ROADRUNNER TRANSPORTATION SYSTEMS, INC. (NYSE:RRTS) Files An 8-K Entry into a Material Definitive Agreement
Item1.01. Entry into a Material Definitive Agreement.
Investment Agreement
On May1, 2017, Roadrunner Transportation Systems, Inc. (the
Company) entered into an Investment Agreement (the Investment
Agreement), by and among (i)the Company and (ii)Elliott
Associates, L.P. and Brockdale Investments LP (collectively. the
Purchasers), to which the Company agreed to issue and sell to the
Purchasers, and the Purchasers agreed to purchase from the
Company, for an aggregate purchase price of $540,500,100.00,
(a)155,000 shares of a newly created class of preferred stock
designated as SeriesB Cumulative Redeemable Preferred Stock, par
value $0.01 per share, of the Company (the SeriesB Preferred
Stock), at a purchase price of $1,000 per share; (b)55,000 shares
of a newly created class of preferred stock designated as SeriesC
Cumulative Redeemable Participating Preferred Stock, par value
$0.01 per share, of the Company (the SeriesC Preferred Stock) at
a purchase price of $1,000 per share; (c)100 shares of a newly
created class of preferred stock designated as SeriesD Cumulative
Redeemable Participating Preferred Stock, par value $0.01 per
share, of the Company (the SeriesD Preferred Stock), at a
purchase price of $1.00 per share; (d)90,000 shares of a newly
created class of preferred stock designated as SeriesE Cumulative
Redeemable Preferred Stock, par value $0.01 per share, of the
Company (the SeriesE Preferred Stock) at a purchase price of
$1,000 per share; and (e)240,500 shares of a newly created class
of preferred stock designated as SeriesF Cumulative Redeemable
Preferred Stock, par value $0.01 per share, of the Company (the
SeriesF Preferred Stock) at a purchase price of $1,000 per share
(the SeriesB Preferred Stock, SeriesC Preferred Stock, SeriesD
Preferred Stock, the SeriesE Preferred Stock and SeriesF
Preferred Stock are collectively referred to as the Preferred
Stock). The parties consummated the transactions described above
on May2, 2017 (the Closing Date). The proceeds of the sale of the
Preferred Stock were used to pay off and terminate the Companys
senior credit facility and to provide working capital to support
the Companys current operations and future growth.
The Company made certain customary representations and warranties
in the Investment Agreement and agreed to certain covenants,
including agreeing to use reasonable best efforts to enter into,
within 90 days following the Closing Date, an asset based lending
facility (the New ABL Facility) (the earlier of (i)the date of
such entry and (ii)the expiration of such 90-day period, the
Refinancing Date). The proceeds from the New ABL Facility, if
any, will be used to redeem the outstanding shares of SeriesF
Preferred Stock and, if and to the extent sufficient proceeds are
available, shares of Series E Preferred Stock. From the Closing
Date until the Refinancing Date, the Company will pay the
Purchasers a daily payment in an amount equal to $33,333.33 per
calendar day (which amount accrues daily and is payable monthly
in arrears).
The assertions embodied in the representations and warranties
contained in the Investment Agreement are made solely for the
benefit of the parties and are qualified by information in a
confidential disclosure letter provided by the Company to the
Purchasers in connection with the signing of the Investment
Agreement. The disclosure letter contains information that has
been included in the Companys prior public filings, as well as
potential additional non-public information. The disclosure
letter contains information that modifies, qualifies and creates
exceptions to the representations and warranties set forth in the
Investment Agreement. Moreover, certain representations and
warranties in the Investment Agreement were made as of a
specified date, may be subject to a contractual standard of
materiality different from what might be viewed as material to
stockholders, or were used for the purpose of allocating risk
between the Company, on the one hand, and the Purchasers, on the
other hand, rather than establishing matters as fact.
Accordingly, the representations and warranties in the Investment
Agreement should not be relied upon by any persons as indicative
of the actual state of facts about the Company or the Purchasers
at the time they were made or otherwise. In addition, the
information concerning the subject matter of the representations
and warranties may change after the date of the Investment
Agreement, which subsequent information may or may not be fully
reflected in the Companys public disclosures.
The foregoing description of the Investment Agreement and the
transactions contemplated thereby does not purport to be complete
and is subject to, and qualified in its entirety by, the full
text of the Investment Agreement, which is attached hereto as
Exhibit 10.1.
Certain Terms of the Series B Preferred Stock
In connection with the consummation of the transactions
contemplated by the Investment Agreement, the Company filed a
Certificate of Designations, Preferences and Rights of Series B
Cumulative Redeemable Preferred Stock (the Series B Certificate
of Designations) setting forth the terms, rights, obligations,
and preferences of the Series B Preferred Stock.
Rank. The Series B Preferred Stock, with respect
to payment of dividends, redemption payments, rights (including
as to the distribution of assets) upon liquidation, dissolution
or winding up of the affairs of the Company, or otherwise, ranks
(i)senior and prior to the Companys common stock, par value $0.01
per share (the Common Stock), and other junior securities, and
(ii)on parity with the Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock and Series F Preferred
Stock.
Liquidation Value. Each share of Series B
Preferred Stock has an initial liquidation preference equal to
$1,000 per share, plus accrued and unpaid dividends on such share
(the Series B Liquidation Value).
Dividends. Dividends are cumulative from the
Closing Date as a percentage of the Series B Liquidation Value as
and when declared by the Companys board of directors and accrue
and compound if not paid in cash. Dividends accrue daily and
compound quarterly, subject to any adjustments for Triggering
Events (as defined in the Series B Certificate of Designations).
The annual dividend rate for the shares of Series B Preferred
Stock is equal to the sum of (i)AdjustedLIBOR (as defined in the
Series B Certificate of Designations), plus (ii)3.00%per
annum, plus (iii)an additional rate ranging from 4.75%
to 12.5% depending on the Companys Total Preferred Leverage (as
defined in the Series C Certificate of Designations) as of the
applicable adjustment date. The dividend rate increases by
3.0%per annum above the rates described in the preceding sentence
upon and during any Triggering Events. Holders of shares of
Series B Preferred Stock are not entitled to participate in
dividends or distributions of any nature paid on or in respect of
the Common Stock.
Redemption at Maturity. On the eighth
anniversary of the Closing Date, the Company will have the
obligation to redeem all outstanding shares of Series B Preferred
Stock for cash at the Series B Liquidation Value.
Optional Redemption. The Company may redeem the
shares of Series B Preferred Stock at any time following the
latest to occur of (i)the earlier of (x)the redemption of all
issued and outstanding shares of Series F Preferred Stock and
(y)the redemption, retirement or payment in full of any issued
and outstanding First Lien Notes (as defined in the Series B
Certificate of Designations), (ii)the earlier of (x)the
redemption of all issued and outstanding shares of Series E
Preferred Stock and (y)the redemption, retirement or payment in
full of any issued and outstanding Secured Notes (as defined in
the Series B Certificate of Designations) and (iii)the twelve
(12)month anniversary of the Closing Date (except in the case of
a Change of Control, in which case such twelve (12)month period
shall not apply). The redemption of shares of Series B Preferred
Stock shall be at a purchase price per share, payable in cash,
equal to (i)in the case of a an optional redemption effected on
or after the 36 month anniversary of the Closing Date, the Series
B Liquidation Value, (ii)in the case of an optional redemption
effected on or after the 24 month anniversary of the Closing Date
and prior to the 36 month anniversary of the Closing Date, 103%
of the Series B Liquidation Value and (iii)in the case of an
optional redemption effected prior to the 24 month anniversary of
the Closing Date, 105% of the Series B Liquidation Value.
2
Change of Control. Upon the occurrence of a
Change of Control (as defined in the Series B Certificate of
Designations), the holders of Series B Preferred Stock may
require redemption by the Company of the Series B Preferred Stock
at a purchase price per share, payable in cash, equal to either
(i)105% of the Series B Liquidation Value if the Change of
Control occurs prior to the second anniversary of the Closing
Date, or (ii)the Series B Liquidation Value if the Change of
Control occurs after the second anniversary of the Closing Date.
Certain Terms of the Series C Preferred Stock
In connection with the consummation of the transactions
contemplated by the Investment Agreement, the Company filed a
Certificate of Designations, Preferences and Rights of SeriesC
Cumulative Redeemable Participating Preferred Stock (the Series C
Certificate of Designations) setting forth the terms, rights,
obligations, and preferences of the Series C Preferred Stock.
Rank. The Series C Preferred Stock, with respect
to payment of dividends, redemption payments, rights (including
as to the distribution of assets) upon liquidation, dissolution
or winding up of the affairs of the Company, or otherwise, ranks
(i)senior and prior to the Common Stock and other junior
securities, and (ii)on parity with the Series B Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock and Series F
Preferred Stock.
Liquidation Value. Each share of Series C
Preferred Stock has an initial liquidation preference (the Series
C Liquidation Value) equal to the greater of (i)$1,000 per share,
plus accrued and unpaid dividends on such share (the Base Series
C Liquidation Value) and (ii)(x)the amount that a holder of such
share of Series C Preferred Stock would have received (after
giving effect to the preference amount described in clause
(y)below) in respect of such share of Series C Preferred Stock
if, immediately prior to the liquidation, such share of Series C
Preferred Stock were hypothetically converted into a number of
shares of Common Stock equal to the quotient of (A)the Base
Series C Liquidation Value, divided by (B)the
Measurement Price (as defined below) (the Series C Hypothetical
Conversion Amount), plus (y)if the amount received in
respect of each share of Common Stock by the holders thereof in
connection with such liquidation (including a Change of Control,
if applicable) (the Common Liquidation Value) does not exceed the
Make Whole Price (as defined below), the product of
(A)the number of shares of Common Stock described in the
foregoing clause (x), multiplied by (B)the excess of the
Make Whole Price over the Common Liquidation Value. The
Measurement Price will initially equal $8.50, and the Make Whole
Price will initially equal $14.00, in each case subject to
adjustment as described in the Series C Certificate of
Designations.
Dividends. Dividends are cumulative from the
Closing Date as a percentage of the Base Series C Liquidation
Value as and when declared by the Companys board of directors and
accrue and compound if not paid in cash. Dividends accrue daily
and compound quarterly, subject to any adjustments for Triggering
Events (as defined in the Series C Certificate of Designations).
The annual dividend rate for the shares of Series C Preferred
Stock is equal to the sum of (i)AdjustedLIBOR (as defined in the
Series C Certificate of Designations), plus (ii)3.00%per
annum, plus (iii)an additional rate ranging from 4.75%
to 12.5% depending on the Companys Total Preferred Leverage (as
defined in the Series C Certificate of Designations) as of the
applicable adjustment date. The dividend rate increases by
3.0%per annum above the rates described in the preceding sentence
upon and during any Triggering Events.
3
In addition to any dividends declared and paid as described in
the preceding paragraph, holders of the outstanding shares of
Series C Preferred Stock also have the right to participate
equally and ratably with the holders of shares of Common Stock in
all cash dividends paid on the Common Stock.
Redemption at Maturity. On the eighth
anniversary of the Closing Date, the Company will have the
obligation to redeem all outstanding shares of Series C Preferred
Stock for cash at the Series C Redemption Price (as defined
below).
Optional Redemption. The Company may redeem the
shares of Series C Preferred Stock at any time following the
latest to occur of (i)the earlier of (x)the redemption of all
issued and outstanding shares of Series F Preferred Stock and
(y)the redemption, retirement or payment in full of any issued
and outstanding First Lien Notes (as defined in the Series C
Certificate of Designations), (ii)the earlier of (x)the
redemption of all issued and outstanding shares of Series E
Preferred Stock and (y)the redemption, retirement or payment in
full of any issued and outstanding Secured Notes (as defined in
the Series C Certificate of Designations) and (iii)the redemption
of all issued and outstanding Series B Preferred Stock. The
redemption of shares of Series C Preferred Stock shall be at a
purchase price per share, payable in cash, equal to (i)the Series
C Hypothetical Conversion Amount multiplied by (ii)the greater of
(x)the Trading Price (as defined in the Series C Certificate of
Designations) as of the redemption date and (y)the Make Whole
Price (the Series C Redemption Price).
Change of Control. Upon the occurrence of a
Change of Control (as defined in the Series C Certificate of
Designations), the holders of Series C Preferred Stock may
require redemption by the Company of the Series C Preferred Stock
at a purchase price per share, payable in cash, equal to Series C
Liquidation Value.
Certain Terms of the Series D Preferred Stock
In connection with the consummation of the transactions
contemplated by the Investment Agreement, the Company filed a
Certificate of Designations, Preferences and Rights of SeriesD
Cumulative Redeemable Participating Preferred Stock (the Series D
Certificate of Designations) setting forth the terms, rights,
obligations, and preferences of the Series D Preferred Stock.
Rank. The Series D Preferred Stock, with respect
to payment of dividends, redemption payments, rights (including
as to the distribution of assets) upon liquidation, dissolution
or winding up of the affairs of the Company, or otherwise, ranks
(i)senior and prior to the Common Stock and other junior
securities, and (ii)on parity with the Series B Preferred Stock,
Series C Preferred Stock, Series E Preferred Stock and Series F
Preferred Stock.
Liquidation Value. Each share of Series D
Preferred Stock has an initial liquidation preference (the Series
D Liquidation Value) equal to the Series D Hypothetical
Conversion Amount (as defined in the Series D Certificate of
Designations) multiplied by the Trading Price (as
defined in the Series D Certificate of Designations).
Dividends. Holders of the outstanding shares of
Series D Preferred Stock have the right to participate equally
and ratably with the holders of shares of Common Stock in all
cash dividends paid on the Common Stock.
Redemption at Maturity. On the eighth
anniversary of the Closing Date, the Company will have the
obligation to redeem all outstanding shares of Series D Preferred
Stock for cash at the Series D Liquidation Value.
4
Optional Redemption. The Company may redeem the
shares of Series D Preferred Stock at any time following the
latest to occur of (i)the earlier of (x)the redemption of all
issued and outstanding shares of Series F Preferred Stock and
(y)the redemption, retirement or payment in full of any issued
and outstanding First Lien Notes (as defined in the Series D
Certificate of Designations), (ii)the earlier of (x)the
redemption of all issued and outstanding shares of Series E
Preferred Stock and (y)the redemption, retirement or payment in
full of any issued and outstanding Secured Notes (as defined in
the Series D Certificate of Designations), (iii)the redemption of
all issued and outstanding Series B Preferred Stock and (iv)the
redemption of all issued and outstanding Series C Preferred
Stock. The redemption of shares of Series D Preferred Stock shall
be at a purchase price per share, payable in cash, equal to the
Series D Liquidation Value.
Change of Control. Upon the occurrence of a
Change of Control (as defined in the Series D Certificate of
Designations), the holders of Series D Preferred Stock may
require redemption by the Company of the Series D Preferred Stock
at a purchase price per share, payable in cash, equal to Series D
Liquidation Value.
Certain Terms of the Series E Preferred Stock
In connection with the consummation of the transactions
contemplated by the Investment Agreement, the Company filed a
Certificate of Designations, Preferences and Rights of Series E
Cumulative Redeemable Preferred Stock (the Series E Certificate
of Designations) setting forth the terms, rights, obligations,
and preferences of the Series E Preferred Stock.
Rank. The Series E Preferred Stock, with respect
to payment of dividends, redemption payments, rights (including
as to the distribution of assets) upon liquidation, dissolution
or winding up of the affairs of the Company, or otherwise, ranks
(i)senior and prior to the Common Stock and other junior
securities, and (ii)on parity with the Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series F
Preferred Stock.
Liquidation Value. Each share of Series E
Preferred Stock has an initial liquidation preference equal to
$1,000 per share, plus accrued and unpaid dividends on such share
(the Series E Liquidation Value).
Dividends. Dividends are cumulative from the
Closing Date as a percentage of the Series E Liquidation Value as
and when declared by the Companys board of directors and accrue
and compound if not paid in cash. Dividends accrue daily and
compound quarterly, subject to any adjustments for Triggering
Events (as defined in the Series E Certificate of Designations).
The annual dividend rate for the shares of Series E Preferred
Stock is equal to the sum of (i)AdjustedLIBOR (as defined in the
Series E Certificate of Designations), plus (ii)5.25%per
annum, plus (iii)an additional rate of 8.5%. The
dividend rate increases by 3.0%per annum above the rates
described in the preceding sentence upon and during any
Triggering Events. Holders of shares of Series E Preferred Stock
are not entitled to participate in dividends or distributions of
any nature paid on or in respect of the Common Stock.
Redemption at Maturity. On the sixth anniversary
of the Closing Date, the Company will have the obligation to
redeem all outstanding shares of Series E Preferred Stock for
cash at the Series E Liquidation Value.
Optional Redemption. The Company may redeem the
shares of Series E Preferred Stock at any time. The redemption of
shares of Series E Preferred Stock shall be at a purchase price
per share, payable in cash, equal to (i)in the case of a an
optional redemption effected on or after the 24 month anniversary
of the Closing Date, the Series E Liquidation Value, (ii)in the
case of an optional redemption effected on or after the 12 month
anniversary of the Closing Date and prior to the 24 month
anniversary of the Closing Date, 103.5% of the Series E
Liquidation Value and (iii)in the case of an optional redemption
effected prior to the 12 month anniversary of the Closing Date,
106.5% of the Series E Liquidation Value.
5
Change of Control. Upon the occurrence of a
Change of Control (as defined in the Series E Certificate of
Designations), the holders of Series E Preferred Stock may
require redemption by the Company of the Series E Preferred Stock
at a purchase price per share, payable in cash, equal to either
(i)106.5% of the Series E Liquidation Value if the Change of
Control occurs prior to the 24 month anniversary of the Closing
Date, or (ii)the Series E Liquidation Value if the Change of
Control occurs after the 24 month anniversary of the Closing
Date.
Certain Terms of the Series F Preferred Stock
In connection with the consummation of the transactions
contemplated by the Investment Agreement, the Company filed a
Certificate of Designations, Preferences and Rights of Series F
Cumulative Redeemable Preferred Stock (the Series F Certificate
of Designations) setting forth the terms, rights, obligations,
and preferences of the Series F Preferred Stock.
Rank. The Series F Preferred Stock, with respect
to payment of dividends, redemption payments, rights (including
as to the distribution of assets) upon liquidation, dissolution
or winding up of the affairs of the Company, or otherwise, ranks
(i)senior and prior to the Common Stock and other junior
securities, and (ii)on parity with the Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock.
Liquidation Value. Each share of Series F
Preferred Stock has an initial liquidation preference equal to
$1,000 per share, plus accrued and unpaid dividends on such share
(the Series F Liquidation Value).
Dividends. Dividends are cumulative from the
Closing Date as a percentage of the Series F Liquidation Value as
and when declared by the Companys board of directors and accrue
and compound if not paid in cash. Dividends accrue daily and
compound quarterly, subject to any adjustments for Triggering
Events (as defined in the Series F Certificate of Designations).
The annual dividend rate for the shares of Series F Preferred
Stock is equal to the sum of (i)AdjustedLIBOR (as defined in the
Series F Certificate of Designations), plus (ii)(A)on or
prior to the Refinancing Date, 6.25%per annum and (B)following
the Refinancing Date, 5.25%per annum, plus (iii)an
additional rate of (A)on or prior to the Refinancing Date, 0.00%
per annum and (B)following the Refinancing Date, 8.50%per annum.
The dividend rate increases by 3.0%per annum above the rates
described in the preceding sentence upon and during any
Triggering Events. Holders of shares of Series F Preferred Stock
are not entitled to participate in dividends or distributions of
any nature paid on or in respect of the Common Stock.
Redemption at Maturity. On the sixth anniversary
of the Closing Date, the Company will have the obligation to
redeem all outstanding shares of Series F Preferred Stock for
cash at the Series F Liquidation Value. However, if the New ABL
Facility is not entered into by the Refinancing Date, then
promptly following such date, the Company and the Purchasers
shall exchange the shares of Series F Preferred Stock then
outstanding for first lien secured notes having the terms
described in the Stockholders Agreement (as defined below).
Optional Redemption. The Company may redeem the
shares of Series F Preferred Stock at any time. The redemption of
shares of Series F Preferred Stock shall be at a purchase price
per share, payable in cash, equal to (i)in the case of a an
optional redemption effected on or after the 24 month anniversary
of the Closing Date, the Series F Liquidation Value, (ii)in the
case of an optional redemption effected on or after the 12 month
anniversary of the Closing Date and prior to the 24 month
anniversary of the Closing Date, 103.5% of the Series F
Liquidation Value, (iii)in the case of an optional redemption
effected following the Refinancing Date and prior to the 12 month
anniversary of the Closing Date, 106.5% of the Series F
Liquidation Value, and (iv)in the case of an optional redemption
effected prior to the Refinancing Date, 101% of the Series F
Liquidation Value.
6
Change of Control. Upon the occurrence of a
Change of Control (as defined in the Series F Certificate of
Designations), the holders of Series F Preferred Stock may
require redemption by the Company of the Series F Preferred Stock
at a purchase price per share, payable in cash, equal to (i)101%
of the Series F Liquidation Value if the Change of Control occurs
prior to the Refinancing Date, (ii)106.5% of the Series E
Liquidation Value if the Change of Control occurs after the
Refinancing Date and prior to the 24 month anniversary of the
Closing Date, or (iii)the Series F Liquidation Value if the
Change of Control occurs after the 24 month anniversary of the
Closing Date.
Other Terms of the Preferred Stock
Voting. The holders of Preferred Stock will
generally not be entitled to vote on any matters submitted to a
vote of the stockholders of the Company. So long as any shares of
Preferred Stock are outstanding, the Company may not take certain
actions without the prior approval of the holders of shares of
Preferred Stock representing a majority of the aggregate
liquidation value of all of the shares of Preferred Stock (the
Preferred Requisite Vote), voting as a separate class, including,
among other matters: (1)amending, altering, repealing or
otherwise modifying any provision of the Companys certificate of
incorporation, certificate of designations or bylaws in a manner
that would alter or change the terms or the powers, preferences,
rights or privileges of the Preferred Stock; (2)declaring, paying
or setting aside for payment any dividends or distributions upon
any junior securities; (3)repurchasing, redeeming or otherwise
acquiring any junior securities or parity securities (other than
for certain ordinary course purposes) for any consideration or
paying any moneys or making available for a sinking fund for the
redemption of any shares of such junior securities or parity
securities; (4)authorizing, creating, increasing the authorized
amount of, or issuing any class or series of senior securities or
parity securities, including any securities convertible into, or
exchangeable or exercisable for, any senior securities or parity
securities; (5)amending, restating, supplementing, modifying or
replacing any debt agreement or other financing agreement which
would restrict the minimum cash dividend payments contemplated by
the certificates of designations for the Preferred Stock;
(6)subject to various exceptions (including the New ABL
Facility), incurring any indebtedness; or (7)subject to an agreed
upon exception, during the six months following the Closing Date,
making any divestiture, or series of related divestitures, valued
at or more than $10 million.
Board of Directors. From and after the date when
all applicable waiting periods (and any extension thereof)
prescribed by the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, have expired or been terminated, for so long as
(x)any shares of Series B Preferred Stock or Series C Preferred
Stock are issued and outstanding and (y)the Purchasers hold
shares of Preferred Stock collectively representing a majority of
the liquidation value of the Preferred Stock, the holders of
Preferred Stock shall have the exclusive right, acting with the
Preferred Requisite Vote, to nominate and elect two
(2)individuals selected by the holders of Preferred Stock, or to
require the Companys Board of Directors to fill two (2)vacancies
in the Board of Directors with individuals selected by the
holders of Preferred Stock, to serve as, respectively, a Class II
director and a Class III director of the Company (the Preferred
Stock Directors).
Following the redemption of all shares of Series B Preferred
Stock and Series C Preferred Stock have been redeemed, and until
such time as all shares of Series D Preferred Stock are redeemed,
for so long as the Purchasers holds at least 5.0% of the equity
value of the Company, the holders of Preferred Stock shall have
the exclusive right acting with the Preferred Requisite Vote, to
(i)nominate and elect one (1)Preferred Stock Director, and
(ii)designate one individual to act as an observer to the Board
of Directors.
7
In the event of any Triggering Event (as defined in the
Certificates of Designations), subject to applicable rules of the
New York Stock Exchange, including, without limitation,
independent director requirements, the number of directors
constituting the Board of Directors shall be increased such that
the number of vacancies on the Board of Directors resulting from
such increase (the Triggering Event Vacancies), together with the
Preferred Stock Directors (to the extent then serving on the
Board of Directors), constitutes a majority of the Board of
Directors. The holders of Preferred Stock shall have the right,
acting with the Preferred Requisite Vote, to nominate and elect
individuals selected by the holders of Preferred Stock to fill
such Triggering Event Vacancies and thereby serve as directors of
the Company, or to require the Board of Directors to act to fill
such Triggering Event Vacancies with individuals selected by such
holders of Preferred Stock, to serve as directors of the Company,
and the size of the Board of Directors shall be increased as
needed. Each such director so elected is referred to as a
Triggering Event Director. When a Triggering Event is no longer
continuing, then the right of the holders of Preferred Stock to
elect the Triggering Event Directors will cease, the terms of
office of the Triggering Event Directors will immediately
terminate and the number of directors constituting the Board of
Directors will be reduced accordingly. The holders of Preferred
Stock have other rights in the event of a Triggering Event, as
described in the Certificate of Designations.
Board Committees. Until such time as all shares
of Series B Preferred Stock has been redeemed, the Company shall,
upon the request of the holders of Preferred Stock, acting with
the Preferred Requisite Vote, cause each of the Compensation
Committee of the Board of Directors and the Nominating and
Corporate Governance Committee of the Board of Directors to
include one Preferred Stock Director, in each case, to the extent
permitted under applicable requirements of the New York Stock
Exchange or applicable law.
The foregoing description of the terms of the Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series
E Preferred Stock and Series F Preferred Stock does not purport
to be complete and is subject to, and qualified in its entirety
by, the full text of the Series B Certificate of Designations,
Series C Certificate of Designations, Series D Certificate of
Designations, Series E Certificate of Designations and Series F
Certificate of Designations, which are attached hereto as
Exhibits3.3, 3.4, 3.5, 3.6 and 3.7, respectively.
Warrant Agreement
In connection with the issuance of the Preferred Stock to the
Investment Agreement, the Company and the Purchasers entered into
a Warrant Agreement (the Warrant Agreement), to which the Company
issued to the Purchasers eight year warrants (the Warrants) to
purchase an aggregate of 379,572 shares of Common Stock, at an
exercise price of $0.01 per share.
The foregoing description of the terms of the Warrant Agreement
and the transactions contemplated thereby does not purport to be
complete and is subject to, and qualified in its entirety by, the
full text of the Warrant Agreement and the schedules thereto,
which is attached hereto as Exhibit 4.2.
Stockholders Agreement
In connection with the issuance of the Preferred Stock to the
Investment Agreement, the Company and the Purchasers entered into
a Stockholders Agreement (the Stockholders Agreement), to which
the Purchasers were granted certain preemptive rights and other
rights.
8
Subject to customary exceptions, each Eligible Elliott Party (as
defined in the Stockholders Agreement) shall have the right to
purchase their pro rata percentage of subsequent issuances of
equity securities offered by the Company in any non-public
offering.
The foregoing description of the terms of the Stockholders
Agreement and the transactions contemplated thereby does not
purport to be complete and is subject to, and qualified in its
entirety by, the full text of the Stockholders Agreement and the
schedules thereto, which is attached hereto as Exhibit4.3.
Registration Rights Agreement
In connection with the issuance of the Preferred Stock to the
Investment Agreement, the Company, the Purchasers, Thayer Equity
Investors V, L.P., TC Roadrunner-Dawes Holdings, L.L.C., TC
Sargent Holdings, L.L.C., HCI Equity Partners III, L.P., and HCI
Co-Investors III, L.P. entered into a Registration Rights
Agreement (the Registration Rights Agreement), to which the
Company granted certain demand and piggyback registration rights.
The foregoing description of the terms of the Registration Rights
Agreement and the transactions contemplated thereby does not
purport to be complete and is subject to, and qualified in its
entirety by, the full text of the Registration Rights Agreement
and the schedules thereto, which is attached hereto as Exhibit
4.4.
Item1.02. Termination of a Material Definitive
Agreement.
In connection with the issuance of the Preferred Stock to the
Investment Agreement, the Company and HCI Equity Management, L.P.
(HCI) entered into a Termination Agreement dated May2, 2017 (the
Termination Agreement), to which the Company and HCI agreed to
terminate the Amended and Restated Advisory Agreement, dated as
of September12, 2011 (the Advisory Agreement). to the Termination
Agreement, HCI waived the Companys payment of any and all unpaid
fees and expenses accrued under the Advisory Agreement through
the Closing Date.
Item3.02. Unregistered Sales of Equity
Securities.
The information contained in Item1.01 of this Current Report on
Form 8-K is incorporated herein by reference.
As described in Item1.01, under the terms of the Investment
Agreement, the Company issued and sold shares of Preferred Stock
and issued the Warrants to the Purchasers. The issuance and sale
of the shares of Preferred Stock and the issuance of the Warrants
by the Company to the Purchasers was made in reliance upon the
exemption from securities registration afforded by Section4(a)(2)
of the Securities Act of 1933, as amended (the Securities Act),
and Rule 506 of Regulation D as promulgated by the Securities and
Exchange Commission under the Securities Act. Each of the
Purchasers represented to the Company that it is an accredited
investor as defined in Rule 501 of the Securities Act and that
the shares of Preferred Stock and Warrants are being acquired for
investment purposes and not with a view to or for sale in
connection with any distribution thereof, and appropriate legends
were affixed to any certificates evidencing the shares of
Preferred Stock and Warrants.
9
Item3.03. Material Modification to Rights of Security
Holders.
Upon issuance of the shares of Preferred Stock on the Closing
Date (referenced in Items 1.01 and 3.02 above), the ability of
the Company to declare or pay dividends on, make distributions
with respect to, or redeem, repurchase or acquire, or make a
liquidation payment on its Common Stock and on other preferred
stock ranking junior to, or on a parity with, the Preferred
Stock, became subject to certain restrictions. In addition, the
Company may not take certain actions without the affirmative vote
or written consent of holders representing the Preferred
Requisite Vote. The information set forth in the Item1.01 of this
Current Report on Form 8-K hereof is incorporated herein by
reference.
Item5.02. Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
Appointment of Chief Executive Officer
On April30, 2017, the Board of Directors of the Company appointed
Curtis W. Stoelting as Chief Executive Officer. Mr.Stoelting, age
57, has served as the Companys President and Chief Operating
Officer since January 2016 and as the Companys principal
financial officer and principal accounting officer since April
2017. Prior to that time, Mr.Stoelting served as the Chief
Executive Officer and a director of TOMY International (formerly
RC2 Corporation, a designer, producer and marketer of
high-quality toys, collectibles and infant and toddler products)
from January 2003 to March 2013. RC2 Corporation (NASDAQ: RCRC)
was acquired by Tomy Company, Ltd. in April 2011. Mr.Stoelting
previously served as RC2s Chief Operating Officer from 2000 to
2003, Executive Vice President from 1998 to 2000, and Chief
Financial Officer from 1994 to 1998. Prior to joining RC2,
Mr.Stoelting served in various positions with Arthur Andersen LLP
for 12 years. Mr.Stoelting currently serves on the Board of
Directors (as the Presiding Director) and Audit Committee of
Regal-Beloit Corporation (NYSE: RBC).
In connection with his appointment as Chief Executive Officer,
the Company and Mr.Stoelting entered into a second amended and
restated employment agreement, dated as of April30, 2017 (the
Stoelting Employment Agreement), that amends certain provisions
of Mr.Stoeltings previous employment agreement with the Company.
to the terms of the Stoelting Employment Agreement, Mr.Stoelting
will receive an annual base salary of $571,000. Mr.Stoelting is
also eligible to earn bonus compensation under the Companys bonus
plan and is entitled to participate in and receive all benefits
under the Companys employee benefit programs. The Stoelting
Employment Agreement provides that, in the event the Company
terminates Mr.Stoeltings employment without cause (as such term
is defined in the Stoelting Employment Agreement) or Mr.Stoelting
terminates his employment for good reason (as such term is
defined in the Stoelting Employment Agreement), the Company will
(i)continue to pay Mr.Stoelting his base salary for the 18-month
period following the date of such termination, and (ii)pay
Mr.Stoelting a lump sum amount equal to 18 times the monthly
COBRA premium that would be necessary to permit him to continue
group insurance coverage under the Companys plans for an 18-month
period. In addition, the Stoelting Employment Agreement provides
that, in the event the Company terminates Mr.Stoeltings
employment without cause (as such term is defined in the
Stoelting Employment Agreement) or Mr.Stoelting terminates his
employment for good reason (as such term is defined in the
Stoelting Employment Agreement) during the two year period
immediately following a change in control (as defined in the
Companys 2010 Incentive Compensation Plan), then in lieu of the
payments described in the immediately preceding sentence, the
Company will (i)continue to pay Mr.Stoelting his base salary for
the 24-month period following the date of such termination,
(ii)pay Mr.Stoelting a lump sum amount equal to two times
Mr.Stoeltings bonus for the year in which the termination of
employment occurs, with such bonus amount being payable at the
target bonus amount, and (iii)pay Mr.Stoelting a lump sum amount
equal to 24 times the monthly COBRA premium that would be
necessary to permit him to continue group insurance coverage
under the Companys plans for an 24-month period. Mr.Stoelting
must execute a general release in order to receive any severance
benefits. The foregoing is a summary only and does not purport to
be a complete description of all of the terms, provisions,
covenants and agreements contained in the Stoelting Employment
Agreement, and is subject to and qualified in its entirety by
reference to the complete text of the Stoelting Employment
Agreement, a copy of which will be filed as an exhibit to the
Companys Quarterly Report on Form 10-Q for the quarter ending
June30, 2017.
10
There was no arrangement or understanding to which Mr.Stoelting
was appointed as an executive officer of the Company, and there
have been no related party transactions between Mr.Stoelting and
the Company that are reportable to Item404(a) of Regulation S-K.
Mr.Stoelting is not related to any executive officer or director
of the Company.
Appointment of President and Chief Operating Officer
Also on April30, 2017, the Board of Directors of the Company
appointed Michael L. Gettle as President, Chief Operating Officer
and Secretary of the Company. Mr.Gettle, age 57, has served as
Executive Vice President of the Company since May 2016. Prior to
that time, Mr.Gettle served as Amercias Chief Executive Officer
of TNS, a division of British multinational WPP plc from 2013 to
2016 and as Global Chief Financial Officer and Chief Operating
Officer from 2008 to 2012. Prior to that time, Mr.Gettle served
as the Executive Vice President and Chief Financial Officer of
Millward Brown from 1992 to 2008. Prior to joining Millward Brown
Mr.Gettle served in various positions with Arthur Andersen LLP
for 9 years.
In connection with his appointment as President and Chief
Operating Officer, the Company and Mr.Gettle entered into a
second amended and restated employment agreement, dated as of
April30, 2017 (the Gettle Employment Agreement), that amends
certain provisions of Mr.Gettles previous employment agreement
with the Company. to the terms of the Gettle Employment
Agreement, Mr.Gettle will receive an annual base salary of
$571,000. Mr.Gettle is also eligible to earn bonus compensation
under the Companys bonus plan and is entitled to participate in
and receive all benefits under the Companys employee benefit
programs. The Gettle Employment Agreement provides that, in the
event the Company terminates Mr.Gettles employment without cause
(as such term is defined in the Gettle Employment Agreement) or
Mr.Gettle terminates his employment for good reason (as such term
is defined in the Gettle Employment Agreement), the Company will
(i)continue to pay Mr.Gettle his base salary for the 18-month
period following the date of such termination, and (ii)pay
Mr.Gettle a lump sum amount equal to 18 times the monthly COBRA
premium that would be necessary to permit him to continue group
insurance coverage under the Companys plans for an 18-month
period. In addition, the Gettle Employment Agreement provides
that, in the event the Company terminates Mr.Gettles employment
without cause (as such term is defined in the Gettle Employment
Agreement) or Mr.Gettle terminates his employment for good reason
(as such term is defined in the Gettle Employment Agreement)
during the two year period immediately following a change in
control (as defined in the Companys 2010 Incentive Compensation
Plan), then in lieu of the payments described in the immediately
preceding sentence, the Company will (i)continue to pay Mr.Gettle
his base salary for the 24-month period following the date of
such termination, (ii)pay Mr.Gettle a lump sum amount equal to
two times Mr.Gettles bonus for the year in which the termination
of employment occurs, with such bonus amount being payable at the
target bonus amount, and (iii)pay Mr.Gettle a lump sum amount
equal to 24 times the monthly COBRA premium that would be
necessary to permit him to continue group insurance coverage
under the Companys plans for an 24-month period. Mr.Gettle must
execute a general release in order to receive any severance
benefits. The foregoing is a summary only and does not purport to
be a complete description of all of the terms, provisions,
covenants and agreements contained in the Gettle Employment
Agreement, and is subject to and qualified in its entirety by
reference to the complete text of the Gettle Employment
Agreement, a copy of which will be filed as an exhibit to the
Companys Quarterly Report on Form 10-Q for the quarter ending
June30, 2017.
There was no arrangement or understanding to which Mr.Gettle was
appointed as an executive officer of the Company, and there have
been no related party transactions between Mr.Gettle and the
Company that are reportable to Item404(a) of Regulation S-K.
Mr.Gettle is not related to any executive officer or director of
the Company.
11
Resignation of Chief Executive Officer; Appointment of Vice
Chairman of the Board
On April30, 2017, Mark A. DiBlasi, who has served as the Companys
Chief Executive Officer since January 2006, resigned from the
position of Chief Executive Officer. Mr.DiBlasi was appointed as
Vice Chairman of the Board of Directors and will remain an
employee and executive officer of the Company.
Item5.03. Amendments to Articles of Incorporation or
Bylaws; Change in Fiscal Year.
The disclosure in Item1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item7.01. Regulation FD Disclosure.
On May2, 2017, the Company issued a press release relating to the
items described in this Current Report. A copy of the press
release is furnished as Exhibit 99.1 to this Current Report.
In accordance with General Instruction B.2 of Form 8-K, the
information furnished to this Item7.01, including Exhibit 99.1
furnished herewith, shall not be deemed filed for purposes of
Section18 of the U.S. Securities Exchange Act of 1934, as amended
(the Exchange Act), nor shall such be deemed incorporated by
reference in any filing under the U.S. Securities Act of 1933, as
amended, or the Exchange Act, except as shall be expressly set
forth by specific reference in such a filing.
Item9.01. Financial Statements and Exhibits.
| (a) | Financial Statements of Business Acquired. |
| Not applicable. |
| (b) | Pro Forma Financial Information. |
| Not applicable. |
| (c) | Shell Company Transactions. |
| Not applicable. |
| (d) | Exhibits. |
|
Exhibit Number |
||
| 3.3 |
Certificate of Designations, Preferences and Rights of Series B Cumulative Redeemable Preferred Stock |
|
| 3.4 |
Certificate of Designations, Preferences and Rights of SeriesC Cumulative Redeemable Participating Preferred Stock |
12
| 3.5 |
Certificate of Designations, Preferences and Rights of SeriesD Cumulative Redeemable Participating Preferred Stock |
|
| 3.6 |
Certificate of Designations, Preferences and Rights of Series E Cumulative Redeemable Preferred Stock |
|
| 3.7 |
Certificate of Designations, Preferences and Rights of Series F Cumulative Redeemable Preferred Stock |
|
| 4.2 |
Warrant Agreement, dated May2, 2017, between Roadrunner Transportation Systems, Inc., Elliott Associates, L.P., and Brockdale Investments LP. |
|
| 4.3 |
Stockholders Agreement, dated May2, 2017, between Roadrunner Transportation Systems, Inc., Elliott Associates, L.P., and Brockdale Investments LP. |
|
| 4.4 |
Registration Rights Agreement, dated May2, 2017, between Roadrunner Transportation Systems, Inc., Elliott Associates, L.P., Brockdale Investments LP, Thayer Equity Investors V, L.P., TC Roadrunner-Dawes Holdings, L.L.C., TC Sargent Holdings, L.L.C., HCI Equity Partners III, L.P., and HCI Co-Investors III, L.P. |
|
| 10.1 |
Investment Agreement, dated May1, 2017, between Roadrunner Transportation Systems, Inc., Elliott Associates, L.P., and Brockdale Investments LP. |
|
| 99.1 | Press Release dated May2, 2017. |
13
About ROADRUNNER TRANSPORTATION SYSTEMS, INC. (NYSE:RRTS)
Roadrunner Transportation Systems, Inc. (RRTS) is an asset-light transportation and logistics service provider. The Company offers a suite of global supply chain solutions, including truckload logistics (TL), customized and expedited less-than-truckload (LTL), intermodal solutions (transporting a shipment by over one mode, primarily through rail and truck), freight consolidation, inventory management, expedited services, air freight, international freight forwarding, customs brokerage and transportation management solutions. The Company operates through three segments: Truckload Logistics, Less-than-Truckload and Global Solutions. The Company utilizes a third-party network of transportation providers, consisting of independent contractors (ICs) and purchased power providers, to serve a diverse customer base. It primarily focuses on small to mid-size shippers. ROADRUNNER TRANSPORTATION SYSTEMS, INC. (NYSE:RRTS) Recent Trading Information
ROADRUNNER TRANSPORTATION SYSTEMS, INC. (NYSE:RRTS) closed its last trading session up +0.01 at 6.82 with 190,213 shares trading hands.