<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 16, 1997
DYNAMEX INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 000-21057 86-0712225
(State or Other Jurisdiction of (Commission File Number) (IRS employment
Incorporation or Organization) identification no.)
2630 Skymark Avenue
Suite 610
Mississauga, Ontario L4W 5A4
(Address of principal executive offices)
Registrant's telephone number, including area code: (905) 238-6414
Page 1 of pages
Exhibit index on page 2
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 16, 1997 the Company acquired the stock of Road Runner
Transportation, Inc. ("Road Runner"). Road Runner is engaged in the same-day
transportation business, primarily in the Minneapolis-St. Paul, Minnesota area.
The stockholders of Road Runner received $11.2 million in cash and $350,000
shares of the Company's common stock in the transaction. In addition, the
former stockholders may receive additional consideration if certain performance
goals are met by Road Runner. The consideration was determined in arms-length
negotiations between the Company and the stockholders of Road Runner. The
transaction is being accounted for using the purchase method of accounting.
The cash portion of the purchase price was obtained by the Company
pursuant to its revolving credit agreement with NationsBank.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Financial statements of Road Runner for the nine months ended February
28, 1997 are included herein.
(b) PRO FORMA FINANCIAL INFORMATION.
Pro forma financial statements of the Company reflecting the acquisition
of Road Runner are not currently available but will be filed not later than 60
days from the date on which this report on Form 8-K was required to be filed.
(c) EXHIBITS.
2.1 Stock Purchase Agreement dated May 16, 1997 by and among Dynamex Inc.,
Road Runner Transportation, Inc., James C. Isaacson, James L. Isaacson, Gordon
J. Isaacson, Gretchen E. Larsen and Thomas W. Ingeman.
2
<PAGE> 3
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DYNAMEX INC.
Date: May 28, 1997 By: /s/ Robert P. Capps
--------------------------------------
Robert P. Capps
Vice President, Chief Financial
Officer
3
<PAGE> 4
-------------------------------------------
ROAD RUNNER
TRANSPORTATION, INC.
Financial Statements
Nine Months Ended February 28, 1997, and
Independent Auditors' Report
<PAGE> 5
ROAD RUNNER TRANSPORTATION, INC.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Balance Sheet 2-3
Statement of Income 4
Statement of Stockholders' Equity 5
Statement of Cash Flows 6
Notes to Financial Statements 7-11
</TABLE>
<PAGE> 6
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Road Runner Transportation, Inc.
We have audited the accompanying balance sheet of Road Runner Transportation,
Inc. (the "Company") as of February 28, 1997, and the related statements of
income, stockholders' equity and cash flows for the nine months then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of February 28,
1997, and the results of its operations and its cash flows for the nine months
then ended, in conformity with generally accepted accounting principles.
April 14, 1997
<PAGE> 7
ROAD RUNNER TRANSPORTATION, INC.
BALANCE SHEET
FEBRUARY 28, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash $ 12,715
Receivables:
Trade, net of allowance for doubtful accounts of $30,000 (Note 7) 1,995,115
Related parties (Note 6) 97,940
Other 2,035
Inventories 17,383
Prepaid expenses 67,111
----------
Total current assets 2,192,299
PROPERTY AND EQUIPMENT, AT COST (Notes 3 and 4):
Leasehold improvements 154,454
Office furniture and equipment 248,192
Radios 679,791
Data processing equipment 2,191,448
Transportation and other delivery equipment 2,106,790
----------
5,380,675
Less accumulated depreciation 2,817,138
----------
Property and equipment, net 2,563,537
OTHER ASSETS:
Tax deposits 119,631
Other 86,171
----------
205,802
----------
TOTAL ASSETS $4,961,638
==========
</TABLE>
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<PAGE> 8
ROAD RUNNER TRANSPORTATION, INC.
BALANCE SHEET
FEBRUARY 28, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable to bank (Note 2) $ 240,000
Current maturities of long-term debt 583,007
Notes payable to stockholders (Note 6) 72,884
Accounts payable 222,501
Accrued expenses:
Compensation 260,133
Commissions 879,096
Profit sharing 90,000
Other 83,652
Deferred revenue 53,606
----------
Total current liabilities 2,484,879
LONG-TERM DEBT, less current maturities (Notes 2 and 3) 573,993
COMMITMENTS (Note 9)
STOCKHOLDERS' EQUITY (Note 9):
Common stock, no par value; 25,000 shares authorized:
Voting, 6,545 shares, issued and outstanding 135,487
Nonvoting, 4,364 shares, issued and outstanding 90,489
Retained earnings 1,676,790
----------
Total stockholders' equity 1,902,766
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,961,638
==========
</TABLE>
See notes to financial statements. (Concluded)
-3-
<PAGE> 9
ROAD RUNNER TRANSPORTATION, INC.
STATEMENT OF INCOME
NINE MONTHS ENDED FEBRUARY 28, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
REVENUE:
Delivery services (Note 7) $16,413,755
Rents (Note 4) 143,291
Driver services 500,797
-----------
17,057,843
COSTS AND EXPENSES:
Commissions, drivers 8,156,397
Compensation and related costs 4,841,891
Depreciation 752,080
Repairs and maintenance 170,104
Insurance 781,654
Profit sharing contribution (Note 5) 90,000
Interest 143,511
Other direct delivery costs 504,670
Other selling, general and administrative expenses (Note 6) 1,380,777
Loss on sale of property and equipment (Note 8) 137,116
-----------
16,958,200
-----------
NET INCOME $ 99,643
===========
</TABLE>
See notes to financial statements.
-4-
<PAGE> 10
ROAD RUNNER TRANSPORTATION, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED FEBRUARY 28, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Voting Common Nonvoting Common
Stock Stock
--------------------- ----------------------
Number of Number of Retained
Shares Amount Shares Amount Earnings Total
<S> <C> <C> <C> <C> <C> <C>
BALANCE, BEGINNING 6,000 $ 600 4,000 $ 400 $ 1,727,147 $ 1,728,147
Net income 99,643 99,643
Common stock issued for compensation 545 134,887 364 90,089 224,976
Dividends (150,000) (150,000)
----- ----------- ----- ----------- ----------- -----------
BALANCE, ENDING 6,545 $ 135,487 4,364 $ 90,489 $ 1,676,790 $ 1,902,766
===== =========== ===== =========== =========== ===========
</TABLE>
See notes to financial statements.
-5-
<PAGE> 11
ROAD RUNNER TRANSPORTATION,INC.
STATEMENT OF CASH FLOWS
NINE MONTHS ENDED FEBRUARY 28, 1997
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATING ACTIVITIES:
Net income $ 99,643
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 753,384
Common stock issued as compensation 224,976
Loss on sale of property and equipment 137,116
Changes in assets and liabilities:
Increase in trade receivables (334,237)
Decrease in other receivables 55,638
Decrease in inventories 8,320
Increase in prepaid expenses (31,869)
Decrease in accounts payable (136,519)
Increase in accrued expenses 488,925
Increase in deferred revenue 8,656
----------
Net cash provided by operating activities 1,274,033
----------
INVESTING ACTIVITIES:
Proceeds from sales of property and equipment 1,148,752
Purchases of property and equipment (1,431,799)
Advances to related parties (34,748)
Other (1,534)
----------
Net cash used in investing activities (319,329)
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on revolving loan agreement (535,000)
Proceeds from notes payable to stockholders 30,000
Principal payments on notes payable to stockholders (32,116)
Proceeds from long-term borrowings 177,330
Principal payments on long-term debt (434,531)
Cash dividends (150,000)
----------
Net cash used in financing activities (944,317)
----------
NET INCREASE IN CASH 10,387
CASH, BEGINNING OF PERIOD 2,328
----------
CASH, END OF PERIOD $ 12,715
==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION - Cash payment
for interest $ 142,481
==========
SUPPLEMENTAL SCHEDULE OF NONCASH OPERATING, INVESTING,
AND FINANCING ACTIVITIES:
Common stock issued as compensation $ 224,976
==========
Other asset resulting from sale - leaseback transaction $ 72,601
==========
Capital lease obligations incurred for use of equipment $ 136,829
==========
</TABLE>
See notes to financial statements.
-6-
<PAGE> 12
ROAD RUNNER TRANSPORTATION, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 1997
- -------------------------------------------------------------------------------
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:
Nature of Business - Road Runner Transportation, Inc. (the "Company:)
provides on-demand delivery and logistics management for customers in the
metropolitan areas of Minneapolis-St. Paul, Minnesota; Dallas, San
Antonio, and Austin, Texas; and Denver, Colorado. The Company grants credit
terms to customers on an individual customer basis.
Cash - The Company maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts.
Inventories - Inventories are composed of radio and vehicle repair parts
and delivery envelopes valued at the lower of cost (first-in, first-out
method) or market.
Depreciation - Depreciation of property and equipment is provided using
the straight-line method over estimated useful lives of three to seven
years.
Revenue Recognition - The Company recognizes revenue as delivery services
are performed. Deferred revenue represents prebilled deliveries or
payments received for delivery services which have not been performed as
of February 28, 1997.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Income Tax Matters - The Company, with the consent of its stockholders,
has elected to be taxed under sections of the federal and state income tax
laws (Subchapter S) which provide that, in lieu of corporate income taxes,
the stockholders separately account for the Company's items of income,
deductions, losses and credits. Therefore, the accompanying financial
statements do not include any provision for corporation income taxes. The
Company pays dividends to assist the stockholders in paying their personal
income taxes on the income of the Company.
In addition, as a result of the Company's May 31 fiscal year, the Company
is required to make federal tax deposits that will vary annually depending
on the Company's income.
Fair Value of Financial Instruments - The financial statements include the
following financial instruments: cash, trade accounts and other
receivables, accounts payable, and notes payable to banks, stockholders
and other financial institutions. At February 28, 1997, no separate
comparison of fair values to carrying values is presented for the
aforementioned financial instruments since their fair values are not
significantly different than their balance-sheet carrying values.
-7-
<PAGE> 13
2. BANK FINANCING
As of February 28, 1997, the Company has a loan agreement with a bank that
provides for a revolving line of credit, a nonrevolving capital
expenditure line, a nonrevolving acquisition line and the term notes
payable to bank as described in Note 3. The loan agreement expires
December 31, 1997, and is collateralized by substantially all Company
assets, a personal guaranty of the Company's majority stockholder and the
assignment of a life insurance policy on the Company's majority
stockholder. The loan agreement contains various covenants that require
the Company to, among other things, not exceed a certain debt to tangible
net worth ratio, maintain a minimum tangible net worth, maintain a minimum
debt service coverage ratio and limit the amount of capital expenditures.
Revolving Line of Credit - The Company can borrow up to $800,000 on its
line of credit; however, the amount borrowed cannot exceed a borrowing
base equal to 75% of eligible receivables. Amounts borrowed bear interest
at the prime rate (8.25% at February 28, 1997) plus 0.5%. As of February
28, 1997, $240,000 was outstanding under this line.
Nonrevolving Capital Expenditure Line - The Company can borrow up to
$1,750,000 under this line for the purpose of financing vehicle and other
equipment purchases through December 31, 1997. Interest on any outstanding
borrowings is payable monthly at the prime rate plus 0.5%. On January 1,
1998, the then-outstanding principal balance will be converted to a term
loan with principal and interest payable monthly over 30 months. As of
February 28, 1997, no borrowings are outstanding under this line.
Nonrevolving Acquisition Line - The Company can borrow up to $1,500,000
under this line for the purpose of financing acquisitions of businesses.
As of February 28, 1997, no borrowings are outstanding under this line.
3. LONG-TERM DEBT
<TABLE>
Long-term debt is composed of the following as of February 28, 1997:
<S> <C>
Note payable to bank, due in monthly principal installments
of $9,583, plus interest at 9.0%, through June 1998 $ 153,333
Note payable to bank, due in monthly installments of $16,941,
including interest at 8.5%, through November 1998 306,171
Note payable to bank, due in monthly installments of $11,771,
including interest at 8.45%, through July 1999 298,122
Notes payable to finance companies, due in varying monthly
installments, including interest at varying rates, through
April 1999 50,939
Capital lease obligations (see Note 4) 348,435
---------
1,157,000
Less current maturities 583,007
---------
$ 573,993
==========
</TABLE>
-8-
<PAGE> 14
Aggregate annual maturities of the above long-term debt at February 28,
1997, are as follows:
<TABLE>
<CAPTION>
Years ending February 28:
<S> <C>
1998 $ 583,007
1999 466,854
2000 107,139
----------
$1,157,000
==========
</TABLE>
4. LEASE ARRANGEMENTS
The Company has acquired certain equipment under capital leases. As of
February 28, 1997, capital lease equipment costs of $467,815 and related
accumulated depreciation of $116,331 are included in property and
equipment. The related capital lease obligations are reflected in
long-term debt and require varying monthly payments, including interest at
rates ranging from 8.0% to 9.5%.
The Company also leases its office and warehouse facilities and certain
vehicles and telecommunications equipment under various operating lease
arrangements. These leases require minimum monthly payments plus
additional payments based on vehicle miles or a pro rata share of real
estate taxes and other operating costs associated with a leased property.
The following is a schedule of future minimum rental payments required
under the operating and capital leases as of February 28, 1997:
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
<S> <C> <C>
Years ending February 28:
1998 $ 418,118 $ 174,816
1999 313,260 162,491
2000 275,871 149,194
2001 174,360
2002 159,408
Thereafter 1,255,100
---------- ----------
$2,596,117 386,501
==========
Less amounts representing interest on
capital lease obligations 38,066
----------
Principal portion of capital lease
obligations $ 348,435
==========
</TABLE>
Total rental expense included on the statement of income for the nine
months ended February 28, 1997, was $365,655.
The Company rents computers and radios to nonemployee owner/operators on a
month-to-month basis. Rental income from these arrangements amounted to
$143,291 for the nine months ended February 28, 1997.
-9-
<PAGE> 15
5. PROFIT SHARING PLAN
The Company has a profit sharing plan for those employees who meet the
eligibility requirements set forth in the plan. Contributions to the plan
are at the discretion of the Company's Board of Directors. For the nine
months ended February 28, 1997, the Company has accrued $90,000 of profit
sharing expense.
6. RELATED PARTY TRANSACTIONS
The Company has advanced to two of its stockholders funds which bear
interest at 8.0%. The stockholders make periodic repayments of principal.
Amounts due to the Company from these stockholders totaled $97,940 as of
February 28, 1997.
The Company leases its office and warehouse facilities in St. Paul,
Minnesota, from its majority stockholder under a thirty-six month lease
agreement that calls for monthly rentals of $11,279 through November 1999.
The Company carries insurance and pays the real estate taxes, utilities
and maintenance costs on the property. The Company paid rents of
approximately $90,000 to this stockholder for the nine months ended
February 28, 1997.
The Company has notes payable to three of its minority stockholders that
total approximately $73,000 as of February 28, 1997. The Company pays
interest monthly at the rate of 8.0% with the principal due in April 1997.
7. MAJOR CUSTOMER
Approximately 15% of the Company's delivery services revenue for the nine
months ended February 28, 1997, is from one customer. Trade receivables
from this customer approximated 18% of total trade receivables at February
28, 1997.
8. SALE-LEASEBACK TRANSACTION
The Company completed the construction of an office/warehouse facility in
the Denver, Colorado, metropolitan area in September 1996 at a cost of
approximately $1,200,000, including land. In December 1996, the Company
sold the property to an unrelated party, incurring a loss of approximately
$103,000. Concurrent with the sale, the Company leased back the property
for a period of approximately fourteen years at monthly rentals ranging
from $10,000 to $12,000 during the term of the lease. The Company is also
responsible for insuring and maintaining the property and the real estate
taxes assessed on the property. In addition, the majority stockholder has
provided a guaranty to the lessor for the rents on this property. The
guaranty is for a period of five years and for a maximum amount of
$150,000 in the first year of the lease term. This guaranty amount reduces
by $30,000 each year until the end of the five-year period, at which time
the guaranty terminates.
9. COMMITMENTS
The Company has a buy-sell agreement with its minority stockholders
whereby the Company has the first option to purchase any shares of common
stock upon death, disability or termination of employment of the minority
stockholders or upon the offer to sell any shares by the minority
stockholders. The purchase price for the shares of common stock subject to
this agreement is to be determined within 75 days following the end of
each fiscal year.
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<PAGE> 16
10. LETTER OF INTENT
On March 13, 1997, stockholders of the Company's voting common stock
signed a non-binding letter of intent to sell all of the Company's issued
and outstanding common stock. There can be no assurances the sale will be
completed.
******
-11-
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.1 - Stock Purchase Agreement
</TABLE>
<PAGE> 1
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of the 16th day
of May, 1997, is by and among Dynamex Inc., a Delaware corporation
("Purchaser"), Road Runner Transportation, Inc., a Minnesota corporation (the
"Company"), James C. Isaacson ("JCI"), James L. Isaacson ("JLI"), Gordon J.
Isaacson ("GJI"), Gretchen E. Larsen ("Larsen"), and Thomas W. Ingeman
("Ingeman"). Each of JCI, JLI, GJI, Larsen and Ingeman shall be referred to
individually herein as the "Shareholder" and collectively herein as the
"Shareholders".
W I T N E S S E T H:
WHEREAS, the Company is engaged in the same-day transportation and
distribution business (the "Business"); and
WHEREAS, the Shareholders collectively own all of the outstanding capital
stock (collectively, the "Shares") of the Company; and
WHEREAS, the Shareholders desire to sell to Purchaser, and Purchaser
desires to purchase from the Shareholders, the Shares; and
WHEREAS, the Shareholders have appointed JCI, and in the event of his
death or total disability, Ingeman as their representative (the "Shareholder
Representative") to take certain actions under this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. SALE AND PURCHASE OF SHARES
1.1 PURCHASE AND SALE OF SHARES. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (as defined in Section
2.2 hereof), the Shareholders shall assign, transfer, convey and deliver to
Purchaser, and Purchaser shall purchase from the Shareholders, all right, title
and interest in and to all of the Shares, free and clear of all liens, security
interests, charges, encumbrances and rights of others.
1.2 EMPLOYMENT AGREEMENTS. At the Closing, the Company and each of JCI and
Ingeman shall enter into an employment agreement in the form of Exhibit A-1 and
A-2, respectively, hereto (collectively, the "Employment Agreements").
<PAGE> 2
1.3 CONFIDENTIALITY AND NON-COMPETITION AGREEMENTS. At the Closing,
Purchaser and each of JCI and Ingeman shall enter into a confidentiality and
non-competition agreement in the form of Exhibit B hereto (collectively, the
"Non-Competition Agreements").
1.4 LEASE FOR MINNEAPOLIS PROPERTY. At the Closing, Purchaser and JCI
shall enter into a lease in the form of Exhibit C hereto (the "Lease"), related
to that certain real property in Minneapolis, Minnesota that is owned by JCI
and used in the Business.
1.5 EXCLUDED ASSETS AND EXCLUDED LIABILITIES. Notwithstanding anything to
the contrary in this Agreement, the assets designated as excluded assets on
Schedule 1.5(a) attached hereto and made a part hereof (the "Excluded Assets")
and the liabilities designated as excluded liabilities on Schedule 1.5(b)
attached hereto and made a part hereof (the "Excluded Liabilities") shall not
be owned or owed, respectively, by the Company at the time of the Closing. To
the extent the Shareholders are unable to cause the Company to be released from
any of the Excluded Liabilities, the Shareholders will indemnify Purchaser
therefrom as provided in Section 12 hereof.
1.6 TAX ELECTION. The Shareholders and Purchaser will make appropriate
filings and elections in their federal and state income tax returns to treat
the sale and purchase of the Shares as an asset purchase and sale for income
tax purposes pursuant to Section 338(h)(10) of the Internal Revenue Code of
1986, as amended (the "Code").
2. CONSIDERATION; CLOSING
2.1 PURCHASE PRICE; CLOSING PAYMENTS.
(a) Payment to Shareholders. The consideration to be received by the
Shareholders in exchange for the Shares shall be the following, which
shall be apportioned among them in accordance with Schedule 2.1(a) hereto:
(i) an aggregate of $11,200,000, payable in cash at the Closing by wire
transfer to the accounts specified by the Shareholders; (ii) an aggregate
of 350,000 shares (the "Dynamex Shares") of the common stock, $.01 par
value (the "Common Stock"), of Purchaser, to be issued and delivered to
the Shareholders at the Closing; (iii) the "Earn-Out Payments", to be paid
to the Shareholders as described in paragraph (b) below; and (iv) the
"Top-Up Payment," to be paid to the Shareholders upon the circumstances
described in paragraph (e) below. The aforementioned consideration to be
received by the Shareholders and the Funded Indebtedness described in
Section 2.4 shall be referred to collectively as the "Purchase Price".
(b) Earn-Out.
(i) Purchaser will pay to the Shareholders, no later than
September 30, 1998, an aggregate amount (the "First Earn-Out
Payment") equal to the product of (A) 5.5 and (B) the amount by which
the EBITDA (as defined in subparagraph (ii) below) for the twelve
months ended July 31, 1998 exceeds $2,700,000; provided
2
<PAGE> 3
that, the First Earn-Out Payment shall not exceed $6,000,000. If the
First Earn-Out Payment is less than $6,000,000, the Purchaser will
pay to the Shareholders, no later than September 30, 1999, an
aggregate amount (the "Second Earn-Out Payment") equal to the product
of (A) 5.5 and (B) the amount by which the EBITDA for the twelve
months ended July 31, 1999 exceeds the greater of (x) EBITDA for the
twelve months ended July 31, 1998 and (y) $2,700,000; provided
however, that the sum of the First Earn-Out Payment and the Second
Earn-Out Payment (the "Earn-Out Payments") shall not exceed
$6,000,000.
(ii) As used herein, "EBITDA" shall mean the Company's earnings
before interest, taxes, depreciation and amortization. EBITDA of the
Company shall be computed before deducting any general corporate
overhead or other general charges from Purchaser to the Company,
except for those historically incurred by the Company in conducting
the Business and in amounts historically incurred by the Company
(subject to reasonably anticipated increases consistent with revenue
growth of the Company and inflation).
(iii) The calculation of each Earn-Out Payment shall be set
forth on a written statement prepared by Purchaser and delivered to
the Shareholders, together with the applicable Earn-Out Payment. The
Shareholders shall have the right to contest the statement at any
time within 30 days after their receipt thereof by delivering their
objection in writing to Purchaser. The parties shall use their best
efforts to resolve any contest promptly. If Purchaser and the
Shareholders are unable to resolve such dispute within 30 days after
notification of such objection, then the parties will request that
the Dallas office of KPMG Peat Marwick, LLP, certified public
accountants ("Independent Auditors"), make the final determination
with respect to the correctness of the Earn-Out Payment calculation
in light of the terms and provisions of this Agreement. Each of the
parties hereto represents and warrants that such party has not
engaged the Independent Auditors and that the Independent Auditors
are not affiliated with such party, and such party further agrees not
to engage the Independent Auditors until such time as any Earn-Out
Payment calculation has been resolved. The decision of the
Independent Auditors shall be final and binding on the parties. The
costs and expenses of the Independent Auditors and their services
rendered pursuant to this subsection shall be borne equally by the
Shareholders and Purchaser.
(iv) In order to secure the Purchaser's obligation to make the
"Earn-Out Payments," the Purchaser does hereby grant to the
Shareholders the right and option (the "Option") to purchase such
number of shares of Dynamex Common Stock as is equal to the quotient
obtained by dividing (i) the "Default Amount" by (ii) the "Earn-Out
Determination Price" (each as defined hereinbelow). The option shall
be exercisable only upon the occurrence of (i) the failure of the
Purchaser to pay, on or before September 30, 1998 and/or September
30, 1999, the First Earn-Out Payment or Second Earn-Out Payment,
respectively (and shall be exercisable with respect to each such
default separately), and (ii) the written notice of the
3
<PAGE> 4
Shareholder Representative at any time during the 120 days subsequent
to such default of his election to exercise the Option. Upon such
exercise, the Purchaser shall promptly deliver to the Shareholder
Representative certificates representing the number of shares of
Dynamex Common Stock determined pursuant to the first sentence of
this subsection (b)(iv), and the Purchaser's obligation with respect
to the Default Amount shall be deemed to be cured. The Shareholders
shall not have any voting or other rights in respect of the shares
covered by the Option prior to the exercise of the Option. For the
purposes of this Agreement, "Default Amount" shall mean the amount of
the Earn-Out Payment as to which the Company is in default in
payment; and "Earn-Out Determination Price" shall mean the average
closing price of the Dynamex Common Stock on the Nasdaq National
Market or other national securities exchange on which the Dynamex
Common Stock is then trading for the five trading days prior to the
date of default. The Purchaser hereby covenants to reserve sufficient
shares of its authorized but unissued Common Stock for the exercise
of the Option. All shares of Dynamex Common Stock issued pursuant to
the Option shall be afforded the same benefits as Dynamex Shares
pursuant to Sections 5.1 and 5.3 of this Agreement.
(c) Bonus Payments to Key Employees. In the event that EBITDA for the
twelve months ended July 31, 1998 equals or exceeds $2,800,000, Purchaser
will pay, to those individuals designated by the Shareholder
Representative (collectively, the "Key Employees"), no later than
September 30,1998, cash in the aggregate amount of $500,000 (the "Bonus
Payment"), which amount shall be apportioned among such Key Employees as
determined by the Shareholder Representative.
(d) Segregation of Performance Results. In the event that at any time
(i) the Company is no longer a separate subsidiary of Purchaser or (ii)
businesses other than the historic operations of the Company are combined
with those of the Company, Purchaser shall maintain separate books and
records for the historic operations of the Company so that the Earn-Out
Payments and Bonus Payments discussed in subparagraphs (b) and (c) above
can be computed hereunder. In addition, should the Purchaser determine
that it is in its best interests to combine other acquired operations with
those of the Company, the targeted EBITDA set forth in subparagraph (b)
above ($2,700,000) and subparagraph (c) above ($2,800,000) will be
adjusted upward or downward, as appropriate, based on the historical
earnings before interest, taxes, depreciation and amortization of the
operations to be combined. The Shareholders shall have the right to
approve such adjustment.
(e) Top-Up Payment. In the event that, during the period starting on
the six month anniversary of the Closing Date and ending on the 12 month
anniversary of the Closing Date (the "Top-Up Determination Period"), the
closing sales price of Dynamex Common Stock (as reported by the Nasdaq
National Market or other national securities exchange on which the Dynamex
Common Stock is then trading) does not equal or exceed $8.00 per share for
five consecutive trading days on at least one occasion, Purchaser will pay
to the Shareholders, no later than 30 days after the end of the Top-Up
Determination Period, an aggregate amount (the "Top-Up Payment") equal to
(A) 350,000 times (B) the
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deficiency between (i) the average closing price of the Dynamex Common
Stock during the Top-Up Determination Period and (ii) $8.00; provided,
however, that in no event shall the Top-Up Payment exceed the sum of
$700,000. The Top-Up Payment shall be made in cash or, at the election of
the Purchaser, in shares of Dynamex Common Stock (valued at the average
closing price of the Dynamex Common Stock for the last five trading days
of the Top-Up Determination Period). Any shares of Dynamex Common Stock
issued pursuant to the payment of the Top-Up Payment shall be afforded the
same benefits as Dynamex Shares pursuant to Sections 5.1 and 5.3 of this
Agreement.
2.2 TIME OF CLOSING. A closing (the "Closing") for the sale and purchase
of the Shares shall be held at 9:00 a.m., Dallas, Texas time, on May 16, 1997
(the "Closing Date"), at the law offices of Crouch & Hallett, L.L.P. located at
717 N. Harwood, Suite 1400, Dallas, Texas, or at such other place or places
and/or time as may be agreed upon by the Purchaser and the Shareholders.
2.3 CLOSING PROCEDURE. At the Closing, the Shareholders shall deliver to
Purchaser stock certificates duly endorsed to Purchaser and representing the
Shares, in form sufficient to vest record and beneficial title fully in
Purchaser to the Shares. Purchaser shall issue and deliver to the Shareholders
the cash portion of Purchase Price to be received by the Shareholders and the
Dynamex Shares as described in Section 2.1 above. Each party will cause to be
prepared, executed and delivered all documents required to be delivered by such
party pursuant to Article 9 hereof and all other appropriate and customary
documents as another party or its counsel may reasonably request for the
purpose of consummating the transactions contemplated by this Agreement. All
actions taken at the Closing shall be deemed to have been taken simultaneously
at 12:01 a.m., Dallas, Texas time on the Closing Date.
2.4 REPAYMENT OF CERTAIN INDEBTEDNESS. At the Closing, the Purchaser shall
cause all of the Company's indebtedness (the "Funded Indebtedness") to its
lender (First Bank National Association) to be repaid in full.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS.
The Shareholders and the Company hereby severally represent and warrant to
Purchaser that, except as qualified by the Disclosure Schedule attached on
Schedule 3 hereto and made a part hereof (the "Sellers' Disclosure Schedule"):
3.1 ORGANIZATION; GOOD STANDING. The Company is a corporation, duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation and has all requisite corporate power and authority to own
and lease its properties and assets and to carry on its business as currently
conducted. After giving effect to the elimination of the Excluded Assets and
Excluded Liabilities, the Company will have no subsidiaries and no equity,
profit sharing, participation or other ownership interest (including any
general partnership interest) in any corporation, partnership, limited
partnership or other entity. The Company is duly qualified and
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licensed to do business and is in good standing in all jurisdictions where such
qualification is required, a list of which is set forth on the Sellers'
Disclosure Schedule.
3.2 DUE AUTHORIZATION. The Shareholders have full power and authority to
enter into and perform this Agreement, the Employment Agreement and the
Non-Competition Agreement, to the extent same is a party thereto and to carry
out the transactions contemplated hereby and thereby. The Company has full
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company.
3.3 EXECUTION AND DELIVERY. This Agreement has been duly executed and
delivered by the Company and the Shareholders and constitutes their legal,
valid and binding obligation, enforceable against each of them in accordance
with its terms, except as may be limited by the availability of equitable
remedies or by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally. The execution and delivery by
the Company and the Shareholders of this Agreement, the execution and delivery
by the Shareholders of the Employment Agreement and the Non-Competition
Agreement to which same is a party and the consummation of the transactions
contemplated hereby and thereby will not: (i) conflict with or result in a
breach of the articles of incorporation or bylaws of the Company, (ii) violate
any law, statute, rule or regulation or any order, writ, injunction or decree
of any court or governmental authority, or (iii) violate or conflict with or
constitute a default under (or give rise to any right of termination,
cancellation or acceleration under) any indenture, mortgage, lease, contract or
other instrument to which the Company or any Shareholder is a party or by which
they are bound or affected.
3.4 GOVERNMENTAL CONSENTS. No approval, authorization, consent, order or
other action of, or filing with, any governmental authority or administrative
agency is required in connection with the execution and delivery by the Company
and the Shareholders of this Agreement or the consummation of the transactions
contemplated hereby. Except as set forth in the Sellers' Disclosure Schedule,
no approval, authorization or consent of any other third party is required in
connection with the execution and delivery by the Company and the Shareholders
of this Agreement and the consummation of the transactions contemplated hereby.
3.5 TRANSACTIONS WITH AFFILIATES. At the time of the Closing, none of the
Company's shareholders, officers, employees or directors or any of foregoing
persons' Affiliates (as defined herein) will have any interest in or will own
any property or right used principally in the conduct of the Business, except
for the ownership of the Excluded Assets. The term "Affiliate" shall mean any
Shareholder or any of the Company's officers, employees and directors, any
partner of any such person, or any member of the immediate family (including
brother, sister, descendant, ancestor or in-law) of any such person, or any
corporation, partnership, trust or other entity in which any such person or any
such family member has a substantial interest or is a director, officer,
partner or trustee.
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3.6 TITLE TO ASSETS. The Company is the sole and exclusive legal owner of
all right, title and interest in, and has good and marketable title to, all of
the assets of the Business (other than the Excluded Assets) that it purports to
own (the "Assets"), free and clear of liens, claims and encumbrances except (i)
liens, claims and encumbrances to be released at Closing and (ii) liens for
taxes not yet payable. At the Closing, the Assets to be indirectly acquired by
Purchaser through its ownership of the Shares shall include, by way of example
and not of limitation, the following:
(a) current assets, accounts receivable, fixtures and leasehold
improvements, fixed assets, equipment, tools, inventory and supplies,
spare parts, furniture, office equipment and other tangible assets and
property used in business operations;
(b) leasehold interests and improvements related thereto;
(c) rights under agreements and contracts entered into by the Company
in the ordinary course of its operations;
(d) customer lists, trade names, trademarks, service marks, software
programs and rights related thereto;
(e) all books and records related to the Company, the Assets or the
operation of the Business, including all financial, accounting and tax
records, computer data and programs, and records and all correspondence
with and documents pertaining to suppliers, governmental authorities and
other third parties;
(f) client records; and
(g) state, federal and regulatory licenses as required to conduct the
Business.
3.7 REAL ESTATE.
(a) The Company does not own and has never owned any real property.
With respect to the Company's leased real property (the "Real Estate")),
(i) applicable zoning ordinances permit the operation of the Business at
the Real Estate, (ii) the Company has all easements and rights, including
easements for all utilities, services, roadways and other means of ingress
and egress, necessary to operate the Business, (iii) the Real Estate is
not located within a flood or lakeshore erosion hazard area, and (iv)
neither the whole nor any portion of the Real Estate has been condemned,
requisitioned or otherwise taken by any public authority, and no notice of
any such condemnation, requisition or taking has been received. To the
knowledge of the Shareholders, no such condemnation, requisition or taking
is threatened or contemplated, and there are no pending public
improvements which may result in special assessments against or which may
otherwise affect the Real Estate. The Company has delivered to Purchaser
accurate copies of all leases and other agreements relating to the Real
Estate.
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(b) Neither the Company nor the Shareholders has received notice of,
or has any actual knowledge of, any material violation of any zoning,
building, health, fire, water use or similar statute, ordinance, law,
regulation or code in connection with the Real Estate.
(c) Neither the Company nor the Shareholders has received notice of,
or has actual knowledge of, any hazardous or toxic material (as
hereinafter defined) existing in any structure located on, or existing on
or under the surface of, any of the Real Estate which is, in any case, in
material violation of any applicable environmental law. For purposes of
this Section, "hazardous or toxic material" shall mean waste, substance,
materials, smoke, gas or particulate matter designated as hazardous, toxic
or dangerous under any environmental law. For purposes of this Section,
"environmental law" shall included the Comprehensive Environmental
Response Compensation and Liability Act, the Clean Air Act, the Clean
Water Act and any other applicable federal, state or local environmental,
health or safety law, rule or regulation relating to or imposing liability
or standards concerning or in connection with hazardous, toxic or
dangerous waste, substance, materials, smoke, gas or particulate matter.
3.8 CONDITION OF ASSETS. All of the fixed assets of the Company are in
good condition and working order, ordinary wear and tear excepted, and are
suitable for the uses for which they are intended, free from any known defects
except such minor defects as do not substantially interfere with the continued
use thereof. The fixed assets of the Company as of the date hereof are set
forth on the Sellers' Disclosure Schedule. The Company has in force such
insurance of its properties and operations as is set forth on the Sellers'
Disclosure Schedule.
3.9 GOVERNMENTAL LICENSES. The Sellers' Disclosure Schedule lists and
accurately describes all licenses, permits, orders, approvals, authorizations
and filings issued to the Company by a governmental or regulatory authority in
connection with the lawful ownership and operation of the Company's business
(the "Governmental Licenses"), except where the failure to hold such
Governmental Licenses would not have a material adverse effect on the Company.
The Company has furnished to Purchaser true and accurate copies of all such
Governmental Licenses, and each Governmental License is in full force and
effect and is valid under applicable federal, state and local laws.
3.10 TAXES. All tax reports and returns relating to the Company's assets
and operations (including sales, use, income, property, franchise and
employment taxes) that are due have been filed with the appropriate federal,
state and local governmental agencies, and the Company has paid all taxes,
penalties, interest, deficiencies, assessments or other charges due as
reflected on the filed returns or claimed to be due by such federal, state or
local taxing authorities (other than taxes, deficiencies, assessments or claims
which are being contested in good faith and which in the aggregate are not
material). There are no examinations or audits pending or unresolved
examinations or audit issues with respect to the Company's federal, state or
local tax returns. All additional taxes, if any, assessed as a result of such
examinations or audits have been paid. There are no pending claims or
proceedings relating to, or asserted for, taxes, penalties, interest,
deficiencies or assessments against the Company. The Company has delivered to
Purchaser true,
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accurate and complete copies of all tax returns and filings made by them in the
last three years and any related correspondence from the Company, the
Shareholders or applicable taxing authority relating to such returns and
filings.
3.11 LITIGATION. There is no order of any court, governmental agency or
authority and no action, suit, proceeding or investigation, judicial,
administrative or otherwise, of which the Company or the Shareholders have
actual knowledge that is pending or threatened against or affecting the Company
which, if adversely determined, might materially and adversely affect the
business, operations, properties, assets or conditions (financial or otherwise)
of the Company or which challenges the validity or propriety of any of the
transactions contemplated by this Agreement.
3.12 REPORTS AND GOVERNMENTAL COMPLIANCE. The Company has duly filed all
reports required to be filed by law or applicable rule, regulation, order, writ
or decree of any court, governmental commission, body or instrumentality and
have made payment of all charges and other payments, if any, shown by such
reports to be due and payable.
3.13 EMPLOYEE BENEFIT PLANS; LABOR CONTROVERSIES. The Sellers' Disclosure
Schedule sets forth all liabilities of the Company under The Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or similar laws
with respect to employee benefit plans. Except as set forth in the Sellers'
Disclosure Schedule, no "plan" which is subject to Part 3 of Subtitle B of
Title I of ERISA or Section 412 of the Code has incurred an accumulated funding
deficiency as the term is defined in Section 302 of ERISA or Section 412 of the
Code (whether or not waived). None of the Company nor any of its affiliates has
ever sponsored, adopted, maintained or been obligated to contribute to a
"multiemployer plan" as such term is defined in Section 3(37) of ERISA. No
liability under Title IV of ERISA has been incurred by the Company or an
affiliate thereof that has not been satisfied in full, and no condition exists
that presents a material risk to the Company or its affiliates of incurring
liability under such Title, other than for premiums due to the Pension Benefit
Guaranty Corporation. The Company has made or will make all contributions
required to be made by it under any employee benefit plan for all periods
through and including the Closing Date.
There are no labor disputes of a material nature pending between the
Company, on the one hand, and any of its employees, on the other hand, and
there are no known organizational efforts presently being made involving any of
such employees. The Company has complied in all material respects with all laws
relating to the employment of labor, including any provisions thereof relating
to wages, hours, collective bargaining and the payment of social security and
other taxes, and is not liable for any material arrearages of wages or any
taxes or penalties for failure to comply with any of the foregoing.
3.14 CAPITALIZATION. All of the issued and outstanding Shares have been
duly authorized and validly issued and are fully paid and nonassessable, and
are owned of record and beneficially by the Shareholders. Schedule 3.14 sets
forth the capitalization of the Company as of the Closing Date including the
description of the Shares owned by the Shareholders. There are no shares of
capital stock of the Company held in treasury. There is no outstanding
subscription, contract,
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option, warrant, call or other right obligating the Company to issue, sell,
exchange or otherwise dispose of, or to purchase, redeem or otherwise acquire,
shares of, or securities convertible into or exchangeable for, capital stock of
the Company. The Shareholders are the lawful, sole and beneficial owner of the
Shares, free and clear of all liens, claims and encumbrances of every kind,
and, at the Closing, the Shareholders will convey to Purchaser good and
indefeasible title to the Shares.
3.15 FINANCIAL STATEMENTS AND RECORDS OF THE COMPANY.
(a) The Company has delivered to Purchaser true, correct and complete
copies of the following financial statements (collectively, the "Company's
Financial Statements"): (i) the balance sheet of the Company as of
February 28, 1997 and the related statements of income and cash flows for
the nine months then ended, accompanied by a report of Deloitte & Touche
LLP with respect thereto; (ii) the unaudited balance sheet of the Company
as of April 30, 1997 and the related statements of income for the eleven
months then ended; and (iii) the balance sheet of the Company as of May
31, 1996 and the related statements of income and cash flows for the two
years then ended, accompanied by a report of McGladrey & Pullen, L.L.P.
with respect thereto.
(b) The Company's Financial Statements present fairly in all material
respects the assets, liabilities and financial position of the Company as
of the dates thereof and the results of operations thereof for the periods
then ended and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis with prior periods,
except year-end adjustments consisting of normal accruals (the net effect
of which adjustments are not material) with respect to the interim
financial statements. The books and records of the Company have been and
are being maintained in accordance with good business practice, reflect
only valid transactions, are complete and correct in all material respects
and present fairly in all material respects the basis for the financial
position and results of operations of the Company set forth in the
Company's Financial Statements.
3.16 ABSENCE OF CERTAIN CHANGES. Since April 30, 1997, the Company has not
(i) suffered any change in its financial condition or results of operations
other than changes in the ordinary course of business that, individually or in
the aggregate, have had a material adverse effect on the Company, (ii) acquired
or disposed of any asset or made any capital expenditure (including, without
limitation, capitalized leases) in excess of $5,000, (iii) written up, written
down or written off the book value of a material amount of assets; (iv)
incurred, assumed, guaranteed or endorsed any liability or obligation, or
subjected or permitted to be subjected any material amount of assets to any
lien, claim or encumbrance of any kind, except for trade payables and accrued
liabilities in the ordinary course of business, (v) made any loans or other
advances of money (other than for reasonable travel expenses) to any person or
entity, (vi) entered into or terminated any material contract, or agreed or
made any material changes in any material contract, other than renewals and
extensions thereof in the ordinary course of business, (vii) declared, paid or
set aside for payment any dividend or distribution with respect to its capital
stock, (viii) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of directly or
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indirectly, any of the Company's capital stock or securities or any rights to
acquire same, (ix) entered into any collective bargaining, employment,
consulting, compensation or similar agreement with any person or group, (x)
except as set forth on Schedule 3.16 hereto, increased the compensation of or
paid any bonuses to any employees or contributed to any employee benefit plan
or (xi) entered into, adopted or amended any employee benefit plan. At all
times from the date of this Agreement through the Closing Date, the
Shareholders will cause the Company to be operated in the ordinary course of
business, except for such changes as are contemplated by this Agreement.
3.17 MATERIAL UNDISCLOSED LIABILITIES. Other than as set forth on the
Company Financial Statements, there are no material liabilities or obligations
of the Company of a nature required to be disclosed on financial statements
prepared in accordance with generally accepted accounting principles.
3.18 CONTRACTS AND AGREEMENTS. The Sellers' Disclosure Schedule contains a
list, complete and accurate in all material respects, of all of the following
categories of contracts and agreements to which the Company is bound at the
date hereof: (i) employee benefit plans, employment, consulting or similar
contracts, (ii) contracts relating to leasehold interests, (iii) contracts that
involve remaining aggregate payments by the Company in excess of $10,000 or
which have a remaining term in excess of one year, (iv) insurance policies, and
(v) other contracts not made in the ordinary course of business (collectively
the "Material Contracts"). The Company is not in default with respect to any of
the Material Contracts.
3.19 COMPLETENESS OF DISCLOSURE. No representation or warranty by the
Company or the Shareholders in this Agreement nor any certificate, schedule,
statement, document or instrument furnished or to be furnished to Purchaser
pursuant hereto, or in connection with the negotiation, execution or
performance of this Agreement, contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact required to be
stated herein or therein or necessary to make any statement herein or therein
not misleading.
3.20 FINDERS AND BROKERS. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by the Shareholders
directly with Purchaser. No person has as a result of any agreement or action
of the Company or the Shareholders any valid claim against any of the parties
hereto for a brokerage commission, finder's fee or other like payment.
3.21 PROSPECTUS FOR DYNAMEX SHARES. The Shareholders acknowledge (i)
receipt of a copy of the Registration Statement filed November 12, 1996 with
the Securities and Exchange Commission, and any Prospectus Supplements thereto,
covering the potential resale of the Dynamex Shares by the Shareholders (the
"Registration Statement"), (ii) the opportunity to ask questions of and receive
answers from representatives of the management of Purchaser concerning the
terms and conditions of the transactions contemplated by this Agreement and to
obtain all additional information that Purchaser possesses or could acquire
without unreasonable expense that is necessary to verify the accuracy of
information furnished to the Shareholders.
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4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Shareholders as follows:
4.1 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation, duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own and
lease its properties and carry on its business as currently conducted.
4.2 DUE AUTHORIZATION. Purchaser has full corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement, the Employment Agreements and the
Non-Competition Agreements, and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Purchaser.
4.3 EXECUTION AND DELIVERY. This Agreement has been duly executed and
delivered by Purchaser and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as may be limited
by the availability of equitable remedies or by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally. The execution and delivery by Purchaser of this Agreement,
the Employment Agreements and the Non-Competition Agreements and the
consummation of the transactions contemplated hereby and thereby will not: (i)
conflict with or result in a breach of the certificate of incorporation or
bylaws of Purchaser, (ii) violate any law, statute, rule or regulation or any
order, writ, injunction or decree of any court or governmental authority, or
(iii) violate or conflict with or constitute a default under (or give rise to
any right of termination, cancellation or acceleration under) any indenture,
mortgage, lease, contract or other instrument to which Purchaser is a party or
by which it is bound or affected.
4.4 CAPITALIZATION. On the date of issuance, the Dynamex Shares shall be
duly authorized and validly issued and fully paid and nonassessable. Upon
issuance and delivery in accordance with Section 2.1, the Dynamex Shares shall
be transferred to the Shareholders free and clear of any lien, privilege,
pledge, option or other encumbrance, other than the restrictions on the resale
of such shares (as described in Section 5.2) or under federal and state
securities laws.
4.5 FINDERS AND BROKERS. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by Purchaser directly
with the Shareholders and the Company. No person has as a result of any
agreement or action of Purchaser any valid claim against any of the parties
hereto for a brokerage commission, finder's fee or other like payment.
4.6 SEC REPORTS. As of the date hereof, the Purchaser has filed all
material forms, reports and documents with the Securities and Exchange
Commission (the "SEC") required to be filed by it pursuant to the federal
securities laws and the SEC rules and regulations thereunder, each of which, at
the time such form, report or document was filed, (i) complied as to form in
all material respects with the applicable requirements of the Securities Act of
1933, as amended (the
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"Securities Act") and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and (ii) did not contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein
not misleading. Since the most recent date of such report, there has not been
any material adverse change in the Purchaser's financial condition or results
of operations.
5. REGISTRATION STATEMENT AND DYNAMEX SHARES.
5.1 RESALE REGISTRATION.
(a) No later than the six month anniversary of the Closing Date,
Purchaser shall file with the SEC a prospectus supplement (the "Prospectus
Supplement") to the Registration Statement, which shall cover the public
reoffering or resale by the Shareholders of the Dynamex Shares issued as
of such date.
(b) Purchaser shall cause the Registration Statement to remain
effective so that the Dynamex Shares issued to the Shareholders may be
offered and sold on a continuous or delayed basis in accordance with Rule
415 under the Securities Act, until the earlier of (i) one year after the
Closing Date (or such earlier or later date, should the general holding
period requirement of Rule 144 under the Securities Act or any successor
rule be revised), (ii) such date as, in the opinion of counsel for
Purchaser, the sale of the Dynamex Shares is exempt from the registration
provisions of the Securities Act and the securities laws of the states in
which the Dynamex Shares are to be sold or transferred, or (iii) such time
as all of the Dynamex Shares issued to the Shareholders have been sold in
the manner described in the Registration Statement.
(c) Purchaser may, by written notice to the holders of the Dynamex
Shares, suspend or withdraw the Registration Statement and require that
the holders of the Dynamex Shares cease sales of the Dynamex Shares
thereunder, if (i) the Registration Statement is required to be amended or
supplemented or (ii) material corporate developments make the use of such
Registration Statement inappropriate. Purchaser agrees to use its best
reasonable efforts to file any required amendments or supplements to the
Registration Statement or take such other actions so that the holders of
Dynamex Shares may resume sales of the Dynamex Shares issued to them
without undue delay. In the event the sale of Dynamex Shares must be
suspended as set forth hereinabove, the number of days such sales are
suspended shall be added to the period specified in Section 5.1(b) hereof.
(d) Purchaser agrees to furnish to the Shareholders, as soon as
available, copies of the Prospectus Supplement and all other amendments
and supplements to the Registration Statement in such quantities as the
Shareholders may reasonably request.
(e) Purchaser shall bear all expenses of each Registration Statement
filed pursuant to this Agreement, which shall include, without limitation,
all registration and
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filing fees and the reasonable fees and disbursements of counsel and
accountants for Purchaser, but which shall not include any selling
commissions or underwriting discounts or stock transfer taxes relating to
the Dynamex Shares or the fees and expense of counsel to the Shareholders.
(f) The Dynamex Shares have been approved for listing on the Nasdaq
National Market, subject to official notice of issuance.
5.2 LOCK UP AGREEMENT. In order to provide for an orderly disposition of
the Dynamex Shares, the Shareholders agree that prior to the six month
anniversary of the Closing Date, they will not sell, offer or agree to sell,
grant any option for the sale of or otherwise dispose of directly or
indirectly, any of the Dynamex Shares or any security substantially similar to
the Dynamex Shares or any securities convertible into, exercisable for or
exchangeable for common stock or securities substantially similar to the
Dynamex Shares without the prior written consent of Purchaser.
5.3 INDEMNIFICATION WITH RESPECT TO SECURITIES LAWS.
(a) Purchaser shall defend, indemnify and hold harmless (to the
extent permitted by law) the Shareholders against all losses, claims,
damages or liabilities which arise out of or are based upon any untrue or
alleged untrue statement of material fact contained in any registration
statement (including any post-effective amendment thereto), prospectus or
preliminary prospectus or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished to Purchaser by the
Shareholders for use therein or by the failure of the Shareholders to
deliver a copy of the Registration Statement or prospectus or any
amendments or supplements thereto after Purchaser has furnished the
Shareholders with a sufficient number of copies of the same.
(b) The Shareholders shall defend, indemnify and hold harmless (to
the extent permitted by law) Purchaser, its directors and officers and
each person who controls Purchaser (within the meaning of Section 15 of
the Securities Act and Section 20 of the Securities and Exchange Act of
1934) against any losses, claims, damages, liabilities and expenses which
arise out of or are based upon any untrue or alleged omission of a
material fact required to be stated in the Registration Statement or
prospectus or any amendment thereof or supplement thereto or necessary to
make the statements therein not misleading, but only to the extent that
such untrue statement or omission is contained in any information
furnished by the Shareholders for inclusion in the Registration Statement.
5.4 COOPERATION. The Company and the Shareholders shall cooperate with
Purchaser and cause all of the management of the Company to cooperate with
Purchaser and its agents, representatives, counsel and underwriters, in
preparing documentation required by the Registration Statement, in the sale of
Dynamex Shares pursuant to the Registration Statement. The Company
14
<PAGE> 15
and the Shareholders agree to notify Purchaser immediately of any material
adverse change in the Business or the Assets prior to the Closing Date.
6. CERTAIN COVENANTS AND AGREEMENTS
The parties covenant and agree to comply with the following covenants, in
each case to the extent applicable to such party:
6.1 ACCESS. Upon reasonable notice, the Company and the Shareholders will
give to Purchaser and its counsel, accountants and other authorized
representatives, full access during reasonable business hours to all of the
Company's properties, books, contracts, documents and records and shall furnish
Purchaser with all such information concerning their affairs, including
financial statements, as the other may reasonably request in order that
Purchaser may have full opportunity to make such reasonable investigations as
it shall desire for the purpose of verifying the performance of and compliance
with the representations, warranties, covenants and the conditions contained
herein or for other purposes reasonably related to the transactions
contemplated hereby. The Company and the Shareholders will take all action
necessary to enable Purchaser, its counsel, accountants and other
representatives to discuss the affairs, properties, business, operations and
records of the Company at such times and as often as Purchaser may reasonably
request with executives, independent accountants and counsel of the Company and
the Shareholders. In the event that the Closing does not occur and this
Agreement is terminated, the Company and the Shareholders, on the one hand, and
Purchaser, on the other, shall (i) maintain the confidentiality of all
information obtained from the other party in connection herewith, except for
such information as is in the public domain, (ii) not use any such information
so obtained to the detriment or competitive disadvantage of the other party,
and (iii) promptly return copies of all books, records, contracts and any other
documentation of the other delivered to such party pursuant to the transactions
contemplated hereby.
6.2 BEST EFFORTS. The Company, the Shareholders and Purchaser shall take
all reasonable actions necessary to consummate the transactions contemplated by
this Agreement and will use all necessary and reasonable means at their
disposal to obtain all necessary consents and approvals of other persons and
governmental authorities required to enable it to consummate the transactions
contemplated by this Agreement. Each party shall make all filings,
applications, statements and reports to all governmental agencies or entities
which are required to be made prior to the Closing Date by or on its behalf
pursuant to any statute, rule or regulation in order to consummate the
transactions contemplated by this Agreement, and copies of all such filings,
applications, statements and reports shall be provided to the other.
6.3 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, all notices to third
parties and other publicity relating to the transaction contemplated by this
Agreement shall be jointly planned and agreed to by the Shareholders and
Purchaser; provided, however that any required public disclosures related to
any regulatory or governmental filing or requirement may be made by Purchaser,
after notice to the Shareholders, without the Shareholders' or the Company's
consent.
15
<PAGE> 16
6.4 ORDINARY COURSE OF BUSINESS. Except as contemplated by this Agreement,
during the period from the execution and delivery of this Agreement through the
Closing Date, the Company shall (i) conduct its operations in the ordinary
course of business consistent with past and current practices, (ii) use
reasonable best efforts to maintain and preserve intact its goodwill and
business relationships, (iii) not enter into any agreement which involves the
payment by the Company of an aggregate amount exceeding $10,000, or which has a
term exceeding one year, (iv) not increase, or agree to increase, the level of
compensation (other than scheduled anniversary raises consistent with prior
practice) payable to any of its employees or (v) take any action which would
cause any representation contained in Article 3 to be untrue as of the Closing
Date.
7. CONDITIONS TO PURCHASER'S CLOSING
All obligations of Purchaser under this Agreement shall be subject to the
fulfillment at or prior to the Closing of the following conditions, it being
understood that Purchaser may, in its sole discretion, waive any or all of such
conditions in whole or in part:
7.1 REPRESENTATIONS, ETC. The Company and the Shareholders shall have
performed in all material respects the covenants and agreements contained in
this Agreement that are to be performed by each of them at or prior to the
Closing, and the representations and warranties of the Company and the
Shareholders contained in this Agreement shall be true and correct in all
material respects as of the Closing Date with the same effect as though made at
such time (except as contemplated or permitted by this Agreement).
7.2 CONSENTS. All consents and approvals of governmental agencies, and
from any other third parties required to consummate the transactions
contemplated by this Agreement, including the consent of the lenders to
Purchaser, shall have been obtained without material cost or other materially
adverse consequence to Purchaser shall be in full force and effect.
7.3 NO ADVERSE LITIGATION. No order or preliminary or permanent injunction
shall have been entered and no action, suit or other legal or administrative
proceeding by any court or governmental authority, agency or other person shall
be pending or threatened on the Closing Date which may have the effect of (i)
making any of the transactions contemplated hereby illegal, (ii) materially
adversely affecting the value of the assets or business of the Company or (iii)
making Purchaser or the Company liable for the payment of a material amount of
damages to any person.
7.4 MATERIAL ADVERSE CHANGES. There shall have occurred no material
adverse change in the business, properties, assets, liabilities, results of
operations or condition, financial or otherwise, of the Company.
7.5 CLOSING DELIVERIES. Purchaser shall have received each of the
documents or items required to be delivered to it pursuant to Section 9.1
hereof.
16
<PAGE> 17
8. CONDITIONS TO SHAREHOLDERS' AND COMPANY'S CLOSING
All obligations of the Company and the Shareholders under this Agreement
shall be subject to the fulfillment at or prior to the Closing of the following
conditions, it being understood that the Company and the Shareholders may, in
their sole discretion, waive any or all of such conditions in whole or in part:
8.1 REPRESENTATIONS, ETC. Purchaser shall have performed in all material
respects the covenants and agreements contained in this Agreement that are to
be performed by it at or prior to the Closing, and the representations and
warranties of Purchaser contained in this Agreement shall be true and correct
in all material respects as of the Closing Date with the same effect as though
made at such time (except as contemplated or permitted by this Agreement).
8.2 NO ADVERSE LITIGATION. No order or preliminary or permanent injunction
shall have been entered and no action, suit or other legal or administrative
proceeding by any court or governmental authority, agency or other person shall
be pending or threatened on the Closing Date which may have the effect of (i)
making any of the transactions contemplated hereby illegal, (ii) materially
adversely affecting the value of the assets or business of the Company or (iii)
making the Company and the Shareholders liable for the payment of a material
amount of damages to any person.
8.3 CLOSING DELIVERIES. The Company and the Shareholders shall have
received each of the documents or items required to be delivered to them
pursuant to Section 9.2 hereof.
8.4 LENDER CONSENT. Dynamex shall have received the written consent of its
bank lender to the execution, delivery and performance of this Agreement.
9. DOCUMENTS TO BE DELIVERED AT CLOSING
9.1 TO PURCHASER. At the Closing, there shall be delivered to Purchaser:
(a) the Shares, together with duly executed stock powers, in form
satisfactory to Purchaser and its counsel;
(b) the Non-Competition Agreements;
(c) the Employment Agreements;
(d) the Lease;
(e) a certificate, signed by the chief executive officer of the
Company, as to the fulfillment of the conditions set forth in Sections
7.1, 7.3 and 7.4 hereof;
(f) opinion of counsel to the Company and the Shareholders, dated as
of the Closing Date, in form reasonably acceptable to Purchaser;
17
<PAGE> 18
(g) a copy of all consents and approvals referred to in Section 7.2
hereof;
(h) resignations of all the officers and directors of the Company;
(i) the corporate minute books and stock books of the Company; and
(j) all other items reasonably requested by Purchaser.
9.2 TO THE SHAREHOLDERS. At the Closing, there shall be delivered to the
Shareholders:
(a) the Dynamex Shares and the cash portion of the Purchase Price to
be received by the Shareholders as contemplated by Section 2.1(a) hereof;
(b) a certificate, signed by the Vice President of Purchaser, as to
the fulfillment of the conditions set forth in Sections 8.1 and 8.2
hereof;
(c) a copy of the consent referred to in Section 8.4 hereof;
(d) an opinion of Purchaser's counsel, dated the Closing Date, in
form reasonably acceptable to the Shareholders; and
(e) all other items reasonably requested by the Shareholders.
10. SURVIVAL
All representations, warranties, covenants and agreements made by any
party to this Agreement or pursuant hereto shall be deemed to be material and
to have been relied upon by the parties hereto and shall survive the Closing
for a period of two years; provided, however, that the representations
contained in Section 3.10 shall survive until the statute of limitations with
respect to tax matters expires; and provided further, that the representations
contained in Section 3.14 shall survive indefinitely. The representations and
warranties hereunder shall not be affected or diminished by any investigation
at any time by or on behalf of the party for whose benefit such representations
and warranties were made. All statements contained herein or in any
certificate, exhibit, list or other document delivered pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties.
11. INDEMNIFICATION OF THE SHAREHOLDERS
Purchaser shall indemnify and hold the Shareholders harmless from,
against, for and in respect of:
(a) any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances
suffered, sustained, incurred or required to be paid by the Shareholders
because of the breach of any written
18
<PAGE> 19
representation, warranty, agreement or covenant of Purchaser contained in
or made in connection with this Agreement;
(b) any and all liabilities, obligations, claims and demands (other
than the Excluded Liabilities) arising out of the ownership and operation
of the Company on and after the Closing Date, except to the extent the
same arises from a breach of any written representation, warranty,
agreement or covenant of any Company or any Shareholder contained in or
made in connection with this Agreement; and
(c) all reasonable costs and expenses (including, without limitation,
attorneys' fees, interest and penalties) incurred by the Shareholders in
connection with any action, suit, proceeding, demand, assessment or
judgment incident to any of the matters indemnified against in this
Section 11.
12. INDEMNIFICATION OF PURCHASER
The Shareholders shall indemnify and hold Purchaser harmless from,
against, for and in respect of:
(a) any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances
suffered, sustained, incurred or required to be paid by Purchaser because
of the breach of any written representation, warranty, agreement or
covenant of the Company or any Shareholder contained in or made in
connection with this Agreement (excluding matters as to which clause (c)
below is applicable);
(b) the Excluded Liabilities (excluding matters as to which clause
(c) below is applicable);
(c) any federal, state or local income or other tax (i) payable with
respect to the business, assets, properties or operations of the Company
or any Shareholder or any member of any affiliated group of which any of
them is a member for any period prior to the Closing Date (except for
additional taxes or penalties that arise directly from the classification
of the Company's drivers as independent contractors rather than employees
and which taxes or penalties are assessed as a result of an audit of
Purchaser's affiliated group (as opposed to the Company individually)
performed after the Closing Date) and (ii) incident to or arising as a
consequence of the negotiation or consummation by the Company or any
Shareholder (or any member of any affiliated group of which any of them is
a member) of this Agreement and the transactions contemplated hereby;
(d) any liability or obligation under or in connection with the
Excluded Assets; and
(e) all reasonable costs and expenses (including, without limitation,
attorneys' fees, interest and penalties) incurred by Purchaser in
connection with any action, suit,
19
<PAGE> 20
proceeding, demand, assessment or judgment incident to any of the matters
indemnified against in this Section 12.
13. GENERAL RULES REGARDING INDEMNIFICATION
(a) The obligations and liabilities of each indemnifying party
hereunder with respect to claims resulting from the assertion of liability
by the other party or indemnified third parties shall be subject to the
following terms and conditions:
(i) The indemnified party shall give prompt written notice
(which in no event shall exceed 20 days from the date on which the
indemnified party first became aware of such claim or assertion) to
the indemnifying party of any claim which might give rise to a claim
by the indemnified party against the indemnifying party based on the
indemnity agreements contained in Section 11 or 12 hereof, stating
the nature and basis of said claims and the amounts thereof, to the
extent known;
(ii) If any action, suit or proceeding is brought against the
indemnified party with respect to which the indemnifying party may
have liability under the indemnity agreements contained in Section 11
or 12 hereof, the action, suit or proceeding shall, upon the written
acknowledgment by the indemnifying party that is obligated to
indemnify under such indemnity agreement, be defended (including all
proceedings on appeal or for review which counsel for the indemnified
party shall deem appropriate) by the indemnifying party. The
indemnified party shall have the right to employ its own counsel in
any such case, but the fees and expenses of such counsel shall be at
the indemnified party's own expense unless the employment of such
counsel and the payment of such fees and expenses both shall have
been specifically authorized in writing by the indemnifying party in
connection with the defense of such action, suit or proceeding, in
which event the indemnifying party shall not have the right to direct
the defense of such action, suit or proceeding on behalf of the
indemnified party. The indemnified party shall be kept fully informed
of such action, suit or proceeding at all stages thereof whether or
not it is represented by separate counsel.
(iii) The indemnified party shall make available to the
indemnifying party and its attorneys and accountants all books and
records of the indemnified party relating to such proceedings or
litigation and the parties hereto agree to render to each other such
assistance as they may reasonably require of each other in order to
ensure the proper and adequate defense of any such action, suit or
proceeding.
20
<PAGE> 21
(iv) The indemnified party shall not make any settlement of any
claims without the written consent of the indemnifying party, which
consent shall not be unreasonably withheld or delayed.
(v) If any claims are made by third parties against an
indemnified party for which an indemnifying party would be liable,
and it appears likely that such claims might also be covered by the
indemnified party's insurance policies, the indemnified party shall
make a timely claim under such policies and to the extent that such
party obtains any recovery from such insurance, such recovery shall
be offset against any sums due from an indemnifying party (or shall
be repaid by the indemnified party to the extent that an indemnifying
party has already paid any such amounts). The parties acknowledge,
however, that if an indemnified party is self-insured as to any
matters, either directly or through an insurer which assesses
retroactive premiums based on loss experience, then to the extent
that the indemnified party bears the economic burden of any claims
through self-insurance or retroactive premiums or insurance ratings,
the indemnifying party's obligation shall only be reduced by any
insurance recovery in excess of the amount paid or to be paid by the
indemnified party in insurance premiums.
(vi) The indemnified party shall not make any claim hereunder
unless it has incurred a cumulative aggregate of $75,000 of expenses
for which indemnification is otherwise provided hereunder and only to
the extent of expenses in excess of such initial $75,000 incurrence.
(vii) The obligation of the Shareholders under Section 12 shall
be several and not joint, provided that JCI shall be responsible for
payment of the proportionate liability of JLI, GJI, Larsen and
Ingeman to the extent any of such persons is not, at the time notice
of indemnification is given, an employee of the Company or Purchaser
(other than by reason of termination by the Company or Purchaser).
(viii) The aggregate amount of each Shareholder's liability
under Section 12 shall not exceed such Shareholder's proceeds of the
Purchase Price, which proceeds shall include, any payments of cash or
Dynamex Shares set forth in Section 2.1 but shall not include such
Shareholder's ratable portion of the Funded Indebtedness.
(b) Except as herein expressly provided, the remedies provided in
Sections 11 through 13 hereof shall be cumulative and shall not preclude
assertion by any party of any other rights or the seeking of any other
rights or remedies against any other party hereto.
21
<PAGE> 22
14. FAILURE TO CLOSE BECAUSE OF DEFAULT
In the event that the Closing is not consummated by virtue of a material
default made by a party in the observance or in the due and timely performance
of any of its covenants or agreements herein contained ("Default"), the parties
shall have and retain all of the rights afforded them at law or in equity by
reason of that Default. In addition, the Company and the Shareholders, on the
one hand, and Purchaser, on the other, acknowledge that the Shares and the
transactions contemplated hereby are unique, that a failure by any of them to
complete such transactions will cause irreparable injury to the other, and that
actual damages for any such failure may be difficult to ascertain and may be
inadequate. Consequently, Purchaser, the Company and the Shareholders agree
that each shall be entitled, in the event of a Default by the other, to
specific performance of any of the provisions of this Agreement in addition to
any other legal or equitable remedies to which the non-defaulting party may
otherwise be entitled. In the event any action is brought, the prevailing party
shall be entitled to recover court costs, arbitration expenses and reasonable
attorneys' fees.
15. TERMINATION RIGHTS
This Agreement may be terminated by either Purchaser or the Shareholders,
if either such party is not then in Default, upon written notice to the other
upon the occurrence of any of the following:
(a) If the Closing has not occurred on or before June 30, 1997;
(b) If either party Defaults and such Default has not been cured
within 30 days of written notice of such Default by the other party;
(c) Subject to the provisions of Sections 7 and 8 hereof, by the
Shareholders or Purchaser, if on the Closing Date any of the conditions
precedent to the obligations of Shareholders or Purchaser, respectively,
set forth in this Agreement have not been satisfied or waived by such
party; or
(d) By mutual consent of the Shareholders and Purchaser.
16. MISCELLANEOUS PROVISIONS
16.1 EXPENSES. Purchaser shall pay the fees and expenses incurred by it in
connection with the transactions contemplated by this Agreement and the
Shareholders shall pay the fees and expenses incurred by them and the Company
in connection with the transactions contemplated by this Agreement.
Notwithstanding the foregoing, Purchaser shall pay all fees, costs and expenses
of Deloitte & Touche LLP in preparing their audit report with respect to the
Company Financial Statements discussed in Section 3.15(a)(i). If any action is
brought for breach of this Agreement or to enforce any provision of this
Agreement, the prevailing party shall be entitled to recover court costs,
arbitration expenses and reasonable attorneys' fees.
22
<PAGE> 23
16.2 AMENDMENT. This Agreement may be amended at any time but only by an
instrument in writing signed by the parties hereto.
16.3 NOTICES. All notices and other communications delivered hereunder
shall be in writing and shall be deemed given if delivered personally or upon
actual receipt if mailed by certified mail, return receipt requested or
delivered by nationally recognized "next-day" delivery service, to the parties
at the addresses set forth below:
If to the Shareholders, in care of the Shareholder Representative:
Road Runner Transportation, Inc.
2395 Capp Road
St. Paul, Minnesota 55114
Attention: James C. Isaacson
Telephone: (612) 644-8787
Telecopy: (612) 659-6421
with a copy to:
Frederickson & Byron, P.A.
1100 International Centre
900 Second Avenue South
Minneapolis, Minnesota 55402
Attention: Dobson West
Telephone: (612) 347-7111
Telecopy: (612) 347-7077
If to Purchaser:
Dynamex Inc.
One Galleria Tower
13355 Noel Road, Suite 1050
Dallas, Texas 75240
Attention: Robert P. Capps
Telephone: (214) 960-4859
Telecopy: (214) 960-4899
with a copy to:
Crouch & Hallett, L.L.P.
717 N. Harwood, Suite 1400
Dallas, Texas 75201
Attention: Bruce H. Hallett
Telephone: (214) 922-4120
Telecopy: (214) 953-3154
23
<PAGE> 24
or such other address or addresses as any party shall have designated by notice
to each other party in accordance with this Section 16.3.
16.4 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, heirs and
permitted assigns. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of the others; provided, however, that Purchaser may
assign its rights under this Agreement to any of its subsidiaries or affiliated
corporations.
16.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16.6 HEADINGS. The headings of the Sections of this Agreement are inserted
for convenience only and shall not constitute a part hereof.
16.7 ENTIRE AGREEMENT. This Agreement and the documents referred to herein
contain the entire understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
warranties, conveyances or undertaking other than those expressly set forth
herein. This Agreement supersedes any prior agreements and understandings
between the parties with respect to the subject matter.
16.8 WAIVER. No attempted waiver of compliance with any provision or
condition hereof, or consent pursuant to this Agreement, will be effective
unless evidenced by an instrument in writing by the party against whom the
enforcement of any such waiver or consent is sought.
16.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
16.10 ASSERTION OF CLAIMS AGAINST THE COMPANY. In any proceeding by
Purchaser to assert or prosecute any claims under, or to otherwise enforce, the
Agreement, the Shareholders agree that they shall not assert as a defense or
bar to recovery, and hereby waive any right to so assert such defense or bar
such recovery, that (a) prior to Closing the Company shall have had knowledge
of the circumstances giving rise to the claim being pursued by it; (b) prior to
Closing, the Company engaged in conduct or took action that caused or brought
about the circumstances giving rise to its claim, or otherwise contributed
thereto; or (c) the Shareholders have a right of contribution from the Company
to the extent that there is any recovery against the Shareholders.
16.11 SEVERABILITY. The event that any of the provisions contained in this
Agreement is held to be invalid, illegal or unenforceable shall not affect any
other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had not been contained herein.
16.12 INTENDED BENEFICIARIES. The rights and obligations contained in this
Agreement are hereby declared by the parties hereto to have been provided
expressly for the exclusive benefit
24
<PAGE> 25
of such entities as set forth herein and shall not benefit, and do not benefit,
any unrelated third parties.
16.13 MUTUAL CONTRIBUTION. The parties to this Agreement and their counsel
have mutually contributed to its drafting. Consequently, no provision of this
Agreement shall be construed against any party on the ground that such party
drafted the provision or caused it to be drafted or the provision contains a
covenant of such party.
16.14 TERMINATION OF BUY-SELL AGREEMENT. Each of the Shareholders hereby
agrees that upon the occurrence of the Closing, the Buy-Sell Agreement as to
which they are parties and relating to the Company shall be terminated and of
no further force or effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
DYNAMEX INC.
By: /s/ Robert P. Capps
-----------------------------------
Robert P. Capps
Vice President - Finance and
Corporate Development
ROAD RUNNER TRANSPORTATION, INC.
By: /s/ James C. Isaacson
-----------------------------------
Its: President
----------------------------------
/s/ James C. Isaacson
--------------------------------------
James C. Isaacson
/s/ Thomas W. Ingeman
--------------------------------------
Thomas W. Ingeman
/s/ James L. Isaacson
--------------------------------------
James L. Isaacson
/s/ Gordon J. Isaacson
--------------------------------------
Gordon J. Isaacson
/s/ Gretchen E. Larsen
--------------------------------------
Gretchen E. Larsen
25
<PAGE> 26
INDEX TO SCHEDULES
Schedule 1.5(a) Excluded Assets
Schedule 1.5(b) Excluded Liabilities
Schedule 2.1(a) Shareholder Allocation
Schedule 3 Sellers' Disclosure Schedule
Schedule 3.14 Capitalization of the Company
Schedule 3.16 Certain Changes
INDEX TO EXHIBITS
Exhibit A-1 Employment Agreement-- James C. Isaacson
Exhibit A-2 Employment Agreement--Thomas W. Ingeman
Exhibit B Form of Confidentiality and Non-Competition Agreement
Exhibit C Lease
<PAGE> 27
Schedule 1.5(a)
EXCLUDED ASSETS
NONE
<PAGE> 28
Schedule 1.5(b)
EXCLUDED LIABILITIES
All liabilities and obligations of the Company relating to periods prior
to the Closing, other than liabilities accrued on the Company's financial
statements as of April 30, 1997 or incurred in the ordinary course of
business from such date to the date of Closing.
<PAGE> 29
Schedule 2.1(a)
SHAREHOLDER ALLOCATION
<TABLE>
<CAPTION>
Shareholder Cash Number of Dynamex Shares
- ----------- ---- ------------------------
<S> <C> <C>
James C. Isaacson 6,160,000.01 192,502
James L. Isaacson 1,493,333.33 46,666
Gordon Isaacson 1,493,333.33 46,666
Gretchen Larson 1,493,333.33 46,666
Thomas W. Ingeman 560,000.00 17,500
</TABLE>
