DASEKE,INC. (NASDAQ:HCACU) Files An 8-K Entry into a Material Definitive Agreement
Item1.01 Entry Into a Material Definitive
Agreement.
Term Loan Facility
Overview
On February27, 2017, concurrently with the consummation of the
Business Combination, Merger Sub (and, upon consummation of and
after giving effect to the Business Combination, Daseke
Companies,Inc.), as borrower (the Term Loan
Borrower), entered into a new seven-year, $350.0 million
term loan facility under a loan agreement with Credit Suisse AG,
Cayman Islands Branch, as administrative agent (the Term
Loan Administrative Agent), and the lenders party
thereto (the Term Loan Facility). The Term Loan
Facility consists of (i)a $250.0 million term loan funded on the
closing date of the Term Loan Facility (the Closing Date
Term Loan), and (ii)up to $100.0 million of term loans
to be funded from time to time under a delayed draw term loan
facility (the Delayed Draw Term Loans).
Additionally, the size of the Term Loan Facility could increase
from time to time to an uncommitted incremental facility in an
aggregate amount for all such incremental loans and commitments
up to the sum of (a)$65.0 million and (b)an uncapped amount for
which availability is to be determined based on maximum first
lien, secured, and total leverage ratio-based formulas depending
upon the security and ranking of the relevant incremental
facility. The Term Loan Facility has a scheduled maturity date of
February27, 2024.
The proceeds from the Closing Date Term Loan were used to
partially refinance certain of the Term Loan Parties (as
defined below) capital leases, purchase money debt, equipment
and real estate financings and to pay transaction costs
associated with the Business Combination.
Interest Rates
Term loans under the Term Loan Facility are, at the Term Loan
Borrowers election from time to time, comprised of alternate
base rate loans (an ABR Borrowing) or adjusted
LIBOR loans (a Eurodollar Rate Borrowing),
with the applicable margins of interest being an alternate base
rate (subject to a 2.00% floor) plus 4.50% per annum for ABR
Borrowings and LIBOR (subject to a 1.00% floor) plus 5.50% per
annum for Eurodollar Rate Borrowings.
Amortization
The Closing Date Term Loan amortizes in equal quarterly
installments in aggregate annual amounts equal to 1.0% per
annum of the original principal amount thereof. The Delayed
Draw Term Loans, if drawn, will amortize in equal quarterly
installments in aggregate annual amounts equal to a percentage
of the original principal amount thereof that will result in
the Delayed Draw Term Loans being fungible with the Closing
Date Term Loan. The final principal repayment installment of
the Closing Date Term Loan and the Delayed Draw Term Loans is
required to be paid on the maturity date of the Term Loan
Facility in an amount equal to the aggregate principal amount
of the Closing Date Term Loan and the Delayed Draw Term Loans
outstanding on such date.
Mandatory and Optional Prepayments
The Term Loan Facility will permit the Term Loan Borrower to
voluntarily prepay its borrowings, subject, under certain
circumstances in connection with any repricing transaction that
occurs in the six months after the closing of the Term Loan
Facility, to the payment of a prepayment premium of 1.00%
(except in connection with certain transformative acquisitions
or similar investments, change in control transactions and
initial public offerings). In certain circumstances (subject to
exceptions, exclusions and, in the case of excess cash flow,
step-downs described below), the Term Loan Borrower may also be
required to make an offer to prepay the Term Loan Facility if
it receives proceeds as a result of certain asset sales, debt
issuances, casualty or similar events of loss, or if it has
excess cash flow (defined as an annual amount calculated using
a customary formula based on consolidated adjusted EBITDA,
including, among other things, deductions for (i)the amount of
certain voluntary prepayments of the Term Loan Facility, and
(ii)the amount of certain capital expenditures, acquisitions,
investments, and restricted payments). The percentage of excess
cash flow that must be applied as a mandatory prepayment is 50%
with respect to the initial excess cash flow period (the fiscal
year ending on December31, 2018) and will be 50%, 25% or 0% for
future excess cash flow periods depending upon the first lien
leverage ratio of the Term Loan Borrower and its restricted
subsidiaries.
Guarantees and Collateral
The Term Loan Facility is guaranteed by the Company and all of
the Term Loan Borrowers wholly owned domestic restricted
subsidiaries (subject to customary exceptions for excluded
subsidiaries) (collectively, Term Loan
Guarantors and together with the Term Loan Borrower,
collectively Term Loan Parties and each a
Term Loan Party). Subject to certain customary
exceptions, the Term Loan Facility is secured by (a)a first
priority security interest in substantially all now owned or
hereafter acquired personal property and real property of the
Term Loan Parties (other than ABL Priority Collateral, as
defined below), including, without limitation, (i)a pledge of
the capital stock of the Term Loan Borrower owned by the
Company and a pledge of the capital stock of each Term Loan
Partys direct restricted subsidiaries, but limited, in the case
of voting capital stock of foreign subsidiaries and controlled
foreign corporation holding companies, to a pledge of 65% of
the voting capital stock of any first-tier foreign subsidiary
or controlled foreign corporation holding company and (ii)any
and all tractors, trailers and equipment used for transport
(other than any parts inventory) of the Term Loan Parties
(subject to customary exceptions and exclusions) (the
collateral described in this clause (a), the Term
Priority Collateral), and (b)a second priority
security interest in the following assets of the Term Loan
Parties: (i)accounts receivable; (ii)inventory; (iii)cash and
cash equivalents (other than cash and cash equivalents
constituting identifiable proceeds of Term Priority
Collateral); (iv)securities and deposit accounts (subject to
exceptions for accounts containing
exclusively identifiable cash proceeds of Term Priority
Collateral); (v)general intangibles (other than capital stock
and intellectual property), instruments, documents, chattel
paper, commercial tort claims, letter of credit rights and
supporting obligations, in each case related to the foregoing;
(vi)books and records to the extent related to the foregoing
and (vii)in each case above, proceeds thereof (the collateral
described in this clause (b), the ABL Priority
Collateral).
Financial Covenant
The Term Loan Facility contains a financial covenant requiring
the Term Loan Borrower to maintain a consolidated total
leverage ratio as of the last day of any fiscal quarter of less
than or equal to 4.25 to 1.00 commencing on June30, 2017,
stepping down to 4.00 to 1.00 on March31, 2019 and stepping
down to 3.75 to 1.00 on March31, 2021. The Term Loan Borrowers
consolidated total leverage ratio is defined as the ratio of
(1)consolidated total debt minus unrestricted cash and cash
equivalents and cash and cash equivalents restricted in favor
of the Term Loan Administrative Agent and the lenders not to
exceed $5 million, to (2)the Term Loan Borrowers consolidated
adjusted EBITDA for the trailing 12 month period (with
customary add-backs permitted to consolidated adjusted EBITDA,
including in respect of synergies and cost-savings reasonably
identifiable and factually supportable that are anticipated to
be realized in an aggregate amount not to exceed 25% of
consolidated adjusted EBITDA and subject to other customary
limitations).
Other Covenants
The Term Loan Facility contains (i)certain customary
affirmative covenants that, among other things, require
compliance with applicable laws, periodic financial reporting
and notices of material events, payment of taxes and other
obligations, maintenance of property and insurance, and
provision of additional guarantees and collateral, and
(ii)certain customary negative covenants that, among other
things, restrict the incurrence of additional indebtedness,
liens on property, sale and leaseback transactions,
investments, mergers, consolidations, liquidations and
dissolutions, asset sales, acquisitions, the payment of
distributions, dividends, redemptions and repurchases of equity
interests, transactions with affiliates, prepayments and
redemptions of certain other indebtedness, burdensome
agreements, holding company limitations, changes in fiscal year
and modifications of organizational documents.
Events of Default
The Term Loan Facility contains customary events of default,
including, among others, nonpayment of principal, interest or
other amounts, failure to perform covenants, inaccuracy of
representations and warranties in any material respect,
cross-defaults and cross-acceleration with other material
indebtedness, cross-acceleration and cross payment default with
the ABL Facility, certain undischarged judgments, the
occurrence of certain ERISA or bankruptcy or insolvency events
or the occurrence of a change in control (including, among
other things, the acquisition by any person, entity or group
(other than certain permitted holders) of more than the greater
of (x)35% of the total voting power of outstanding voting stock
of the Company and (y)the percentage of the total voting power
of outstanding voting stock of the Company held by certain
permitted holders).
Remedies
Upon the occurrence, and during the continuance, of an event of
default, the Term Loan Administrative Agent may, in addition to
other customary rights and remedies, declare any outstanding
obligations under the Term Loan Facility immediately due and
payable.
A copy of the Term Loan Facility agreement is filed with this
Current Report on Form8-K as Exhibit10.1 and is incorporated
herein by reference, and the foregoing description of the Term
Loan Facility is qualified in its entirety by reference
thereto.
ABL Revolving Credit Facility
Overview
On February27, 2017, concurrently with the consummation of the
Business Combination, Daseke Companies,Inc. and its wholly
owned domestic subsidiaries, as borrowers (collectively, the
ABL Borrowers), entered into a new five-year,
senior secured asset-based revolving credit facility (the
ABL Facility) under a credit agreement with
PNC Bank, National Association, as administrative agent (the
ABL Facility Administrative Agent), and the
lenders party thereto, in an aggregate maximum credit amount
equal to $70.0 million (subject to availability under a
borrowing base). Additionally, the size of the ABL Facility
could increase from time to time to an uncommitted accordion by
an aggregate amount for all such increases of up to $30
million. The ABL Facility has a scheduled maturity date of
February27, 2022. Borrowings under the ABL Facility will bear
interest at rates based upon the ABL Borrowers fixed charge
coverage ratio and, at the ABL Borrowers election from time to
time, either a base rate plus an applicable margin or adjusted
LIBOR rate plus an applicable margin.
Amounts available under the ABL Facility may be used to
(i)finance a portion of any Permitted Acquisition (as defined
in the ABL Facility) (ii)pay fees and expenses relating to the
Transactions (as defined in the ABL Facility), (iii)provide for
working capital needs and reimburse drawings under Letters of
Credit (as defined in the ABL Facility) and (iv)for other
general corporate purposes, all as more fully set forth in the
ABL Facility.
Amortization
Borrowings under the ABL Facility will not amortize. All
obligations outstanding or issued under the ABL Facility are
due and payable at the scheduled maturity.
Mandatory and Optional Prepayments
The ABL Facility permits the Company to voluntarily prepay its
borrowings, without premium or penalty (subject to customary
requirements for payment of LIBOR breakage costs). The ABL
Facility contains customary cash management provisions with
respect to proceeds of ABL Priority Collateral (as defined
above). In certain circumstances, the Company may also be
required to prepay the ABL Facility as a result of revolving
credit exposure exceeding the borrowing base and, during any
period after a default or event of default or after excess
availability falling below the greater of (x)$15,000,000 and
(y)20% of the maximum credit amount and continuing until such
time as no default or event of default has existed and excess
availability has exceeded such amounts for a period of 60
consecutive days, to the extent (a)it receives proceeds of
certain asset sales or casualty or similar events of loss with
respect to ABL Priority Collateral or (b)there are Declined
Proceeds (as defined in the Term Loan Facility) with respect to
certain asset sales, debt issuances, or casualty or similar
events of loss.
Guarantees and Collateral
The ABL Facility is guaranteed by the same entities that
guarantee the Term Loan Facility (to the extent that such Term
Loan Guarantors are not already borrowers under the ABL
Facility). The ABL Facility is secured by a first priority
security interest in all ABL Priority Collateral and second
priority security interests in all Term Priority Collateral.
Financial Covenants
The ABL Facility contains (i)a financial covenant similar to
the consolidated total leverage ratio required under the Term
Loan Facility (but in any event requiring a leverage ratio of
less than or equal to 4.25:1:00), and (ii)during any period
after a default or event of default or after excess
availability falling below the greater of (x)$15,000,000 and
(y)20% of the maximum credit amount, continuing until such time
as no default or event of default has existed and excess
availability has exceeded such amounts for a period of 60
consecutive days, a financial covenant requiring the Company to
maintain a minimum consolidated fixed charge coverage ratio of
1.00x, tested on a quarterly basis. The Companys fixed charge
coverage ratio is defined as the ratio of (1)consolidated
adjusted EBITDA minus unfinanced capital expenditures, cash
taxes and cash dividends or distributions, to (2)the sum of all
funded debt payments for the four quarter period then ending
(with customary add-backs permitted to consolidated adjusted
EBITDA).
Other Covenants and Events of Default
The ABL Facility contains other affirmative and negative
covenants and events of default similar to those in the Term
Loan Facility, together with such additional terms as are
customary for a senior secured asset-based revolving credit
facility secured by the ABL Priority Collateral.
Remedies
The ABL Facility contains remedies similar to those in the Term
Loan Facility. In addition, the ABL Facility Administrative
Agent may terminate any obligations of the lenders under the
ABL Facility to make advances, and in the event of certain
bankruptcy proceedings and other insolvency events, the
obligation of each lender to make advances will automatically
terminate and any outstanding obligations under the ABL
Facility will immediately become due and payable.
A copy of the fifth amended and restated revolving credit and
security agreement governing the ABL Facility is filed with
this Current Report on Form8-K as Exhibit10.2 and is
incorporated herein by reference, and the foregoing description
of the ABL Facility is qualified in its entirety by reference
thereto.
Employment Agreements
On February27, 2017, in connection with the consummation of the
Business Combination, the Company entered into employment
agreements with each of Don R. Daseke, R. Scott Wheeler and
Angie J. Moss (the Named Executive Officers)
as described below.
The employment agreements each have an initial five-year term
(three-year term in the case of Ms.Moss) that will be
automatically extended for successive one-year periods unless
either party provides written notice of termination at least 60
days prior to the date the then-current employment term would
otherwise end. The employment agreements provide for annual
salaries of at least $550,000, $450,000, and $300,000 for
Mr.Daseke, Mr.Wheeler and Ms.Moss, respectively, and target
annual cash bonuses of at least $150,000 for Messrs.Daseke and
Wheeler and $75,000 for Ms.Moss, based upon the attainment of
certain milestones determined by the Compensation Committee
(the Compensation Committee) of the Companys
Board of Directors (the Board). Mr.Wheelers
agreement also provides for a transaction bonus of $100,000,
which became payable on the closing of the Business
Combination. The Named Executive Officers are able to
participate in the same incentive compensation and benefit
plans in which other senior executives of the Company are
eligible to participate.
If a Named Executive Officers employment is terminated by the
Company for cause or by the executive without good reason, such
executive will be entitled to receive (i)all accrued salary
through the date of termination and (ii)any post-employment
benefits due under the terms and conditions of the Companys
benefits plans. The executive will not be entitled to any
additional amounts or benefits as the result of a termination
of employment for cause or by the executive without good
reason.
During the initial three years of employment under the
employment agreements of Messrs.Daseke and Wheeler, the
executive may only be terminated by the Company for cause. If a
Named Executive Officers employment is terminated by the
Company without cause (after the three year anniversary of the
effective date of the agreement for Messrs.Daseke and Wheeler)
or by the executive for good reason (including a voluntary
resignation following notice from the Company of non-renewal),
such Named Executive Officer will be entitled to receive (i)an
amount equal to one and one-half times (one times for Ms.Moss)
his or her base salary in effect immediately prior to the date
of termination of his or her employment, (ii)an amount equal to
one and one-half times (one times for Ms.Moss) his or her
target annual bonus for the year preceding the year in which
termination occurs, (iii)accelerated vesting of (A)outstanding
unvested time-based equity which would have otherwise become
vested in the calendar year of the executives termination had
the executives employment under the employment agreement
continued through the end of such calendar year and (B)unless
otherwise provided in an applicable award agreement, the
service condition relating to outstanding unvested
performance-based equity pro-rated
proportionate to the portion of the applicable performance
period during which the executive would have been employed had
the executives employment under the employment agreement
continued through the end of the calendar year of the
executives termination (but the vesting of such
performance-based awards shall remain subject to the applicable
performance conditions) and (iv)reimbursements equal to the
difference between monthly amounts owed by the executive to
continue coverage for the executive and his or her eligible
dependents under the Companys group health plans to the
Consolidated Omnibus Reconciliation Act of 1985, as amended
(COBRA), and the contribution amount owed by
similarly situated employees for the same or similar healthcare
coverage, if the executive timely and properly elects COBRA
coverage and until the earlier of the date such executive is no
longer eligible for COBRA coverage, receives such coverage
under another employers group health plan or 18 months (12
months for Ms.Moss) following the date of termination
(COBRA Payments). Payments made to the
executive under this paragraph will be made in installments
over a period of 18 months (or 12 months for Ms.Moss), subject
to the earlier payment of certain of such installments as
provided in the employment agreements to ensure such payments
are not considered nonqualified deferred compensation under
certain provisions of the Internal Revenue Code of 1986, as
amended (the Code).
If a Named Executive Officers employment is terminated by the
Company due to the executives death or disability, the Named
Executive Officer will be entitled to receive (i)all accrued
salary through the date of termination, (ii)an amount equal to
the executives pro-rated target annual bonus, (iii)accelerated
equity award vesting (under the same terms described above for
termination without cause or for good reason), (iv)COBRA
Payments, and (v)any post-employment benefits due under the
terms and conditions of the Companys benefit plans. The Named
Executive Officer will not be entitled to any additional
amounts or benefits as the result of a termination of
employment due to death or disability.
A Named Executive Officers eligibility and entitlement, if any,
to each severance payment and any other payment and benefit
described above is subject to the execution and non-revocation
of a customary release of claims agreement by such Named
Executive Officer. Each Named Executive Officer is also subject
to general confidentiality obligations in his or her employment
agreement as well as non-compete and non-solicitation
restrictions for a period of 18 months (12 months for Ms.Moss).
Under the employment agreements, good reason generally means
(i)relocation of the geographic location of an executives
principal place of employment by more than 50 miles; (ii)a
material diminution in the executives position,
responsibilities or duties or the assignment of the executive
to a position, responsibilities or duties of a materially
lesser status or degree of responsibility than his or her
position, responsibilities or duties immediately following the
Business Combination; (iii)any material breach by the Company
of any provision of the executives employment agreement; or
(iv)non-renewal by the Company of the then-existing initial
term or renewal term of the executives employment agreement.
Under the employment agreements, cause generally means (i)the
commission by the executive of fraud, breach of fiduciary duty,
theft, or embezzlement against the Company, its subsidiaries,
affiliates or customers; (ii)the executives willful refusal
without proper legal cause to faithfully and diligently perform
his or her duties; (iii)the breach of the confidentiality,
non-competition, non-solicitation and intellectual property
provisions in the executives employment agreement or the
material breach of any other written agreement between the
executive and one or more members of affiliated entities
including the Company and its direct and indirect subsidiaries;
(iv)the executives conviction of, or plea of guilty or nolo
contendere to, a felony (or state law equivalent) or any
crime involving moral turpitude; (v)willful misconduct or gross
negligence by the executive in the performance of duties to the
Company that has or could reasonably be expected to have a
material adverse effect on the Company; or (vi)the executives
material breach and violation of the Companys written policies
pertaining to sexual harassment, discrimination or insider
trading.
Each of the employment agreements between the Named Executive
Officers and the Company contains a clawback provision that
enables the Company to recoup any amounts paid to an executive
as an annual bonus or incentive compensation under his or her
employment agreement if so required by applicable law, any
applicable securities exchange listing standards or any
clawback policy adopted by the Company. If amounts payable to a
Named Executive Officer under his or her employment agreement
or otherwise exceed the amount allowed under Section280G of the
Code for such executive (thereby subjecting the executive to an
excise tax), then such payments due to the executive officer
under the employment agreement will either (i)be reduced (but
not below zero) so that
the aggregate present value of the payments and benefits
received by the executive is $1.00 less than the amount which
would otherwise cause the executive to incur an excise tax
under Section4999 of the Code or (ii)be paid in full, whichever
produces the better net after-tax position to the executive.
Copies of Mr.Dasekes, Mr.Wheelers and Ms.Mosss employment
agreements are filed with this Current Report on Form8-K as
Exhibits 10.3, 10.4 and 10.5, respectively, and are
incorporated herein by reference, and the foregoing description
of the employment agreements are qualified in their entirety by
reference thereto.
Indemnification Agreements
In addition, the Company expects to enter into customary
indemnification agreements with each of its directors and
executive officers, effective February27, 2017. Each
indemnification agreement provides that, subject to limited
exceptions, the Company will indemnify each such director and
executive officer to the fullest extent permitted by Delaware
law for claims arising in such persons capacity as our director
and/or officer. The indemnification agreements supersede any
similar agreement previously entered into by our directors and
executive officers with Hennessy Capital. A copy of a form
indemnification agreement is filed with this Current Report on
Form8-K as Exhibit10.6 and is incorporated herein by reference,
and the foregoing description of the indemnification agreement
is qualified in its entirety by reference thereto.
Registration Rights Agreement
On the Closing Date, the Company entered into an amended and
restated registration rights agreement (the New
Registration Rights Agreement) with each of the
Companys initial stockholders, the Preferred Financing
Investors, the Backstop Commitment Investors, Don R. Daseke,
The Walden Group,Inc. (The Walden Group),
Daniel Wirkkala and the former holders of Daseke SeriesB
Convertible Preferred Stock party thereto. In this section, we
refer to each of the parties to the New Registration Rights
Agreement (other than the Company) as a Restricted
Stockholder.
Resale Shelf Registration Statement. to the New
Registration Rights Agreement, we have agreed to file, as soon
as reasonably practicable (but in any event no later than 45
days after the Closing Date, a resale shelf registration
statement on FormS-3 (the Shelf Registration
Statement), for the benefit of the Restricted
Stockholders, to register (i)the shares of the Companys common
stock issued to Daseke stockholders to the Business
Combination, (ii)the founder shares held by Hennessy Capitals
initial stockholders, (iii)15,080,756 warrants (the
Placement Warrants) issued to Hennessy Capital
Partners II LLC (the HCAC Sponsor) in the
private placement that occurred simultaneously with the
consummation of Hennessy Capitals initial public offering
(including any shares of the Companys common stock issued or
issuable upon the exercise of such Placement Warrants), (iv)the
shares of SeriesA Preferred Stock issued in the Preferred
Financing (including any shares of the Companys common stock
issued or issuable upon conversion of such preferred shares),
(v)the shares of our common stock issued to Backstop Commitment
Investors as Utilization Fee Shares (as defined in the Backstop
and Subscription Agreements), (vi)any outstanding shares of the
Companys common stock or any other equity security (including
the shares of the Companys common stock issued or issuable upon
the exercise or exchange of any other equity security) of the
Company held by a Restricted Stockholder as of the Closing
Date, and (vii)any other equity security of the Company issued
or issuable with respect to any such share of the Companys
common stock by way of a stock dividend or stock split or in
connection with a combination of shares, distribution,
recapitalization, merger, consolidation, reorganization or
other similar event. In addition, the Company intends to
register the shares issuable upon the exercise of the warrants
issued in Hennessy Capitals initial public offering in the
Shelf Registration Statement. The Company is obligated to use
its reasonable best efforts to cause the Shelf Registration
Statement to be declared effective by United States Securities
and Exchange Commission (the SEC) as promptly
thereafter as practicable, but in any event not later than 120
days after the Closing Date if the Company receives comments to
the Shelf Registration Statement from the SEC (SEC
Comments) or 90 days after the Closing Date if the
Company does not receive SEC Comments, and to use reasonable
best efforts to maintain the Shelf Registration Statement
continuously effective under the Securities Act of 1933, as
amended (the Securities Act), subject to
certain permitted blackout periods, until the earliest to occur
of (a)36 months after the effective date of the Shelf
Registration Statement, (b)the date on which all the equity
securities covered by the Shelf Registration Statement have
been sold or distributed or (c)the date on which the equity
securities covered by the Shelf Registration Statement first
become eligible for sale to Rule144 under the Securities Act
without volume limitation or other restrictions on transfer
thereunder (such period, the Shelf Registration
Effective Period). There are no penalties associated
with delays in registering such securities under the Shelf
Registration Statement.
Certain Restricted Stockholders (consisting of our initial
stockholders, the Preferred Financing Investors, the Backstop
Commitment Investors, Don R. Daseke, The Walden Group, Joseph
Kevin Jordan, The Joy and Kevin Jordan Revocable Trust, The
Jordan Family Irrevocable Trust, Daseke Trucking Preferred, LP,
Gekabi Capital Management, LP, VCA Daseke LP and Daniel
Wirkkala) (each such person, a Demand Right
Holder) will have the right, subject to certain
conditions, to demand an underwritten offering of their equity
securities. The Company is not obligated to effect more than
(i)two underwritten offerings for Don R. Daseke and The Walden
Group (taken together) or (ii)one underwritten offering for the
other Demand Right Holders (acting individually), in each case
less any demand registrations initiated by such person.
In addition, the Company is also not obligated to effect any
underwritten offering demand unless the minimum aggregate
offering price is at least $5.0 million.
Demand Rights. If (a)the Shelf Registration Statement
is not declared effective by the SEC on or prior to the date
that is 180 days after the Closing Date or (b)at any time
during the Shelf Registration Effective Period, the Shelf
Registration Statement is not available to the Restricted
Stockholders (subject to certain specified exceptions), the
Demand Right Holders will have the right, subject to certain
conditions, to require the Company by written notice to prepare
and file a registration statement registering the offer and
sale of a certain number of registrable securities (which
offering may, in certain cases, be in the form of an
underwritten offering). The Company is not obligated to effect
more than (i)two demand registrations for Don R. Daseke and The
Walden Group (taken together) or (ii)more than one demand
registration for the other Demand Right Holders (acting
individually), in each case less any underwritten shelf
offerings initiated by such person.
In addition, the Company is also not obligated to effect any
demand registration in the form of an underwritten offering
unless the minimum aggregate offering price is at least $5.0
million (if on FormS-3) or at least $25.0 million (if the
Company is not eligible to use FormS-3 or any successor form or
similar short-form registration).
Piggyback Rights. If (i)(a)the Shelf Registration
Statement is not declared effective by the SEC on or prior to
the date that is 180 days after the Closing Date or (b)at any
time during the Shelf Registration Statement Effective Period,
the Shelf Registration Statement is not available to the
Restricted Stockholders (subject to certain specified
exceptions), and (ii)the Company proposes to file a
registration statement under the Securities Act with respect to
an offering of equity securities for its own account or for the
account of stockholders of the Company (other than those public
offerings to registration statements on forms that do not
permit registration for resale by the Restricted Stockholders),
then the Restricted Stockholders will have customary piggyback
registration rights that allow them to include their
registrable securities in any such registration statement. In
addition, if the Company proposes to effect an underwritten
offering for its own account or for the account of stockholders
of the Company, then the Restricted Stockholders will have
customary piggyback rights that allow them to include their
equity securities in such underwritten offering, subject to
proportional cutbacks based on the identity of the party
initiating such offering.
Limitations; Expenses; Indemnification. These
registration rights are subject to certain customary
limitations, including the right of the underwriters to limit
the number of securities to be included in an underwritten
public offering and our right to delay or withdraw a
registration statement under certain circumstances. The Company
will generally be required to bear the registration expenses,
other than underwriting discounts and commissions and transfer
taxes, associated with any registration and sale of registrable
securities held by the Restricted Stockholders. In addition,
the Company will pay the reasonable fees and expenses of one
legal counsel selected by the majority-in-interest of the
Demand Right Holders initiating a demand registration. Under
the New Registration Rights Agreement, the Company has agreed
to indemnify the Restricted Stockholders against any losses or
damages resulting from any untrue statement or omission of a
material fact in any registration statement or prospectus to
which they sell the Companys equity securities, unless such
liability arose from their misstatement or omission, and each
of the Restricted Stockholders, severally and individually, has
agreed to indemnify the Company against any losses or damages
caused by such Restricted Stockholders misstatements or
omissions in those documents.
A copy of the New Registration Rights Agreement is filed with
this Current Report on Form8-K as Exhibit4.1 and is
incorporated herein by reference, and the foregoing description
of the New Registration Rights Agreement is qualified in its
entirety by reference thereto.
Lock-Up Agreements
At the Closing, each of the Companys directors and executive
officers and certain of its stockholders, including those that
beneficially owned at least one percent of Dasekes common stock
immediately prior to the consummation of the Business
Combination, each entered into a 180-day lock-up agreement
(each, a lock-up agreement) (except for
(i)Daseke Trucking Preferred, LP and Gekabi Capital Management,
LP, for which such lock-up period is 120 days post-Closing and
(ii)Don R. Daseke and The Walden Group, for which such lock-up
period is three years post-Closing) with us with respect to the
shares of our common stock received by such person to the
Business Combination (the lock-up shares). to
the lock-up agreements, each party agreed that for its
respective lock-up period, such party will not (a)sell, offer
to sell, contract or agree to sell, hypothecate, pledge, grant
any option to purchase or otherwise dispose of or agree to
dispose of, directly or indirectly, or establish or increase a
put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section16 of the
Securities Exchange Act of 1934, as amended, with respect to
any lock-up shares of such party, (b)enter into any swap or
other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of any
lock-up shares of such party, in cash or otherwise, or
(c)publicly announce any intention to effect any transaction
specified in clause (a)or (b); provided, however, Don R. Daseke
and The Walden Group may transfer up to 10% of his or its
lock-up shares to charities or educational institutions to the
extent such transfer does not involve a disposition for value
and such transferee agrees to be bound by the terms and
conditions of the lock-up agreement until the 180th day after
such transferee receives such shares. Notwithstanding the
foregoing, each party may sell or otherwise transfer any
lock-up shares of such party to, among other persons, its
equity holders or other affiliates or immediate family members,
provided in each such case that the transferee thereof agrees
to be bound by the restrictions set forth in the lock-up
agreement applicable to such lock-up shares.
A copy of the form of the lock-up agreement is filed with this
Current Report on Form8-K as Exhibit4.2 and is incorporated
herein by reference, and the foregoing description of the
lock-up agreements are qualified in its entirety by reference
thereto.
Item2.01 Completion of Acquisition or
Disposition of Assets.
The disclosure set forth under Introductory Note above and in
Item 2.01 Completion of Acquisition or Disposition of Assets in
the Companys Current Report on Form8-K filed with the SEC on
February27, 2017 is incorporated in this Item 2.01 by
reference.
Prior to the Closing, Hennessy Capital was a shell company with
no operations, formed as a vehicle to effect a business
combination with one or more operating businesses. After the
Closing, the Company became a holding company whose assets
primarily consist of interests in its direct wholly-owned
subsidiary, Daseke Companies,Inc. and the direct and indirect
subsidiaries thereof. The following information is provided
about the business of the Company following the consummation of
the Business Combination, set forth below under the following
captions:
Cautionary Note Regarding Forward-Looking Statements;
Business;
Risk Factors;
Selected Historical Consolidated Financial Information of
Daseke;
Unaudited Pro Forma Condensed Combined Financial Information;
Managements Discussion and Analysis of Financial Condition and
Results of Operations and Quantitative and Qualitative
Disclosures About Market Risk;
Security Ownership of Certain Beneficial Owners and Management;
Directors and Executive Officers;
Executive Compensation;
Director Compensation;
Certain Relationships and Related Party Transactions;
Legal Proceedings;
Market Price of and Dividends on the Registrants Common Equity
and Related Stockholder Matters;
Recent Sales of Unregistered Securities;
Description of the Companys Securities;
Indemnification of Directors and Officers;
Financial Statements and Supplementary Data; and
Changes in and Disagreements with Accountants and Financial
Disclosure.
Cautionary Note Regarding Forward-Looking
Statements
We make forward-looking statements in this Current Report on
Form 8-K, including in the statements incorporated herein by
reference. These forward-looking statements relate to
expectations for future financial performance, business
strategies or expectations for our business. These
forward-looking statements are often preceded by, followed by
or include the words estimate, plan, project, forecast, intend,
expect, anticipate, believe, seek, target, will or similar
expressions. Specifically, forward-looking statements may
include statements relating to:
the benefits of the Business Combination;
the future financial performance of the Company following the
Business Combination;
changes in the market for the Companys services; and
expansion plans and opportunities, including future
acquisitions or additional business combinations.
These forward-looking statements are based on information
available as of the date of this Current Report on Form 8-K
(or, in the case of forward-looking statements incorporated
herein by reference, as of the date of the applicable filed
document), and current expectations, forecasts and assumptions,
and involve a number of judgments, risks and uncertainties.
Accordingly, forward-looking statements should not be relied
upon as representing our views as of any subsequent date, and
we do not undertake any obligation to update forward-looking
statements to reflect events or circumstances after the date
they were made, whether as a result of new information, future
events or otherwise, except as may be required under applicable
securities laws. As a result of a number of known and unknown
risks and uncertainties, our actual results or performance may
be materially different from those expressed or implied by
these forward-looking statements. Some factors that could cause
actual results to differ include:
the outcome of any legal proceedings that may be instituted
against us following consummation of the Business Combination
and the transactions contemplated thereby;
the inability to maintain the listing of the Companys common
stock and warrants on The Nasdaq Capital Market following the
Business Combination;
the risk that the Business Combination disrupts current plans
and operations as a result of the consummation of the
transactions contemplated thereby;
the ability to recognize the anticipated benefits of the
Business Combination, which may be affected by, among other
things, competition and the Companys ability to grow and manage
growth profitably;
the possibility that we may be adversely affected by other
economic, business, and/or competitive factors;
changes in applicable laws or regulations; and
other risks and uncertainties indicated in the Proxy Statement,
including those under Risk Factors on pages 63 through 99 of
Hennessy Capitals definitive proxy statement dated February 6,
2017 (the Proxy Statement).
Business
The business of the Company, including a description of its
properties, is described in the Proxy Statement in the section
entitled Information About Daseke beginning on page 229, which
is incorporated by reference herein. The business of Hennessy
Capital is described in the Proxy Statement in the Section
entitled Information About Hennessy Capital beginning on page
208, which incorporated by reference herein.
Risk Factors
The risk factors related to the Companys business, operations
and industry and ownership of our common stock are described in
the Proxy Statement in the section entitled Risk Factors on
pages 63 through 99, which descriptions are incorporated by
reference herein.
Selected Historical Consolidated Financial
Information of Daseke
The section entitled Selected Historical and Pro Forma
Consolidated Financial and Other Data of Daseke beginning on
page 51 of the Proxy Statement is incorporated by reference
herein.
Unaudited Pro Forma Condensed Combined Financial
Information
The following unaudited pro forma condensed combined financial
statements give effect to the Business Combination under the
acquisition method of accounting in accordance with Financial
Accounting Standards Board (FASB) Accounting Standard
Codification (ASC) Topic 805, Business
Combinations (ASC 805). The Business
Combination will be accounted for as a reverse merger in
accordance with accounting principles generally accepted in the
United States of America. Under this method of accounting,
Hennessy Capital will be treated as the acquired company for
financial reporting purposes. This determination was primarily
based on Daseke comprising the ongoing operations of the
combined company, Dasekes senior management comprising the
senior management of the combined company, and Daseke
stockholders having a majority of the voting power of the
combined company. For accounting purposes, Daseke will be
deemed to be the accounting acquirer in the transaction and,
consequently, the transaction will be treated as a
recapitalization of Daseke (i.e., a capital transaction
involving the issuance of stock by Hennessy Capital for the
stock of Daseke). Accordingly, the consolidated assets,
liabilities and results of operations of Daseke will become the
historical financial statements of the combined company, and
Hennessy Capitals assets, liabilities and results of operations
will be consolidated with Daseke beginning on the acquisition
date.
The historical consolidated financial information has been
adjusted in these unaudited pro forma condensed combined
financial statements to give effect to pro forma events that
are (1) directly attributable to the Business Combination and
the proposed related financing transactions, (2) factually
supportable, and (3) with respect to the statements of
operations, expected to have a continuing impact on the
post-combination company. The unaudited pro forma condensed
combined balance sheet is based on the historical unaudited
consolidated balance sheet of Daseke, and the unaudited balance
sheet of Hennessy Capital, as of September 30, 2016 and has
been prepared to reflect the Business Combination and the
proposed related financing transactions as if they occurred on
September 30, 2016. The unaudited pro forma condensed combined
statement of operations for the nine months ended September 30,
2016 combines the historical results of operations of Daseke
and Hennessy Capital for the nine months ended September 30,
2016. The unaudited pro forma condensed combined statement of
operations for the year ended December 31, 2015 combines the
pro forma results of operations of Daseke to reflect the 2015
acquisitions of Bulldog and Hornady as though they were made at
January 1, 2015 (as described in note 6 below), together with
the historical results for Hennessy Capital for the period from
April 29, 2015 (inception) to December 31, 2015, giving effect
to the Business Combination and the proposed related financing
transactions as if they occurred on January 1, 2015.
The unaudited pro forma condensed combined statement of
operations for the nine months ended September 30, 2016 was
derived from Dasekes unaudited consolidated statement of
operations for the nine months ended September 30, 2016 and
Hennessy Capitals unaudited consolidated statement of
operations for the nine months ended September 30, 2016, each
of which is included elsewhere in this Current Report on Form
8-K or in the Proxy Statement. Such unaudited interim financial
information has been prepared on a basis consistent with the
audited financial statements of Daseke and Hennessy Capital,
respectively, and should be read in conjunction with the
interim unaudited financial statements and audited financial
statements and related notes, each of which is included
elsewhere in this Current Report on Form 8-K or in the Proxy
Statement. The unaudited pro forma condensed combined statement
of operations information for the year ended December 31, 2015
was derived from Dasekes audited consolidated statement of
operations for the year ended December 31, 2015, after making
pro forma adjustments to include the operations of the acquired
Bulldog and Hornady businesses as though they were acquired on
January 1, 2015 (see note 6 below) and Hennessy Capitals
audited statement of operations for the period April 29, 2015
(inception) to December 31, 2015 included elsewhere in this
Current Report on Form 8-K or in the Proxy Statement.
On January 5, 2017, Hennessy Capital consummated a transaction
in which it received a $5 million release fee in exchange for
releasing a party from a non-circumvention agreement with
Hennessy Capital that was associated with a planned business
combination with a third party that was not consummated. In
connection with the receipt of this payment by Hennessy
Capital, Hennessy Capital paid down approximately $6.6 million
of liabilities accrued in connection with that business
combination that did not close. The payment and settlement of
these liabilities in January 2017 is not reflected in the
unaudited pro forma condensed combined balance sheet because it
is not related to the Business Combination.
These unaudited pro forma condensed combined financial
statements are for informational purposes only. They do not
purport to indicate the results that would actually have been
obtained had the Business Combination and the proposed related
financing transactions been completed on the assumed date or
for the periods presented, or which may be realized in the
future. The pro forma adjustments are based on the information
currently available and the assumptions and estimates
underlying the pro forma adjustments are described in the
accompanying notes. Actual results may differ materially from
the assumptions within the accompanying unaudited pro forma
condensed combined financial information. The combined company
will incur additional costs after the Business Combination in
order to satisfy its obligations as a fully reporting public
company. In addition, we anticipate the adoption of various
stock compensation plans or programs (including the Incentive
Plan) that are typical for employees, officers and directors of
public companies. No adjustment to the unaudited pro forma
statement of operations has been made for these items as they
are not directly related to the Business Combination and
amounts are not yet known.
The unaudited pro forma condensed combined financial
information should be read in conjunction with the accompanying
notes and the sections entitled Daseke Managements Discussion
and Analysis of Financial Condition and Results of Operations,
Hennessy Capital Managements Discussion and Analysis of
Financial Condition and Results of Operations and the
historical financial statements and notes thereto of Daseke and
Hennessy Capital, included elsewhere in this Current Report on
Form 8-K or in the Proxy Statement.
The unaudited pro forma condensed combined financial statements
have been prepared based on: (i) 11,616,990 shares of Hennessy
Capital common stock redeemed at the Closing ($116.2 million)
to Hennessy Capitals pre-Business Combination certificate of
incorporation of Hennessy Capital and (ii) $65.0 million of
Series A Preferred Stock issued in connection with Preferred
Financing at the Closing.
Unaudited Pro Forma Condensed Combined Balance Sheet As
of September30, 2016 (In thousands)
Hennessy Capital Acquisition Corp.II
Daseke, and Subsidiaries
ProForma Adjustments
Footnote Reference
ProForma Combined
ASSETS
Current assets
Cash and cash equivalents
$
$
4,769
$
199,599
3a
$
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