<PAGE>
================================================================================
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
______________
July 31, 1997
(Date of Report)
THE DWYER GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0 15227 73-0941783
(State or other (Commission (IRS employer
jurisdiction of file number) identification no.)
incorporation or
organization)
1010 N. University Parks Drive
Waco, Texas 76707
(Address of principal executive offices)
(254) 745-2400
(Registrant's telephone number,
including area code)
================================================================================
<PAGE>
ITEM 5. OTHER EVENTS
As of June 1, 1993, The Dwyer Group, Inc., a Delaware corporation (the
"Company"), Rainbow International Carpet Dyeing and Cleaning Co., a Texas
corporation ("Rainbow"), Pride Venture Capital, Inc., a Texas corporation doing
business under the name General Business Services ("GBS"), and Mr. Donald J.
Dwyer, Sr. ("Mr. Dwyer") entered into that certain Agreement and Plan of
Reorganization and Share Exchange, dated as of June 1, 1993 (the "Reorganization
Agreement"), pursuant to which Mr. Dwyer was issued shares of the Company's
common stock, $.20 par value per share, in exchange for all of the outstanding
stock of Rainbow and GBS (the "Exchange") and GBS and Rainbow became wholly
owned subsidiaries of the Company.
Pursuant to the Reorganization Agreement and the Exchange, Mr. Dwyer was
issued 8,071,110 shares of Common Stock, of which 680,600 shares were to be
placed in escrow pursuant to the Reorganization Agreement until GBS met certain
earnings requirements. Subsequent to such issuance, the Company effected a one
for two reverse stock split such that Mr. Dwyer's common stock, par value after
split of $.10 per share ("Common Stock"), issued in the Exchange became
4,035,555 shares of Common Stock, of which 340,300 shares (the "Escrow Shares")
were issued (evidenced by Certificate No. 509 dated June 14, 1993) and were to
be placed in escrow until GBS achieved certain earnings targets as contemplated
by the Reorganization Agreement. However, the material definitive terms of the
escrow were never resolved.
Mr. Dwyer is now deceased and his spouse, Theresa Dwyer, and his son,
Donald J. Dwyer, Jr., have been duly appointed and qualified and are serving as
the personal representatives of Mr. Dwyer's Estate (the "Estate") and the Dwyer
Family Trust (the "Trust"). In lieu of the escrow arrangement contemplated by
the Reorganization Agreement, and in order to more accurately represent the
intent of the parties, the Company and personal representatives of Mr. Dwyer,
the Estate and the Trust, have entered into an Agreement relating to the Escrow
Shares, to be effective as of June 1, 1993 (the "Agreement").
The Board of Directors of the Company formed the GBS Exchange Committee
comprised of its three outside directors to negotiate and approve the terms of
the Agreement on behalf of the Company and to determine whether the earnings
targets have been met. Upon approval of such committee on July 10, 1997, the
Company and such personal representatives signed the Agreement to be effective
as of June 1, 1993, the form of which is attached to the 8-K as an exhibit.
The Agreement provides for the cancellation of the Escrow Shares and such
shares have been returned to the authorized but unissued shares of the Company's
Common Stock as of June 1, 1993. Pursuant to the Agreement, 340,300 new shares
of Common Stock (the "Contingent Shares") have been reserved by the Company's
Board of Directors out of the Company's authorized but unissued Common Stock and
may subsequently be issued to the successors and assigns of Mr. Dwyer if certain
earnings targets are achieved by GBS or if GBS is sold to a third party in
certain transactions as provided in the Agreement.
As of June 30, 1997, after giving effect to the cancellation of the Escrow
Shares, the Company had 6,775,427 shares of Common Stock issued and outstanding.
ITEM 7. FINANCIAL STATEMENTS and EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
4.3 Agreement dated as of June 1, 1993 between the Company under
its prior name, Mr. Rooter Corporation, and the personal
representatives of Mr. Donald J. Dwyer, Sr., the Estate and
The Trust.
<PAGE>
SIGNATURES
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.
THE DWYER GROUP, INC.
Dated: July 31, 1997 By: /s/ THOMAS J. BUCKLEY
-------------------------------------
Thomas J. Buckley
Chief Financial Officer and Treasurer
<PAGE>
EXHIBIT 4.3
AGREEMENT
This Agreement (this "Agreement") is dated as of June 1, 1993, by and
between Mr. Rooter Corporation, a Delaware corporation now named The Dwyer
Group, Inc. (the "Company"), and Donald J. Dwyer, Sr. (together with his heirs,
successors and assigns, "Mr. Dwyer").
R E C I T A L S:
- - - - - - - -
WHEREAS, as of June 1, 1993, the Company, Rainbow International Carpet
Dyeing and Cleaning Co., a Texas corporation ("Rainbow"), Pride Venture Capital,
Inc., a Texas corporation doing business under the name General Business
Services ("GBS"), and Mr. Dwyer entered into that certain Agreement and Plan of
Reorganization and Share Exchange, dated as of June 1, 1993 (the "Reorganization
Agreement"), pursuant to which Mr. Dwyer was issued shares of the Company's
common stock, $.20 par value per share ("Common Stock"), in exchange for all of
the outstanding stock of Rainbow and GBS (the "Exchange") and GBS and Rainbow
became wholly owned subsidiaries of the Company; and
WHEREAS, pursuant to the Reorganization Agreement and the Exchange, Mr.
Dwyer was issued 8,071,110 shares of Common Stock, of which 680,600 shares were
to be placed in escrow pursuant to the Reorganization Agreement until GBS met
certain earnings requirements; and
WHEREAS, subsequent to such issuance, the Company effected a one for two
reverse stock split such that Mr. Dwyer's Common Stock (par value after split of
$.l0 per share) issued in the Exchange became 4,035,555 shares of Common Stock,
of which 340,300 shares were issued and were to be placed in escrow as
contemplated by the Reorganization Agreement; although material definitive terms
of the escrow were unresolved; and
WHEREAS, Mr. Dwyer is deceased and his spouse, Theresa Dwyer, and his son,
Donald J. Dwyer, Jr., were duly appointed and qualified and are serving as the
independent Co-Executors of his Estate; and
WHEREAS, in lieu of the escrow arrangement contemplated by the
Reorganization Agreement, the Company and Mr. Dwyer, acting by and through his
duly authorized and empowered personal representatives, desire to enter into
this Agreement relating to 340,300 shares of Common Stock of the Company, to be
effective as of June 1, 1993;
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the mutual agreements, representations,
and warranties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and Mr.
Dwyer, acting by and through his duly authorized and empowered personal
representatives, hereby agree as follows:
1. Definitions.
-----------
As used in this Agreement, the following terms shall have the following
meanings:
(a) "Assumed Overhead" means the dollar amount of corporate general and
administrative overhead expenses necessary to operate GBS independently of
the Company which is initially
-1-
<PAGE>
equal to $138,000 annually for the fiscal years ended December 31, 1994
through and including December 31, 1997, after which time such dollar
amount will increase 2.5% per fiscal year.
(b) "Earnout" means that the Net Earnings of GBS equal or exceed $750,000
for any twelve consecutive calendar months, up to and including December
31, 2000.
(c) "Independent Directors" means the directors of the Company who are
neither employees of the Company nor members of Mr. Dwyer's family or
heirs.
(d) "Net Earnings" means, for any period of twelve consecutive calendar
months, the net income of GBS for such period as determined in accordance
with generally accepted accounting principles, prior to any deduction for
federal, state, local and foreign income taxes and state franchise taxes as
adjusted by (a) adding to such net income the allocation to GBS of
corporate general and administrative expenses for such period (b)
subtracting from such net income the Assumed Overhead with respect to that
period (prorated for any partial year), and (c) excluding (i) net pre-tax
extraordinary gains or losses (including all fees and expenses relating
thereto), and (ii) net pre-tax gains or losses (including all fees and
expenses relating thereto) attributable to asset sales not in the ordinary
course of business.
(e) "Qualified Sale" means a Transfer of GBS to a third party who is not
affiliated with the Company which results in consideration to the Company
in an amount sufficient to provide a net profit to, the Company before
federal income taxes on the date of Transfer of at least $750,000 (which
amount shall be increased by 2.5% per year beginning with the fiscal year
ending December 31, 1998). For purposes of this calculation, the
consideration received shall be determined as follows:
(i) in a sale for cash, the cash received by the Company from the
acquiror;
(ii) if, or to the extent, the consideration received by the Company
is in the form of stock in a publicly held company, the closing price
of such stock as of the date the agreement to sell GBS is signed; and
(iii) if, or to the extent, the consideration received by the Company
is in the form of other property or rights (including notes
receivable), the fair market value of such property or rights as
determined in accordance with Section 4 of this Agreement.
(f) "Transfer" with respect to GBS means a sale of all of the outstanding
stock of GBS, a sale of substantially all of the assets of GBS, or a sale of
GBS by merger, which sale has been approved by the Independent Directors.
(g) "Shares" means 340,300 shares of Common Stock of the Company, as
constituted on the date of the execution of this Agreement.
2. Cancellation of Prior Shares.
----------------------------
To properly reflect the intent of the parties to the Reorganization
Agreement, the 340,300 shares of Common Stock (giving effect to the
subsequent reverse stock split) issued to Mr. Dwyer pursuant to the
Reorganization Agreement, and any stock certificate purporting to evidence
the same, shall be and hereby are canceled on the Company's books and
records and returned to the status of authorized but unissued shares of
Common Stock, all effective as of June 1, 1993. In
-2-
<PAGE>
addition, any stock certificate representing the 680,600 shares of Common
Stock of the Company (prior to giving effect to the subsequent reverse stock
split) are also hereby cancelled and of no further force and effect.
3. Contingent Issuance of Shares.
-----------------------------
(a) Upon the occurrence of all of the following conditions, the Company
covenants and agrees to issue the Shares to Mr. Dwyer as additional
consideration to him for the Exchange:
(i) Earnout has been achieved prior to or on December 31, 2000;
(ii) Mr. Dwyer notifies the Company that Earnout has been achieved
and requests in writing that the Shares be issued;
(iii) The Chief Financial Officer of the Company has certified that
Earnout has been achieved;
(iv) The Company's independent accounting firm confirms that in its
opinion, but without an audit in accordance with generally accepted
auditing standards, Earnout has been achieved; and
(v) The Independent Directors determine by majority vote that
Earnout has been achieved.
(b) Prior to the time Earnout has been achieved, upon the occurrence of all of
the following conditions, the Company will issue the Shares to Mr. Dwyer as
additional consideration for the Exchange:
(i) A Qualified Sale has occurred prior to December 31, 2000;
(ii) Mr. Dwyer notifies the Company that a Qualified Sale has
occurred and requests in writing that the Shares be issued;
(iii) The Chief Financial Officer of the Company has certified that a
Qualified Sale has occurred;
(iv) The Company's independent accounting firm confirms that in its
opinion, but without an audit in accordance with generally accepted
auditing standards, a Qualified Sale has occurred; and
(v) The Independent Directors determine by majority vote that a
Qualified Sale has occurred.
(c) In making their determination in Sections 3(a)(v) or 3(b)(v) above, the
Independent Directors will rely on the most recent audited financial
statements of GBS available at the time of such determination. If the
Independent Directors in their sole discretion believe the available audited
financial statements are not representative of the period for which Earnout
is to be determined or of the Qualified Sale, the Independent Directors may
in their discretion, but at Mr. Dwyer's sole expense, order an audit by the
Company's independent accountants or a review under AICPA
-3-
<PAGE>
Statement on Auditing Standards No.71 (SAS 71) to assist in the
determination of whether Earnout has been achieved or a Qualified Sale has
occurred.
(d) In the event neither Earnout is achieved nor a Qualified Sale has
occurred prior to December 31 2000, this Agreement shall terminate and be of
no further force and effect and neither Mr. Dwyer nor his personal
representatives, heirs, devisees and assigns shall have any claim against
the Company or any other person with respect to the Shares.
(e) Upon issuance as set forth above, the Shares will be duly authorized,
validly issued, fully paid, and nonassessable shares of the Common Stock of
the Company.
4. Valuation Procedure:
-------------------
To the extent other property or rights are received as consideration for a
Transfer of GBS, the fair market value of such property or rights on the
date of such Transfer will be determined as follows:
(a) One or more independent financial experts will determine the value as
follows:
(i) by an independent financial expert chosen by the Independent
Directors of the Company in their sole discretion (paid for by the
Company);
(ii) Mr. Dwyer, at his option and sole expense, may hire his own
independent financial expert for such valuation; and
(iii) to the extent Mr. Dwyer elects to engage a financial expert and
the two experts chosen in (a)(i) and (a)(ii) above are unable to
agree on the fair market value of such property, the two such experts
shall choose a third independent financial expert (paid for by the
Company and Mr. Dwyer, on an equal basis), and the fair market value
for the property, final and binding on the Company and Mr. Dwyer,
shall be the average of the values determined by each of the three
financial experts.
(b) In determining the fair market value of the consideration received, any
deferred consideration or rights to receive money or property after the
Transfer, including without limitation, any discounted debt, deferred
payments, or other debt, shall be valued at their present value at the time
of Transfer.
5. Additional Investment.
---------------------
Until this Agreement is terminated as provided in Section 6 of this
Agreement, any further investment by the Company in GBS will be in the form
of a loan bearing interest at rates no lower that the prime rate as shown in
the Money Rates section of the Wall Street Journal.
6. Termination.
-----------
This Agreement shall be terminated upon the earlier of (a) issuance of the
Shares pursuant to Sections 3(a) or (b) of this Agreement, or (c) December
31, 2000.
-4-
<PAGE>
7. Miscellaneous provisions:
------------------------
(a) This Agreement shall be subject to and governed by the laws of the
State of Texas, excluding any conflicts-of-law rule or principle that might
refer the construction or interpretation of this Agreement to the laws of
another state.
(b) In the event of a dispute regarding the interpretation of this
Agreement, the decision of a majority of the Independent Directors shall be
final and binding on all parties.
(c) Any notice required to be given pursuant to this Agreement shall be in
writing, which shall include, without limitation, telex, telecopy or other
electronic transmission reduced to written form. Notice given by telex,
telecopy or other electronic transmission shall be deemed to have been given
and received when sent. Notice by mail shall be deemed to have been given
and received three (3) calendar days after the day first deposited in the
United States mail, certified mail, first class postage prepaid, return
receipt requested, and as addressed as shown below. Notice by overnight
service shall be deemed to have been given and received the day after they
are sent. All notices shall be to the following addresses, unless changed in
writing by the respective addressee:
If to the Company:
The Dwyer Group, Inc.
1010 N. University Parks Drive
Waco, Texas 76707
Attn: President
Telecopy No: (254) 745-2590
If to Mr. Dwyer or his personal representatives, heirs or assigns:
In care of Theresa Dwyer and Donald Dwyer, Jr
1224 Joy Drive
-----------------------------------------
Waco, TX 76708
-----------------------------------------
Telecopy No.: (245) 245-2590
----------------------------
(d) This Agreement constitutes the entire agreement of the parties hereto
relating to the matters contained herein, superseding all prior and
contemporaneous contracts or agreements, whether oral or written, including
any agreements with respect to the escrow of the Shares.
(e) This Agreement may be amended or modified from time to time only in
writing signed by all parties hereto. Each such instrument shall be reduced
to writing and shall be designated on its face an "Amendment" or an
"Addendum" to this Agreement.
(f) This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective personal representatives, heirs,
successors, and assigns.
(g) This Agreement may be executed in any number of counterparts with the
same effect as if all signatory parties had signed the same document. All
counterparts shall be construed together and shall constitute one and the
same instrument.
-5-
<PAGE>
(h) If any provision of this Agreement or the application thereof to any
person, entity or circumstance shall be held invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such
provision to such or other persons, entities or circumstances shall not be
effected thereby and shall be enforced to the greatest extent permitted by
law. Furthermore, in lieu of such void or unenforceable clause(s), there
shall be added automatically as a part of this Agreement a clause as similar
in terms to such void or unenforceable clause(s) as may be possible, valid
and enforceable.
(i) The headings in this Agreement are inserted for convenience and
identification only, and are not intended to describe, interpret, define, or
limit the scope, or intent of this Agreement or any clause hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officer or representatives on this 10 day of July, 1997,
but as of and effective as of June 1, 1993.
MR. ROOTER CORPORATION
(now named The Dwyer Group, Inc.)
By: /s/ Robert Tunmire
--------------------------------------------
Robert Tunmire, President
DONALD J. DWYER, SR.
By: /s/ Theresa Dwyer
--------------------------------------------
Theresa Dwyer, individually as Independent
Executor of the Estate of Donald J. Dwyer,
Sr., Deceased, and as Trustee of the Dwyer
Family Trust
By: /s/ Donald J. Dwyer, Jr
--------------------------------------------
Donald J. Dwyer, Jr., individually and as
Independent Executor of the Estate of Donald
J. Dwyer, Sr., Deceased, and as Trustee of the
Dwyer Family Trust
-6-
