | 3 | |||||
|
||||||||
ARTICLE 3 TERMS OF THE NOTES
|
4 | |||||||
|
3.1. | Interest on the Notes | 4 | |||||
|
3.2. | Payment of Notes | 5 | |||||
|
3.3. | Prepayment Procedures | 8 | |||||
|
3.4. | Taxes | 9 | |||||
|
3.5. | Manner and Time of Payment | 10 | |||||
|
3.6. | Note Obligations Joint and Several | 11 | |||||
|
||||||||
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASERS
|
11 | |||||||
|
4.1. | Legal Capacity; Due Authorization | 11 | |||||
|
4.2. | Restrictions on Transfer | 11 | |||||
|
4.3. | Accredited Investor, etc. | 12 | |||||
|
4.4. | Brokerage Fees, etc. | 12 | |||||
|
4.5. | No Advertisement | 12 | |||||
|
||||||||
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE ISSUERS
|
12 | |||||||
|
5.1. | Organization | 12 | |||||
|
5.2. | Capitalization | 12 | |||||
|
5.3. | Authorization; No Conflict | 13 | |||||
|
5.4. | Validity and Binding Nature | 13 | |||||
|
5.5. | Valid Issuance of the Notes | 13 |
-i-
|
5.6. | Financial Condition | 13 | |||||
|
5.7. | Consents | 14 | |||||
|
5.8. | No Material Adverse Change | 14 | |||||
|
5.9. | Litigation and Contingent Obligations | 14 | |||||
|
5.10. | Ownership of Properties; Liens | 14 | |||||
|
5.11. | Pension Plans | 14 | |||||
|
5.12. | Investment Issuers Act | 15 | |||||
|
5.13. | Public Utility Holding Issuers Act | 15 | |||||
|
5.14. | Regulation U | 15 | |||||
|
5.15. | Taxes | 15 | |||||
|
5.16. | Solvency | 16 | |||||
|
5.17. | Environmental Matters | 16 | |||||
|
5.18. | Insurance | 16 | |||||
|
5.19. | Real Property | 17 | |||||
|
5.20. | Information | 17 | |||||
|
5.21. | Intellectual Property | 17 | |||||
|
5.22. | Burdensome Obligations | 17 | |||||
|
5.23. | Labor Matters | 17 | |||||
|
5.24. | No Default | 17 | |||||
|
5.25. | Related Agreements | 17 | |||||
|
||||||||
ARTICLE 6 CLOSING CONDITIONS
|
18 | |||||||
|
6.1. | Representations and Warranties; No Default | 18 | |||||
|
6.2. | Documents Satisfactory; Transactions Consummated | 19 | |||||
|
6.3. | Delivery of Documents | 19 | |||||
|
6.4. | Due Diligence | 20 | |||||
|
6.5. | Corporate/Capital Structure | 20 | |||||
|
6.6. | Authorizations, Consents and Approvals | 21 | |||||
|
6.7. | Audited Financial Statements | 21 | |||||
|
6.8. | Litigation | 21 | |||||
|
6.9. | Other Fees and Expenses | 21 | |||||
|
6.10. | No Violation of Regulations T, U or X | 21 | |||||
|
6.11. | Existing Indebtedness | 21 |
-ii-
|
6.12. | Consummation of the Merger Resulting in Parent | 21 | |||||
|
||||||||
ARTICLE 7 NOTE AFFIRMATIVE COVENANTS
|
22 | |||||||
|
7.1. | Payment of Obligations | 22 | |||||
|
7.2. | Financial Statements | 22 | |||||
|
7.3. | Certificates; Other Information | 23 | |||||
|
7.4. | Notices | 24 | |||||
|
7.5. | Preservation of Corporate Existence, Etc. | 26 | |||||
|
7.6. | Maintenance of Property | 26 | |||||
|
7.7. | Insurance | 27 | |||||
|
7.8. | Payment of Obligations | 27 | |||||
|
7.9. | Compliance with Laws | 28 | |||||
|
7.10. | Inspection of Property and Books and Records | 28 | |||||
|
7.11. | Use of Proceeds | 28 | |||||
|
7.12. | Solvency | 29 | |||||
|
7.13. | Further Assurances | 29 | |||||
|
||||||||
ARTICLE 8 NOTE NEGATIVE COVENANTS
|
29 | |||||||
|
8.1. | Limitation on Liens | 29 | |||||
|
8.2. | Disposition of Assets | 31 | |||||
|
8.3. | Consolidations and Mergers | 32 | |||||
|
8.4. | Loans and Investments | 32 | |||||
|
8.5. | Limitation on Indebtedness | 34 | |||||
|
8.6. | Transactions with Affiliates | 35 | |||||
|
8.7. | Management Fees and Compensation | 36 | |||||
|
8.8. | Use of Proceeds | 36 | |||||
|
8.9. | Contingent Obligations | 36 | |||||
|
8.10. | Business Activities; Issuance of Equity; Subsidiaries | 37 | |||||
|
8.11. | Compliance with ERISA | 37 | |||||
|
8.12. | Restricted Payments | 38 | |||||
|
8.13. | Change in Business | 39 | |||||
|
8.14. | Change in Structure | 39 | |||||
|
8.15. | Accounting Changes | 39 | |||||
|
8.16. | No Negative Pledges | 39 |
-iii-
|
8.17. | OFAC | 40 | |||||
|
8.18. | Limitation on Activities of Parent | 40 | |||||
|
8.19. | Antilayering | 40 | |||||
|
8.20. | Amendment of Material Documents | 40 | |||||
|
8.21. | Observer Rights | 40 | |||||
|
8.22. | Fiscal Year | 41 | |||||
|
8.23. | Unconditional Purchase Obligations | 41 | |||||
|
8.24. | Additional Covenants | 41 | |||||
|
||||||||
ARTICLE 9 NOTE FINANCIAL COVENANTS
|
41 | |||||||
|
9.1. | Leverage Ratio | 41 | |||||
|
9.2. | Fixed Charge Coverage Ratio | 42 | |||||
|
||||||||
ARTICLE 10 EVENTS OF DEFAULT
|
43 | |||||||
|
10.1. | Payment Default | 43 | |||||
|
10.2. | Default Under Senior Indebtedness | 43 | |||||
|
10.3. | Default Under Other Indebtedness | 43 | |||||
|
10.4. | Certain Covenants | 44 | |||||
|
10.5. | Other Defaults | 44 | |||||
|
10.6. | Breach of Representations or Warranties | 44 | |||||
|
10.7. | Involuntary Bankruptcy, Appointment of Receiver, etc. | 44 | |||||
|
10.8. | Voluntary Bankruptcy, Appointment of Receiver, etc. | 44 | |||||
|
10.9. | Judgments and Attachments | 45 | |||||
|
||||||||
ARTICLE 11 GUARANTEE
|
45 | |||||||
|
11.1. | Guarantee of Note Obligations | 45 | |||||
|
11.2. | Continuing Obligation | 46 | |||||
|
11.3. | Waivers with Respect to Note Obligations | 46 | |||||
|
11.4. | Noteholders Power to Waive, etc. | 47 | |||||
|
11.5. | Information Regarding the Issuers, etc. | 48 | |||||
|
11.6. | Certain Guarantor Representations | 48 | |||||
|
11.7. | Subrogation | 49 | |||||
|
11.8. | Subordination | 49 | |||||
|
11.9. | Contribution Among Guarantors | 50 |
-iv-
ARTICLE 12 RESTRICTIONS ON TRANSFER; LEGENDS
|
50 | |||||||
|
12.1. | Assignments | 50 | |||||
|
12.2. | Restrictive Notes Legend | 52 | |||||
|
12.3. | Termination of Restrictions | 52 | |||||
|
12.4. | Other Note Legends | 52 | |||||
|
||||||||
ARTICLE 13 MISCELLANEOUS
|
53 | |||||||
|
13.1. | Expenses | 53 | |||||
|
13.2. | Indemnity | 54 | |||||
|
13.3. | Right of First Offer | 55 | |||||
|
13.4. | Amendments and Waivers | 55 | |||||
|
13.5. | Independence of Covenants | 55 | |||||
|
13.6. | Notices | 55 | |||||
|
13.7. | Survival of Warranties and Certain Agreements | 57 | |||||
|
13.8. | Failure or Indulgence Not Waiver; Remedies Cumulative | 57 | |||||
|
13.9. | Severability | 57 | |||||
|
13.10. | Heading | 58 | |||||
|
13.11. | Applicable Law | 58 | |||||
|
13.12. | Successors and Assigns; Subsequent Holders | 58 | |||||
|
13.13. | Consent to Jurisdiction and Service of Process | 58 | |||||
|
13.14. | Waiver of Jury Trial | 58 | |||||
|
13.15. | Counterparts; Effectiveness | 59 | |||||
|
13.16. | Confidentiality | 59 | |||||
|
13.17. | Entirety | 59 |
-v-
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-5-
(i) | make a Disposition; or | ||
(ii) | suffer an Event of Loss; |
-6-
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Date | Maximum Leverage Ratio | |
Each of March 31, 2007, June 30, 2007 and September
30, 2007
|
6.55 to 1.00 | |
|
||
December 31, 2007
|
5.50 to 1.0 | |
|
||
March 31, 2008
|
5.25 to 1.0 | |
|
||
June 30, 2008
|
5.0 to 1.0 | |
|
||
September 30, 2008
|
4.75 to 1.0 | |
|
||
December 31, 2008
|
4.40 to 1.0 | |
|
||
Each of March 31, 2009 and every March 31, June 30,
September 30 and December 31 thereafter
|
4.15 to 1.00 |
Date | Minimum Fixed Charge Ratio | |
Each of March 31, 2007 and June 30, 2007
|
0.90 to 1.00 | |
|
||
September 30, 2007
|
0.95 to 1.00 | |
|
||
December 31, 2007
|
1.00 to 1.00 | |
|
||
Each of March 31, 2008 and June 30, 2008
|
1.00 to 1.00 | |
|
||
Each of September 30, 2008 and December 31, 2008
|
1.05 to 1.00 | |
|
||
Each of March 31, 2009, June 30, 2009,
September 30, 2009 and December 31, 2009
|
1.10 to 1.00 | |
|
||
Each March 31 and June 30, September 30 and
December 31 thereafter
|
1.15 to 1.00 |
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ISSUERS:
ROADRUNNER DAWES FREIGHT SYSTEMS, INC. |
||||
By: | /s/ Daniel Moorse | |||
Name: | ||||
Title: | ||||
SARGENT TRUCKING, INC.
|
||||
By: | /s/ Daniel Moorse | |||
Name: | ||||
Title: | ||||
BIG ROCK TRANSPORTATION, INC.
|
||||
By: | /s/ Daniel Moorse | |||
Name: | ||||
Title: | ||||
MIDWEST CARRIERS, INC.
|
||||
By: | /s/ Daniel Moorse | |||
Name: | ||||
Title: | ||||
SMITH TRUCK BROKERS, INC.
|
||||
By: | /s/ Daniel Moorse | |||
Name: | ||||
Title: | ||||
B&J TRANSPORTATION, INC.
|
||||
By: | /s/ Daniel Moorse | |||
Name: | ||||
Title: | ||||
GUARANTORS:
ROADRUNNER DAWES, INC. |
||||
By: | /s/ Daniel Moorse | |||
Name: | ||||
Title: | ||||
SARGENT TRANSPORTATION, LLC.
|
||||
By: | /s/ Daniel Moorse | |||
Name: | ||||
Title: | ||||
PURCHASERS
:
SANKATY CREDIT OPPORTUNITIES, L.P. |
||||
By: | /s/ Stuart Davies | |||
Name: | Stuart Davies | |||
Title: | Managing Director | |||
SANKATY CREDIT OPPORTUNITIES II, L.P.
|
||||
By: | /s/ Stuart Davies | |||
Name: | Stuart Davies | |||
Title: | Managing Director | |||
RGIP, LLC
|
||||
By: | /s/ Alfred O. Rose | |||
Name: | Alfred O. Rose | |||
Title: | Managing Member | |||
AMERICAN CAPITAL STRATEGIES, LTD.
|
||||
By: | /s/ Jon D. Isaacson | |||
Name: | Jon Isaacson | |||
Title: | Senior Vice President | |||
Page | ||||||
|
||||||
ARTICLE I PURCHASE AND SALE OF STOCK | 1 | |||||
1.1
|
Stock Purchase | 1 | ||||
1.2
|
Purchase Price | 1 | ||||
1.3
|
Closing Transactions | 1 | ||||
1.4
|
Contingent Payments | 3 | ||||
1.5
|
Payment and Cancellation of Certain Accounts | 5 | ||||
|
||||||
ARTICLE II [RESERVED] | 6 | |||||
|
||||||
ARTICLE III [RESERVED] | 6 | |||||
|
||||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES CONCERNING THE ACQUIRED ENTITIES | 6 | |||||
4.1
|
Organization | 6 | ||||
4.2
|
Authorization | 6 | ||||
4.3
|
Capitalization | 7 | ||||
4.4
|
Subsidiaries | 7 | ||||
4.5
|
Absence of Conflicts | 7 | ||||
4.6
|
Financial Statements | 7 | ||||
4.7
|
Absence of Undisclosed Liabilities | 8 | ||||
4.8
|
Absence of Certain Developments | 8 | ||||
4.9
|
Real and Personal Property | 9 | ||||
4.10
|
Accounts Receivable | 10 | ||||
4.11
|
Taxes | 11 | ||||
4.12
|
Contracts and Commitments | 12 | ||||
4.13
|
Proprietary Rights | 14 | ||||
4.14
|
Litigation; Proceedings | 15 | ||||
4.15
|
Brokerage | 15 | ||||
4.16
|
Permits | 15 | ||||
4.17
|
Employee Benefit Plans | 15 | ||||
4.18
|
Insurance | 17 | ||||
4.19
|
Officers and Directors; Bank Accounts | 17 | ||||
4.20
|
Affiliate Transactions | 17 | ||||
4.21
|
Compliance with Laws | 17 | ||||
4.22
|
Environmental and Safety Matters | 17 | ||||
4.23
|
[Reserved] | 19 | ||||
4.24
|
Employees | 19 | ||||
4.25
|
Powers of Attorney | 19 | ||||
4.26
|
Indebtedness | 20 | ||||
4.27
|
Customers and Suppliers | 20 | ||||
4.28
|
Cash | 20 | ||||
|
||||||
ARTICLE V REPRESENTATIONS AND WARRANTIES WITH RESPECT TO SELLERS | 20 | |||||
5.1
|
Residency | 21 | ||||
5.2
|
Authorization | 21 | ||||
5.3
|
Absence of Conflicts | 21 | ||||
5.4
|
Brokerage | 21 | ||||
5.5
|
Securities | 21 |
Page | ||||||
|
||||||
5.6
|
Litigation | 21 | ||||
|
||||||
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER | 22 | |||||
6.1
|
Organization | 22 | ||||
6.2
|
Authorization | 22 | ||||
6.3
|
Absence of Conflicts | 22 | ||||
6.4
|
Litigation | 22 | ||||
6.5
|
Brokerage | 22 | ||||
6.6
|
Securities Matters | 22 | ||||
|
||||||
ARTICLE VII [Reserved] | 23 | |||||
|
||||||
ARTICLE VIII INDEMNIFICATION AND RELATED MATTERS | 23 | |||||
8.1
|
Survival | 23 | ||||
8.2
|
Indemnification | 23 | ||||
8.3
|
[Reserved] | 27 | ||||
8.4
|
Exclusive Remedy | 27 | ||||
8.5
|
Limitation on Special or Punitive Damages | 27 | ||||
8.6
|
Subrogation | 28 | ||||
8.7
|
Indemnity Payments as Purchase Price Adjustments | 28 | ||||
|
||||||
ARTICLE IX ADDITIONAL AGREEMENTS | 28 | |||||
9.1
|
Tax Matters | 28 | ||||
9.2
|
Press Releases and Announcements | 30 | ||||
9.3
|
Further Transfers | 30 | ||||
9.4
|
Specific Performance | 30 | ||||
9.5
|
Investigation and Confidentiality | 30 | ||||
9.6
|
Expenses | 31 | ||||
9.7
|
Submission to Jurisdiction; Waiver of Jury Trial | 31 | ||||
9.8
|
Books and Records | 31 | ||||
9.9
|
Reserved | 32 | ||||
9.10
|
Non-Compete; Non-Solicitation | 32 | ||||
9.11
|
Directors and Officers Indemnification | 33 | ||||
9.12
|
Contingent Payment Covenants | 33 | ||||
|
||||||
ARTICLE X MISCELLANEOUS | 35 | |||||
10.1
|
Amendment and Waiver | 35 | ||||
10.2
|
Notices | 35 | ||||
10.3
|
Binding Agreement; Assignment | 36 | ||||
10.4
|
Severability | 36 | ||||
10.5
|
Construction | 36 | ||||
10.6
|
Captions | 37 | ||||
10.7
|
Entire Agreement | 37 | ||||
10.8
|
Counterparts | 37 | ||||
10.9
|
Governing Law | 37 | ||||
10.10
|
Parties in Interest | 37 | ||||
10.11
|
Knowledge | 37 | ||||
|
||||||
ARTICLE XI Definitions | 38 | |||||
11.1
|
Certain Definitions | 38 | ||||
11.2
|
Terms Defined Elsewhere in this Agreement | 41 |
ii
INDEX OF EXHIBITS | ||
Exhibit A
|
Form of Sargent Note | |
Exhibit B
|
Form of Tweedie Note | |
Exhibit C
|
Form of Stock Power | |
Exhibit D
|
Form of Employment Agreement (Sargent) | |
Exhibit E
|
Form of Employment Agreement (Tweedie) | |
Exhibit F
|
Form 8883 Methodologies |
INDEX OF SCHEDULES | ||
Schedule 1.1
|
Securities Ownership | |
Schedule 1.3(b)(ii)
|
Wire Transfer Instructions | |
Schedule 1.3(b)(viii)
|
Required Consents and Approvals | |
Schedule 4.1
|
Foreign Qualifications | |
Schedule 4.3
|
Capitalization | |
Schedule 4.5
|
Absence of Conflicts | |
Schedule 4.6(a)
|
Financial Statements | |
Schedule 4.6(b)
|
GAAP Exceptions | |
Schedule 4.7
|
Undisclosed Liabilities | |
Schedule 4.8
|
Absence of Certain Developments | |
Schedule 4.9(a)
|
Owned Real Property | |
Schedule 4.9(b)
|
Leased Real Property | |
Schedule 4.9(c)
|
Exceptions to Condition of Improvements | |
Schedule 4.9(d)
|
Title / Encumbrances | |
Schedule 4.10
|
Accounts Receivable | |
Schedule 4.11
|
Taxes | |
Schedule 4.11(f)
|
State Elections | |
Schedule 4.12(a)
|
Material Contracts | |
Schedule 4.12(c)
|
Material Contracts Exceptions | |
Schedule 4.13(a)
|
Proprietary Rights | |
Schedule 4.13(b)
|
Proprietary Rights Exceptions | |
Schedule 4.14
|
Litigation | |
Schedule 4.15
|
Brokerage | |
Schedule 4.16
|
Permits | |
Schedule 4.17
|
Employee Benefit Plans | |
Schedule 4.17(d)
|
Benefit Plan Liabilities | |
Schedule 4.18
|
Insurance | |
Schedule 4.19
|
Officers and Directors; Bank Accounts | |
Schedule 4.20
|
Affiliate Transactions | |
Schedule 4.21
|
Compliance with Laws | |
Schedule 4.22
|
Environmental and Safety Matters | |
Schedule 4.24
|
Employees | |
Schedule 4.27(a)
|
Independent Contractors | |
Schedule 4.27(b)
|
Customers | |
Schedule 4.27(c)
|
Third-Party Carriers | |
Schedule 4.27(d)
|
Agents | |
Schedule 4.28
|
Cash Distributions | |
Schedule 6.3
|
Absence of Buyer Conflicts | |
Schedule 9.1(e)
|
Fuel Tax Agreements | |
Schedule 9.11
|
D&O Policy | |
Schedule 9.12(b)(ii)
|
Thayer Advisory Agreement | |
Schedule 11.1(a)
|
Certain Permitted Indebtedness |
iii
Schedule 11.1(b)
|
Transaction Bonuses |
iv
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
Section | ||||
Accounting Firm
|
1.4(b) | |||
Acquired Entities
|
Preamble | |||
Agreement
|
Preamble | |||
Applicable Limitation Date
|
8.2(c)(iii) | |||
Basket
|
8.2(c)(i) | |||
Benefit Plans
|
4.17(a) | |||
Board
|
1.4(b) | |||
Buyer
|
Preamble | |||
Buyer Basket
|
8.2(c)(ii) | |||
Buyer Cap
|
8.2(c)(ii) | |||
Buyer Group
|
8.2(a) | |||
Cap
|
8.2(c)(i) | |||
Calculation Notice Statement
|
1.4(b) | |||
Cash Portion
|
1.2 | |||
Contingent Payment
|
1.4(a) | |||
Contingent Payment Period
|
1.4(a) | |||
Closing
|
1.3(a) | |||
Closing Date
|
1.3(a) | |||
Closing Date Payment
|
1.2 | |||
COBRA
|
4.17(a) | |||
Company Proprietary Right
|
4.13(b) | |||
ERISA
|
4.17(a) | |||
Equity Interests
|
4.3 | |||
HSR Act
|
1.6 | |||
Indemnified Party
|
8.2(d) | |||
Indemnifying Party
|
8.2(d) | |||
Insiders
|
4.20 | |||
Improvements
|
4.9(c) | |||
Latest Balance Sheet
|
4.6 | |||
Leased Real Property
|
4.9(b) | |||
Leases
|
4.9(b) | |||
Loss
|
8.2(a) | |||
Material Contract
|
4.12(a) | |||
Objection Notice
|
1.4(b) | |||
Owned Real Property
|
4.9(a) | |||
Purchase Price
|
1.2 | |||
Sargent
|
Preamble | |||
Sargent Note
|
1.2 | |||
Section 338(h)(10) Election
|
9.1(g)(i) | |||
Securities
|
Preamble | |||
Seller
|
Preamble | |||
Seller Notes
|
1.2 | |||
Transfer
|
1.4(d) | |||
Tweedie
|
Preamble | |||
Tweedie Note
|
1.2 | |||
WARN Act
|
4.8(j) |
42
BUYER:
SARGENT TRANSPORTATION GROUP, INC. |
||||
By: | /s/ Dan Moorse | |||
Name: | Dan Moorse | |||
Its: Vice President | ||||
ACQUIRED ENTITIES:
SARGENT TRUCKING, INC. |
||||
By: | /s/ Bruce W. Sargent | |||
Name: | Bruce W. Sargent | |||
Its: President | ||||
BIG ROCK TRANSPORTATION, INC.
|
||||
By: | /s/ Bruce W. Sargent | |||
Name: | Bruce W. Sargent | |||
Its: President | ||||
MIDWEST CARRIERS, INC.
|
||||
By: | /s/ Bruce W. Sargent | |||
Name: | Bruce W. Sargent | |||
Its: President | ||||
SMITH TRUCK BROKERS, INC.
|
||||
By: | /s/ Bruce W. Sargent | |||
Name: | Bruce W. Sargent | |||
Its: President | ||||
B & J TRANSPORTATION, INC.
|
||||
By: | /s/ Bruce W. Sargent | |||
Name: | Bruce W. Sargent | |||
Its: President |
SELLERS:
|
||||
/s/ Bruce W. Sargent | ||||
Bruce Sargent | ||||
/s/ Michael Tweedie | ||||
Michael Tweedie | ||||
2
3
4
5
6
7
8
9
10
11
12
(i) | balance sheets of GTS as of December 31, 2005 and December 31, 2006 and the related statements of operations and retained earnings and of cash flows for the years then ended, together with related notes, as reviewed by the Companys certified public accountants; | ||
(ii) | balance sheets of Direct as of December 31, 2005 and December 31, 2006 and the related statements of operations and retained earnings and cash flows for the years then ended, together with related notes, as compiled by the Companys certified public accountants; and | ||
(iii) | a balance sheet of the Company as of December 31, 2007 and the related statements of operations and retained earnings and cash flows for the year then ended, together with related notes, as audited by the Companys certified public accountants. |
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
|
To Seller and/or
the Company: |
Group Transportation Services, Inc. | ||
|
5876 Darrow Road | |||
|
Hudson, Ohio 44236 | |||
|
Attn: Michael Valentine | |||
|
Email: MValentine@OneStopShipping.com | |||
|
||||
|
With a copy to: | Krugliak, Wilkins, Griffiths | ||
|
& Dougherty Co., L.P.A. | |||
|
4775 Munson St. N.W. | |||
|
P.O. Box 36963 | |||
|
Canton, Ohio 44735-6963 | |||
|
Attn: Randall C. Hunt, | |||
|
Fax: (330) 497-4020 | |||
|
Email: rchunt@kwgd.com | |||
|
||||
|
To Buyer: | c/o Thayer/Hidden Creek | ||
|
4508 IDS Center | |||
|
Minneapolis, Minnesota 55402 | |||
|
Attn: Scott Rued | |||
|
Managing Partner | |||
|
Fax: (612) 332-2012 | |||
|
Email: srued@thayerhiddencreek.com | |||
|
||||
|
With a copy to: | Greenberg Traurig, LLP | ||
|
2375 Camelback Road | |||
|
Suite 700 | |||
|
Phoenix, AZ 85016 | |||
|
Attn: Michael Kaplan | |||
|
Fax: 602-445-8615 | |||
|
Email: kaplanm@gtlaw.com |
58
59
60
61
62
63
64
Seller: | /s/ Michael P. Valentine | |||
Michael P. Valentine | ||||
Company: |
GROUP TRANSPORTATION SERVICES, INC.,
a Delaware corporation |
|||
By: | /s/ Michael P. Valentine | |||
Name: | Michael P. Valentine | |||
Title: | Chief Executive Officer | |||
GTS DIRECT, LLC, an Ohio limited liability company
|
||||
By: | /s/ Michael P. Valentine | |||
Name: | Michael P. Valentine | |||
Title: | President | |||
Buyer: |
GTS ACQUISITION SUB, INC.
a Delaware corporation |
|||
By: | /s/ Scott Rued | |||
Name: | Scott Rued | |||
Title: | Chairman | |||
65
1. | Lease . Landlord leases the Premises to Tenant, and Tenant leases the Premises from Landlord, all according to the terms and conditions in this Lease. | |
2. | Term . This Lease is for a term of 15 years, beginning July 1, 2005, and ending June 30, 2020 (the Term), unless earlier terminated. | |
3. | Base Rent . During the Term, as base rent for the Premises, Tenant must annually pay to Landlord $336,000.00 US Dollars, payable in equal monthly installments of $28,000 without demand or set-off on the first day of each calendar month. If a monthly installment is not received by Landlord by the fifth (5) day from the due date thereof, a late fee of 5% of the unpaid balance will be immediately due and payable, but in no event shall such late charge exceed a maximum charge now or hereafter established by law. During each lease year, after lease year one, the rent will be increased by 3% per year. For example, commencing on the first day of the second lease year, the monthly base rent will be $28,840 ($28,000 x 1.03 = $28,840). On the first day of the third lease year, the monthly base rent will be $29,705.20 ($28,840 x 1.03 = $29,705.20). |
(A) | All real estate taxes and assessments imposed upon the Property for the term. | ||
(B) | Trash removal, landscaping, snow removal and sewage expenses |
(C) | Repairs and maintenance of the Property and the cost of supplies, tools, materials labor and equipment used in connection therewith. | ||
(D) | Premiums and other charges incurred by Landlord with respect to the insurance on the Property. | ||
(E) | All other operating and maintenance expenses directly related to the maintenance and upkeep of the Premises and those operating and maintenance expenses of the Property except for expenses directly associated with the building located at 5874 Darrow Road, Hudson, Ohio. |
4. | Security Deposit . Upon execution of this Lease, Tenant must deposit with Landlord $56,000.00 to secure performance of Tenants obligations. If Tenant defaults in the performance of any obligation under this Lease, Landlord may apply all or a portion of the security deposit on account of Tenants obligations. Tenant shall promptly reimburse Landlord for any funds so expended. Any balance of the deposit remaining upon termination of this Lease and full performance of Tenants obligations shall be returned to Tenant, without interest, within 30 days after the termination of this Lease. | |
Tenants Improvements: Owner shall provide tenant improvements in accordance with a mutually acceptable plan, which will be provided at Tenants sole expense. It is contemplated that Tenants improvements will include non-structural improvements including, but not limited to: carpet, paint, kitchen build-out, construction of interior offices and all inspection fees and other fees associated with the project. | ||
5. | Expenses . Tenant will be solely responsible for the payment of all expenses, costs, charges and obligations relating to or arising out of the Premises, including, but not limited to, all charges and expenses for utilities, electricity, telephone, and communication services. If any utility is not able to be separately metered, then it will be prorated in accordance with Section 3 above. | |
6. | Tenants Maintenance . Tenant, at its expense, will maintain in all respects the interior of the Premises in good condition, except for reasonable wear and tear, and except for damage by fire or other casualty, including biannual maintenance inspections of the HVAC system and quarterly cleaning of all carpeted areas. In addition, Tenant will be responsible for any damage to the Premises caused by any extraordinary or excessive use by the negligence or other tortious acts of Tenant, its employees, agents, contractors, licensees, or invitees. | |
7. | Landlords Maintenance . Landlord will maintain in good condition and repair, all structural portions of the Premises, including, but not limited to, the roof, walls and exterior columns, footings, foundations and structural floors. Exterior painting will also be the Landlords responsibility. To the extent that repairs or replacements of sidewalks, parking areas and drives are required, Landlord will provide the same. Landlord will also provide, at the tenants expense, all necessary maintenance and repairs made necessary by |
2
tenants actions and keep in good operating condition, the water, gas, electrical, plumbing, heating, ventilating, air conditioning, and all other mechanical and utility systems and facilities serving the Premises. The tenant will notify landlord immediately in the event of maintenance, repair or replacement needs by contacting Landlord during business hours at (330) 603-8963. Tenant agrees to grant Landlord reasonable access to the Premises to perform all maintenance, repairs and replacement set forth herein. Landlord agrees to give Tenant 24 hour notice prior to its entry into the premises unless there is an emergency and said notice is not possible. Landlord maintenance items set forth above will be charged to and paid for by the Tenant if the work relates directly to the Premises. Otherwise, Landlord maintenance expenses will be paid for by the Tenant on a pro rata basis as set forth in Section 3 above. | ||
8. | Alterations to Premises . At its sole expense, and with Landlords prior written consent, Tenant may make alterations and improvements to the Premises, but Tenant may make no exterior or structural alterations or improvements to any portion of the Premises. Except as otherwise provided herein, all alterations and improvements to the Premises will become the property of Landlord upon the termination of this Lease. | |
9. | Condition of Premises . TENANT COVENANTS AND AGREES THAT THE PREMISES ARE FURNISHED AS IS, WHERE IS, WITHOUT WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF HABITABILITY, MERCHANTABILITY, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. | |
10. | Government Regulations . At its sole cost and expense, Tenant must promptly comply with all statutes, ordinances, rules, orders, regulations and requirements of the federal, state and local governments pertaining to Tenants use and occupancy of the Premises. | |
11. | Quiet Enjoyment . While Tenant is not in default, Tenant shall have the right of sole possession and quiet enjoyment of the Premises under the terms of the Lease, except to the extent otherwise provided in this Lease. | |
12. | Lien-Free Use of Premises . The Premises will remain the property of Landlord and title will remain in Landlord exclusively. Except for liens existing as of the date of this Lease, Tenant must keep the Premises free from any and all liens and claims, and Tenant must not do or permit any act or thing to be done whereby title or right to the Premises may be encumbered or impaired. Whenever requested, Tenant must give Landlord immediate notice of any attachment or other judicial process affecting the Premises and must defend and indemnify Landlord from any loss or damage caused thereby. Tenant must pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Tenant at or for use on the Premises, which claims are or may be secured by any mechanics or materialmens lien against the Premises or any interest therein. | |
13. | Use of Premises; Waste; Nuisance . Tenant represents and agrees that it will conduct its business and control its agents, employees, invitees, licensees, and visitors in a safe and lawful manner and neither create nor permit to exist any nuisance on or about the |
3
Premises, nor commit waste of the Premises. Tenant must use the Premises solely for the purpose of general office use. | ||
14. | Casualty . If any part of the Premises is damaged, Landlord must promptly repair and restore the Premises to a condition substantially the same as immediately before the damage, but Landlord is not required to pay more for the repair or restoration than the amount of insurance proceeds received by Landlord, if any, on account of the casualty. | |
15. | Default by Tenant . Any one of the following events will be a default by Tenant: |
(a) | Non-Payment . Tenant fails to pay when due, or within 5 days of its due date, any installment of rent or any other payment required under this Lease; | ||
(b) | Abandonment . Tenant abandons a substantial portion of the Premises; | ||
(c) | Breach . Tenant fails to comply with or abide by this Lease, other than the payment of rent or any other sum to be paid by Tenant, and such failure is not cured within 30 days after receipt of written notice by Landlord to Tenant of such failure; | ||
(d) | Insolvency . Tenant files a petition or is adjudged bankrupt or insolvent under the federal Bankruptcy Act, as amended, or any similar law or statute of the United States or any state; or a receiver or trustee is appointed for all or substantially all of the assets of Tenant; or Tenant makes a transfer in fraud of creditors or makes an assignment for the benefit of creditors; or | ||
(e) | Liens . Except for liens existing as of the date of this Lease, Tenant does or permits to be done any act that results in a lien being filed against the Premises, and the lien is not consented to in writing by the Landlord or is not removed within 60 days. |
16. | Landlords Remedies Upon Default by Tenant . If Tenant defaults, Landlord may pursue any one or more of the following remedies without notice or demand: |
(a) | Lease Termination . Terminate this Lease, in which event Tenant immediately must surrender the Premises to Landlord, and if Tenant fails to surrender the Premises, then Landlord, without prejudice to any other remedy which it may have for possession or arrearages in rent, may enter and take possession of the Premises and lock out, expel or remove Tenant, Tenants representative, or any other person who may be occupying all or any part of the Premises, all without liability for damages. Tenant agrees to pay on demand the amount of all loss and damage that Landlord may suffer by reason of the termination of the Lease under this subparagraph, whether through inability to relet the Premises on satisfactory terms or otherwise. | ||
(b) | Entry and Relet . Enter and take possession of the Premises and lock out, expel or remove Tenant, Tenants representative, and any other person who may be occupying all or any part of the Premises, all without liability for damages, and |
4
relet the Premises on behalf of Tenant (on such terms as Landlord in its sole discretion will see fit) and receive directly the rent by reason of the reletting. Tenant agrees to pay Landlord on demand any deficiency that may arise by reason of any reletting of the Premises. |
(c) | Entry and Compliance . Enter the Premises, without liability for damages, and do whatever Tenant is obligated to do under this Lease. Tenant agrees to reimburse Landlord on demand for any expenses that Landlord may incur in effecting compliance with Tenants obligations under this Lease. Further, Tenant agrees that Landlord will not be liable for any damages resulting to Tenant from so effecting compliance. | ||
(d) | Tenants Property . In the event of re-entry and possession by Landlord, Landlord may remove and store the property of Tenant without liability for safekeeping and Tenant will be liable for the moving and storage charges. | ||
(e) | Remedies Not Exclusive . The remedies above are not exclusive but are in addition to all other remedies of Landlord, and resort to any remedy will not prevent Landlord from using any other remedies available to it. Landlord will have no duty to mitigate its damages. |
17. | Public Liability, Property Damage Insurance . Tenant will obtain and keep in full force and effect during this Lease an adequate Commercial General Liability policy of insurance protecting Tenant and Landlord (as an additional insured) against claims for bodily injury, personal injury, and property damage based upon, involving, or arising out of the ownership, use, occupancy, or maintenance of the Premises and all areas appurtenant thereto. The insurance must have minimum coverage of $1,000,000.00 for combined single limit liability | |
18. | Indemnification of Landlord . Tenant must defend and indemnify Landlord from and against any and all claims, actions, damages, liability and expense not compensated by Landlords insurance in connection with loss of life, personal injury or damage to property arising from or out of any occurrence in, upon or at the Premises, occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, employees, servants, tenants or concessionaires. If Landlord, without fault on its part, is made a party to any litigation commenced by or against Tenant, then Tenant must defend and indemnify Landlord and must pay all costs and expenses (including, without limitation, reasonable attorneys fees) incurred or paid by Landlord in connection with such litigation. | |
19. | Landlords Lien . As security for rents and other charges to be paid by Tenant and for the covenants and agreements to be performed by Tenant, a lien is reserved upon the Premises and on the interest of Tenant in and to the same in favor of the Landlord, prior and superior to any and all other liens thereupon whatsoever. This paragraph will not be construed as providing Landlord with a security interest in or lien on any of the Tenants assets, except Tenants leasehold interest. |
5
20. | Landlords Liability and Subrogation . Landlord will not be liable to Tenant or Tenants employees, patrons, or visitors for any damage to persons or property related to the action, omission, or negligence of Tenant and Tenant agrees to defend and hold Landlord harmless from all claims for any such damage. Tenant may, at Tenants option, maintain insurance protecting and indemnifying Tenant against any damage or loss of Tenants fixtures and contents located on or about the Premises to the extent of the full insurance value of such fixtures and contents. Landlord will not be liable to any damage or loss of Tenants fixtures or contents for any cause, including theft, fire, flood, or other acts. Tenant waives all rights of subrogation against Landlord with respect to the perils described above. | |
21. | Access to and Inspection of Premises . Landlord shall have the right to inspect the Premises during normal business hours, provided that Landlord gives Tenant advance notice of such entry. Landlord will have a right of access upon 48 hours advance notice to show the Premises in connection with a prospective sale, lease or financing. In emergency situations, Landlord may enter the Premises without prior notice to Tenant. | |
22. | Signs . Tenant may erect and place appropriate signs about the Premises after receiving Landlords prior written consent and all applicable government approvals. At the end of the Lease, Tenant must remove all signs from the Premises and repair any damage or defacement to the Premises caused by the removal. | |
23. | Lease Expiration. |
(a) | Surrender . At the expiration of the Lease, or its termination under any clause herein, Tenant covenants and agrees to vacate and surrender possession of the Premises to Landlord in as good as condition as existed at the commencement date, excepting only ordinary wear and tear. | ||
(b) | Forfeiture . Upon expiration of this Lease, or termination under any clause herein, Tenant will forfeit all right, title and interest in and to the Premises and any additions or improvements to the Premises made by Tenant, except to the extent provided below. At its option, Landlord may require Tenant to restore the Premises to the condition existing at the time Tenant took possession, with all costs of removal or alterations borne by Tenant. | ||
(c) | Equipment Removal . Tenant has the right at any time to remove any and all equipment and business or trade fixtures, or other property relating to Tenants business, from the Premises before the termination of the Lease. If Tenant does so, it must restore the Premises to the condition existing at the time Tenant took possession, with all costs of removal or alterations borne by Tenant. If Tenant does not remove its property before or at the termination of the Lease, Landlord may remove and store the property, or any portion thereof, all without liability for safekeeping. Tenant will be liable for the moving and storage charges. If Tenant does not claim the property within 60 days after the termination of the Lease, it will be deemed abandoned by Tenant and will become the property of the Landlord without compensation to the Tenant. |
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(d) | Holding-Over . At the termination of the Term, holding over by Tenant, with or without Landlords consent, will constitute a month-to-month tenancy upon the same terms and conditions as set forth herein, except that the monthly rental due to Landlord will be equal to 1.50 times the rental due during the last month of the just-expired term. |
24. | Assignment and Subletting . It is understood that Tenant may wish to assign this Lease or sublet all or any part of the Premises. Tenant is authorized to assign this Lease or sublet all or any part of the Premises only after receiving the prior written consent of Landlord for assignment or subletting to tenants approved by Landlord. No assignment or subletting will relieve Tenant from liability for performance of its obligations under this Lease. | |
25. | Binding Agreement . Subject to the section titled Assignment and Subletting, this Lease will inure to the benefit of and bind the parties and their respective representatives, executors, administrators, heirs, permitted successors and permitted assigns. | |
26. | Headings . The paragraphs titles are for convenient reference only and do not affect the construction, interpretation, or meaning of the text. | |
27. | Governing Law; Partial Invalidity . This Lease is governed by Ohio law. If a court of competent jurisdiction determines that any provision of this Lease is void, illegal or unenforceable, the other provisions will remain in full force and effect, and the provision determined to be void, illegal or unenforceable will be limited so that this Lease will remain in effect to the fullest extent permissible by law. | |
28. | Waiver . The failure by either party to require strict performance by the other of any of the provisions of this Lease will not waive or diminish the partys right to demand strict compliance therewith or with any other provision. | |
29. | Time is of the Essence . Tenant understands and agrees that time is of the essence in the performance of its obligations and exercise of its rights. | |
30. | Entire Agreement; Amendments . This Lease contains the entire agreement between the parties and supersedes all prior agreements between the parties, whether written or oral, with respect to the subject matter hereof. This Lease may be modified or amended only by a writing signed by the parties. | |
31. | For Lease, For Rent and For Sale Signs . Landlord will be entitled to place For Rent or For Sale signs on or about the Premises and to show the Premises to prospective tenants or buyers at all reasonable times. | |
32. | Subordination. Non-Disturbance, Attornment, Estoppel Certificate. |
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33. | Force Majeure . Neither Landlord nor Tenant will be required to perform any provision in this Lease so long as such performance is delayed or prevented by any acts of God, strikes, lockouts, material or labor restrictions by any governmental authority, civil riot, floods, and any other cause not reasonably within the control of Landlord or Tenant and which, by the exercise of due diligence, Landlord or Tenant is unable, wholly or in part, to prevent or overcome. | |
34. | Recording . This Lease will not be recorded. A Memorandum of Lease may be recorded at the cost of the party requesting recordation. | |
35. | Notices . All notices under this Lease must be in writing and delivered to the parties at their addresses as set forth above. | |
36. | Landlords Use of Common Areas . All common areas or areas outside the Premises can be used by Landlord for any purpose within its sole discretion provided that such use does not preclude Tenants access to the Premises. |
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LANDLORD
GTS SERVICES, LLC |
||||
By: | /s/ Michael P. Valentine | |||
Printed Name: | Michael P. Valentine | |||
Title: | President | |||
TENANT
GROUP TRANSPORTATION SERVICES, INC. |
||||
By: | /s/ Michael P. Valentine | |||
Printed Name: | Michael P. Valentine | |||
Title: | President |
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STATE OF OHIO
|
) | |||
|
) | SS | ||
COUNTY OF SUMMIT
|
) |
/s/ Daniel R. Bryan
|
||||
NOTARY PUBLIC | ||||
STATE OF OHIO
|
) | |||
|
) | SS | ||
COUNTY OF SUMMIT
|
) |
s/ Daniel R. Bryan
|
||||
NOTARY PUBLIC | ||||
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1
2
3
4
5
LANDLORD
:
GTS SERVICES LLC, an Ohio limited liability company |
||||
By: | /s/ Michael P. Valentine | |||
Name: | Michael P. Valentine | |||
Title: | Managing Member | |||
TENANT
:
GROUP TRANSPORTATION SERVICES, INC. |
||||
By: | /s/ Michael P. Valentine | |||
Name: | Michael P. Valentine | |||
Title: | CEO |
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Purchase Price | Percentage | |||
$1 to $10,000,000
|
2.50 | % | ||
$10,000,001 to $50,000,000
|
1.75 | % | ||
$50,000,001 and over
|
1.00 | % |
3
4
5
If to any or all of the Companies
:
|
c/o Roadrunner Dawes, Inc. | |
|
4900 S. Pennsylvania Avenue | |
|
Cudahy, WI 53110 | |
|
Attention: Peter W. Armbruster | |
|
||
If to Thayer
:
|
Thayer Capital Management, L.P. | |
|
c/o Thayer Capital Partners | |
|
1455 Pennsylvania Avenue, N.W. #350 | |
|
Washington, D.C. 20004 | |
|
Attention: Scott Rued | |
|
||
If to Eos
:
|
Eos Management, Inc. | |
|
320 Park Avenue, Suite 910 | |
|
New York, NY 10022 | |
|
Attention: Sam Levine |
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Very truly yours,
THAYER CAPITAL MANAGEMENT, L.P. By: Thayer Management Partners, L.L.C., its General Partner |
||||
By: | /s/ Scott Rued | |||
Scott Rued, | ||||
Member | ||||
EOS MANAGEMENT, INC.
|
||||
By: | /s/ Brian Young | |||
Brian Young | ||||
ROADRUNNER DAWES, INC.
|
||||
By: | /s/ Peter Armbruster | |||
Peter Armbruster, | ||||
Vice President Finance | ||||
ROADRUNNER DAWES FREIGHT SYSTEMS, INC.
|
||||
By: | /s/ Peter Armbruster | |||
Peter Armbruster, | ||||
Vice President Finance | ||||
SARGENT TRANSPORTATION, LLC
|
||||
By: | /s/ Dan Moorse | |||
Dan Moorse, | ||||
Vice President | ||||
SARGENT TRUCKING, INC.
|
||||
By: | /s/ Dan Moorse | |||
Dan Moorse, | ||||
Vice President | ||||
BIG ROCK TRANSPORTATION, INC.
|
||||
By: | /s/ Dan Moorse | |||
Dan Moorse, | ||||
Vice President | ||||
MIDWEST CARRIERS, INC.
|
||||
By: | /s/ Dan Moorse | |||
Dan Moorse, | ||||
Vice President | ||||
SMITH TRUCK BROKERS, INC.
|
||||
By: | /s/ Dan Moorse | |||
Dan Moorse, | ||||
Vice President | ||||
B&J TRANSPORTATION, INC.
|
||||
By: | /s/ Dan Moorse | |||
Dan Moorse, | ||||
Vice President | ||||